Big Oil grab at Iraq


This video from the USA is called Hightower Download: Why We’re in Iraq.

From Najad Abdi in Australia:

Iraq: the (black) gold rush

Four years ago, I walked through Melbourne’s CBD holding a placard that read: “No blood for oil”.

I was an idealistic university student, intent on letting my government know that it’s not okay to launch an invasion in pursuit of so-called “black gold” in a country that was no threat to mine.

Half-a-million deaths later, that black gold will soon be flowing quickly.

The Iraqi government has recently leaked the latest draft of its Iraqi Oil and Gas (Hydrocarbon) Law, set to be passed by the Iraqi parliament in July.

A previous draft was approved by Prime Minister Nuri al Maliki’s cabinet in February.

The law, if passed, will take the majority of Iraq’s oil reserves out of the hands of the Iraqi government and open them to international oil companies for a generation or more, which is just as big business wants it.

As far back as March 2001, US Vice-President Dick Cheney’s National Energy Policy Development Group, which included executives of the US’s largest companies, recommended that the US government support initiatives by Middle Eastern countries “to open up areas of their energy sectors to foreign investment”.

An invasion and a lot of political engineering by the Bush administration later, this is exactly what the proposed hydrocarbon law will achieve.

But it can be argued that it does so to the exclusive benefit of the oil companies and to the great detriment of Iraq’s economy, democracy and sovereignty.

What sets this law apart from other oil laws in the Gulf Co-operation Council is that international oil companies can now be offered some of the most corporate-friendly contracts in the world, including what are known as “production sharing agreements” (PSAs).

Oil law and bombing of Iraqi parliament: here.

Update 5 May 2007: here.

12 thoughts on “Big Oil grab at Iraq

  1. Posted by: “Corey” cpmondello@yahoo.com cpmondello
    Sun Apr 15, 2007 6:22 pm (PST)

    How to Get Out of Iraq

    Juan Cole
    posted April 9, 2007 (April 23, 2007 issue)
    http://www.thenation.com/doc/20070423/cole

    Both houses of Congress have now backed a timeline for withdrawal of US combat troops from Iraq in 2008, which George W. Bush has vowed to veto. He gives two major rationales for rejecting withdrawal. At times he has warned that Iraq could become an Al Qaeda stronghold, at others that “a contagion of violence could spill out across the country–and in time, the entire region could be drawn into the conflict.” These are bogeymen with which Bush has attempted to frighten the public. Regarding the first, Turkey, Jordan and Iran are not going to put up with an Al Qaeda stronghold on their borders; nor would Shiite and Kurdish Iraqis. Most Sunni Iraqis are relatively secular, and there are only an estimated 1,000 foreign jihadis in Iraq, who would be forced to return home if the Americans left.

    Bush’s ineptitude has made a regional proxy war a real possibility, so the question is how to avoid it. One Saudi official admitted that if the United States withdrew and Iraq’s Sunnis seemed in danger, Riyadh would likely intervene. Turkish Foreign Minister Abdullah Gul has threatened to invade if Iraq’s Kurds declare independence. And Iran would surely try to rescue Iraqi Shiites if they seemed on the verge of being massacred.

    But Bush is profoundly in error to think that continued US military occupation can forestall further warfare. Sunni Arabs perceive the Americans to have tortured them, destroyed several of their cities and to be keeping them under siege at the behest of the joint Shiite-Kurdish government of Prime Minister Nuri Kamal al-Maliki. American missteps have steadily driven more and more Sunnis to violence and the support of violence. The Pentagon’s own polling shows that between 2003 and 2006 the percentage of Sunni Arabs who thought attacking US troops was legitimate grew from 14 to more than 70.

    The US repression of Sunnis has allowed Shiites and Kurds to avoid compromise. The Sunnis in Parliament have demanded that the excesses of de-Baathification be reversed (thousands of Sunnis have been fired from jobs just because they belonged to the Baath Party). They have been rebuffed. Sunnis rejected the formation of a Shiite super-province in the south. Shiites nevertheless pushed it through Parliament. The Kurdish leadership has also dismissed Sunni objections to their plans to annex the oil-rich province of Kirkuk, which has a significant Arab population.

    The key to preventing an intensified civil war is US withdrawal from the equation so as to force the parties to an accommodation. Therefore, the United States should announce its intention to withdraw its military forces from Iraq, which will bring Sunnis to the negotiating table and put pressure on Kurds and Shiites to seek a compromise with them. But a simple US departure would not be enough; the civil war must be negotiated to a settlement, on the model of the conflicts in Northern Ireland and Lebanon.

