Local Iraqis Oppose New Oil Deals

In June 2010 Iraq Oil Report had two stories about locals in southern Iraq who opposed the government’s new oil deals. In Dhi Qar, tribal leaders stopped an oil exploration company from doing their work, and threatened them with violence if they didn’t give them money for using their land. Sheikhs also asked Malaysia’s Petronas, which won an auction for the Gharraf field in Dhi Qar in December 2009, to pay them as well.

In southern Iraq, marsh Arabs claimed that oil companies were encroaching on their property and forcing them out. The Arab Marshes Revival Committee also said that their territory was being polluted by petroleum projects. As development steps up on Iraq are other oil fields, more Iraqis may begin protesting.

The first demonstrations actually began last year in Wasit province. There the China National Petroleum Corporation (CNPC) won the first post-Saddam oil contract for the Ahdab field. Shortly after the foreign company began work, farmers started destroying equipment and demanding compensation for damages to their land.

One news story said that the locals caused up to $1 million in damages. They also complained that the company had not hired any locals for jobs as they had hoped. As a result, CNPC actually shut down operations for a month until the government deployed more security for them.

Iraqi’s Oil Ministry has signed twelve oil deals in the last two years. It’s hoping that they will dramatically boost exports, which account for 90% of the government’s revenue, and provide jobs and development as well. The 2010 budget will also pay provinces that produce oil $1 per barrel.

Some Iraqis are not satisfied with these promises, and are taking matters into their own hands by protesting against encroachments upon their property, and threatening international oil companies unless they are paid directly.

This could cause problems for the Oil Ministry’s plans, and may ironically lead the government to crackdown on its own people to develop the country’s greatest resource. This is an issue that needs close attention as the work on the petroleum fields unfolds.