[R-G] The plunder of Iraq’s oil

Sid Shniad shniad at gmail.com
Thu Nov 12 13:36:29 MST 2009


 The Peoples

*The plunder of Iraq’s oil*

    James Cogan

    Having drowned the Iraqi people in blood, the American financial and
corporate oligarchy now believes that day has finally arrived. While US
corporations are not the sole beneficiaries of the contracts, there is no
question who has the final say over Iraq’s oil.

    The awarding of development rights over the huge West Qurna oilfield in
southern Iraq to Exxon-Mobil and Royal Dutch Shell last Thursday once again
underscores the criminal character of the continuing US-led occupation. As
the direct result of the Iraq war, major American and other transnational
energy conglomerates are now gaining control over some the largest oilfields
in the world.

    West Qurna has proven reserves of 8.7 billion barrels of oil. Iraq’s
total reserves are currently put at 115 billion barrels, though dozens of
potential fields have not been explored adequately. Before the US invasion
in 2003, rights over West Qurna had been awarded by the Baathist regime of
Saddam Hussein to the Russian oil firm, Lukoil. The pro-US puppet regime in
Baghdad has torn up all pre-war contracts.

    Exxon-Mobil is the first US-based oil giant to benefit. Under the terms
of a 20-year contract, Exxon-Mobil and Shell plan to boost daily production
at West Qurna from less than 300,000 barrels to 2.3 million barrels per day
over the next six years. As well as the Iraqi government compensating the
companies for the cost of upgrading the field—which may run as high as $50
billion—they will be paid $1.90 for each barrel extracted, or some $1.5
billion per year. Exxon-Mobil holds an 80 percent stake and Shell the
remaining 20 percent.

    The contract is only the second signed by the Baghdad regime with
foreign energy companies. Last Tuesday, the Iraqi government concluded a
deal with British Petroleum (BP) and China National Petroleum Corp (CNPC),
giving them development rights to the massive Rumaila field and its reserves
of 17 billion barrels. BP holds a 38 percent stake and CNPC, a 37 percent
share. The plan is to boost production from around 1 million barrels per day
to 2.85 million barrels, generating profits of over $2 billion per year.

    The only disappointment for the transnationals is that the contracts are
not based on the Production Sharing Agreement (PSA) model, which gives
access to as much as 40 percent of an oilfield’s total revenue. Even the
venal elements that make up the Iraqi government rejected handing over the
country’s largest oil fields on such terms. Instead, the deals are
classified as “service” agreements. This has enabled Prime Minister Nouri
al-Maliki and his oil minister, Hussain al-Shahristani, to ignore parliament
and the lack of a hydrocarbons law to govern the energy industry.

    Further deals are in the process of being finalised. A consortium made
up of the Italian company Eni, US-based Occidental and South Korea’s Kogas
has signed a tentative agreement for the Zubair oilfield with reserves of 4
billion barrels. Eni, Japanese giant Nippon Oil and Spanish firm Repsol are
bidding for a field in Nasiriyah which has similar-sized reserves. In
northern Iraq, Royal Dutch Shell is negotiating a contract to develop
untapped areas of the major Kirkuk oilfield, which is thought to have as
much as 10 billion barrels in reserves despite being in production since

    After initially demanding better terms, the energy companies are
agreeing to deals to upgrade existing fields in the hope that they will
better positioned when more lucrative contracts, on the PSA model, over 67
untapped fields are auctioned later this year or next year. While it has
taken far longer than anticipated, the major energy conglomerates now
calculate that Iraq is now sufficiently stable to begin pouring in money to
vastly expand the country’s oil production. The first step has been taken in
opening up the Iraqi oil industry, which was nationalised in 1975, to
foreign investors.

    Highlighting the neo-colonial nature of this operation, two former top
American officials under the Bush administration are now facilitating
corporate deals in Iraq. Jay Garner, the first head of the US occupation
administration in Iraq following the invasion, is an advisor to the Canadian
energy company Vast Exploration, which has a 37 percent stake in an oilfield
in the Kurdish north. Zalmay Khalilzad, former ambassador to Afghanistan,
Iraq and the UN, has established his own corporate consultancy firm in the
Kurdish city of Irbil.

    The US invasion and occupation of Iraq was always a war over energy
resources. Over one million Iraqis have been slaughtered, millions more
people maimed and traumatised, cities and infrastructure destroyed and tens
of thousands of American soldiers killed or wounded to achieve American
domination of Iraq’s vast oil reserves as part of its broader ambitions in
the Middle East and Central Asia.

    The US failed to achieve its wider regional objectives after the first
Gulf War in 1990-91. The Hussein regime remained in place and despite
continued UN sanctions was signing contracts with companies such as French
oil giant Total and Lukoil. From the late 1990s on, Russia and the European
powers were pressing for the lifting of sanctions to allow these companies
to reap the benefits. War became the only means of preventing US corporate
interests from being cut out.

    American energy conglomerates were not passive bystanders. High-level
representatives of Exxon-Mobil, Chevron, Conoco-Phillips, BP America and
Shell took part in talks in early 2001 with the Bush administration’s
“Energy Task Force” headed by Vice President Dick Cheney. One document
prepared for the discussions included a detailed map of Iraq’s oil fields,
terminals and pipelines and a list of the non-US foreign companies that were
preparing to move in. A May 2001 report by the task force bluntly stated the
US aim: “The Gulf will be the primary focus of US international energy

    The September 11, 2001 terrorist attacks were seized upon to provide a
pretext for war. The lies over Iraqi weapons of mass destruction were
entwined with further lies about an Iraqi link to Al Qaeda. In the lead-up
to the invasion, oil industry executives repeatedly met with Bush
administration officials. As the Wall Street Journal commented on January
16, 2003: “US oil companies are starting to prepare for the day when they
may get a chance to work in one of the world’s most oil-rich countries.”

    Having drowned the Iraqi people in blood, the American financial and
corporate oligarchy now believes that day has finally arrived. While US
corporations are not the sole beneficiaries of the contracts, there is no
question who has the final say over Iraq’s oil. With huge military bases in
the country and a Baghdad regime tied to Washington, the US is positioned to
dictate terms to its European and Asian rivals and, amid rising great powers
tensions, to wield the threat of cutting off oil supplies—a longstanding
tenet of American strategic policy.

    ¤ ¤ ¤ ¤ ¤

    Source: http://www.wsws.org/articles/2009/nov2009/pers-n11.shtml

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