    Talks require a negotiating partner. The first step in Iraq must therefore be holding provincial elections. In the first and only such elections, held in January 2005, the Sunni Arab parties declined to participate. Provincial governments in Sunni-majority provinces are thus uniformly unrepresentative, and sometimes in the hands of fundamentalist Shiites, as in Diyala. A newly elected provincial Sunni Arab political class could stand in for the guerrilla groups in talks, just as Sinn Fein, the political wing of the Irish Republican Army, did in Northern Ireland.

    The United States took a step in the right direction by attending the March Baghdad summit of Iraq’s neighbors and speaking directly to Iran and Syria about Iraqi security. Now the United States and Britain should work with the United Nations or the Organization of the Islamic Conference (OIC) to call a six-plus-two meeting on the model of the generally successful December 2001 Bonn conference on Afghanistan. The Iraqi government, including the president and both vice presidents, would meet directly with the foreign ministers of Iran, Turkey, Syria, Jordan, Saudi Arabia and Kuwait to discuss the ways regional actors could help end the war as the United States and Britain prepare to depart. Unlike the Baghdad summit, this conference would have to issue a formal set of plans and commitments. Recent Saudi consultations with Iranian leaders should be extended.

    The Saudi government should then be invited to reprise the role it played in brokering an end to the Lebanese civil war at Taif in 1989, at which communal leaders hammered out a new national compact, which involved political power-sharing and demobilization of most militias. At Taif II, the elected provincial governors of Iraq and leaders of the major parliamentary blocs should be brought together. Along with the US and British ambassadors to Baghdad and representatives of the UN and the OIC, observers from Iraq’s six neighbors should also be there.

    Saudi Arabia’s King Abdullah has credibility with Iraq’s Sunnis, especially now that he has denounced the US occupation as illegitimate. They could trust his representations, which would include Saudi development aid in places like Anbar province. Since the Sunnis are the main drivers of violence in Iraq, it is they who must be mollified, bribed, cajoled and threatened into a settlement. The Shiites will have to demobilize the Mahdi Army and Badr Organization as well, and Iran will have to commit to working with the Maliki government to make that happen. A UN peacekeeping force, perhaps with the OIC (where Malaysia recently proffered troops), would be part of the solution.

    On the basis of a settlement at Taif II, the US military should then negotiate with provincial authorities a phased withdrawal from the Sunni Arab provinces. The Sunnis will have to understand that this departure is a double-edged sword, since if they continued their guerrilla war, the United States could not protect them from Kurdish or Shiite reprisals. Any UN or OIC presence would be for peacekeeping and could not be depended on for active peace-enforcing. The rewards from neighbors promised at Taif II should be granted in a phased fashion and made dependent on good-faith follow-through by Iraqi leaders.

    From all this the Sunni Arabs would get an end to the US occupation–among their main demands–as well as an end to de-Baathification and political marginalization. They would have an important place in the new order and be guaranteed their fair share of the national wealth. Shiites and Kurds would get an end to a debilitating civil war, even if they have to give up some of their maximal demands. The neighbors would avoid a reprise of the destructive Iran-Iraq War of the 1980s, which killed perhaps a million people and deeply damaged regional economies. And by ending its occupation, the United States would go a long way toward repairing its relations with the Arab and Muslim world and thus eliminate one of Al Qaeda’s chief recruiting tools. A withdrawal is risky, but on the evidence so far, for the US military to remain in Iraq is a sure recipe for disaster.

    Like

  2. Mystery of the Missing Meters: Accounting for Iraq’s Oil Revenue
    Posted by: “Corey” cpmondello@yahoo.com cpmondello
    Sun Apr 22, 2007 7:50 pm (PST)

    Mystery of the Missing Meters: Accounting for Iraq’s Oil Revenue

    Pratap Chatterjee
    March 22nd, 2007
    http://www.corpwatch.org/article.php?id=14427

    How much crude oil is Iraq actually exporting? Nobody really knows how much is potentially being stolen by corrupt officials because the contractors in charge of fixing the meters have yet to calibrate them, four years after the invasion.

    This is the second in a series on the failure of reconstruction in Iraq. The first article, on healthcare in Iraq, may be read here: (1)

    To contact the author, e-mail pratap@corpwatch.org

    ————

    The line of ships at the Al Basra Oil Terminal (ABOT) stretches south to the horizon, patiently waiting in the searing heat of the Northern Arabian Gulf as four giant supertankers load up. Close by, two more tankers fill up at the smaller Khawr Al Amaya Oil Terminal (KAAOT). Guarding both terminals are dozens of heavily-armed U.S. Navy troops and Iraqi Marines who live on the platforms.

