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SUNDAY, NOVEMBER 22, 2009
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In Televised Auction of Oil Contracts, Iraq Plays Hardball

Oil ministry plays hardball on prices

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(Newser) – The Iraqi oil industry has been nationalized since 1972, but today the country is awarding the first contracts in decades to private petroleum companies—live on television. So far a joint bid by British Petroleum and a Chinese firm has won the first contract, for a 17 billion-barrel field in Iraq's southeast. As the Wall Street Journal reports, oil companies were taken aback by the government's tough pricing: the BP consortium won by halving the fee it wanted to assess the oil ministry.

Iraq has the world's third-largest known oil reserves, and its televised auction has introduced a new level of transparency into the lucrative contract battles. The oil ministry has been offering maximum payments far lower than what the petroleum companies want; ExxonMobil, for one, refused to accept the $2-per-barrel price that BP agreed to. "This is a bit crazy that their prices are so different than ours," said one oil exec. "We didn't think they would be so tough."

Iraq's self-ruled Kurdish region began officially pumping crude oil to the international market for the first time Monday June 1, a move that will boost Iraq's thin budget.
Iraq's self-ruled Kurdish region began officially pumping crude oil to the international market for the first time Monday June 1, a move that will boost Iraq's thin budget.   (AP Photo/Hadi Mizban)
Three decades after being booted out of the country following Saddam Hussein's 1972 nationalization of the oil industry, petroleum companies are bidding for contracts in Iraq.
Three decades after being booted out of the country following Saddam Hussein's 1972 nationalization of the oil industry, petroleum companies are bidding for contracts in Iraq.   (AP Photo/Hadi Mizban, File)
The milestone bidding round for a slice of the country's vast crude reserves is taking place live on television.
The milestone bidding round for a slice of the country's vast crude reserves is taking place live on television.   (AP Photo/Nabil al-Jurani, File)
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2 comments
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Reader64481089
Jun 30, 09 7:53 AM CDT
Aww, whats a matter. Did you really think the Bush plan would work out for Big Oil? Please tell me it isn't so. Reply
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TerrifiedCitizen
Jun 30, 09 10:37 AM CDT
There's more than enough cheap oil flowing down the gulf super highway from Kuwait to satisfy the corrupt and greedy oil industry; they don't really need Iraqi oil at the moment. They probably have an inkling that there will be better prices out there to be negotiated once Iraq inevitably returns to its unstable state. Reply
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