No Oil Deals for Iraq?
The Iraqi government is likely to abandon plans to sign short-term contracts with foreign oil companies, negotiations over which have been halting, a senior U.S. diplomat in Baghdad said on Sunday.
"It appears that on present form (the Iraqi government) probably won’t proceed with most of these or all of them," Charles Ries, coordinator for Iraq’s economic transition at the U.S. embassy in Baghdad, told reporters.
"But I think that some of the companies are open to continued discussions even on relationship grounds, and some of the companies … don’t think it’s worth their time."
Apparently the Maliki government, after opening up talks for no-bid contracts to the oil giants, is driving a hard bargain. It puts me in mind of a quote that Carnegie’s Martha Brill Olcott gave me for this piece:
The oil conglomerates "are the toughest negotiators," said Martha Brill Olcott, a former Unocal adviser now at the Carnegie Endowment for International Peace. "They’ll work out a contract that insulates themselves from political risk. That’s where countries get upset — they paid too great a price to protect Western companies from political risk. That’s a problem: Iraqis might agree to one set of terms now, but you can imagine in 2015, if we’re lucky and it’s stable [in Iraq], then they’ll say, ‘Why the hell did we agree to these terms?’"
It looks like Maliki didn’t want to wait until 2015.