Iraq Oil: Storm in a teacup?

Based on all the scaremongering reports I've seen written about this upcoming final draft it appears it has all been a storm in a tea cup.

Far from being restricted to existing fields INOC is permitted to create subsidiary companies, take shares in foreign companies and participate in exploration and production of future resources in accordance with article 6 and appendix 2--which is missing. Exxon Mobil is said to have more seismic data on Iraq than on Houston real estate and my guess is that appendix 2 contains only a sub-set of identified oil reserves if you get my drift :)

Additionally, contrary to Raed's claim, this draft specifically states that all oil revenues are to be deposited with the Iraq Central Bank whose board is made up of national and regional ministers with distribution of these monies to be in accordance with the constitution. In other words, I can find nothing in here that speaks to dividing-up Iraq.

The Royalty fee of 12.5% appears to be within industry standards and if INOC is able to negotiate partnerships with oil companies than it should profit accordingly. I use the term "should" advisedly as I don't know if it's clear what their capacity is to buy in to these joint partnerships and under what terms.

This is the rub, in that pre and post production profit margins etc are all negotiated in individual production contracts. These are subject to public bidding but I imagine the details will remain confidential to all except the parties involved and government.

The maximum period of production agreements is 20 years with renegotiation to 25. If INOC is unable to buy-in to foreign partnerships on favorable terms then these periods could become a pita for Iraq down the track.

As background, one of the main points of concern I read previously concerned an alleged 20% post production cost profit margin for foreign oil companies. The concern was that normally these would be negotiated at around 10-12% post production margin. Oil industry pundits suggested that this was due to the risk involved in conducting oil operations in Iraq. However, with the ability to sign PSA's for periods of up to 20 years this stands as a massive profit margin equivalent to the signing of most standard agreements with a forty year term. One can only hope that the National Oil Council of Iraq will bear this in mind when negotiating the contract periods.