Below is a translation of the attached Arabic language communication from the Federation of Oil Unions in Iraq (IFOU) regarding the announced plan of the Oil Ministry to open bidding to foreign corporations and award 20 year contracts for development of Iraqi oil fields.
The IFOU argues that opening bidding in this manner violates the Iraqi constitution and several laws that govern development policy. The note that the decision of the Minister of Oil to proceed with the awarding of contracts goes against the expert opinion and advice of management of the Southern Oil Company and other government officials, and is being done without the required impact reports.
They contend that the IFOU and employees of the oil sector do not need outside corporations to renovate and upgrade the oil industry. They have demonstrated they can do this themselves if given the appropriate resources, support and technology.
The union charges that if this decision is implemented as proposed by the Minister of Oil, it will result in the country reverting to the conditions that existed prior to nationalization of the oil sector when foreign corporations controlled the nation's resources and operated based on their profit interests rather than the best interests of the Iraqi people and nation.
The IFOU requests that the Prime Minister override and reverse the decision of the Oil Minister.
U.S. Labor Against the War
Oil Unions Federation in Iraq
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In the name of God the Merciful
Iraqi oil policy is passing a critical juncture after the Oil Ministry announced the start of the first licensing round of oil fields to be displayed in auction, in violation of the constitution of Iraq, where there has been no legislation so far for the oil and gas law, which is corner stone of oil policy-making and how to maintain them (the oil fields). They belong to the Iraqi people as stated in Article (111) of the Constitution. All Iraqi experts have rejected the current version of the licenses being sought since they do not accomplished the aims they were enacted for.
Studies by the oil experts have uniformly confirmed the capacity of (Iraqi) national staff to develop the oil industry if they have adequate support from the government and officials of the Ministry of Oil. In a rapid return to the past, we find that the national staff has succeeded in the reconstruction of facilities and an oil terminal in record time that is the envy of the world. This especially after the Iraq Oil industry was exposed to two catastrophes: the first one in 1991 (Gulf War I) and the second in 2003 (present invasion and occupation) and continuing so far. Those feats were accomplished through the efforts of employees of oil sector in the south without any help worth mentioning by foreigners or the Oil ministry. During those days, the rates of production exceeded two million barrels per day. And the Iraqi national staff managed to develop “Nahr bin Omar” field, which began producing 25 thousand barrels per day, as well as in the Al Nasiriyah field producing 20 thousand barrels per day.
Despite all that, we were surprised by the Oil Ministry insistence on holding oil licensing auctioning rounds under the false the banner of “the development of the oil sector.” The (licensing) will cause the oil industry to regress to the sixties of last century when foreign Oil companies used to manipulate and exploit the Iraqi people's oil resources.
That the current licensing round does not have the legal cover required in paragraph (2) of Article (3) of the Act on the allocation of investment areas No. (97) for the year 1967 in force (the oil company has the right to invest in any of the areas allocated to them by participating with others. In this situation, a law is required for such contract.) In addition, Article (6) of the Law No. (84), the year 1985, in force too, which provides for the inadmissibility of any establishment or the establishment of production facilities without providing an economic - technical report for it in advance.
The technical reports issued by the committee formed by order of Mr. Prime Minister, as well as the reports by the department of contracts and licenses, also, the perusal of the Deputy Prime Minister, and books directed to His Excellency the Oil Minister from the Directors-General of the Southern Oil Company all advised against the engagement in the first round of licensing. They recommended accreditation of the national staff in the development of oil fields, as it is the more effective and the more beneficial development track for Iraq.
We would like to note that by signing the licensing round, the Iraqi economy will be at the whim of the interests of foreign companies and will be subject to fluctuations and speculations in world markets. This will weaken the Iraqi government's control on oil wealth, and these (foreign) companies will be able to muster substantial impacts on events and influence significant changes in the political and economic life of Iraq.
However, the insistence of the second party, represented by the minister of oil, on conducting the first round of licenses with foreign companies flouts all the views of experts and professionals on this subject.
Based on the above, we in Federation of Oil Unions in Iraq at this time stand with all the good working people (who want) to upgrade and develop the Iraqi oil industry. At the same time we appeal to the Prime Minister as the person responsible for the design of public policy for the country, a man whom we’ve known not to waiver in front of difficulties, to intervene personally to stop the signing of these contracts that do not promote the public interest ...