New Iraq oil agreement will give oil majors 75%

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.

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Independent

This sounds rather like the original neo-con plan for privatising Iraqi oil that Bremer tried to introduce, but which was kicked back by the former Shell CEO Phillip Carroll, who was brought in to oversee Iraq's oil industry immediately after the invasion.

The real devil will be in the detail to see if the Kurds and SCIRI can use this legislation to further there agenda of breaking up Iraq to hive off the oil wealth. It may be a real indicator if this is the new US policy as well, when this legislation is in front of parlimant.

At a wild guess you can expect the Sadr'sts to fight it like it was Satan incarnate.

Perhaps this is why Bush intends to send extra troops but is being extremely vague about what they're supposed to be doing. If he's expecting massive unrest to kick off because of something he plans to do, e.g. this, or bombing Iran or something, then it would make sense to send more troops (plus the extra carrier battle group that just arrived) but he'd have a hard time explaining coherently exactly why he's sending them, because it wouldn't necessarily look to good to say 'we'll need the extra forces because we plan to annoy the Iraqis even more'

Urg the whole thing is so byzantian that it does my head in.

"The open society and its enemies", well they sure as fuck aint the communists anymore. Some days I think the dyed in the wool liberatarians are right and that any state will ultimately descend into this kind of machiavellian brutality and subversion of constitutional process.

Colin Powell, then Secretary of State, said: "[...] the oil of the Iraqi people belongs to the Iraqi people; it is their wealth, it will be used for their benefit [...]"

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Riiight.

I'm reminded of a Times article way back in '02...

What was the headline now? Ah, yes...

As I was suggesting in the Nuke Iran thread and am just writing up something for my blog on, it seems to me possible that the neo-cons reckon they're in their last window of opportunity to tick off the remaining items on their 'must do' list of global disasters. If they leave it much longer the Democrat subpoenas will have started dragging all kinds of illegal shit out of their closets and their ability to act decreases, so it's now or never for this stuff.

Its convenient for the oilmen that Iraq is a mess of internal fighting. That this 'nation' could hardly be expected to opppose this is possibly what gave the whole damn invasion its feasability.

Are we really expected to believe that they couldn't even carry out the hanging of Saddam properly without provoking riots and stoking the Sunnis anger a few more degrees?

This is bloody looting.

How is it convient? I'd think trying to extract oil which needs pipe lines and refineries and workers ,a tad difficult in a country full of civil war .Tell anyone with a vague hint about exsplosives you want them to blow up something connected to oil and petrol and they get all excited .And Iraq has an awful lot of these .Great profits to be made if the place is at peace bugger all till then imho.

Well, part of what has them excited is the relatively unexplored reserves in the Western Desert. These areas are relatively uninhabited too.

Here's a scenario to consider. Exploration rights are allotted to oil majors in these areas, they explore. They prove out new reserves, their share price goes up enormously. They don't have to pump a single barrel to vastly inflate their share prices, they just have to prove out what they're pretty sure is already down there. Because they aren't actually pumping at this stage and they're in the middle of nowhere, with lots of PMC guards, the insurgency isn't a huge problem for this scenario.

Of course, sooner or later they have to pump the oil to make money off it, which does indeed require that they have relatively stable conditions, but they can make a tremendous amount, particularly in terms of stock options for their execs, without pumping a drop.

Bernie Gunther Thanks for the info looking at your blog good un mate.

Double post.

Thanks.

Meanwhile, I just noticed something interesting about these deals. According to the draft agreement that the Indy (but not it appears many Iraqi MPs) have seen, the shares in these PSAs are tradeable

Which offers another striking opportunity for profitable speculation, given that despite the security situation, these PSAs are long-term and are likely to be on extremely favourable terms to the oil companies (or if you prefer, extremely lousy terms for the Iraqis) and respresent the right to exploit some of the largest and potentially most profitable oil deposits remaining on Earth.

As always I'm stunned that anyone can be surprised. I suppose this ability is the luxury of those not directly confronted with the reality of Western greed-agression.

salaam.

Aldebaran, what do you think the reaction of the average Iraqi to this happy news will be? Dancing in the streets at the news that the big oil corporations are going to help them out, in return for a very reasonable 70-odd% cut?

Bernie Gunther said:

This sounds rather like the original neo-con plan for privatising Iraqi oil that Bremer tried to introduce, but which was kicked back by the former Shell CEO Phillip Carroll, who was brought in to oversee Iraq's oil industry immediately after the invasion.

