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Is US interest in Iraq oil justified from an oil perspective?

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  • Ian Latto
    TRANSCRIPTS Q12. Is the great interest shown by the US (and others) in the Caspian & Iraq justified from an oil perspective? [Answer] The United States
    Message 1 of 1 , Apr 1, 2003

      Q12. Is the great interest shown by the US (and others) in the
      Caspian & Iraq justified from an oil perspective?


      The United States discovery peaked in 1930, production peaked in
      1970, and even they cannot be unaware that their own supply is
      inexorably falling; I mean this is the most mature place on earth,
      it's also the highest consumer, more or less – highest consumption
      per capita.

      And so the government interestingly - whereas the Clinton
      administration somehow denied anything to do with this and hid away
      from it, the Bush administration when it came in – the Secretary of
      Energy did say that this was a very serious issue – had the brownouts
      in California that kind of triggered this. And he came out with an
      official statement saying that America faced a very important energy
      crisis that might affect the whole way of life. This was a rather
      promising statement.

      But then – I think over the last few years they've been concerned
      about this and have sought to diversify their sources of imports,
      they now import sixty percent of their oil. And they've been looking
      around the world to places where they could not be so dependent on
      Saudi Arabia. And of course when the Soviets fell the opportunity
      arose to look at the Caspian, and the Caspian is one of the world's
      oldest oil provinces, being already developed in the 1840's. But so
      far all the work had been done onshore, and the Soviets had no
      particular reason to invest in offshore technologies, so the
      offshore, this large area offshore, was open in a very attractive
      geological setting.

      And the western companies rushed in there feeling that at last here
      was a new frontier that they could conquer. And not only the
      companies started thinking about this, but there seems very little
      doubt that various think tanks, geopolitical strategist, and these
      whole raft of people started thinking about; here was this great
      supply of oil that the west, and particularly America, could tap. It
      was located in this very unfortunate place in landlocked conditions
      surrounded by newly independent and not very reliable countries,
      through which the export pipelines had to go.

      Now the natural way to take the oil out would be though the Iran to
      the Persian Gulf, but that was considered to be unsuitable because
      Iran's perceived to be an enemy, and you'd simply transfer the
      control, not only the Iranian oil, but the Caspian oil too, to the
      Iranians, so that was rejected. And then there was a kind of not very
      evident, but apparently it's been going on – there was a kind of
      military involvement, military missions were sent to Uzbekistan, and
      Azerbaijan, and to Kazakhstan. And basis were established, and aid,
      and weapons were delivered – who exactly knows what all of that
      really was - but at least it was a growing wish to control Central
      Asia in some manner or another.

      And then we had a statement by; I think Al-Chalabi was the first to
      put a number to it, and I don't have the exact reference, but the
      image of this possibly having 200 billion barrels of oil was put out,
      and this was rapidly this was rapidly taken up by the media. And
      before we knew what it had become a matter of fact, so that all these
      geopolitical strategies and the military planning, and the pipeline
      routes, and all this huge thinking and working away was all premised
      on the 200 billion barrels that it was now assumed was there for the
      taking. But then we began slowly over the last ten years to get the
      actual results of exploration, and here I might digress a little bit
      to explain the geology, because eventually it's the geology that

      Now extreme south of the Caspian is a deep, deep basin in front of
      the mountains of the Carpathian Himalayan belt - it was deep in front
      of it. And by virtue of being deep, you'd expect gas – this is a gas
      province. And sure enough BP drilled on the edge of this thing a
      field called Shah Deniz, and it's a nice big gas field with some gas
      liquids associated with it, just as you would expect. Then you go
      Baku in Azerbaijan, which is the ancient oil capital of this region,
      and this lies on the proto-delta of the Volga River. So this is a
      narrow belt running across the Caspian from Azerbaijan into
      Turkmenistan, and it contains – well known for a hundred years –
      quite thick shallow reservoirs filled with oil leaking up through the
      tertiary sediments.

