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Re: [energyresources] Chickenhawks counting chickens: The future Iraqi oil boom

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  • Frith, Denis
    Can anyone explain why seeminly knowledgeable people can take such a prejudiced view? They appear to ignore two major factors. Firstly, even the most
    Message 1 of 2 , Sep 30, 2002
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      Can anyone explain why seeminly knowledgeable people can take such a
      prejudiced view? They appear to ignore two major factors. Firstly,
      even the most optimistic amount of Iraq oil reserves will have little
      impact on the coming need to be weaned off heavy dependence on oil.
      Secondly, there are other counries, China in particular, that are
      endeavouring to ensure they get a large amount of this dimishing
      resource.

      Denis Frith
      Melbourne

      --- K Davies <kdavies@...> wrote: > Oil firms wait as Iraq crisis
      unfolds
      > Robert Collier, Chronicle Staff Writer
      > Sunday, September 29, 2002
      > ©2002 San Francisco Chronicle.
      >
      > URL:
      >
      http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2002/09/29/MN116803.DTL
      >
      > The world's biggest oil bonanza in recent memory may be just around
      > the
      > corner, giving U.S. oil companies huge profits and American
      > consumers
      > cheap gasoline for decades to come.
      >
      > And it all may come courtesy of a war with Iraq.
      >
      > While debate intensifies about the Bush administration's policy,
      > oil
      > analysts and Iraqi exile leaders believe a new, pro-Western
      > government
      > -- assuming it were to replace Saddam Hussein's regime -- would
      > prompt
      > U.S. and multinational petroleum giants to rush into Iraq,
      > dramatically
      > increasing the output of a nation whose oil reserves are second
      > only to
      > that of Saudi Arabia.
      >
      > "There already is a stampede, with the Russians, French and
      > Italians
      > already lined up," said Lawrence Goldstein, president of the
      > Petroleum
      > Industry Research Foundation, a New York think tank funded by large
      > oil
      > companies.
      >
      > Until now, debate over the economic impact of a U.S.-led attack on
      > Iraq
      > has focused mostly on short-term dangers. Pundits have worried that
      > just
      > as during the Gulf War, a new Iraq war would disrupt oil exports
      > from
      > the Persian Gulf and cause a sharp spike in petroleum prices.
      >
      > If Hussein attacks oil facilities in neighboring gulf states, for
      > example, or Arab oil producers institute a boycott, Americans could
      > wind
      > up paying more than $2 per gallon for gasoline, some experts
      > predict.
      >
      > The long term, however, looks radically different, according to oil
      >
      > analysts.
      >
      > In their view, a new Iraq oil boom could begin within two years of
      > the
      > war's end -- roughly the time it took to repair damaged facilities
      > in
      > Kuwait after the 1991 Gulf War. Once production reaches its full
      > capacity, they say, the enormous increase in supply could weaken
      > OPEC,
      > the oil producers' cartel led by Saudi Arabia, lower international
      > oil
      > prices for the foreseeable future and shift the balance of power
      > among
      > the world's major oil producers.
      >
      > "OPEC is already significantly fractured, and this would already
      > add to
      > its internal frictions," said Reuel Marc Gerecht, a fellow at the
      > American Enterprise Institute who formerly was a U.S. diplomat and
      > CIA
      > agent in the Mideast.
      >
      > "It would definitely diminish the Saudis' influence (over the
      > United
      > States) and would cause the Iranian regime a lot of trouble."
      >
      > Iraq has 113 billion barrels of proven reserves, second worldwide
      > only
      > to Saudi Arabia, which has 262 billion barrels. But because of its
      > two
      > decades of war, Iraq's oil potential remains relatively unexplored.
      > The
      > U.S. Energy Department estimates that Iraq has as much as 220
      > billion
      > barrels in undiscovered reserves, bringing the Iraqi total to the
      > equivalent of 98 years of current U.S. annual oil imports.
      >
      > American firms are barred by U.S. law from making contracts with
      > Iraq
      > and have had to watch as the rival firms of other nations sign