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Palast interviewed Carroll (3/05) for Newsnight, where he certainly was in a 'kicking' mood:

Ariel Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq's oil fields.

He advocated the plan as a means to help the US defeat Opec, and said America should have gone ahead with what he called a "no-brainer" decision.

Mr Carroll hit back, telling Newsnight, "I would agree with that statement. To privatize would be a no-brainer. It would only be thought about by someone with no brain."

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And that's from the guy who was CEO of Shell when Ken Saro Wiwa was offed! He knows what he's talking about.

Here's some of the original (pre-'Sept. 11th') brainless 'plans':

Maps and Charts of Iraqi Oil Fields

These are documents turned over by the Commerce Department, under a March 5, 2002 court order as a result of Judicial Watch’s Freedom of Information Act (FOIA) lawsuit concerning the activities of the Cheney Energy Task Force. The documents contain a map of Iraqi oilfields, pipelines, refineries and terminals, as well as 2 charts detailing Iraqi oil and gas projects, and “Foreign Suitors for Iraqi Oilfield Contracts.” The documents are dated March 2001.

# Iraq Oil Map
# Foreign Suitors for Iraqi Oilfield Contracts - Part 1
# Foreign Suitors for Iraqi Oilfield Contracts - Part 2
...

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http://www.judicialwatch.org/printer_iraqi-oil-maps.shtml

That map's quite useful.

A few choice quotes appear at the end of another (slightly longer&fleshier) Indy piece:

"Oil revenues, which people falsely claim that we want to seize, should be put in a trust fund for the Iraqi people"

Tony Blair; Moving motion for war with Iraq, 18 March 2003


"Oil belongs to the Iraqi people; the government has... to be good stewards of that valuable asset "

George Bush; Press conference, 14 June 2006


"The oil of the Iraqi people... is their wealth. We did not [invade Iraq] for oil "

Colin Powell; Press briefing, 10 July 2003


"Oil revenues of Iraq could bring between $50bn and $100bn in two or three years... [Iraq] can finance its reconstruction"

Paul Wolfowitz; Deputy Defense Secretary, March 2003


"By 2010 we will need [a further] 50 million barrels a day. The Middle East, with two-thirds of the oil and the lowest cost, is still where the prize lies"

Dick Cheney; US Vice-President, 1999

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It would seem that not everything changed on 9/11, then.

What's fascinating me at the moment, and this is a thought provoked by the right-wing justifications for this impending oil rights grab, is the enormous speculative potential of tradable shares in the rights to exploit at hugely favourable terms, the largest remaining supply of easy-access, high-quality oil on Earth. As a sink for ficticious capital, it's hard to imagine a better one. What's more they don't have to pump a drop of it for it to have this global impact.

Meanwhile, have you noticed how little reporting of this oil rights grab has happened so far?

Everybody seems all distracted by the 'Israel to Nuke Iraq' story, or maybe Britney Spears giving birth to a three-headed calf or something.

Of course I can't speak for "the average Iraqi", only for my friends and other Iraqis I know personally.

In general, absolutely nobody (in or outside Iraq) expected anything else then exactly this sort of "deals", since the very moment the USA started to talk about war on Iraq. This, the establishment of permanent US military bases in the very heart of the region and the creation of a new market for Corperate USA where the aims and goals of this invasion.

For the moment I don't think "the average Iraqi" is up to date informed on such back-stage deals and developments or even wants to know about it. Staying alive and survive in a desintegrating country is more of a daily returning concern then no matter what. What is to be expected is that those involved in resistance (no matter their background and ultimate goals) shall gratefully make use of it. It proves what is part of their rethoric since the beginning.

What you noticed about Bremer gives only a part of the original plan, which was to create "barren ground" for Corporate USA to invade as follow up force. I couldn't believe it at first - all while one could see it happening - for the simple reason that at the time I still wasn't convinced that the Bush administration was as utterly arrogant and willfully ignorant about the situation on the ground as they proved to be.
By now I am convinced they still have no clue what they are dealing with. They truly live on an other planet or else they must hope that the Iraqis are going to murder each other until the only survivers are too young or too old to resist US imported "democracy" plundering them while agressively pushing Capitalism down their throats.

