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Mazin Qumsiyeh: Money, Big Oil & Iraq

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    How much money will big oil companies make in Iraq, how much money and blood will US citizens lose? Mazin Qumsiyeh - qumsi001 @ hotmail.com Can those with
    Message 1 of 1 , Feb 1, 2007
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      How much money will big oil companies make in Iraq,
      how much money and blood will US citizens lose?
      Mazin Qumsiyeh - qumsi001 @ hotmail.com


      Can those with economic background or research skills give me a better
      picture of this issue. These are my rough calculations based on bits
      and pieces of information on oil production costs, royalties etc.

      According to a study by Prof R. Dobie Langenkamp (Director, National
      Energy-Environment Law and Policy Institute University of Tulsa
      College of Law):

      "Iraq has reserves of at least 112 billion barrels. The significance
      of this number is often overlooked. Imagine all the oil reserves in
      the U.S., the North Sea, China, the Caspian Sea, and West Africa all
      combined under one jurisdiction. This oil is not to be found under
      high seas in 1,000 feet of water or more, in arctic snows, in
      equatorial jungles or in third world conditions where men and
      material must be brought in from great distances. Iraq's oil is on
      land in a flat, temperate, geographically compact area and at a depth
      which is commonly drilled without difficulty. Iraq is not a third
      world country and possesses considerable experience and skill in
      petroleum development."(www.beg.utexas.edu/energyecon/documents/
      behind_the_gas_pump/Langenkamp_FullPaper.pdf)

      Iraqi oil production costs are the lowest anywhere but of course do
      not include security because that is picked up not by the oil
      companies but by US taxpayer funded; as one retired general put it,
      the US army has become corporate mercenaries paid by tax payers. So
      far we have spent $400 billion for securing Iraq and that is not
      counting billions more separate issues.

      Projects like the separately funded $600 million US "embassy": a large
      US city that will serve to house all the 8000 imperial employees of
      the US who will use it as a base not just to control/manage Iraq but
      be the epicenter of US power in West Asia. The cost of production in
      Iraq for oil companies is estimated at $1/barrel. But even if one
      doubles that to $2 and the current price of Iraq crude on the market
      is $52-60/barrel, this means that at a minimum there are $50 per
      barrel profit. It is not clear where this money has gone in the past
      nearly four years (roughly $150 billion in profit, perhaps congress
      will find the guts to investigate?) but I am more interested in a
      forward looking projections/understanding.

      The draft oil bill pushed by the US (and mentioned in Bush's speech)
      offers Big oil companies production rights for 20 years at a mere
      12.5% royalties to the Iraqi government
      http://www.time.com/time/world/article/0,8599,1576593,00.html) . The
      delay in approval is not about whether to accept the 12.5% (this was
      not negotiable) but about how to divvy up the 12.5% among the
      provinces (as Bush clearly pointed out)! The US imposed that number of
      12.5% based on deep see royalties on US oil companies in the Gulf of
      Mexico but this is a rip-off because:

      1) Deep see drilling costs about 20 times higher than surface drilling
      2) American and British oil companies pay significant local tax and
      incur significant other expenses (e.g.; on environmental issues0 that
      they do not have to do in Iraq.
      3) US law promotes sharing of US natural resources with US companies
      not foreign companies.

      OK so this leaves the oil companies with roughly $44/per barrel. But
      what about exploration costs you say: well much of Iraq oil is located
      in well designated and discovered areas and close to the surface, the
      cost would be minimal. But even if it triples the cost to $3 , that
      would still leave $43/barrel profit. OK say $40 to account for the
      $100-500 million executive pays of these companies/administration etc.
      At a minimum of 3 million barrels per day production, this is $120
      million per day profit or $43,800 million per year or $876 billion for
      the 20 years at a minimum (if no new field development happens). But
      this is assuming production remains as is. Iraq actually has reserves
      estimated at 120-300 billion barrels. Taking an intermediate/low
      level of 150 billion barrels and an extraction rate of 2/3rd means
      roughly 100 billion barrels total x $44/barrel profit, that means $4.4
      TRILLION. The bottom line is that it appears the Big oil companies are
      about to make between $1 to $4.4 trillion over the next 20 years if
      Bush succeeds in his plan (he says "win in Iraq"). If he fails, that
      money could be used for the Iraqi people AND the security for oil
      company profits would Corporate greed would not be watered by US and
      Iraqi blood and fertilized by our taxes. For those with backgrounds or
      research skills, I would love to have more information or corrections
      to this guestimation of the oil loot. Email me.

      Addendeum: the following link a brief history of Iraq oil policy under
      the leadership of Kassem before CIA asset Saddam Hussain tried to
      assainate him and later Baath party with Saddam being key succeeded in
      ousting him. http://www.globalpolicy.org/security/oil/5873nation.htm

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