Press release from:
Voices in the Wilderness UK
PLATFORM

FOR IMMEDIATE RELEASE
Wednesday 16th June 2004

OIL COMPANIES HUNGRY FOR IRAQ BONANZA - SURVEY

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 revealed.

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. [1]

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 http://www.robresint.co.uk/ar/whatsnew/pdfs/NVS2004_PressRelease.pdf
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.

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

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 http://www.carbonweb.org/documents/PR271102.htm
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 http://www.parliament.the-stationery-offic e.co.uk/pa/cm200102/cmstand/scotg/st020508/20508s02.htm]
For oil industry comment on those changes,
see http://www.ukooa.org.uk/media/view-press.cfm/246