I remember an anecdote in the first days of the invasion, where water supplies of a village were bombed to non-existence. A few of the freshly invading US cowboys found no better way to repair it then to "leanr the locals" how to "set up a free enterprise in a free country".
Meaning: they filled some trucks with water, "employed" some "locals" to sell it against a % in the profit to other villagers, who then learned the valuable lesson that they had to pay for what was their own.
Try that out within any tribal area - let alone in a rural setting where water is scarse - and you have a mini-war in the making. Try to explain such a detail to a US'er and they think *you* live on an other planet. Just a tiny demonstration of how deep the water between cultures really is.

salaam.

Nice thread once again Bernie, good stuff.

Aldebaran said:

Of course I can't speak for "the average Iraqi", only for my friends and other Iraqis I know personally.

In general, absolutely nobody (in or outside Iraq) expected anything else then exactly this sort of "deals", since the very moment the USA started to talk about war on Iraq. This, the establishment of permanent US military bases in the very heart of the region and the creation of a new market for Corperate USA where the aims and goals of this invasion.

For the moment I don't think "the average Iraqi" is up to date informed on such back-stage deals and developments or even wants to know about it. Staying alive and survive in a desintegrating country is more of a daily returning concern then no matter what. What is to be expected is that those involved in resistance (no matter their background and ultimate goals) shall gratefully make use of it. It proves what is part of their rethoric since the beginning.

What you noticed about Bremer gives only a part of the original plan, which was to create "barren ground" for Corporate USA to invade as follow up force. I couldn't believe it at first - all while one could see it happening - for the simple reason that at the time I still wasn't convinced that the Bush administration was as utterly arrogant and willfully ignorant about the situation on the ground as they proved to be.
By now I am convinced they still have no clue what they are dealing with. They truly live on an other planet or else they must hope that the Iraqis are going to murder each other until the only survivers are too young or too old to resist US imported "democracy" plundering them while agressively pushing Capitalism down their throats.

I remember an anecdote in the first days of the invasion, where water supplies of a village were bombed to non-existence. A few of the freshly invading US cowboys found no better way to repair it then to "leanr the locals" how to "set up a free enterprise in a free country".
Meaning: they filled some trucks with water, "employed" some "locals" to sell it against a % in the profit to other villagers, who then learned the valuable lesson that they had to pay for what was their own.
Try that out within any tribal area - let alone in a rural setting where water is scarse - and you have a mini-war in the making. Try to explain such a detail to a US'er and they think *you* live on an other planet. Just a tiny demonstration of how deep the water between cultures really is.

salaam.

Click to expand...

Thanks for that Aldebaran. It might seem obvious to you, but from a nice safe western country, it's very illuminating to hear your view.

Meanwhile, I can't help having this appallingly cynical thought. The horrible security situation in Iraq was the justification for the extremely favourable deals apparently cut by the oil majors in this agreement. Wasn't that a useful coincidence? I mean, most likely it was just a coincidence, with sharp oil company guys spotting an opportunity, but if you were very suspicious it might make you wonder why they made such a mess of the security thing.

exosculate said:

Nice thread once again Bernie, good stuff.

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My pleasure. I suspect all that stuff about Israel nuking people, leaked to the Murdoch press, is a PR stunt meant to distract us from this stuff. The heart of the reason for the invasion.

Thinking some more about this. I'd be interested in getting some feedback.

A cynical person might for example, look at what happened to the PSAs negotiated after the fall of the Soviet Union with a weak Russian government and which have recently been overturned by Putin’s government, which has just re-negotiated much more more favourable deals now that it’s strong enough to do so.

A cynical person might conclude that from the oil companies point of view, a weak and divided Iraqi government, terrified that if the US doesn’t protect them from their own citizens, they and their families will be tortured to death by angry zealots from a multitude of rival militias, gangs and whatnot, might actually be advantageous to the oil companies, who would therefore have no particular reason to want the overall security situation in Iraq resolved as long as they’re able to lift and ship ‘their’ oil. After all, while their cut remains at 70% of all those hundreds of billions of dollars worth of oil, they can afford to spend a bit on pipeline security and so on. Whereas if the Iraqi government ever became strong enough and the country stable enough to tell them to fuck off as Putin has done recently, they’d be making considerably less money on the deal.

These Iraq threads have been informative, well done to Mr.Gunther and the participants.

The question:

Did invaders plan all the chaos? As I mentioned in post 9 ‘Its convenient for the oilmen that Iraq is a mess of internal fighting. That this 'nation' could hardly be expected to opppose this is possibly what gave the whole damn invasion its feasability.’

In these and the related threads, it tells its own story. We had Dastardly Dick rubbing his hands and slavering at the Iraq oil fields as far back as 1999.

