[Vision2020] Some food for thought re. the LMT article this morning

[Louise Barber]

Page 3’s article:  Iraqi PM fears U.S. will bring down government if oil
benchmark isn’t met, by Steven R. Hurst and Qassim Abdul-Zahra, Associated
Press

 

 

>From the NYT:

TODAY more than three-quarters of the world’s oil is owned and controlled by
governments. It wasn’t always this way. 

Until about 35 years ago, the world’s oil was largely in the hands of seven
corporations based in the United States and Europe. Those seven have since
merged into four: ExxonMobil, Chevron, Shell and BP. They are among the
world’s largest and most powerful financial empires. But ever since they
lost their exclusive control of the oil to the governments, the companies
have been trying to get it back.

Iraq’s oil reserves — thought to be the second largest in the world — have
always been high on the corporate wish list. In 1998, Kenneth Derr, then
chief executive of Chevron, told a San Francisco audience, “Iraq possesses
huge reserves of oil and gas — reserves I’d love Chevron to have access to.”

A new oil law set to go before the Iraqi Parliament this month would, if
passed, go a long way toward helping the oil companies achieve their goal.
The Iraq hydrocarbon law would take the majority of Iraq’s oil out of the
exclusive hands of the Iraqi government and open it to international oil
companies for a generation or more.

In March 2001, the National Energy Policy Development Group (better known as
Vice President Dick Cheney’s energy task force), which included executives
of America’s largest energy companies, recommended that the United States
government support initiatives by Middle Eastern countries “to open up areas
of their energy sectors to foreign investment.” One invasion and a great
deal of political engineering by the Bush administration later, this is
exactly what the proposed Iraq oil law would achieve. It does so to the
benefit of the companies, but to the great detriment of Iraq’s economy,
democracy and sovereignty.

Since the invasion of Iraq, the Bush administration has been aggressive in
shepherding the oil law toward passage. It is one of the president’s
benchmarks for the government of Prime Minister Nuri Kamal al-Maliki, a fact
that Mr. Bush, Secretary of State Condoleezza Rice, Gen. William Casey,
Ambassador Zalmay Khalilzad and other administration officials are publicly
emphasizing with increasing urgency.

The administration has highlighted the law’s revenue sharing plan, under
which the central government would distribute oil revenues throughout the
nation on a per capita basis. But the benefits of this excellent proposal
are radically undercut by the law’s many other provisions — these allow much
(if not most) of Iraq’s oil revenues to flow out of the country and into the
pockets of international oil companies. 

The law would transform Iraq’s oil industry from a nationalized model closed
to American oil companies except for limited (although highly lucrative)
marketing contracts, into a commercial industry, all-but-privatized, that is
fully open to all international oil companies. 

The Iraq National Oil Company would have exclusive control of just 17 of
Iraq’s 80 known oil fields, leaving two-thirds of known — and all of its as
yet undiscovered — fields open to foreign control. 

The foreign companies would not have to invest their earnings in the Iraqi
economy, partner with Iraqi companies, hire Iraqi workers or share new
technologies. They could even ride out Iraq’s current “instability” by
signing contracts now, while the Iraqi government is at its weakest, and
then wait at least two years before even setting foot in the country. The
vast majority of Iraq’s oil would then be left underground for at least two
years rather than being used for the country’s economic development.

The international oil companies could also be offered some of the most
corporate-friendly contracts in the world, including what are called
production sharing agreements. These agreements are the oil industry’s
preferred model, but are roundly rejected by all the top oil producing
countries in the Middle East because they grant long-term contracts (20 to
35 years in the case of Iraq’s draft law) and greater control, ownership and
profits to the companies than other models. In fact, they are used for only
approximately 12 percent of the world’s oil.

Iraq’s neighbors Iran, Kuwait and Saudi Arabia maintain nationalized oil
systems and have outlawed foreign control over oil development. They all
hire international oil companies as contractors to provide specific services
as needed, for a limited duration, and without giving the foreign company
any direct interest in the oil produced. 

Iraqis may very well choose to use the expertise and experience of
international oil companies. They are most likely to do so in a manner that
best serves their own needs if they are freed from the tremendous external
pressure being exercised by the Bush administration, the oil corporations —
and the presence of 140,000 members of the American military.

Iraq’s five trade union federations, representing hundreds of thousands of
workers, released a statement opposing the law and rejecting “the handing of
control over oil to foreign companies, which would undermine the sovereignty
of the state and the dignity of the Iraqi people.” They ask for more time,
less pressure and a chance at the democracy they have been promised.

Antonia Juhasz, an analyst with Oil Change International, a watchdog group,
is the author of “The Bush Agenda: Invading the World, One Economy at a
Time.” 

 


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