Editor's Note: Iraq has approved a $3 billion deal with China to develop the al-Ahdab oil field. It's the first oil deal to be honored by Iraq and its new Iraqi government since the fall of Saddam Hussein, originally canceled after the 2003 invasion. Under the contract, China National Petroleum Corp. will develop the field for 20 years. It's expected to produce up to 25,000 barrels a day after three years, and eventually reach 125,000 barrels per day. CNN's Baghdad correspondent Arwa Damon share's with us the mood on the ground:
Arwa Damon | BIO
CNN Baghdad Correspondent
The news that Iraq had signed a “service contract” with China made the A bloc in the locals newscasts, but caused little reaction among most Iraq’s still trying to grapple with the difficulties of day to day life. The contract is in fact but a tiny fraction of Iraq’s oil wealth, and is service only – the China National Petroleum Company is going to provide technical advice, oil workers, and equipment. Iraq has already sworn that all oil revenue would go straight into the Iraqi treasury.
Problem is – Iraq, though expecting to rake in an additional 70 billion dollars of oil revenue this year – can’t get its oil flowing at full capacity. The extra and unexpected surplus is due to the rising oil prices, and has little to do with oil flow. The country’s oil infrastructure is in shambles. This is the first deal that government signed to try to address that problem, and in that sense it is significant. And its also symbolic – its the first deal signed with a foreign oil company since the fall of Saddam Hussein.
Aside from needing to rebuild the oil infrastructure, there’s also the political side of if all. Iraq still needs to pass an oil law to define how much of the revenue goes into the central government’s pocket, how much to the provinces, and how to deal with who gets the money from unknown reserves. And that’s all caught up in tensions between the country’s Sunni, Shi’a, and Kurdish political blocs, each that wants what they think is their fair share of Iraq’s black gold. Even the spokesman for Iraq’s government concedes that that’s not going to pass anytime soon.
Iraqi’s are fully aware of how wealthy their country is and the potential that is out there, but few really believe it will turn into anything tangible that will improve their lives anytime soon.
As one of our Iraqi staff put it “From a burnt house you can take what you want, the house is burnt anyways”.
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