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    Middle East
     May 9, 2007
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US eyes still on the Iraqi prize
By Michael Schwartz

The struggle over Iraqi oil has been going on for a long, long time. One could date it to 1980 when president Jimmy Carter - before his Habitat for Humanity days - declared that Persian Gulf oil was "vital" to US national interests. So vital was it, he announced, that the United States would use "any means necessary, including military force", to sustain access to it.

Soon afterward, Carter announced the creation of a Rapid Deployment Joint Task Force, a new military command structure

that would eventually develop into US Central Command (Centcom) and give future presidents the ability to intervene relatively quickly and massively in the region.

Or we could date it back to World War II, when British officials declared Middle Eastern oil "a vital prize for any power interested in world influence or domination" and US officials seconded the thought, calling it "a stupendous source of strategic power and one of the greatest material prizes in world history".

The date when the struggle for Iraqi oil began is less critical than our ability to trace the ever-growing willingness to use "any means necessary" to control such a "vital prize" into the present. We know, for example, that before and after he ascended to the US vice presidency, Dick Cheney has had his eye squarely on the prize. In 1999, for example, he told the Institute of Petroleum Engineers that when it came to satisfying the exploding demand for oil, "The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies."

The mysterious Energy Task Force he headed on taking office in 2001 eschewed conservation or developing alternative sources as the main response to any impending energy crisis, preferring instead to make the Middle East "a primary focus of US international energy policy". As part of this focus, the task force recommended that the administration put its energy, so to speak, into persuading Middle Eastern countries "to open up areas of their energy sectors to foreign investment" - in other words, into a policy of reversing 25 years of state control over the petroleum industry in the region.

The Energy Task Force set about planning how to accomplish this historic reversal. We know, for instance, that it scrutinized a detailed map of Iraq's oilfields, together with the (non-US) oil companies scheduled to develop them (once the United Nations sanctions still in place on Saddam Hussein's regime were lifted). It then worked jointly with the administration's national-security team to find a compatible combination of military and economic policies that might inject US power into this equation.

According to Jane Mayer of The New Yorker, the National Security Council directed its staff "to cooperate fully with the Energy Task Force as it considered the 'melding' of two seemingly unrelated areas of policy: 'the review of operational policies towards rogue states', such as Iraq, and 'actions regarding the capture of new and existing oil and gas fields'".

While we cannot be sure that this planning itself was instrumental in setting the US on a course toward invading Iraq, we can be sure that plenty of energy was being expended in Washington planning for the disposition of Iraq's massive oil reserves once that invasion was successfully executed.

In 2002, just a year after Cheney's task force completed its work, and before the US had officially decided to invade Iraq, the State Department "established a working group on oil and energy", as part of its "Future of Iraq" project. It brought together influential Iraqi exiles, US government officials and international consultants. Later, several Iraqi members of the group became part of the Iraqi government. The result of the project's work was a "draft framework for Iraq's oil policy" that would form the foundation for the energy policy now being considered by the Iraqi Parliament.

The prize
The specific prize in Iraq is certainly worthy of almost any kind of preoccupation. Indeed, Iraq could some day become the most important source of petrochemical energy on the planet.

According to the US Energy Information Administration, Iraq possesses 115 billion barrels of proven oil reserves, third-largest in the world (after Saudi Arabia and Iran). About two-thirds of its known oil reserves are in Shi'ite southern Iraq, and the final third in Kurdish northern Iraq. However, in energy terms, only about 10% of the country has actually been explored, and there is good reason to believe that modern methods - which have not been applied since the beginning of the Iran-Iraq War in 1980 - might well uncover magnitudes more oil.

Estimates of the possible new finds offered by officials of various interested governments range from 45 billion to 214 billion additional barrels, depending on the source; but some non-governmental experts see the final treasure exceeding 400 billion barrels. If the last figure is correct, then Iraq would likely become the world's largest source of oil.

For the most part, Iraq's petroleum has "attractive chemical properties", that is, its oil is considered to be of very high quality. Moreover, both its current fields and many of the potential new discoveries would be extremely cheap to access, if security weren't such a problem today in Iraq. James Paul of the international policy-monitoring group the Global Policy Forum, offers this positive view:
According to Oil and Gas Journal, Western oil companies estimate that they can produce a barrel of Iraqi oil for less than $1.50 and possibly as little as $1 ... This is similar to production costs in Saudi Arabia and lower than virtually any other country.
With the price of a barrel of crude oil today above $64, the potential for profits is stupendous, and the only question is: Who will pocket them - the oil companies or the Iraqi government - and, if the former, which oil companies will those be? It is not inconceivable that any major oil companies able to claim a large portion of the Iraqi oil spoils could double, triple or even quintuple their already gigantic global profits.

Under Saddam Hussein, Iraqi oil never fulfilled the potential of even its proven oilfields. A modest goal for the country's oil industry would have been producing 3.5 million barrels per day, but the temporary disruptions caused by the Iran-Iraq War and the more permanent ones caused by UN sanctions imposed after the Gulf War in 1991 severely limited production. From the late 1990s until the US invasion in 2003, Iraq averaged about 2.5 million barrels per day.

Knowledge of this level of underproduction was certainly one factor in deputy secretary of defense Paul Wolfowitz' prewar prediction that the administration's invasion and occupation of Iraq would pay for itself; he hoped for a quick postwar increase in production to 3.5 million barrels per day or, at the $30 per barrel price of oil at that time, close to $40 billion per year in revenues.

An expected expansion in production levels (once the oil giants were brought into the mix) to perhaps 6.5 million barrels, through the development of new oilfields or more efficient exploitation of existing fields, had the potential to more than cover the expected US short-term military costs and leave the new Iraqi government flush as well.

This, then, was the allure of melding energy policy and military policy, as Cheney's energy group and allied administration officials envisaged it.

The initial campaign to capture Iraqi oil
With all this history, the particular way the US sprang into action 

Continued 1 2 3 4 

Selling Iraq by the barrel (Mar 2, '07)

US's Iraq oil grab is a done deal (Feb 28, '07)

Big Oil in, stability out under new Iraqi law (Feb 28, '07)

Surging toward the holy oil grail (Jan 12, '07)


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