Iraq Prepares to Amend Existing Oil Contracts

Meanwhile, the CPI is in charge of investigating corruption charges in the oil contracts made by Araji. Thus, the report by the parliamentary fact-checking committee would include all information stated in the reports of the board and the CPI.

In this regard, Hama said, “The final report of the fact-finding committee will be submitted — following the investigation with the minister of oil and after collecting the necessary information and data from the CPI and the board — to the parliament that will take the appropriate decisions and recommendations to address the damage resulting from the decline in oil prices in light of the work of foreign oil companies in the country.”

The Iraqi Oil Ministry regards the contracts reached with international companies to develop oil fields in Iraq for a period of 20 years as a “service,” meaning that companies get remuneration for their services, up to $6 for every barrel. However, these contracts were concluded when the oil prices exceeded $60 per barrel.

The damage does not only result from the decline in oil prices; the Iraqi government had already paid $270 million as compensation to foreign companies for the government's inability to export the oil produced from the development of oil fields because of the weak export system, which led Iraq to lose about $14 billion between 2011 and 2014.

The oil licensing contracts have raised a lot of controversy, as some consider them a new form of foreign tutelage on oil wealth, while others believe they are not economically beneficial and cause losses for Iraq. Thus, these licensing contracts need to be reviewed, especially in light of the financial crisis in Iraq. The review should be made public to avoid any suspicions of corruption and to establish contracts that are in line with the current economic situation.

(Agreement image via Shutterstock)

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