    These two offshore terminals, a maze of pipes and precarious metal walkways, deliver some 1.6 million barrels of crude oil, at least 85 percent of Iraq’s output, to buyers from all over the world. If the southern oil fields are the heart of Iraq’s economy, its main arteries are three 40-plus inch pipelines that stretch some 52 miles from Iraq’s wells to the ports.

    Heavily armed soldiers spend their days at the oil terminals scanning the horizon looking for suicide bombers and stray fishing dhows (boats). Meanwhile, right under their noses, smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT – has not worked since the March 2003 U.S. invasion of Iraq.

    Officials blame the four-year delay in repairing the relatively simple system on “security problems.” Others point to the failed efforts of the two U.S. companies hired to repair the southern oil fields, fix the two terminals, and the meters: Halliburton (2) – The biggest windfall in the invasion of Iraq has most certainly gone to the oil services and logistics company Halliburton ) of Houston, Texas, and Parsons of Pasadena, California.

    The Special Inspector General for Iraq Reconstruction (SIGIR) is scheduled to publish a report this spring that is expected criticize the companies’ failure to complete the work.

    Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. “Iraq is the victim of the biggest robbery of its oil production in modern history,” blazed a March 2006 headline in Azzaman, Iraq’s most widely read newspaper. A May 2006 study of oil production and export figures by Platt’s Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for.

    “Iraqi oil is regularly smuggled out of the country in many different ways,” an oil merchant in Amman told the Nation (U.S.) magazine last month. “Emir al-Hakim [the head of the Supreme Council of the Islamic Revolution in Iraq] is spending all his time in Basra selling oil as if it were his own. People there call him Uday al-Hakim, meaning he is behaving the same way Uday Saddam Hussein was acting. Other merchants like myself have to work through him with the big deals or smuggle small quantities on our own. The petroleum is now divided among political parties in power.”

    The Resource Curse

    The smuggling and black market operations bear striking parallels to Saddam Hussein’s tactics for circumventing the UN embargo. Saddam was accused of selling some $5.7 billion worth of petroleum products on the black market over the six years of the Oil-for-Food program while United Nations inspectors turned a blind eye. Today, his successors stand accused of similar abuses.

    Iraq sits on 115 billion barrels of proven oil reserves, the third largest in the world (behind Saudi Arabia and Canada). From a society that once used its oil revenue to create a social welfare state that provided education, health care and social services, the country has plummeted into the ranks of the poorest countries of the world.

    Economists call this the “resource curse.” Those blessed with non-renewable resources often benefit the least, because a few wealthy people control the resources, or war prevents almost anyone from the benefiting.

    Iraq’s main revenue source – earnings from the export sales of petroleum, petroleum products and natural gas – is currently managed by the Development Fund for Iraq. DFI’s May 21, 2003 document, United Nations Security Council Resolution 1483, assigns this money to benefit the Iraqi people. The resolution replaces the previous United Nations-run Oil-for-Food scheme that lasted from 1997 until the March 2003 invasion.

    Almost four years after the DFI was created, officially logged crude sales have generated more than $80 billion. The U.S.-led Coalition Provisional Authority (CPA) managed the DFI from the immediate aftermath of Saddam’s removal until June 28, 2004, when the CPA was disbanded. During those 14 months, the CPA spent $19.6 billion of Iraq’s DFI funds. The three succeeding governments have been officially in charge of the DFI revenues, although the influence of the U.S. military and political advisors has remained significant throughout. In the 32 months after the CPA left, the three governments spent $47 billion more.

    Halliburton & Parsons

    U.S. contractors have played a key role in the repair and upgrading of Iraq’s oil infrastructure and expected the industry to pay for reconstruction. In January 2004, under project Restore Iraqi Oil II (RIO II), the Bush administration contracted with Halliburton to fix southern Iraq’s oil fields and with Parsons to handle the northern fields. The two companies were supposed to be supervised by yet another contractor, New Jersey-based Foster Wheeler. (The first RIO contract was the infamous, secret no-bid contract issued to Halliburton before the invasion of Iraq. Although RIO II was competitively bid, Sheryl Tappan, a former Bechtel employee wrote a book criticizing the award as unfair.)

    Halliburton and Parsons have long histories in Iraq, going back more than 40 years. Brown & Root, which is now part of Halliburton , began work in Iraq in 1961, while Parsons dipped into Iraq’s oil sector in the 1950s. Foster Wheeler dates its work in Iraq to the 1930s.

