Iraq Prepares to Amend Existing Oil Contracts

Assem Jihad, a spokesman for the Iraqi Oil Ministry, told Al-Monitor, “The Oil Ministry began new talks with foreign oil companies in an attempt to make adjustments to the contracts’ wording to match the dramatic decline in the global oil prices and the decline of Iraq’s revenues, while the [foreign] oil companies are receiving their dues as before.”

The finalized contracts do not include any provisions on the possible drop in oil prices, and therefore the companies charge the Iraqi government a fixed price for their work in developing oil fields and increasing oil production.

Jihad explained that oil companies seek to increase the duration of their contracts to 50 additional years instead of 20 years in return for agreeing to change the wording. He rejected the idea that the oil licensing has become useless or that there is any suspicion of corruption. “The ministry does not get involved in accusations and political tugging. It is enough to just look at the figures achieved by the development of oil field production for the period 2011-2015,” he said.

He said that the total production in the period between 2011 and 2015 is 4.66 billion barrels and 2.34 billion barrels for basic production. This means that the increase in production over the basic production is 2.32 billion barrels, and the financial returns of the total production amounts are over $395 billion.

Jihad also tackled the foreign companies’ operations for the last five years, noting that over $46 billion has been paid to the companies by the Iraqi government, the profitability of contracting companies is $2.25 billion and the tax paid to the Iraqi Treasury was $1.21 billion, bringing the state’s net gross revenues to more than $348 billion.

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