Western Oil Companies a Step Away from Iraq's 'Prize'

wallyburger · January 8th, 2007, 03:52 AM

Well, now we finally know why the USA invaded Iraq and blew their country into the Stone Age. Blow everything up so they have nothing , then give them a pittance of revenue to rebuild it.

Quote:

Western Oil Companies a Step Away from Iraq's 'Prize'

By Andrew Murray-Watson and Danny Fortson and Tim Webb, The Independent UK. Posted January 7, 2007.

Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies.

Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days.

The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.

The huge potential prizes for Western firms will give ammunition to critics who say the Iraq war was fought for oil. They point to statements such as one from Vice-President Dick Cheney, who said in 1999, while he was still chief executive of the oil services company Halliburton, that the world would need an additional 50 million barrels of oil a day by 2010. "So where is the oil going to come from?... The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies," he said.

Oil industry executives and analysts say the law, which would permit Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise. But it will operate through "production-sharing agreements" (or PSAs) which are highly unusual in the Middle East, where the oil industry in Saudi Arabia and Iran, the world's two largest producers, is state controlled.

Opponents say Iraq, where oil accounts for 95 per cent of the economy, is being forced to surrender an unacceptable degree of sovereignty.

Proposing the parliamentary motion for war in 2003, Tony Blair denied the "false claim" that "we want to seize" Iraq's oil revenues. He said the money should be put into a trust fund, run by the UN, for the Iraqis, but the idea came to nothing. The same year Colin Powell, then Secretary of State, said: "It cost a great deal of money to prosecute this war. But the oil of the Iraqi people belongs to the Iraqi people; it is their wealth, it will be used for their benefit. So we did not do it for oil."

Supporters say the provision allowing oil companies to take up to 75 per cent of the profits will last until they have recouped initial drilling costs. After that, they would collect about 20 per cent of all profits, according to industry sources in Iraq. But that is twice the industry average for such deals.

Greg Muttitt, a researcher for Platform, a human rights and environmental group which monitors the oil industry, said Iraq was being asked to pay an enormous price over the next 30 years for its present instability. "They would lose out massively," he said, "because they don't have the capacity at the moment to strike a good deal."

Iraq's Deputy Prime Minister, Barham Salih, who chairs the country's oil committee, is expected to unveil the legislation as early as today. "It is a redrawing of the whole Iraqi oil industry [to] a modern standard," said Khaled Salih, spokesman for the Kurdish Regional Government, a party to the negotiations. The Iraqi government hopes to have the law on the books by March.

Several major oil companies are said to have sent teams into the country in recent months to lobby for deals ahead of the law, though the big names are considered unlikely to invest until the violence in Iraq abates.

James Paul, executive director at the Global Policy Forum, the international government watchdog, said: "It is not an exaggeration to say that the overwhelming majority of the population would be opposed to this. To do it anyway, with minimal discussion within the [Iraqi] parliament is really just pouring more oil on the fire."

Vince Cable, the Liberal Democrat Treasury spokesman and a former chief economist at Shell, said it was crucial that any deal would guarantee funds for rebuilding Iraq. "It is absolutely vital that the revenue from the oil industry goes into Iraqi development and is seen to do so," he said. "Although it does make sense to collaborate with foreign investors, it is very important the terms are seen to be fair."

PortlandCardFan · January 8th, 2007, 07:34 AM

So Iraq is a box of 'Crackjacks'.... Sweet!!!

Pariah · January 8th, 2007, 07:44 AM

Quote:

Originally Posted by PortlandCardFan

So Iraq is a box of 'Crackjacks'.... Sweet!!!

Yeah, 'cept we've eaten all of the tasty caremel corn and all we're left with are nasty nuts.

Dan H · January 8th, 2007, 09:04 AM

What "non-Western" oil companies are there that have the resources to get the Iraqi oil industry back on their feet?

It's one thing to say, I'm not going to do business with company A, I'm going to go with company B because they're a local company. If there aren't any other companies out there that can do the job, then who else should they turn to?

