SRF Heavy Industries

From the New York Times: Deals With Iraq Are Set to Bring Oil Giants Back

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

Mission accomplished.

Here, for instance, is an excerpt of ExxonMobil’s financial data from 2002-2007, in millions, according to Wikipedia:

Also doesn’t include non-realized income, like appreciation (or depreciation) of assets, etc. But note that is Net Income — what’s left over after expenses are paid and debt is paid down. (One of the reasons I left the debt row in the table.) Net Income = what’s distributed among executives as bonuses and divvied up among ~5800 institutional shareholders, mutual funds, and private investors.

When you ask, what exactly did we buy with the trillions of dollars we’ve flung at the Middle East since 2002, this is pretty much it. Plus danger pay for a really large number of National Guards, who ordinarily would have just stayed home and helped large metropolitan areas deal with flooding.

But anyway.

The arrangements being discussed aren’t the traditional kind of the sort of “come to the fields, keep what you pick, pay us a percentage” kind of migrant field worker deals. They’re “improve our infrastructure and equipment and techniques and we’ll pay you for services rendered — in barrels of oil since dollars are so worthless”. So instead of extracting a certain number of barrels of oil per day and paying 75% of the value of that in royalties to the holders of the mineral rights, they provide equipment and technology and training and get paid in a coin that’s worth more if they don’t really haul as much of it as they can out of the ground. Same as always, really, but this way the locals don’t scream at their oil actually falling into the hands of Americans until they actually give it to us in exchange for services rendered.

But anyway. That’ll show those terrorists what’s what!

Mission accomplished.

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