Don’t take my word for it. Click the link below and hear British Petroleum explain in a five minute Youtube video that 98 percent of the profits generated from the largest oil field BP operates are paid to Iraq, the owner of the field. What does BP get? Reimbursement for all costs, plus 2 percent of the oilfields profits. In 2009, BP bid for the right to produce Iraq’s largest oilfield. Their bid was reimbursement of cost plus 2 percent of the profits. The country of Iraq keeps 98 percent.
https://www.youtube.com/watch?v=O4sQAq8TOcE
The Legislature is considering a bill that would cut BP, ConocoPhillips and Exxon’s share of Alaska’s profits to reimbursement of all costs plus 27 percent, 13 times the share they are getting per barrel in Iraq, and they are squealing like a…
Had we Alaskans had Iraq’s deal and had we placed the additional revenue in the Permanent Fund, dividends would have grown to $10,000, and Alaska would be in position to fund government for the next hundred years from Permanent Fund earnings.
Faced with these facts, the Alaska Oil and Gas Association will argue that BP only has a technical services contract with Iraq. Fact: BP does exactly the same thing in Iraq that they do in Prudhoe. Here they call it one thing and their they call it another. BP employs the subs and has hundreds of BP employs in both places. Revenue from both fields pay all costs in both places.
When their first argument fails, the Alaska Oil and Gas Association then argues that BP stepped into an operating field, taking no risk of exploration and development. FACT: BP discovered the field they now operate in Iraq. BP was kicked out of all the fields they discovered in Iraq in 1974 and came back hat in hand years later admitting that 2 percent was enough.
One hundred percent Of BP’s risk in Alaska was more than compensated with lavish returns on investment by 1982. Today BP Alaska produces the oil, pays the bills, and sends what’s leftover to BP Global. BP Global has not put one dime into Alaska since 1982.
Below are two quotes from a BP website. You can see for yourself at: http://www.bp.com/en/global/corporate/about-bp/bp-worldwide/bp-in-iraq.html
• The government of Iraq receives about 98 percent of the revenue from the 25-year TSC. In June 2010, the Rumaila Operating Organization was formed as a joint venture with these organizations, with the remit to operate and redevelop the field, with BP as the lead contractor. In September 2014, the TSC was extended by another five years to service the field through 2034, with the target of producing 2.1 million barrels per day.
• Quoting from BP’s web site: “BP has a long history of oil exploration and production in Iraq. This history stretches back to the 1920s when the company that would eventually come to be known as BP helped Iraq locate, produce and export oil from Baba Gurgur, Kirkuk. This was the largest oilfield in the world at that time. The collaboration in Iraq continued up to the early 1970s, with the Zubair field discovered in 1948 and the supergiant oilfield, Rumaila, in 1953.”
Since 1982, every dime put into Prudhoe came out of Prudhoe. About risk, Read the quote from the BP web site. BP took the risk of discovering and developing the majority of Iraq’s oilfields. They were kicked out in 1974 and begged their way back in 2009. Today they lay out the money to update the fields and apply to Iraq for a refund. Here it is easier. They collect the money from the sale of refined oil products, and tell us what the cost was of getting our oil to their refinery. They deduct what they say they spent, and send us their definition of our requested share of the profits. Cash remaining after expenses and taxes is sent to BP Global. We don’t audit and we have less to show for 18 billion barrels of production than any other major oil producing country in the world. The Alaska Oil and Gas Association has persuaded many Alaskans that we are not smart enough to manage our oil like most of the rest of the world. BP Global’s only involvement with Alaska is depositing the checks they get from BP Alaska. The proposed House Bill 111 would reduce what BP Alaska sends to BP Global from 29 percent to 27 percent.
What is an owner’s fair share? It’s any amount of profits in excess of what the world market has demonstrated oil companies need to keep to be willing to provide production services. In the absence of bribery, that’s the way market driven capitalism works.
• Ray Metcalfe is the former legislator who worked with the FBI in their investigation of what became known as the Corrupt Bastards Club. The six legislators who were convicted of taking bribes to keep Alaska’s taxes on oil low. Metcalfe lives in Anchorage.