      And the Soviets had already identified a large structure just off
      shore, and with rather primitive platforms more or less coming off
      the beach, they had begun to develop this thing. Well the western
      companies have gone in there and they are now producing this field,
      and its got – I don't know – 3 to 5 billion barrels of oil in it, a
      nice oil field, but nothing outrageous. And this trend goes on
      eastwards, but it looks like it gets gassy in that direction because
      it gets deeper. So this is a narrow belt, it's fairy well understood,
      and there's more to come out of it, but nothing outrageous. Then lets
      turn northern end of the Caspian, where in 1979 onshore the Soviets
      did find a field called Tengiz, a very deep field, 4500 meters deep.
      The reservoir is a reefal deposit, and the source is a deep Silurian
      source. The critical thing here is there's a cap of salt, think salt
      that holds it all in. Salt is a very good seal. But the one
      unfortunate feature of this oil, it has 16 percent sulphur, it's very
      sulphurous oil, and the Soviet steel just wasn't up to coping with
      this high sulphur that corrodes the pipes and everything.

      So anyway, Chevron then came in and is producing this field with
      difficulty, they've got production up to 250,000 barrels a day, and
      just recently they've announced that their hopes of expanding this to
      700 are delayed, or deferred, or not happening. And they've had some
      conflict with the Kazak government over the environmental
      consequences of these huge tips of sulphur that they extract from the
      oil. Then offshore – this is the real critical thing – offshore is an
      enormous structure, an enormous thing, very similar in general
      appearance to the Tengiz field. And at first sight this indeed looked
      like promising to be the worlds largest something, oil field,
      something outrageously large. But - and it's in shallow water, with
      environmental problems because it's the breeding ground of the
      Sturgeon, which the Russians like for Caviar. There's some gruesome
      wind there that covers everything in ice in winter, it's difficult to
      get the equipment in because it's shallow water. But eventually, and
      having spent 300 million dollars they managed to sink the first well,
      and again it was deep, again it was high sulphur, and it was in the
      order of 6-8 billion barrels.

      And now they had more knowledge of what the reservoir was, and it
      became evident that this was a reef and that this whole structure was
      a platform, within which were isolated reefs. And then they drilled
      another one to the west, and together it seems that the reserves of
      this place is in the order of 9-13 billion. And the economics of it
      are desperate – you've environmental problems, you've uncertainty of
      the pipeline routes, you've uncertainty about the contract –
      everything is difficult about it, and eventually BP and Statoil
      withdrew from the project. Now when you find a major oil company
      withdrawing from 9-13 billion barrels of oil, it tells you that
      there's something pretty seriously wrong with it. And there are a few
      more prospects left to test around, but I think, the conclusion is
      that there are still nice oil fields there, it's still a nice
      province in the normal sense, but it isn't going to change the world

      Now stepping back just a little bit, it does have a lot of gas mind
      you, and one of these pipeline routes that were planned was through
      Afghanistan to supply gas to Pakistan and India, and the famous Enron
      company was involved in all of that. And this man, Katabi - whatever
      his name is, the new president of Afghanistan – Karzai – he was
      formally involved in this Union Oil project in some consultancy
      fashion and so on. Anyway, then we had 9-11 as they call it, or the
      twin towers, and suddenly the Bush administration felt obliged to
      react in some ways to these alleged terrorist who were responsible
      for this, who were surprisingly enough were apparently living in an
      Afghan cave. And so the next thing we hear is that this Afghan war
      broke loose, and one can see that maybe it was about trying to find
      these terrorists people and the man in the cave and everything, but
      it had also a sort of hidden agenda of a convenient place to
      establish a presence on the edge of the Caspian Sea with all of this
      oil that was suppose to be there. It may not be that there was an
      actual pipeline through Afghanistan, may not have been quite what was
      planned, because this was primarily a gas project, but still it was a
      presence and a point from which US control could be exercised over
      this situation.

