Big Oil’s return to Iraq

Thirty-six years after Western oil giants were ejected from Iraq by Saddam Hussein, the Iraq Oil Ministry has awarded two-year, no-bid contracts to the same companies. The deals with U.S.-based ExxonMobil and Chevron, Royal Dutch Shell, France’s Total, and Great Britain’s BP are for oil-field repair work and technical support, but give these companies the inside track to securing enormously lucrative oil-drilling licenses. Iraq’s vast oil fields remain largely undeveloped, with some experts estimating that $30 trillion of oil still lies under its sands. Secretary of State Condoleezza Rice said the U.S. played no role in securing the deals, though Americans still advise the Iraq Oil Ministry.

In Washington, a group of Democratic senators sought to block final approval of the contracts. The lawmakers said in a letter to Rice that contracts should not be awarded until Iraq enacts a long-delayed law aimed at assuring that oil riches are equitably divided among Shiites, Sunnis, and Kurds. Without such a law, said Sen. Charles Schumer of New York, Iraq could become “one of these petro-feudal states, with different factions warring for the oil.”

“Didn’t you just know this was coming?” said Cynthia Tucker in The Atlanta Journal-Constitution? The American public was repeatedly reassured “that petroleum had absolutely nothing to do with the Bush administration’s decision to invade Iraq.” That claim is a little harder to believe now that the very companies that lost out when Saddam nationalized the oil industry have been welcomed back—while offers by Indian, Chinese, and Russian oil companies were rejected. Perhaps it’s just a coincidence.

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It’s amazing how war critics turn even positive developments into something dark, said Investor’s Business Daily in an editorial. At a time when Americans are reeling from $4-a-gallon gas, “this breakthrough will lead to more oil on the world market.” And the fact that private companies are willing to move personnel and equipment into Iraq is evidence that security conditions there have improved markedly.

Still, this process was dangerously mishandled, said The New York Times. The contracts were sure to “rekindle understandable suspicions” that the war was all about oil, which is why the bidding should have been transparent and competitive. Oil could be Iraq’s salvation, but it also could easily become “one more centripetal force pulling the country apart.”