Iraq:
Big Oil Profits

Jul 21, 2014

The oil of Iraq has been split in two parts, one officially controlled by the central government of Nuri al-Maliki, the other controlled by a Kurdish council in the north of Iraq. This division, which resulted from the 2003 U.S. war on Iraq, has allowed the big oil companies, led by Exxon, to jump in to gobble up Iraq’s oil.

In 2011, Exxon signed a contract with the central government to pump oil from fields in the south. A few months later, Exxon signed a much more profitable deal with the Kurdish government in the north to drill for oil there. The Iraqi central government soon fell in line, rewarding Exxon and other oil companies with similar, much more favorable terms for the oil companies than they got from Kurdistan. Exxon also signed contracts with the Kurdish government to develop oil fields around Kirkuk, even though the Kurdish government only shared control over those fields with the central Iraqi government.

But oil production in Kurdistan was still held back because the only pipeline to transport the oil from Kurdistan was controlled by the Iraqi central government, which had cut off the Kurdish government from using it. This meant that the only way to get the oil out of Kurdistan was by slow and costly tanker truck.

So, Kurdistan, with the help of Exxon, built its own pipeline to neighboring Turkey, which was promised a very profitable share both in the pipeline company and the oil flowing from Kurdistan–even though for decades, the Turkish government had vehemently opposed the Kurds in Iraq, even invading Kurdistan and massacring them on many occasions.

Even as civil war envelopes Iraq, even as the country threatens to break apart, oil deals are being made, and oil production continues to boom throughout the country, reaching 3.6 million barrels of crude per day on average. This amount is 50% higher than four years ago, and higher than at any time in the last three decades. Iraq is now the second largest oil exporter in OPEC, behind only Saudi Arabia. It has the greatest potential to grow, given Iraq’s vast oil reserves, much of which has not been explored, because of the decades of wars and crippling trade embargoes.

The big international oil companies, including Exxon, BP, Shell and Chevron, stand to gain the highest profits from all this. They could care less about the wars and chaos that they have instigated, provoked and played on.

That’s just their way of doing business.