can’t see the forest

Crude Awakening – Carving Up the ‘Meat Charts’ in Iraq

Pointed from Reclaiming Space, the UK’s The Independent reports on a new piece of Iraqi legislation which, if passed, will doubtless constitute a major milestone in the Bush administration’s fight for “victory” in that troubled and beleaguered nation (emphases added):

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.

Oil Rig“Oil industry executives and analysts say the law…is the only way to get Iraq’s oil industry back on its feet.” What unmitigated nonsense. For a minute fraction of the annual cost of its occupation of Iraq, the US government could, in theory, revitalize the Iraqi oil infrastructure as a comparatively tiny gesture of goodwill.  The new law is, in fact, the only way to get Iraq’s oil industry in the hands of US and multinational corporations. It is as simple as that.

Let’s clarify and simplify: this legislation will allow Big Four Oil to reap three quarters of the oil revenues of an ostensibly sovereign nation for an introductory period, after which external revenues are expected to drop to about 20%—which is still about twice the standard for deals of this type.

These sorts of profit-sharing agreements were commonplace in the Middle East of yesteryear, but nations such as Saudi Arabia and Iran have since moved on to nationalize their oil industries. Of course, this is exactly why the United States and the United Kingdom are willing to do anything to prevent Iraq from following the same path—because an Iraq with state-controlled oil is not an Iraq with US-controlled oil. That lesson was learned in the late 1970s. There is an awful lot of oil in Iraq, and that means an awful lot of economic leverage against Russia, Europe, and East Asian economies.

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3 Responses

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  1. Herbesse said, on 1/19/07 at 8:05 pm

    Will this make my Dick Cheney stocks on trendio rise? http://www.trendio.com/word.php?language=en&wordid=72

  2. Curtis said, on 1/21/07 at 7:39 pm

    Gasoline dipped below $2.00/gal here in the Heart of Dixie today. Sure, it’s the weather! Do you remember that part in Batman (Keaton/Nicholson) where The Joker puts out the TV ad about all the tainted cosmetics? Love that Joker… Love that Cheney… Pretty disgusting stuff.

    Thanks for the link.

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