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[casi-analysis] Oil companies hungry for Iraq bonanza - survey

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Press release from:
Voices in the Wilderness UK

Wednesday 16th June 2004


As political handover begins to take place in Iraq, oil companies have
expressed keen interest in investing in the country’s oilfields,
despite ongoing security and human rights problems, a survey has

The respected Robertsons New Ventures Survey – published last week by
oil industry consultancy Fugro-Robertsons – ranked Iraq third out of
147 countries for level of interest expressed by oil company executives.

Gabriel Carlyle, of campaign group Voices UK [2], observed, "Oil is
clearly one of the key factors driving US/UK policy in the Middle East
generally and Iraq in particular. It has been estimated that, even if
Iraq's oil production remains under national control, average annual
profits from Iraqi oil for Western oil companies over the next 50 years
could amount to as much as $90bn - provided only that Iraq enters into
production sharing agreements that offer the companies favourable terms.
Rhetoric aside, one of the key aims of the occupation - which is set to
continue long after the much-touted ‘handover’ on 30 June - has
been, and remains, to secure just such terms.”

Iraq has the world’s second largest oil reserves, and some of the
cheapest development costs. However, to date most oil companies have
been careful to distance themselves from the occupation and from
allegations of profiteering from war. Last week, Iraq’s interim oil
minister began to lay out plans for national control over Iraqi oil
production. This survey shows that western oil companies plan to
maximise their role.

Top of the survey was the UK, for a second year running. This will be a
surprise for many observers outside the oil industry, to whom the
British North Sea is seen as an expensive oil producing region.

The oil industry complained loudly when Chancellor Gordon Brown made a
small increase in the tax rate on North Sea production in April 2002.
But oil industry commentator Greg Muttitt, of PLATFORM [3], explained
“The industry’s moans at tax changes really don’t match the
reality. The 2002 tax change was small, and the UK remains one of the
least taxed oil producing areas of the world – as this survey
confirms”. [4]

Muttitt added, “Oil industry PR tells us that the North Sea is too
expensive because the tax is too high, and that companies aren’t
interested in Iraq until security improves and a democratic government
is in place. But surveys like this cut through that spin – when
companies vote with their feet, we see their real intentions”.

For more information, please contact:
Greg Muttitt of PLATFORM, on 07970 589 611
Gabriel Carlyle of Voices UK, on 0845 458 2564

Notes for editors:
1: See the Fugro-Robertson press release on the survey, at
The survey is published annually. It is based on a questionnaire with
over 200 senior executives in the oil industry as to their interest in
new ventures in 147 countries outside North America. Libya came second
in the 2004 survey.

2: Voices in the Wilderness UK has been campaigning on British policy
towards Iraq since 1998. See

3: PLATFORM is a research group specialising in the environmental and
social impacts of the oil industry. See

4: In April 2002, Gordon Brown increased corporation tax on North Sea
oil production from 30% to 40%. To offset this, later that year he
abolished Royalties on North Sea oil – which according to some
indications may actually leave major oil corporations paying less rather
than more tax – see
        Even after the change, government tax take as a proportion of
pre-tax NPV is 40%, compared to 88% in Norway and 66% in the UK Gulf of
Mexico [NPV is a measure of profitability].
        [source: comments by Paul Boateng, Financial Secretary to the
Treasury, in debate on North Sea Oil and Gas in Scottish Grand
Committee, 8/5/03, at
        For oil industry comment on those changes, see 
Emma Sangster

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