      Well all of this went by and gradually – and I don't think there was
      any particular moment of revelation, but gradually the news began to
      filter out - and by the way, Exon Mobile also withdrew from
      Azerbaijan. Again, when you find the major companies pulling out it
      delivers a sort of a message. I think gradually the penny began to
      drop that, well; the Caspian wasn't going to make all this much
      difference. And then surprisingly we suddenly find the Afghan
      campaign comes to a sort of inconclusive end, they toppled the
      government, but what really else happened. They never found the man
      they were looking for in his cave - killed a lot of innocent people
      in the process and all of this, but it suddenly sort of withered away
      and today you never hear about Afghanistan anymore.

      But what you do hear about is Iraq, and although this is a long
      story, long relationship between the US and Iraq, and the Gulf War,
      which we don't have to go into here, but suddenly although Saddam
      Hussein hasn't changed particularly in 10 years. Suddenly he's now
      depicted as having all kinds of objectionable viruses under his
      pillow and atomic weapons being produced in backyards of paint
      factories – really rather implausible picture of the threat that he
      might at some stage pose to somebody. This all sounds, to just
      ordinary mortals, extraordinary thin. But if you look at it in the
      context of Americas need for access to oil, you could – and I'm not
      saying this is the truth – but you could at least say that their new
      interest in Iraq is a response to having discovered that they're not
      finding their solution in the Caspian. Now of course if they do
      invade Iraq, who knows what the consequence will be and I think
      there's a huge – they themselves are probably misled – you can't
      expect these governments to have much understanding of what's

      So I think, they think, they can just show up there and put a puppet
      regime in command and simply open the tap and solve the problem, but
      Iraq's oil – they've found about 90 billion barrels of oil in Iraq of
      which 50 lie in 3 fields, only 3 big ones, the first Kirkuk found in
      1927. Now these are old fields and as we've discussed earlier, it's
      not just opening a tap; you have reconfigure the wells, you have to
      drill infill wells, there's a huge amount of work. And probably
      they've been badly managed in the recent past so there's remedial
      action. And then there are a lot of smaller fields that have not yet
      been put onto production so you've got to drill them up, they don't
      deliver so much as the big old ones. And still more, you've got to
      look for new ones all the time, and I think one can say that the old
      Iraq Petroleum Company found most of the obvious big prospects long
      ago. So I think it's an enormous mistake to imagine you can just show
      up and install a puppet regime of some kind, and hope, quite apart
      from the continuing acts of sabotage, and snipers are behind every
      palm tree. Even under ideal conditions it would still be a long, long
      time before, production could grow significantly to have any real
      world impact. So that I think is a mistake, if – and I don't think
      it's entirely to do with oil – I think there's a large Israeli
      content to this action as well, but oil I'm sure is sort of part of
      the assessment that is behind all of this.

      And of course you could also foresee, as Moe Moland - recent British
      Cabinet Minister published not long ago, that she interpreted this
      whole thing as an invitation to a breakdown of the Middle East
      political system. With public outrage throughout the place, the fall
      of the Saud's in Saudi Arabia in response to popular outrage, which
      in turn would give the United States the right almost, or the
      opportunity to move in and take the Saudi oilfields, which in fact
      would be a much easier military target than Iraq would be. So if you
      wanted to take Middle East oil, the place to take it is Saudi Arabia.
      And one can see the deterioration of relations between the Saud's and
      America has been developing over the last few months. So one can read
      all kinds of scenarios into the situation and I think you can be
      fairly sure that the governments themselves are the last people to
      understand what they're really doing, if history is anything to go
      by. So we face this unbelievable third world war really that is
      probably triggered by all of these considerations, not many of which
      have a real substance.

      I mean the irony of it is – I mean it's one thing to go in and take
      some place by the right of conquest, and kill millions of people in
      the process – it wouldn't be the first time this has happened. But to
      do it all and then to find there's no prize at the end of the rainbow
      is really doubly tragic.

      Transcript of ASPO.ColinCampbell.2-4.2002-12-18
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