May 01, 2003

What Future for Iraqi Oil?

As Iraq’s oil fields have been state-owned since the 1970s, through contracts to private Iraqi companies, decisions about renewal of such contracts will be determined by the new civilian authority under US Gen. Garner. It is currently unclear whether the Iraqi state oil company will be ‘privatized’, or whether new contracts will be restricted to US firms, Iraqi firms, or will be subject to international competitive bidding.

To date, Halliburton, the firm where Vice President Dick Cheney served as the Chief Executive until 2000, received the contract to put out the oil fires. Bechtel, the firm where former Secretary of State George Shultz serves on the Board of Directors, was recently awarded a contract for $34.6 million that can be extended to up to $680 million to rebuild Iraqi infrastructure, including roads, airports, and seaports.

The bidding was restricted to a handful of US companies – a move criticized by several lawmakers. A bill co-sponsored by Democratic Senators Byrd, Clinton, Lieberman and Wyden and Republican Senator Collins would require public justification for future contracts awarded without competitive bidding.

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