One Utah

How many of the more than 3,000 American soldiers and marines who have died as a result of our invasion of Iraq knew what the acronym PSA stands for?

No, we’re not talking about a public service announcement. For oil industry executives, a PSA is a “production-sharing agreement.” It’s a method of gaining control of oil reserves without having to pay for them directly. In countries with unknown and undeveloped petroleum resources, PSAs are a means of inviting in foreign companies with needed expertise by guaranteeing them a profit.

A PSA is manifestly not a good deal for any countries in the Middle East, where oil exploration is relatively simple and there is already a large oil industry with all the needed infrastructure. Yet Iraq is poised to offer PSAs that would permit Western companies to keep up to 75 percent of profits from Iraqi oil, twice the average profit share compared to other such agreements worldwide.

From The Independent (again the U.S. media scooped by the Brits):

Iraq’s massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days.

The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.

Of course, given the current political chaos, Iraqi citizens have little power over whether their politicians sign the proposed PSA agreements under the new law.

For balance, I offer this analysis by “Jerome a Paris” on DailyKos who argues: “PSAs, per se, or even a given profit split, are not necessarily disadvantageous for the host country. If the sharing is well negotiated, and the project well supervised, they can be extremely profitable for the host country… PSAs are not an evil plot by Western companies.”

UPDATE: Speaker Nancy Pelosi confirms that President Bush wants American oil companies to have precedence in any Iraqi oil deals.

This entry was posted Sunday, January 7th, 2007 at 2:42 pm and is filed under Economic Exploitation, George W. Bush, Iraq, This Blog, War. Both comments and pings are currently closed.