    These companies have a lot of experience at the terminals where the black market now thrives. Indeed, Halliburton built the ABOT terminal, then known as Mina al-Bakr, in the early1970s. After it was damaged during the Iran-Iraq war in the 1980s, Halliburton repaired the terminal, before it was bombed yet again during the 1991 Persian Gulf War.

    The Khor al-Amaya oil terminal also saw a similar cycle of destruction and rebuilding. Built with Halliburton ‘s help in 1973, it was heavily damaged by Iranian commandos during the Iran-Iraq war, then again during Operation Desert Storm in 1991, and most recently in May 2006 by a major fire that destroyed 70 percent of its facilities. During the sanctions, Ingersoll Dresser Pump Company, a Halliburton subsidiary, had a secret contract to sell Iraq spare parts, compressors, and firefighting equipment for the refurbishment.

    (Halliburton also a long history near the Turkish port of Ceyhan, from where Iraq sells oil produced at Kirkuk in northern Iraq. Halliburton runs the nearby U.S. military base at Incirlik, which was the staging ground for Operation Northern Watch that provided air protection for the Kurds during the 1990s.)

    Measuring the Oil

    With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals.

    The kinds of meters they were supposed to repair or replace at ABOT are commonly found at hundreds of similar sites around the world. Because they are custom-built, shipped, then assembled and calibrated on site, the process can take up to a year. But the probelm has persisted for four years.

    After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields. (The northern oil fields in Kirkuk, which supply the Beiji refinery in Iraq and export crude to the Turkish port of Adana, has reliable metering but little oil to measure since insurgent attacks largely shut down the facility.)

    Lieutenant Aaron Bergman, the U.S. Navy officer in charge of Mobile Security Squadron 7 at ABOT, says export authorities have “guesstimated” how much is being sold, with a back-of-the-envelope formula: Every centimeter a tanker lowers into the water equals 6,000 barrels of oil cargo.

    “So you can imagine,” he said earlier this month to Stars & Stripes, a newspaper serving the U.S. military, the numbers could be off, “A couple of inches could equal 180,000 barrels of fuel.”

    “I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq,” Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station.

    Neither US officials nor contractors have provided good reasons why, four years into the US occupation, the meters have not been calibrated, repaired, or replaced. One excuse is that the job of calibration requires special devices to assess the current meters and security issues make importing these devises problematic. Yet that and other security-related explanations fall apart given that the oil terminals are under 24 hour high security guard, lie more than 50 miles off-shore, and are accessible only by helicopter or ship.

    There are two possible explanations: that the project has been delayed by bureaucracy or that vested interests benefiting from the lack of oil metering (such as smugglers or corrupt officials) have prevented the project from moving forward.

    Skyrocketing Costs

    The RIO II project, which includes the meter repair work, has come under much criticism, although specific details are scarce.

    For example, the Bush administration issued Halliburton the RIO II order in January 2004 and gave detailed task orders in June. But despite not starting work until November 2004, the company charged the government millions of dollars for engineers who sat idle. Halliburton’s $296 million bill included at least 55 percent overhead. (In an estimate due later this month, SIGIR may predicts even higher overhead costs.)

    A Parsons joint venture (with Worley of Australia), was also issued a contract in January 2004, given detailed task orders in June, and started work in July 2004. It has also been accused of charging high overhead costs while idle, although not as much as Halliburton . SIGIR estimate pegs its overhead at 43 percent.

    In addition, in a series of scathing internal reports uncovered by Congressman Henry Waxman, supervisors Foster Wheeler criticized Halliburton ‘s cost. The U.S. Army Corps of Engineers issued a “cure” notice on January 29, 2005, ordering Halliburton to do a better job or else. After Halliburton did improve its cost controls, the military turned over the southern oil work to Parsons in mid 2005.

    When Parsons took over the contracts, two years after the invasion, it hired a Saudi Arabian sub-contractor, Alaa for Industry, to help repair or replace the meters.

    The turbine meters were shipped to Kuwait for repairs but do not appear to have been fixed in a timely manner, although some have been fixed and re-installed earlier this year. Unofficial sources suggest that the Kuwaiti bureaucracy delayed the repair work: “The real reason for the hindrance to work at the ABOT is because Kuwait has a vested interest in minimizing Iraqi oil exports,” an anonymous source who worked on the project told CorpWatch. His claim could not be verified.

