Reply #39: China was the first to sign a deal for Iraqi oil after our invasion.

[pampango]

Something tells me that the US and Europe don't think bombing missions will do more to keep China away from Libya's oil than the US' massive invasion of Iraq succeeded in keeping China away from Iraq's oil.

http://www.businessinsider.com/sovereign-backed-oil-com...

"Post-invasion, Iraq is actually hard-bargaining their oil deals, offering relatively meager returns to winning bidders and keeping much of the profit potential to itself. The U.S. has been mostly left out as a result."

History News Network: The proposed contracts did not, in fact, offer them the kind of control over development and production that the Cheney task force had envisioned back in 2001. Instead, they would be hired to finance, plan, and implement a vast expansion of the country’s production capacity. After repaying their initial investment, the government would reward them at a rate of no more than two dollars for every additional barrel of oil extracted from the fields they worked on.

The major international oil companies initially rejected these terms out of hand, demanding instead complete control over production and payments of approximately $25 per barrel. This initial resistance began to erode, however, when the Chinese National Petroleum Corporation (CNPC), a government-owned operation, induced its partner, BP, the huge British oil company, to accept government terms for expanding the Rumaila field near Basra in southern Iraq to one million barrels a day.

The Chinese company, experts believed, could afford to accept such meager returns because of Beijing’s desire to establish a long-term energy relationship with Iraq. This foot-in-the-door contract, China’s leaders evidently hoped, would lead to yet more contracts to explore Iraq’s vast, undeveloped (and possibly as yet undiscovered) oil reserves.

The threat of Chinese domination, in particular, set off a stampede from other nations. ...(B)y December a veritable stampede had begun to bid for contracts. In the end, the major winners were state-owned firms from Russia, Japan, Norway, Turkey, South Korea, Angola, and -- of course -- China. The Malaysian national company, Petronas, set a record by participating with six different partners in four of the seven new contracts the Maliki government gave out. Shell and Exxon were the only major oil companies to participate in winning bids; the others were outbid by consortia led by state-owned firms. These results suggest that national oil companies, unlike their profit-maximizing private competitors, were more willing to forego immediate windfalls in exchange for long-term access to Iraqi oil.

Thus the U.S. invasion indeed unlocked Iraq's oil production potential as many critics said had been the plan all along, but in the end the U.S. won't have much control over it.