The Oil Ministry in Iraq (Orwell, anyone?) just concluded a second auction for contracts for developers to go to work on Iraq’s oil fields. The last auction created 10 deals and this new one created the same- if all of these deals come to fruition, Iraq could be churning out 12 million barrels of oil per day, around what Saudi Arabia does. The new Iraqi government thinks that this is where the money for the reconstruction is going to come from- and not just that, but the money for Iraq’s citizens to live better lives as well.

With much of the population in poverty and little if any infrastructure improvements having been made over the last 7 years of war, the fledgling government is pinning, well, betting, its hopes on the promise of oil money to make everything better- the black gold band-aid, if you will.

Iraqis, on the other hand, remain unconvinced- to their credit. Transparency International says that Iraq is one of the most corrupt countries in the world, and the country deals with daily power outages, sewage running into water, and bad news on the state services front. The average annual income was $3,200 last year.

The oil money could be a huge boon for Iraq- the government currently gets 90% of its income from oil exports- 90%! And of course they claim that hundreds of thousands of jobs will be created for Iraqis- which could very well be true. In all, the government estimates that $200 billion in extra revenue will be generated from the new oil contracts. And all this financial and governmental confidence is nice for the ruling party just before the election-

"Of course success (from the oil auctions) might serve us in the election. Iraq will no longer be considered a poor country,” said Sami al-Askari, a lawmaker close to re-eletion-seeking Prime Minister Nuri al-Maliki.

Oil contracts were awarded to exactly who you would think- BP, Royal Dutch Shell, Exxon-Mobil- it’s the next generation of oil extraction. Cue the film from the corner with the mini-documentary on how Bush knew it all along and this is why he invaded Iraq in the first place- the older Bush, I mean. It is a pretty beautiful situation for us- an amazing thing, in fact. Companies that supply the oil to the world are descending on Iraq, ready to usher in the next era of extraction- but will that mean money for anyone but them? I can see jobs bringing salaries and taxes bringing money to the government- but how much of that money will go to the bombed-out buildings and neglected infrastructure of Iraq?

I would throw my hat into the ring with the skeptical Iraqis- while it does sound like a good thing that jobs will be created, there is a long way to go until there is general stability in the region- what will happen is completely a question mark. Hopefully the companies will get the oil out and get some money to Iraq- and hopefully it is viewed as some kind of last stand for the oil industry- just imagine if that money went to renewable and clean energy…

Photo Credit: YourLocalDave (via Flickr under CCL)