      > contracts
      > with the Iraqi dictator to pump oil after U.N. sanctions are
      > lifted.
      > Assuming Hussein is overthrown and U.S. and U.N. sanctions are
      > lifted,
      > Goldstein said, "you'll see the U.S. companies will be very
      > interested."
      >
      > Muhammad-Ali Zainy, a former Iraqi government oil official,
      > estimates
      > that after an overthrow of Hussein, oil production would rise from
      > its
      > current output of about 2.5 million barrels per day to as much as 7
      >
      > million barrels per day by the end of the decade.
      >
      > "Given Iraq's dire financial situation, any Iraqi government after
      > Saddam Hussein will need massive amounts of money and will try to
      > produce as much as it can," said Zainy, now a senior energy analyst
      > at
      > the Center for Global Energy Studies in London.
      >
      > Just how low prices could go as a result of increased Iraqi
      > production
      > is unclear. Some analysts have predicted that oil could plummet
      > from its
      > current level of about $30 per barrel -- a price that includes a $5
      > "war
      > premium" caused by short-term jitters -- to as low as the level of
      > late
      > 1998 and early 1999, when it briefly hit $10 per barrel.
      >
      > For domestic oil producers, however, such a collapse could be
      > unwelcome.
      >
      > "I don't think it's really in the interest of the United States to
      > have
      > OPEC disintegrate and have a crash in oil prices," Zainy said. "The
      >
      > United States is a large (oil) producer; there are interest groups,
      > oil
      > corporations and independent oil producers that want a reasonable
      > price
      > level."
      >
      > The Bush administration and U.S. oil firms have stayed quiet on the
      >
      > subject of Iraqi oil, perhaps leery of accusations that an attack
      > on
      > Iraq is motivated by U.S. desires to have greater control of world
      > oil.
      > A spokesman for oil giant Chevron-Texaco, based in San Francisco,
      > declined to comment whether the company is interested in postwar
      > Iraq,
      > saying the issue is "too speculative."
      >
      > The Iraqi government has taken the propaganda bull by the horns,
      > accusing Washington of waging an imperialist grab for oil.
      >
      > "The U.S. administration wants to destroy Iraq in order to control
      > the
      > Middle East oil, and consequently control the politics as well as
      > the
      > oil and economic policies of the whole world," said a letter from
      > Hussein read to the U.N. General Assembly on Sept. 19.
      >
      > Some domestic U.S. critics, while reluctant to appear sympathetic
      > to
      > Hussein, partially echo his claims.
      >
      > "The administration doesn't want oil to be part of the war
      > discussion
      > because it undercuts the reasoning that the rush to war is because
      > of an
      > imminent (Iraqi) military threat," Michael Klare, professor of
      > peace and
      > world security studies at Hampshire College in Amherst, Mass., and
      > author of "Global Petro-Politics," wrote in the March issue of
      > Current
      > History magazine.
      >
      > "If the real motives were made clear -- that this is a grab for oil
      > and
      > an attempt to break the back of OPEC -- it would make our motives
      > look
      > more predatory than exemplary."
      >
      > The oil card is clearly a factor in the current tug-of-war between
      > Baghdad, Washington and key members of the U.N. Security Council
      > that
      > oppose the Bush administration's push for a military move on Iraq.
      > In
      > recent years, seeking to curry favor, Hussein has given huge
      > contracts
      > to oil firms from France, Russia and China, which all have veto
      > power in
      > the Security Council.
      >
      > The French oil giant TotalFinaElf has the largest position in Iraq,
      > with
      > exclusive negotiating rights to develop Majnoon, a field near the
      > Iranian border with estimated reserves of 10 billion barrels.
      > Moscow has
      > a $3.5 billion, 23-year agreement for several huge Iraqi fields
      > that
      > gives a lead position to a Russian oil consortium led by LukOil.
      >
      > While that may partly explain those countries' reluctance to sign
      > on to
      >
      === message truncated ===

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