Wally, this is just like the Kerry thing. Don't jump to conclusions before you know all of the facts. Most of the other countries in the Gulf rely on state-owned industry to control their oil. If we're wanting to set up a "free" government in Iraq, state-owned business aren't the way to go.

http://www.virginia.edu/igpr/APAG/apagoilcompany.html

wallyburger · January 8th, 2007, 09:51 AM

Quote:

Originally Posted by Dan H

What "non-Western" oil companies are there that have the resources to get the Iraqi oil industry back on their feet?

It's one thing to say, I'm not going to do business with company A, I'm going to go with company B because they're a local company. If there aren't any other companies out there that can do the job, then who else should they turn to?

Wally, this is just like the Kerry thing. Don't jump to conclusions before you know all of the facts. Most of the other countries in the Gulf rely on state-owned industry to control their oil. If we're wanting to set up a "free" government in Iraq, state-owned business aren't the way to go.

http://www.virginia.edu/igpr/APAG/apagoilcompany.html

I believe my question deals directly with the purpose of the invasion, not the reconstruction. Seems like there is room for speculation. If the Oil Folks couldn't get access pre invasion, then that leaves room for the possibility that was the purpose for the invasion. Access and control.

40yearfan · January 8th, 2007, 09:55 AM

Quote:

Originally Posted by wallyburger

I believe my question deals directly with the purpose of the invasion, not the reconstruction. Seems like there is room for speculation. If the Oil Folks couldn't get access pre invasion, then that leaves room for the possibility that was the purpose for the invasion. Access and control.

If it was, we are really being stupid about it. We should have fought a conventional war and just took the country over. Less fuss and muss and a lot quicker with less casualties.

wallyburger · January 8th, 2007, 10:01 AM

Quote:

Originally Posted by 40yearfan

If it was, we are really being stupid about it. We should have fought a conventional war and just took the country over. Less fuss and muss and a lot quicker with less casualties.

IIRC , the first step in the invasion was to wipe out the oil production facilities.

This from a 2003 article, and arguably, a questionable source for opinions, ... but

Quote:

WSWS : News & Analysis : Middle East : Iraq
Washington seeks cover for occupation
US convenes Iraqi council with aim of grabbing oil
By Bill Vann
12 July 2003

Use this version to print | Send this link by email | Email the author

A new “governing council” appointed by Washington’s administrator in Baghdad, L. Paul Bremer, has been hailed by the Bush administration as a step toward democracy. However, numerous reports from both the US and Iraq indicate that the real function of this body will be to rubber stamp the privatization of the Middle Eastern country’s oil industry and the US expropriation of its earnings for years to come.

The so-called interim government, to consist of approximately 25 individuals hand-picked by Bremer, is to assemble this weekend for a formal swearing-in ceremony. It is to include right-wing, pro-US exiles, led by the convicted bank embezzler Ahmad Chalabi, Washington-backed Kurdish groups, and at least one Shiite Islamic group. The Supreme Council of the Islamic Revolution in Iraq told Bremer that it would not decide until Saturday whether it would participate. Its hesitancy reflects the growing hostility toward the US- British occupation among Iraq’s oppressed Shiite majority.

While the council was proposed by Bremer’s predecessor, retired General Jay Garner, as a means of lending the occupation an “Iraqi face,” Bremer backed off from initial pledges to convene a congress to select members of the body, and insisted that it would be no more than an advisory group. Over the past week, the US proconsul has tried to accommodate the groups and individuals agreeing to participate by affirming that they will “share responsibility” for governing the country, while “final authority” on every decision will rest with the US colonial authorities.

Among the principal concerns of US officials has been to parcel out the seats on the council to members of different ethnic groups and to include some relatively unknown women, apparently with the aim of lending the panel a superficial appearance of being representative. Excluded from the council, however, is anyone voicing opposition to the continued US occupation.

