More Unintended Consequences in Iraq

For those who said that the US invasion of Iraq was just a pretext for American firms to seize control of Iraq’s oil fields, there’s more news today that undercuts their claims. Russia’s Lukoil signed a deal with the Iraqi government on Sunday to develop the massive West Qurna-2 oil field. By 2017, Lukoil plans to extract 1.8 million barrels of oil from West Qurna-2 each day, the Iraqi government is hoping that by the end of the decade their fields will be producing 12 million barrels of oil per day. Iraq has the second largest known reserves of oil in the world, though because of decades of neglect of the petroleum industry the fields are only producing a small fraction of their potential.

Lukoil has a 56% share in the West Qurna-2 field along with their partners Norway’s StatoilHydro and Iraq’s North Oil Company. In recent months Iraq has been actively seeking foreign investment in their oil fields. So far Russian and Chinese firms have been the big winners, but firms from a host of other countries including France, the Netherlands, Malaysia, Japan, Korea and even Angola have all been awarded contracts; firms from the United States though have been relatively minor players in the Iraqi oil bonanza, which seems to work against the war-for-oil hypothesis.

Meanwhile in the south, Iraq is building a lasting link with their longtime nemesis (and neighbor), Iran in the form of a railroad. Iran is hoping to build a link between their city of Khorramshahr and the Iraqi port Basra; the two cities are about 50 kilometers (approx. 35 miles) apart. So far Iran has built a 16km section from Khorramshahr and is negotiating with the Iraqi government about constructing a line from Basra to the Iran/Iraq border.

Iraq’s former leader Saddam Hussein was a bitter adversary of the Iranian regime; the two nations fought a bloody war through much of the 1980s. Since the removal of Hussein, relations between the two countries have been steadily growing closer and Iran is said to have a great deal of influence over the current Iraqi government.