texas tea off

The Iraqi oil ministry hopes to finalize contracts with foreign oil companies by the end of this year according to Iraq's deputy oil minister for exploration, Abdul Kareem Leaby. Contracts for 10 Iraqi oil fields will be auctioned on December 11-12 to a slew of major international oil companies.



Oil companies prefer to sign production-sharing agreements where each company holds an equity stake in the oil itself; however, the Iraqi government has established service contracts in recent deals. Production sharing agreements are significantly more lucrative for oil companies than service contracts yet elicit specters of a colonial past due to the high level of foreign control over projects.



Iraq’s oil minister Hussain al-Shahristani said, “We have shown that we can attract international companies to invest in Iraq and boost production through service contracts. They will not have a share of Iraqi oil, and our country will have total control over production.”

Over the past few months a number of preliminary agreements have been reached with foreign oil majors. Eni (Italy), Occidental (US) and Korea Gas conglomerate signed a preliminary agreement to develop the Zubayr field, which has an estimated 4.1 billion barrels of oil.

In June, British Petroleum and the China National Petroleum Company successfully bid for Iraq’s Rumaila oil field which is estimated to hold 17.8 billion barrels of oil.

Shortly thereafter, Exxon Mobil (US) and Royal Dutch Shell (headquartered in the Netherlands) signed an initial contract to develop West Qurna, believed to have at least 8.6 billion barrels of oil.

It is interesting to note that these companies are accepting significantly lower prices per barrel than they originally bargained for. In their deal for Qurna, Exxon accepted a price of $1.90/barrel after arguing for about $4.00/barrel at the outset.
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Secretary of Defense Gates met with Aghan President Karzai today in Kabul. At a joint news conference following the meeting President Karzai said it would be 15 years until Afghanistan would be fully able to fund its security force.

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The European Union backed away from a Swedish proposal which named East Jerusalem as the de facto capital of a future Palestinian state. EU foreign ministers instead called for negotiations to determine the status of city as a future capital for both Israel and Palestine.

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Violent clashes continue in Iran.