> >conversely, it's not like big oil will not still make money dealing
> >with an iraqi state oil company, right?
>
> They'll make money, but it means the Iraqi state will capture most of
> the rents (i.e., the difference between the world price, now around
> $30/barrel, and the cost of production in Iraq
There is a third possibility we might also keep in mind. If the CPA sets up a state owned oil company modelled on the Venezuealan PdVSA -- an constitutionally autonomous company run by neo-liberal minded professionals -- it might allow the sort of privatization under state-oil-company auspices that PdVSA was more than halfway towards before Chavez stopped it (at great cost). Many third world "state" companies in extractive resources are really more like autonomous fiefdoms where the workers and managers capture the rents and split them with foreign capital.
I'm not saying that will happen. But it's something to keep an eye out for. The majors have been eager for years to invest in Saudi Arabia and Kuwait, which both have state owned oil companies. But they haven't made deals because the states won't give them enough open-ended control over the new oil they would generate to make them feel it's worth their while. If Iraqco did, the majors would consider that a big step forward. And if it was as gung-ho as PdVSA was, they'd probably consider that even better than doing it in their own names, precisely for the cover it would provide.
(I hasten to add that this doesn't mean the majors were gung-ho for the war. I agree that all signs are that they weren't.)
> which is probably only a couple of dollars a barrel).
I think it's more like $5/barrel. One thing that was highlighted by the botched early days of the reconstruction was how many of the northern fields require pressurization or constant drainage. (The reason it became news is because those are two more things that can't take place without lots of reliable electricity.)
Future fields might have cheaper production costs. But of course first they'd have to amortize the 10s of billions of dollars needed to develop them fully.
Michael