Iraq Oil Report

Bush administration officials knew that a Texas oil company with close ties to President Bush was planning to sign an oil deal with the regional Kurdistan government that ran counter to American policy and undercut Iraq’s central government, a Congressional committee has

The conclusions were based on e-mail messages and other documents that the committee released Wednesday, James Glanz and Richard A. Oppel Jr. write for The New York Times.

Steven Mufson with the Washington Post writes that last fall the State Department said that it had tried to dissuade Hunt Oil from signing a contract with Kurdish regional authorities but that the company had proceeded “regardless of our advice.” Although Hunt Oil’s chief executive has been a major fundraiser for President Bush, the president said he knew nothing about the deal.

Yesterday, however, Henry A. Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, released documents and e-mails showing that for nearly four months, State and Commerce department officials knew about Hunt Oil’s negotiations with the KRG and had told company officials that there were no objections.

In Iraq this week, the giant oil fields were opened to foreign bidders. U.S. conglomerates such as Exxon Mobil are about to sign no-bid contracts to move in. Big Oil, already brimming with profits, will have a fine Fourth of July.

Azzaman notes that the central government and the Kurdish authorities have signed a secret deal under which the Kurds are to extend their political autonomy over their oil riches, a senior member of parliament said.

Jaber Khaleefa of the parliament’s Oil and Gas Committee said the secret deal has allowed both sides to proceed ahead with contracts with foreign firms despite the lack of constitutional backing.

Despite having the world’s third-largest proven oil reserves, Iraq’s production of 2.5 million barrels a day is only the 12th biggest. And although production has recently recovered to the levels seen before the 2003 US-led invasion, it is still about 1 million barrels a day below its peak in the late 1970s, the BBC’s Richard Thompson writes.

Total, one of the largest petroleum company in Europe, is “on the verge” of signing an oil-services contract with Iraq as companies from the U.S. and Europe seek to access supplies and increase production there, Anthony DiPaola writes for Bloomberg News

The French company will sign the contract as a partner of Chevron, the Total chief executive, Christophe de Margerie said Tuesday during a news conference at the World Petroleum Congress in Madrid.

Iraqi Oil Minister Hussain al-Shahristani has told lawmakers that short-term technical support contracts with oil majors worth around $3 billion may not get signed, two parliamentarians said.

The lawmakers, the two top officials on parliament’s oil and gas committee, told Reuters late on Wednesday that Shahristani was unhappy with delays in getting the contracts agreed. One sticking point was payment terms, Ahmed Rasheed reported for Reuters.

The new Baghdad deals will trigger more wrangling over the real motivation for the Iraq invasion. There was a time when it was mainly just conspiracy theorists and other assorted weedy types who claimed the aggression was chiefly about oil. But along came Alan Greenspan, the former chairman of the U.S. Federal Reserve Board, who wrote last year in his book The Age of Turbulence, “I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil.” This week’s entry of Big Oil in Iraq will only buttress this view, says the Globe and Mail’s Lawrence Martin.

The Iraqi parliament’s oil and gas committee must have the right to scrutinise any long-term oil contracts signed with foreign firms or it will try to block the deals, the committee’s head said on Tuesday.

The comments by Ali Hussain Balou came a day after the Oil Ministry opened Iraq’s giant oilfields to bids for long-term contracts by foreigners for the first time in decades, Ahmed Rasheed reported for Reuters

Balou also demanded an explanation from Oil Minister Hussain al-Shahristani on plans to offer a series of short-term technical support contracts worth $500 million each to a handful of Western oil majors without competitive bidding.

“The parliamentary oil and gas committee … should have access to every detail on all the contracts, otherwise we will block them in parliament,” Balou, a Kurd, told Reuters.

Perhaps Sen. Schumer would approve if the Saudis were to agree to pump the Iraq oil?A few weeks ago New York Sen. Schumer and aspiring global Petroleum Czar was threatening to block arms sales to Saudi Arabia if it didn’t produce more oil. Now, he’s outraged that the Iraqi government may give modest no-bid service contracts to Western oil companies as a first step toward more fully exploiting the country’s vast oil reserves, the editors of the National Review said.

Mohammed Abbas for ArabianBusiness.com writes that Iraq’s finance ministry wants to raise its 2008 budget by 44 percent to a record $70 billion, cashing in on record oil prices to rebuild shattered infrastructure, the government’s spokesman said on Wednesday.

The ministry’s submission of a supplementary budget of $21 billion - on top of February’s 2008 budget of $48 billion - comes as prices for Iraq’s main export oil hits record highs.

“This enhanced budget that results from the stability in Iraq’s oil exports… will have tangible positive effects on the provision of basic services in the country,” government spokesman Ali Al-Dabbagh said in a statement.

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