Political implications of the second oil auction
The net outcome of the licensing rounds is likely to be more of an asset than a liability for Prime Minister Nouri al-Maliki.The second licensing round for Iraqi oilfields carried out by the oil ministry in Baghdad over the weekend will prove controversial, on the one hand, because Iraq remains in the middle of a chaotic process of political transition and has yet to agree on a legal framework for the oil sector.
At the same time, however, the relatively straightforward nature of the technical service contracts under offer as well as the emerging broader picture of a reasonably balanced mix of foreign and Iraqi participation in developing the country’s oil sector mean that these deals are on the whole less vulnerable to criticism than those previously entered into by foreign companies on extremely lucrative terms with the Kurdistan Regional Government – and therefore also stand a greater chance of surviving in their existing form in the long term.
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