Operation Iraqi Liberation (O.I.L.)

Throughout nearly four years of the daily mayhem and carnage in Iraq, President Bush and his aides in the White House have scoffed at even the slightest suggestion that the U.S. military occupation has anything to do with oil.

The President presumably would have us all believe that if Iraq had the world’s second-largest supply of bananas instead of petroleum, American troops would still be there.

Now comes new evidence of the big prize in Iraq that rarely gets mentioned at White House briefings.

A proposed new Iraqi oil and gas law began circulating last week among that country’s top government leaders and was quickly leaked to various Internet sites – before it has even been presented to the Iraqi parliament.

Under the proposed law, Iraq’s immense oil reserves would not simply be opened to foreign oil exploration, as many had expected. Amazingly, executives from those companies would actually be given seats on a new Federal Oil and Gas Council that would control all of Iraq’s reserves.

In other words, Chevron, ExxonMobil, British Petroleum and the other Western oil giants could end up on the board of directors of the Iraqi Federal Oil and Gas Council, while Iraq’s own national oil company would become just another competitor.

The new law would grant the council virtually all power to develop policies and plans for undeveloped oil fields and to review and change all exploration and production contracts.

Since most of Iraq’s 73 proven petroleum fields have yet to be developed, the new council would instantly become a world energy powerhouse.

“We’re talking about trillions of dollars of oil that are at stake,” said Raed Jarrar, an independent Iraqi journalist and blogger who obtained an Arabic copy of the draft law and posted an English-language translation on his Web site over the weekend.

Take, for example, the massive Majnoon field in southern Iraq near the Iranian border, which contains an estimated 20 billion barrels. Before Saddam Hussein was toppled by the U.S. invasion in 2003, he had granted a $4 billion contract to French oil giant TotalFinaElf to develop the field.

In the same way, the Iraqi dictator signed contracts with Chinese, Russian, Korean, Italian and Spanish companies to develop 10 other big oil fields once international sanctions against his regime were lifted.

The big British and American companies had been shut out of Iraq, thanks to more than a decade of U.S. sanctions against Saddam.

But if the new law passes, those companies will be the ones reviewing those very contracts and any others.

“Iraq’s economic security and development will be thrown into question with this law,” said Antonia Juhasz of Oil Change International, a petroleum industry watchdog group. “It’s a radical departure not only from Iraq’s existing structure but from how oil is managed in most of the world today.”

Throughout the developing world, national oil companies control the bulk of oil production, though they often develop joint agreements with foreign commercial oil groups.

But under the proposed law, the government-owned Iraqi National Oil Co. “will not get any preference over foreign companies,” Juhasz said.

The law must still be presented to the Iraqi parliament. Given the many political and religious divisions in the country, its passage is hardly guaranteed.

The main religious and ethnic groups are all pushing to control contracts and oil revenues for their regions, while the Bush administration is seeking more centralized control.