Despite officials in the UK confirming that oil was not one of the reasons for the Iraq war, BP has profited a staggering £15.4 billion from Iraqi oil, a 2023 report by Declassified revealed. The investigation revealed that BP started producing oil in Iraq for the first time in almost forty years after the conflict was declared illegal by the United Nations.
The invasion, which began in March 2003, resulted in a “catastrophic humanitarian situation” in which close to 655,000 Iraqi deaths were documented within the first three years equalling 2.5 per cent of the population.
Many critics consequently saw the war as a war for oil, as Iraq has the world’s fifth-largest proven oil reserves, and, they believe, it wasn’t a part of the United States’ “War on Terror.”
Data regarding the oil production of BP in post-invasion Iraq has been inferred from the company’s annual reports using the average annual barrel price for each year of production. From 2011-2022, BP extracted a total of 262 million barrels of oil from the state of Iraq.
In 2011 it started to produce oil at a rate of 31,000 barrels of Iraqi oil per day, reaching 123,000 barrels per day in 2015. By 2020, BP’s Iraqi output topped the combined production in all its European operations including the North Sea.
During the Bush administration, the US considered a new oil law that would have provided a form of indirect privatisation of Iraq’s oil through PSAs. These agreements would permit foreign companies to contract with the government to develop certain parts of Iraq’s oil sector in return for a share of the profits. However, due to internal political dynamics, the Iraqi parliament was unable to push the law through.
Instead, the Iraqi government used an alternative method which permitted only technical service contracts (TSC). In those, the ownership of oil remained with Iraq, but foreign companies received a flat service fee. For example, BP invested in the Rumaila field on a TSC basis, which became effective in December 2009, under which it was paid cost recovery irrespective of the price of oil. The company also earned a fixed fee per barrel.
The Rumaila development project was operated by BP, which originally held a 38 per cent working interest, 37 per cent belonged to the China National Petroleum Company (CNPC), and the remaining 25 per cent was held by the government of Iraq. After the first year, BP took a 48 per cent share and extended the development by five years to 2034.
The term “Blair Petroleum” was frequently used as a joke in the run-up to the 2003 invasion of Iraq to show the close relationship between BP and Tony Blair’s government.
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