Crude Awakening: How Exxon/Mobil Won the War in Iraq
In Iraq’s turbulent politics, whoever controls the oil production wields the power. And that might soon be ExxonMobil.
On Dec. 17, two days after the U.S. military cased its colors and formally ended its mission in Iraq, the brain trust of the Iraqi oil sector gathered for a symposium at Baghdad’s Alwiyah Club, a fortified concrete complex of meeting rooms and outdoor gardens. They were officially meeting to discuss “Challenges Facing the Development of the Extractive Industry.” The issues they grappled with held the prospect to transform the global energy marketplace and determine the course of Iraqi democracy.
A few top government officials sat on a dais while members of the audience — about 150 parliamentarians, technocrats, and academics — took turns at a podium, giving short speeches and asking questions of the panelists. Speakers often had to yell to be heard over the objections of audience members. A bit of shouting was to be expected: This was the first time in years that Iraqis were gathering without a foreign military occupation to outline their economic future. And in a country where 95 percent of government revenue comes from oil, any debate about oil is also a struggle for power. They addressed the most fundamental questions: How much oil should Iraq produce? What should happen to the revenue? Who should control the country’s oil strategy? You wouldn’t have known it by the volume of the rhetoric, but a lot of the talk was moot.
Much has already been decided. In 2009, the government started awarding contracts for the country’s largest fields, and the biggest names in oil have signed up. Companies like ExxonMobil and BP have invested billions of dollars, bringing the latest in technology and engineering expertise. Production has rebounded from just over 1 million barrels per day after the invasion to nearly 3 million today. Baghdad’s 11 international oil contracts promise to deliver a total of more than 13 million barrels per day within seven years — a figure that would make Iraq the largest oil producer, ever.
There are good reasons to doubt these projections. For one thing, the current political crisis has underscored Iraq’s failure to build the kinds of institutions — a credible judiciary, non-politicized security forces — that support a stable, functioning, democratic state. Even if Iraq weren’t plagued by daily bombings and political dysfunction, it would be hard-pressed to achieve what would be the most rapid oil expansion in world history.
Yet if the investment bonanza can even partially succeed, it promises to reshape not only Iraq but also the regional balance of power. Falah al-Amri, director of the State Oil Marketing Organization, showed the audience at the Alwiyah Club a PowerPoint presentation with figures that he had quotedto his Gulf counterparts at a recent OPEC meeting. By 2014 or 2015, he said, the country would reach the magic number of 4.5 million barrels per day of oil production, at which point OPEC would start trying to enforce quota restrictions.