No-bid contract awarded to US companies in Iraq

From Fazle Rashid | Published: June 20, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

NEW YORK, June 19: Iraq's oil ministry has provoked sharp international reactions by awarding no-bid contract to the US companies to revamp its shattered and war ravaged oil industry. It is a difficult terrain to work with insurgency still on the rise, notwithstanding the claim that things are calming down.

There are three claimants to Iraq's oil revenue: Kurdish demanding the largest chunk stating most of the oil fields are located in their territories; Shias and Sunnis are also demanding equal share.

American oil companies are in negotiation with Iraq's oil ministry to service its oil fields. More than 40 companies, many from China, Russia and India, have made bids in vain. The deal has reawakened fears that America had invaded Iraq on flimsy pleas only to extend its stranglehold on Iraq's oil resources. It is not known whether the White House had any hand in securing the contracts for the American oil companies. The American experts are still on the pay roll of Iraq's oil ministry.

The Iraqi government tried to calm down speculation saying it is inviting back the major oil companies in a bid to increase oil production by half a million barrels a day by employing modern technology and expertise. The avowed intention of the Bush administration is that the increased output of oil in Iraq will smoothen the exceptionally tight supply that is the cause of soaring prices.

The government of Iraq said that the no bid contracts was a stop gap arrangement to bring in modern skills into the fields. It also defended the no-bid deal, saying the American companies were providing advise without charges for past two years before being awarded the contract. A total of 40 companies have a memorandum of understanding with Iraq's oil ministry. Iraq is one of the few countries where oil reserves are up for grabs.

Extraction of Iraq's oil reserve will be difficult unless carried out by country's sub-contractors. Others will be threatened by insurgents for cooperating with Western countries. Iraq's oil output will increase to 3.0 million barrels a day from 2.5 million barrels now. The current petrol price in America is $4 a gallon Corruption galore.