In Bid for Iraqi Crude, Oil Corporations Play Politics

Exxon, Shell, and BP tread lightly over Iraq's political sectarianism to reign supreme in Iraqi oil production

by John Glaser, April 05, 2012

Major oil companies like Exxon Mobil and Shell are playing politics in Iraq, juggling the autonomous Kurdish north with the central government in Baghdad in fuzzy legal limbo in an attempt to capitalize on their contracts made possible by Washington’s war of aggression.

Exxon Mobil has signed up to explore for oil in the north while their competitors at Shell have waited on the sidelines to see if such a move angers the increasingly dictatorial government led by Prime Minister Nouri al-Maliki.

Iraq’s huge southern oilfields – potentially the one of the world’s biggest sources of new oil – are set to be opened up to bidding in the next few years. Oil corporations like Shell don’t want to risk being left out of such a bonanza by pissing off Baghdad.

In January, Ben Van Heuvelen wrote a piece at Foreign Policy describing how Iraq is on track to become a “swing producer” within five years. A “swing producer” refers to “the ability to drastically increase production on short notice” (Saudi Arabia is currently the world’s only swing producer, and it affords the monarchy unmatched geopolitical power).

“In 2009,” he wrote, “the government started awarding contracts for the country’s largest fields, and the biggest names in oil have signed up. Companies like ExxonMobil and BP have invested billions of dollars, bringing the latest in technology and engineering expertise…Baghdad’s 11 international oil contracts promise to deliver a total of more than 13 million barrels per day within seven years — a figure that would make Iraq the largest oil producer, ever.”

Oil corporations, aside from having been given the prize of Iraq as a result of the Bush administration’s criminal invasion in 2003, have relied heavily on the undemocratic centralization of political power under Maliki in order to develop Iraq’s oil. “Maliki’s Shiite-majority allies have backed centralized control of oil,” Van Heuvelen writes, “while parties representing the minority Kurds and Sunnis say local governments should have more authority.”

The autonomous Kurdistan region, though, is becoming more attractive because it avoids the ornery – and costly – officialdom of the Maliki regime for development in the south. While companies like Exxon, Shell and BP have already signed agreements with Baghdad to develop fields in the south, they are playing a waiting game on more assertive action in the north, to see if Iraq’s sectarianism gets in the way of their profits.

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