Due to a large supply of oil in Iraq, four new refineries will be built by and to be used by international companies. However, in order to own one of the refineries, countries must submit certain documents and applications to Iraq for review (Hafidh). From these documents, the Iraqi Oil Ministry will decide who is prequalified to build each refinery. Many countries have already completed the application process and all of the other countries have about another two weeks to submit their paperwork (Hafidh). Even though the use of alternative energy has significantly increased, the use and need of oil is still very strong. Having control of one of these new refineries could be extremely economically beneficial for any country because for now, there will be a constant demand for oil, even if it is lower in some places than it was before.
Once a company is prequalified, Iraq will begin to negotiate with the chosen companies to determine who will ultimately receive the rights to the refinery (Hafidh). Each country will then have the ability to choose what they would like to do with their refinery. There are three choices available; build, own, and operate alone, build, operate, and then transfer to another company or country, or begin a joint venture with a local Iraqi company (Hafidh). The cost of each refinery is about $20 million and will produce around 740,000 gallons of refined oil every day. With any of the choices, Iraq and the outside country have the opportunity to seriously profit from the project.
-Ashley Luddy
http://online.wsj.com/article/BT-CO-20101019-
This is very interesting, I wonder if it is an attempt for Iraq to improve its relations with other economic powers. While Iraq could just enter in to a joint venture and be guaranteed a percentage of the profit, they are choosing to potentially not receive any profits from this deal. As a country this does not seem like a wise decision unless they were genuinely trying to improve themselves economically, which would make for a strong progressive middle eastern country that could eventually be a strong ally to the United States.
ReplyDelete~Tom Langevin