You have this clique of oil men with Dick being pretty much the boss. These Straussian band of brothers. This is the heart of Neo Con philosophy-

The was a thread some time ago in which I summarized Straussianism a bit more thouroughly. The thread was called ‘Do you think Bush/Blair would do it again?’

‘I think a lot of these power guys couldn't give a shit about public opinion or dead Iraqi's. THeir motivations and capacity for shadiness are far far beyond the comprehension of the general public.

When you consider the heart of Neo -Con philosophy are the teachings of LEO STRAUSS, you start to understand that they have no qualms at all about lying to us.

The Neo Cons spawned from, from Chicago University. Where Strauss was a Proffessor.

Wiki:

‘Strauss noted that thinkers of the first rank, going back to Plato, had raised the problem of whether good and effective politicians could be completely truthful and still achieve the necessary ends of their society. By implication, Strauss asks his readers to consider whether "noble lies" have any role at all to play in uniting and guiding the polis.'

Two of the founders of Neo Conservatism, Paul Wolfowitz and William Kristol are students of Strauss. The documentary ‘ the Power of Nightmares’ (google video), discussess his influence.

David Dissident ( post 5 ) Byzantian is right, Machievelian also is a good term to describe these men.

The philosophy basically boils down to one of elitism, that the masses must be controlled. If they are they are to be lied to, or terrorised and manipulated, this is justifiable in their view.’


Now, given that they apparently do in fact lie and terrorise the populace without shame or conscience indicates to me that they are well capable of this armed robbery of Iraq. The motives and intents are there.

Then we have this unprecedented profit for the western oil giants.

To me, it speaks for itself.

It was sophisticatedly done. All the costs and benefits would have been analysed, a thorough feasibility study completed. At heart who can deny that this was a business venture.

==============================================================


Here is an interesting excerpt from an article in the Liverpool Times:
link

Regarding the execution of Saddam on Eid:

‘Make no mistake, this wicked barbaric execution is something that America sought.

For many Arabs this execution, with the howling mob on a Holy day is a terrible insult and a humiliating event... Saddams death also sees an end to the secular tradition of Arab leaders as the power bases shift to Islamic based alliances. We’ve swapped a secular Iraq for one in which the secular intellectuals are being slaughtered or culled.

It is a reversal of the aim during WW2 when we fought a nation which had invaded the land of another nation. Now, in a turn of events, we have become the invaders just like the Nazis once were. British soldiers are risking life and limb to help the Shia dominated Iraqi Interior Ministry who command death squads that outdo the horror that took place under Saddams presidency.

Saddam died aged 69 yrs old. He lived through three years of captivity and was given a few moments notice before being marched up to the gallows just as dozens of other poor unfortunates have been since the toppling of the Baathist regime. He faced a baying mob of thugs and never broke, telling them that they had ‘no manhood’ and ‘no bravery’.

This was no Nuremberg trial, it was a lynch mob... They hoped to see Saddam cry and broadcast that final indignity to the world, finishing the image he created for himself as a tough Arab leader who would not flinch. But the video will merely endorse the legend which will grow in the years to come. Saddam will be known as the man who faced the gallows with some semblance of honour. He showed courage in the face of certain death.

Many of the men hung since the invasion, were broadcast on Iraqi TV, making confessions after being tortured and given a script to read from. The Iraqi Interior Ministry was funded by the USA to broadcast these shows which also featured allegations against named Sunni clerics. (some of whom have since been killed) The shows were attempts to stir up sectarian hatred and humiliate people on live TV.

Some might say that Saddam suffered the fate that he had forced many others to go through, but such sentiments are merely an extension of saying that we ought to take an eye for an eye.

Under Christian laws or moral codes, there is no such instruction to commit murder when you consider that the Ten Commandments, one of which strictly states ‘Thou shall not kill’, are the final words on such matters. Killing an adversary who might be about to kill you or some innocent party, is a different matter. Killing them after the fact is murder plain and simple. For this reason, you can be assured that neither Blair or Bush are Christians.
We hope all Muslim nations and the USA abolish this barbaric practice of the death penalty. America in particular spoils the Christian record of having carefully rid most Christian nations of such grim practices.

The final word goes to an Iraqi academic, who sums up the Iraqi plummet into chaos as follows….

“In the moment of dramatic collapse of Baath regime at April 2003, a promising civil progressive movement begun to develop, aiming at restoring liberty, justice and civil rights, especially inside universities and other cultural institutions. But the Americans started immediately, continuously till now, to block that rational stream, by adopting the following policy:

• 1) Encouraging leaders of religious groups and parties (from different sects) to be influential politicians, regardless of their ignorance, selfishness and closed minds; in parallel with dismissing secular trends (liberals, socialists, technocrats …).