Given the recent deadly attacks by Iraqi resistance fighters on police recruits and others collaborating with the US occupation, however, it is doubtful that the council will have much contact with the Iraqi people. Instead, it will be on the receiving end of a series of US proposals worked out behind the scenes before the US invasion even began.

At a Tuesday press briefing in Baghdad, Bremer spelled out his determination to push through a wholesale privatization of Iraq’s oil industry and the rest of its large state-owned sector before Iraqis are given any opportunity to vote for a government or express their attitude toward such sweeping economic changes. He and other US officials have acknowledged that there is widespread popular sentiment against the denationalization of oil and its takeover by foreign-owned multinationals.

“Privatization is obviously something we have been giving a lot of thought to,” Bremer said. “When we sit down with the council ... it is going to be on the table.”

The US viceroy said that a key concern was that US and other foreign investors would be reluctant to buy out Iraqi oil facilities and other state-owned enterprises without having some legal guarantee that their ownership would not be challenged once a new government is elected.

Bremer: privatization can’t wait on election

“The governing council will be able to make statements that could be seen as more binding and the trick will be to figure out how to do this,” said the US viceroy. “Everybody knows we cannot wait until there is an elected government here to start economic reform.... The dilemma will be to make changes in such a way that new laws will survive the elected Iraqi government.” US officials have warned that it will be anywhere between three and five years before any elected Iraqi government is allowed to take office.

Bremer announced a budget for Iraq covering the second half of 2003, which amounts to $6.1 billion. US plans project that oil revenues will cover $3.45 billion. In May, the United Nations offered its seal of approval to Washington’s looting of Iraq’s oil wealth. The Security Council approved a US-drafted resolution giving the occupation authority unfettered control over Iraq’s oil revenues, which are deposited in a “development fund” run by the US colonial regime.

The remainder of the budget is to be financed with money taken from Iraq’s central bank and state enterprises, seized and frozen Iraqi assets in the US and surplus funds from the United Nations oil-for-food program.

These funding streams are hardly secure, however. The oil revenue, for example, is based on a projection that oil production will nearly double by the end of the year from 800,000 barrels per day to 1.5 million. A mounting sabotage campaign, however, has hampered efforts to repair the country’s oil facilities and expand production. Resistance fighters have repeatedly struck at pipelines and destroyed key equipment. Two wars and more than a decade of sanctions, moreover, have left the oil industry’s infrastructure in an advanced state of disrepair. While Iraq sits on the second largest oil reserves in the world, the country has been compelled to import gasoline and liquefied natural gas in recent weeks to meet domestic needs.

The Bush administration recently submitted a request for another $800 million from Congress to refurbish Iraq’s oil industry. This comes on top of $400 million already allocated for that purpose. Given a continuation of the escalating guerrilla war in Iraq, US projections that oil revenues will quadruple over the next year to $14 billion appear highly dubious. Oil industry analysts have predicted that it will take 18 months just to get the Iraqi fields back to prewar production levels.

The balance of the funding is covered by one-shot sources that will not be available when it comes time to put together another budget for the first half of 2004. Concern over how reconstruction costs in Iraq will be covered is rising following the admission by US Defense Secretary Donald Rumsfeld that the cost of the US occupation is estimated at $3.9 billion a month, roughly double what the Pentagon had estimated at the outset of the war. Meanwhile, the Pentagon has also unveiled a series of new multimillion-dollar contracts in Iraq.

One newly announced contract was awarded to the Vinnell Corp., a subsidiary of the arms-making conglomerate Northrop-Grumman. The $48 million deal covers the recruitment and training of a new Iraqi army over the course of one year. The company’s web site has already placed a notice seeking former US Army and Marine officers to work in Iraq. Vinnell has long held a contract for training the security forces of the Saudi Arabian monarchy.

The US Army on Thursday invited corporations to bid on contracts for the rebuilding of Iraq’s oil industry that will be worth up to $1 billion. These deals will supersede a no-bid contract awarded last March to Kellogg Brown & Root (KBR), a subsidiary of Halliburton, the Texas oil company that Vice President Richard Cheney headed before joining the Republican ticket in the 2000 election. KBR, which has already billed the US government for several hundred million dollars, will bid on the new contract.

