Click HERE to watch the segment as it aired on ABC 7 KGO-TV.
Feb 28 - It's being heralded as a major breakthrough -- a plan for the future of the oil industry in Iraq. The Iraqi cabinet has approved a proposal for managing Iraq's vast oil reserve and distributing the wealth it produces equally among the various factions in the country.
The Iraqis appear ready to distribute billions in oil revenues based on population. That's something the U.S. has pushed for. It's an effort to reach a compromise among all of the Iraqi ethnic and religious factions -- the Shiites, the Sunis and the Kurds. But that's not the part of the agreement that's raising the most concern.
The Iraqi government appears ready to allow foreign oil companies to take a share of Iraq's oil production. It's a very unusual arrangement in this part of the world where oil belongs to the countries that have it, or at least to their ruling families.
Antonia Juhasz, Author: "The oil law as it's drafted seems to be a smoking gun exposing the agenda of the administration."
Author Antonia Juhasz has written a book that says the Bush administration's agenda from the very beginning has been to control Iraq's oil. She believes Iraq's political leaders are being pressured to sell out.
Antonia Juhasz: "It seems highly unlikely that it's to the long-term benefit of the Iraqis to turn over production and control to foreign oil companies."
But Kalev Sepp at the Naval Post Graduate School in Monterey has been to Iraq's oil fields on several occasions since the invasion. He says they need outside help.
Kalev Sepp: "The Iraqi oil fields had been completely neglected by Saddam Hussein for three decades. They are literally falling apart at this point."
Sevrin Borinstein, director of University of California's Energy Institute, agrees with that assessment
Sevrin Borinstein: "There's a lot of expertise in the United States and in some other oil companies that simply doesn't exist in Iraq that they're going to need to make efficient use of these oil fields."
Leon Panetta, who was a member of the Iraq Study Group, says foreign oil companies aren't necessarily a bad deal, but Iraq should be concerned about how it negotiates.
Leon Panetta: "They've got to make sure they don't get ripped off by those that do come in and develop the oil, that's number one. Number two, they've got to make very sure that security is provided because frankly not even these private companies are going to go into Iraq and develop that oil if that country isn't secure."
Iraq has a lot of oil, by some estimates the second largest reserves in the world. But its production is less than that of Mexico or Norway or the United Kingdom.
At the U.C. Energy Institute, Severin Borenstien says Iraq can sit on all that oil and wait, but it needs money now and there's a risk for waiting. In 50 years there may or may not be a big demand.