Iraq’s oil boom

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Much of the uncertainty Iraqis feel is about the economic future of their country.Those prospects depend largely on the recovery of Iraq’s oil industry. That’s been more or less dormant for the past seven years. But The World’s Katy Clark reports that Iraq’s oil is flowing again. Download MP3

• BBC video: Iraq oil contracts awarded
• BBC video: UK and China secure Iraq oil deal
• Iraq Oil Report

Read the Transcript
This text below is a phonetic transcript of a radio story broadcast by PRI’s THE WORLD. It has been created on deadline by a contractor for PRI. The transcript is included here to facilitate internet searches for audio content. Please report any transcribing errors to theworld@pri.org. This transcript may not be in its final form, and it may be updated. Please be aware that the authoritative record of material distributed by PRI’s THE WORLD is the program audio.

MARCO WERMAN: Much of the uncertainty Iraqis feel is about the economic future of their country. Those prospects depend largely on the recovery of Iraq’s oil industry. That’s been more or less dormant for the past 7 years. But The World’s Katy Clark reports that Iraq’s oil is flowing again.

KATY CLARK:  Ben Lando is Baghdad Bureau Chief of the online publication, “Iraq Oil Report.” He says things are looking up for Iraq’s oil industry. That’s thanks in large part to nearly a dozen oil development deals awarded by the Iraqi government this past year to foreign oil companies.

BEN LANDO:  And the plan is over the next 7 years Iraq’s oil production capacity is to grow to more than 12.5 million barrels per day, which is, would be the most any country has ever produced.

CLARK: But a lot has to happen first before that goal becomes reality. For one thing, Iraq lacks the infrastructure to transport the crude to refineries and then on to outside markets. Lando says security’s also a concern.

LANDO: In the north especially you’ll see the pipeline that goes from Kirkuk into Turkey is still being targeted, not as frequently as it was between 2003-2007 when the pipeline was mostly offline because of being targeted. But there are explosions along the pipeline in Iraq as well as in Turkey.

CLARK: And there’s the fact that Iraq remains without a government six months after election day. Various political factions are threatening to throw out the oil contracts with foreign companies. Iraqis still harbor ill will towards foreign oil firms. Outside conglomerates unilaterally controlled Iraq’s oil industry until the early ‘70s. Meghan O’Sullivan served as Deputy National Security Advisor for Iraq and Afghanistan under President George W. Bush. Now a professor of international affairs at Harvard’s Kennedy School, O’Sullivan says the next Iraqi government will certainly have some big decisions to make about how to proceed with the development of its oil reserves. But she doubts the terms of the international contracts now in place will be among them.

MEGHAN O’SULLIVAN: These 10 contracts that were signed in the last year under the Maliki government they are extremely favorable to Iraq. And I think a very cold hard look at those contracts would leave most Iraqis pretty skeptical that they could get a better deal were they to try to renegotiate those contracts.

CLARK: China has the biggest foreign stake in Iraq’s oil industry at the moment. Some of the others include Royal Dutch Shell, Russia’s Lukoil and US-based Exxon Mobil. Some experts say the fact that most countries now poised to profit aren’t American should help dispel the belief that the US invaded Iraq to gain control of its oil reserves. Meghan O’Sullivan says the more intriguing question now is what will happen if Iraq continues developing its oil reserves.

O’SULLIVAN: One of the issues that is likely to arise as Iraq produces more and more oil is its status within OPEC. Iraq has not been subject to an OPEC quota since the first gulf war.

CLARK: If Iraq starts doubling or even tripling production in the coming years, it could eventually become the world’s largest oil producing nation. O’Sullivan says the question then won’t be should it fall under an OPEC quota, but when. For The World, this is Katy Clark.

Copyright ©2009 PRI’s THE WORLD. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to PRI’s THE WORLD. This transcript may not be reproduced, in whole or in part, without prior written permission. For further information, please email The World’s Permissions Coordinator at theworld@pri.org.