Iraq's billions of oil money in limbo
Iraq is known to have the super huge oil reserves the world over. Surprisingly, the country is still wallowing in political shambles and economic chaos so that basic services are not immediately available to most of those who need them.
Various political factions, not to discount religious affiliations, are mixed in their interpretations on the presence of coalition forces which continue to help keep peace and order throughout the country at the expense of their personal safety. Latest count showed that thousands had been killed while millions of refugees are now scattered all over the Middle East to escape the daily sectarian violence that hounds their lives in Iraq. They thought that the demise of Saddam Hussein had freed them from the clutches of economic difficulties and would stabilize the political situation in the country. They were wrong.
Until now, their apprehensions have grown even more because the present government under Prime Minister Nouri Jawad al-Maliki isn't doing much to calm the current situation. All the more, daily sectarian violence is the name of the game owing to the tussle between the Shias and the Sunni militias which has aggravated considerably, thus leaving many innocent civilians caught up in the crossfires. Do they have the choice? And it keeps many people wondering why Iraq is suffering when more and more of its crude oil are being shipped out purportedly to generate revenues intended to sustain the economic needs of its people.
According to Pratap Chatterjee of CorpWatch, Iraq sits on 115 billion barrels of proven oil reserves. And at least 1.6 million barrels of crude oil, about 85 percent of Iraq's oil output, are shipped out to buyers the world over from Al Basra Ol Terminal and the Khawr Al Amaya Oil Terminal, Chatterjee wrote.
These oil terminals are heavily guarded by armed soldiers who scan the horizon for suicide bombers and smugglers believed to be diverting an estimate billions of dollars worth of crude onto tankers as the oil metering system is defective since March 2003 U.S. invasion of Iraq. Perhaps, the only viable reason that could play up among the dirty minds is the deliberate cheating on the exact flow of oil out of Iraq. And where do you think the revenues would go but to the personal pockets of smugglers, while many of the poor Iraqi people are wallowing in poverty and starvation.
At least, an estimated US$3 billion worth of oil remains unaccounted for due to smuggling activities at the said Iraqi oil terminals. The modus operandi is that buyers from many parts of the world, would buy crude at the two terminals. The smugglers, including the tanker operators, would sign receipts for a lower quantity than they actually receive, and pay the extra cash directly to the smugglers, in collaboration with either Iraqi or U.S. officials who supvervise the oil deliveries, says Pratap Chatterjee. One of the notorious Iraqi officials often seen selling oil at the Al Basra Oil Terminal is Emir al-Hakim, head of the Supreme Council of the Islamic Revolution of Iraq.
The Christian Aid revealed that an estimated $20 billion of oil money had been transferred to the U.S.-controlled Coalition Provisional Authority, but failed to account for the amount when it handed over the power to the Iraqi government. The Iraqi people have been wondering how the money was spent, the Christian Aid report added.
With the problems on oil smuggling already bleeding Iraq's economy to death, Iraqi officials have drafted a new law that is expected to allow Western oil companies to extract oil reserves for 30 years. At this time, nobody knows if the proposed law is already in the offing. Accordingly, the 40-page document spells out the legal framework wherein Iraq could sign a production sharing agreements (PSAs) with at least four major oil companies--BP and Shell in Britain; and Exxon and Chevron in the U.S. --to develop the rest of the country's vast oil reserves.
The only fear that is cropping out these past few days is Iraq's weak bargaining position. According to Greg Muttitt of Platform, a human rights and environmental group that monitors the oil industry worldwide, there is danger that Iraq could be locked up to deals on bad terms for decades to come, considering that the new legislation was drafted with the help of BearingPoint, an American consultancy firm hired by the U.S. government. Many Iraqis have expressed apprehensions that the foreign oil companies would be able to secure favorable terms that could not be changed in the future.
The Independent, a London-based newspaper, also said that Iraq's sovereign rights to manage its own natural resources could be threatened by the provision in the draft that any disputes with a foreign company must ultimately be settled by international, rather than Iraqi, arbitration.
It also cited that "foreign oil companies have no restrictions on taking their profits out of the country, and are not subject to any tax when doing this." When put on streams, the new legislation will give foreign oil companies to rake in at least 40 percent on the PSAs, with the rest going to the Iraqi people.
Tags: Oil And Gas , Oil , Iraq , Iraqi
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