U.S. State Dept investigates Iraqi oil contracts

by Christine Simmons

Sunday, 27 July 2008

The State Department’s inspector general is investigating Iraqi oil contracts after four Democratic senators complained that department employees may have encouraged lucrative oil deals between Iraq and several Western companies, Christine Simmons writes for the AP.

Any backstage meddling would have violated Bush administration policy, which has been to discourage such deals until Baghdad passes a law that will fairly divide the nation’s oil resources among the various provinces.

Reports that a number of international oil companies are on the brink of signing contracts with Iraq have prompted a furious reaction in certain parts of the media and on Capitol Hill. The deals have been widely characterized as no-bid contracts, implying that Big Oil has somehow used its political clout to muscle in on Iraq and renewing suspicion that the whole U.S. intervention in Iraq was primarily a grab for natural resources.

In the Senate, senior Democrats have argued that the contracts would heighten Iraq’s sectarian tensions, and those lawmakers are threatening to cut financing for some nonmilitary programs in Iraq if the deals go ahead without prior passage of new hydrocarbons legislation.

These are gross mischaracterizations of the Iraqi contracts, writes Raad Alkadiri in The Washington Post.

The AP reports that the Iraqi Oil Ministry says oil exports in June amounted to 58.1 million barrels, a 4.3 percent decline from the previous month.

Sunday’s statement says it sold for US$123 a barrel and yielded US$7.141 billion.

It adds that 43.6 million barrels were exported through the south and 14.5 million from Turkey’s port of Ceyhan

Jordan is seeking six billion dollars from international donors to build a railway link with its neighbours and plans to import Iraqi crude oil by rail, the transport ministry said.

Covering more than 1,000 kilometres (600 miles), the railway would also link the Saudi and Iraqi borders with Jordan’s northern city of Irbid as well as the northeastern towns of Mafraq and Azraq, Agence France-Presse said.

The report recommended that Iraqi crude oil be carried via rail, scrapping plans to build a 260-million-dollar pipeline between the two countries.

The leader of Iraq’s semiautonomous Kurdish region was in Baghdad for talks with the central government on disputes blocking key measures such as provincial elections and sharing oil revenue.

Kurds also are battling the Shiite-led government over foreign oil investment. Washington strongly backs the elections and proposals to divide Iraq’s oil wealth among its various groups, calling them important steps toward national reconciliation, the AP reported.

“Kurds rejected approving the operation of a national oil company and linking its establishment with legislations of three laws in one package” Abdel Hadi al-Hasani, MP from the Shiite United Iraqi Coalition Voices of Iraq.

Political wrangling has stifled progress on the draft law for dividing revenues from Iraq’s considerable oil reserves, prompting the largely autonomous region of Kurdistan to begin signing its own contracts in September.