• 2) Fabricating terrorism inside Iraq (religious terrorism has no roots in our enlightened Iraqi society, even among religious groups). The Americans gave green light to the governments of Iran, Syria, Saudi Arabia to export thousands of brainwashed “terrorists” who do not have any idea about social and intellectual fabric of the Iraqi society.

• 3) Doing nothing to stop (if not involving in) the planned assassinations of brilliant doctors and academics.

• 4) Fabricating continuous crises of severe shortages in electricity power, water supply, and fuel.”

I'm in two minds about this.

On the one hand a weak Iraqi government, dependent on US forces for its survival, is obviously in the interests of the oil companies, in view of the terms of these PSAs which a strong and unified government would certainly be able to tell them to stick up their arse.

On the other hand, if the intention was to produce a weak government to force outrageously unfair oil deals on, it doesn't necessarily follow that turning the place into a total hell-hole was the intention, because that is going to make the oil more expensive to lift and export.

Bernie Gunther said:

Thinking some more about this. I'd be interested in getting some feedback.

A cynical person might for example, look at what happened to the PSAs negotiated after the fall of the Soviet Union with a weak Russian government and which have recently been overturned by Putin’s government, which has just re-negotiated much more more favourable deals now that it’s strong enough to do so.

A cynical person might conclude that from the oil companies point of view, a weak and divided Iraqi government, terrified that if the US doesn’t protect them from their own citizens, they and their families will be tortured to death by angry zealots from a multitude of rival militias, gangs and whatnot, might actually be advantageous to the oil companies, who would therefore have no particular reason to want the overall security situation in Iraq resolved as long as they’re able to lift and ship ‘their’ oil. After all, while their cut remains at 70% of all those hundreds of billions of dollars worth of oil, they can afford to spend a bit on pipeline security and so on. Whereas if the Iraqi government ever became strong enough and the country stable enough to tell them to fuck off as Putin has done recently, they’d be making considerably less money on the deal.

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I don't think a deliberate degree of instability is the preserve of oil interests; it's been a pretty consistent tactic when applied to client states. You want it stable enough that it doesn't take endless money to prop it up, but unstable enough that the ruling group is always concerned about its position and there's no united opposition to foreigners. Just the history of Iraq itself shows that this is perennial.

It all feels very 19th century really; the British Empire would have been proud. Civilising the natives with the Maxim gun, deliberately exacerbating internal divisions, having home companies with preferred trading routes helping the poor savages with their resources for a fat profit....

Quite. But now that the pretence that we weren't there to take control of Iraq's oil is ended (albeit with little media acknowledgement of that fact) it all stands out in rather sharp relief doesn't it?

I'm sure there is some level of miscalculation involved, but from the balance sheet point of view, the oil companies have got the most favourable deal imaginable, largely due to the horrible security situation and the weakness of the Iraqi government.

FridgeMagnet said:

It all feels very 19th century really; the British Empire would have been proud. Civilising the natives with the Maxim gun, deliberately exacerbating internal divisions, having home companies with preferred trading routes helping the poor savages with their resources for a fat profit....

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Except old John Company would have ensured that the overwhelming bulk of the fighting was done by locals on there behalf.

Britains special forte was inflicting just this kind of mess on its rivals, like the Spanish or Napolean. This is pretty much amatuer hour imperialism.

I dont buy the chaos as a plan. I cant help but remember the hubris of 2003. They believed in it all down to there cotton socks. They really thought they were setting up a weak but welcome democracy that would destabalise Syria and Iran by its shining new Jerusalem on a hill.

Yep, that's what I meant about miscalculation above. I'm pretty sure though, that 'divide and conquer' and a weak and dependent government was precisely the intention, for reasons that the imminent law backing these PSAs makes all too clear, but that things got a little more messy than planned.

Creative distruction and all that then.

http://en.wikipedia.org/wiki/Creative_destruction


Editing to be less obscure, the theory of creative destruction floats around economics, especialy of the right wing bent, that from destruction comes creation and economic activity.

So bang up Iraq, then pay for it to be rebuilt, funnelling the money out of the US, to US companies in Iraq and back to profits in America, Keynes with knuckledusters if you will.

Oh yeah and Iraq to pay for alot of it itself as well funnelling Iraqi oil wealth into US companies. That is the short version.....