    In mid-September 2006, the Iraqi oil ministry abruptly announced that it would pull the plug on the oil metering project, making future monitoring even less certain.

    Asim Jihad, the oil ministry spokesman, told Al Hayat: “The American company had failed in keeping its promise to finish installing these meters; also, refusing to reveal the exact cost, except for saying that it is executing it within the American grant to Iraq and the sum of that grant is unknown to us too. This relieves the ministry from its obligation to it. Besides, many international companies presented good offers to implement the project in a record time due to its importance.”

    The oil ministry then invited British Petroleum and Shell to plan a comprehensive national metering project that would cover not only the oil terminals, but also the productions wells and the even the refineries.

    A SIGIR team traveled to ABOT in November 2006 to check on progress. Its unpublished report suggests that the work was less than half complete.

    Suddenly, in December 2006, a high-level U.S. team traveled out to ABOT to inspect the meters. In a little-noticed announcement issued on a Saturday just before Christmas, John Sickman, the resident oil expert at the U.S. Embassy in Baghdad, said the meters had been fixed and were working fine.

    “The measurement using the existing turbine meters and displacement meters at the offshore terminal at ABOT is transparent and the measurement devices are more than adequate,” Sickman was quoted in the press release. “Furthermore, the crude oil vessels have measurement and quality samplers.”

    Indeed this is how the Dutch company Saybolt measured oil export under the United Nations Oil for Food program. The problem even today, according to experts consulted by CorpWatch, is that the meters have yet to be calibrated, so the data are basically useless.

    Even if the meters are working properly, smuggling could still occur. “It’s easy to steal crude if you knew what you were doing,” Don Deaver, a petroleum metering expert who worked for Exxon for 33 years, told CorpWatch. “If you meaure too low or too high, someone will lose and some will one gain. It’s why you need professionals who understand how the meters work to make sure that nothing is being lost or stolen.”

    U.S. government officials claim that little is being stolen. SGS (a British consultancy) “is providing independent third party loading certifications onsite for the customers. This, coupled with the recent installation of ultrasonic meter provides more than redundant measurement capability,” said Sickman in December.

    Days after the press release, in early January 2007, Parsons began work on the meters under a $57.8 million U.S. government-funded contract supervised by Major Dale Winger of the Joint Contracting Command in Basra. Almost as soon as work started, Winger was replaced by Lieutenant Commander Brian Schorn. When CorpWatch reached Schorn, he said he was not up to speed on what work had been done, and referred questions to his “front-office” in Baghdad at the U.S. Army Corps of Engineers.

    Parsons Iraq Joint Venture spokesman Don Lassus also refused to comment to CorpWatch. The contract with the military does not permit the release of “any unclassified information,” he said, without prior approval of the military.

    Today no government officials have been able to establish conclusively whether oil is being smuggled or not. Even the future of the oil metering remains unclear. The latest report issued by SIGIR in January 2007 notes that repair and rehabilitation work at ABOT is scheduled to be finished by May 2007, but “it is unclear whether this project will be completed because of de-obligation requirements” that is to say that the funding could be cut.

    NOTES;
    (1) http://www.corpwatch.org/article.php?id=14290
    (2) The biggest windfall in the invasion of Iraq has most certainly gone to the oil services and logistics company Halliburton.
    http://www.corpwatch.org/article.php?list=type&type=15&all=1

    Like

  3. Thanks for reacting, Per Kurowski. In itself, the point in the video that concentrating Iraqi oil wealth in the hands of multinational corporations undermines democracy, is correct. However, the point of Bush and his fellow invaders was never in fact (as apart from in propaganda) to bring democracy to Iraq, but rather to concentrate Iraqi oil wealth in the hands of multinational corporations, as in the proposed oil law.

    Like

  4. Pingback: US journalist regrets his Iraq war support | Dear Kitty. Some blog

  5. Pingback: Tony Blair’s South Korea-Iraq oil scandal | Dear Kitty. Some blog

  6. Pingback: Green Zone film, not critical enough of Iraq war | Dear Kitty. Some blog

  7. Pingback: Schröder says Bush lies about Iraq | Dear Kitty. Some blog

  8. Pingback: BAE, corrupt Iraq war profiteers | Dear Kitty. Some blog

  9. Pingback: Iraqi anti occupation demonstrations | Dear Kitty. Some blog

  10. Pingback: Virginia: worst school massacre ever in the USA | Dear Kitty. Some blog

  11. Pingback: The looting of Iraq’s museums, helped by the US Bush administration | Dear Kitty. Some blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.