During the second half of 2009, Iraq held two auctions of its largest oilfields, awarding them to multinational companies such as BP, Shell and ExxonMobil to operate under 20-year contracts. Between them the oilfields account for over 60% of Iraq’s reserves. The contracts were service contracts rather than the companies’ preferred production sharing agreements, which had been proposed for Iraq but rejected as giving too much away.
Media reports of the auction focused on the headline remuneration fees. These sounded so low – between $1.15 and $5.50 per barrel – that many commentators questioned the profitability of the deals. But as always in oil contracts, the devil is in the detail. And whereas the auctions were billed by the Iraqi government as among the world’s most transparent contracting processes, this briefing reveals what subsequently happened behind closed doors to make the contracts much more attractive to the multinational companies, at the expense of the Iraqi people.
The first contract awarded, for the Rumaila field in southern Iraq, was privately renegotiated between the Iraqi government and the winning BP/CNPC consortium for more than three months after the auction. Platform has obtained the renegotiated Rumaila contract, and can reveal its contents for the first time. The report From Glass Box to Smoke Filled Room – How BP secretly renegotiated its Iraqi oil contract, and how Iraqis will pay the price looks at this contract and finds that the terms changed significantly from the published model contract on which the auction was based.
Download the report (pdf) or read online below.