The contact will cover not only repairs and maintenance of the oilfields, but also the marketing and sale of Iraqi crude and other petroleum products on the world market.

A proposal aimed at bridging the gap between revenues from Iraq’s present oil production and the substantial profits that politically connected US corporations are attempting to reap from the occupation was reported in the Los Angeles Times Friday.

Plan to slap US mortgage on Iraq’s oil wealth

The plan would lay claim to Iraq’s future oil revenues, putting them up as collateral for loans to finance current reconstruction contracts.

This scheme, which would effectively mortgage Iraq’s future and ensure its indefinite subjugation to US-run financial institutions, has the support of both the US Export-Import Bank and a coalition of US multinationals that stand to profit handsomely off the contracts, including Halliburton, Bechtel and Northrop-Grunman. The Export-Import Bank has argued that the UN resolution grants Washington the authority to lay claim to future revenues.

Under the plan, the newspaper reports, “Iraq’s future oil and gas revenue would be pledged as collateral to repay loans or bonds issued to finance infrastructure improvements. An Iraq Reconstruction Finance Authority would be established to review projects and arrange financing.”

Such an authority would likewise exercise an effective stranglehold over Iraq’s political and economic life long after a supposedly independent government is brought to power, assuring Washington strategic control of the country’s oil wealth through the enforcement of debt repayment programs.

While critics of the plan argue that Washington has no right to agree to loan conditions that will be imposed upon an Iraqi government that has yet to be formed, its supporters are countering that the participation of Bremer’s hand-picked “governing council” legitimizes the plan.

Bremer himself raised this argument, insisting that the US occupation authority “would not undertake anything like that without the governing council agreeing, because you are effectively mortgaging the future income that belongs to the Iraqi people.” The obvious implication is that if the council he selected rubber-stamps the scheme, it is endorsed by the Iraqi people.

Opposition to the proposal will undoubtedly be strong from Iraq’s existing creditors, who are being asked to wipe out hundreds of billions of dollars in debt to help with the country’s reconstruction. Iraq’s total debt is estimated at $383 billion, a third of it owed to foreign countries, principally Russia, Kuwait and the other Persian Gulf states. Nearly $200 billion is still owed Kuwait in reparations claims stemming from the 1990 Iraqi invasion.

Bush issued an executive order in May declaring any claims by these creditors on Iraq’s oil revenues to be null and void. Such claims, he declared, could disrupt reconstruction and pose “a threat to the national security and foreign policy of the United States.” Yet now Washington is considering a plan to lay claim to the country’s oil revenues for years, if not decades, to come.

Reflecting growing unease over the US colonialist venture, some establishment critics have also warned that if the US loses control of Iraq, US taxpayers would be left holding the bill for the outstanding loans.

Washington has been sharply criticized for supposedly failing to plan for postwar Iraq and being unprepared to deal with the myriad social problems ranging from looting, to the failure of power, water and sewerage systems and the collapse of public health system.

When it comes to the looting of the country’s economy, however, it would appear that there is no shortage of planning or determination. As the Wall Street Journal reported in May, the major US consulting firm BearingPoint Inc. was awarded a contract the previous February, well before the war began, to draft a plan for a “broad-based Mass Privatization Program.” The plan called for the dismantling of Iraq’s state sector, with the least profitable industries to be shut down—their workers thrown into the street—and the oil sector and whatever else is deemed profitable sold off to the multinationals. The end result would be a vast increase in poverty and social inequality.

However, the realization of these predatory schemes depends in the final analysis on the US waging and winning a counterinsurgency war to subjugate the Iraqi people at the cost of many more lives, Iraqi and American alike.

LoyaltyisaCurse · January 8th, 2007, 01:45 PM

Pull your heads our righties, this was-- is about RESOURCES FIRST, the rest if fodder.