Iraq signing oil deals for next 20 years at a time when it is extremely weak and not fully sovereign

[sabra]

http://www.time.com/time/world/article/0,8599,1576593,00.html

<snip>

As written, the law would end more than three decades of Iraq's nationalized oil industry. It would give 10-year exploration and development rights to foreign oil companies — at least those willing to start drilling in a country where hundreds of contractors have been killed and pipelines are regularly blow up. Once the exploration deals expire, the companies can negotiate to produce the oil for another 20 years in partnership with the state-owned Iraq National Oil Company. Foreign oil companies would then pay the government 12.5% royalties of the oil's value, and be able to export the rest of whatever oil they find — potentially massive amounts.

Indeed, early word of the document last weekend brought howls from some groups that believe Iraq's government is offering big oil companies overly generous production-sharing deals, which it could regret when the war finally ends. The alternative would be heavy state control, along the lines of the two oil giants that border Iraq, Saudi Arabia and Iran. "What we are looking at is Iraq signing deals for next 20 years at a time when it is extremely weak and not fully sovereign," says Greg Muttitt, co-director of Platform, a watchdog organization in London that monitors the oil and gas industries. "The U.S. has put a lot of effort into this." But it's not certain that U.S. or British majors like ExxonMobil or BP will be the first big benefactors. Both China and India signed exploration deals with Saddam before the war, which remain in effect.

[no_hypocrisy]

1. How "good" are those contracts? France signed lots of contracts

for oil with Saddam-led Iraq and they are now invalidated.

[madrchsod]

4. this same questioned was raised just before the war

it seemed back then that many did`t think they would be worth the paper they would be written on because of the sovereign issue and whether the iraqi`s can establish a functioning international recognized legal process. i certainly would`t invest until those issues`s were resolved

[Turbineguy]

2. 12.5 percent?

I think Saddam Hussein took a 15 percent commission.

[neoblues]

3. Gives Bush, et.al, plenty of cause...

to claim American Interests in indefinitely propping up any government that will honor these contracts.

[Sal Minella]

5. I read someplace that American oil companies get to keep 75% of the profits

until their drilling costs are recouped, and then 20% after that -- exceedingly generous standards, according to the article I read.