Monday, June 14, 2010

Local Iraqis Oppose New Oil Deals

In June 2010 Iraq Oil Report had two stories about locals in southern Iraq who opposed the government’s new oil deals. In Dhi Qar, tribal leaders stopped an oil exploration company from doing their work, and threatened them with violence if they didn’t give them money for using their land. Sheikhs also asked Malaysia’s Petronas, which won an auction for the Gharraf field in Dhi Qar in December 2009, to pay them as well. In southern Iraq, marsh Arabs claimed that oil companies were encroaching on their property and forcing them out. The Arab Marshes Revival Committee also said that their territory was being polluted by petroleum projects. As development steps up on Iraq’s other oil fields, more Iraqis may begin protesting.

The first demonstrations actually began last year in Wasit province. There the China National Petroleum Corporation (CNPC) won the first post-Saddam oil contract for the Ahdab field. Shortly after the foreign company began work, farmers started destroying equipment and demanding compensation for damages to their land. One news story said that the locals caused up to $1 million in damages. They also complained that the company had not hired any locals for jobs as they had hoped. As a result, CNPC actually shut down operations for a month until the government deployed more security for them.

Iraqi’s Oil Ministry has signed twelve oil deals in the last two years. It’s hoping that they will dramatically boost exports, which account for 90% of the government’s revenue, and provide jobs and development as well. The 2010 budget will also pay provinces that produce oil $1 per barrel. Some Iraqis are not satisfied with these promises, and are taking matters into their own hands by protesting against encroachments upon their property, and threatening international oil companies unless they are paid directly. This could cause problems for the Oil Ministry’s plans, and may ironically lead the government to crackdown on its own people to develop the country’s greatest resource. This is an issue that needs close attention as the work on the petroleum fields unfolds.

SOURCES

Daood, Mayada, “al-maliki gambles on the deficit,” Niqash, 2/23/10

Gentile, Carmen, “Tribal demands, alleged extortion stall oil development,” Iraq Oil Report, 6/2/10

Iraq, Ali Abu, “Iraq’s marsh dwellers denounce oil plans,” Iraq Oil Report, 6/7/10

Reed, Stanley and Razzouk, Nayla, “Iraq’s Economy Wakes Up,” Business Week, 4/22/10

Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 4/30/1

5 comments:

Anonymous said...

Joel:

May I ask if you think it is necessary for Iraq's oil reserves to be developed by foreign oil companies, or do you see this as merely a form of exploitation?

Joel Wing said...

That was a huge question within Iraq. Basically they don't have the money or know how to boost production over what they're currently making. They are at capacity and it doesn't bring in enough for all the rebuilding they need to do. The deals they signed are not very profitable for the foreign companies either. They have to pay huge signing bonuses, a large tax, and then reach a certain production mark before they even get paid and when they do the amount they're going to get isn't that much at all.

viagra online said...

it is necessary for Iraq's oil reserves to be developed by foreign

Maury said...

They don't oppose the oil deals. They oppose not getting a slice of those deals. This is the same b.s Iraq went through went it came to securing the oil fields. Incidents of sabotage plunged when tribes started getting paid to provide security. Not much different from a mafia extorting "protection money" from area businessmen.

Joel Wing said...

Maury, actually when they started paying the tribes to protect the oil lines it did no good. The tribes pocketed the money and continued to steal oil and attack the lines. Things didn't really improve until they built huge berms and other defensive measures across most of the pipelines.

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