Thursday, June 19, 2008

Political Science

I've linked to Jeff Huber's invaluable web site in the past (recently too) and will do so again, because he explains things SO well:

A first semester political science major at the most obscure community college in America can figure out that the less of its own oil an emerging nation burns, the more it can sell to finance its infrastructure and economic growth. Before said poli-sci major starts her sophomore year, she can piece together the strategic wisdom that says if you're the first Middle East oil nation to establish a functioning nuclear energy industry, you'll become a regional superpower.

And by the time she's picked up a full scholarship to finish her baccalaureate studies at Stanford, she'll realize that the Iran crisis has always been about nuclear energy, not nuclear weapons, because if Iran and its senior partners China and Russia can control when and how the world transitions from fossil fuel to the power of the sun, Dick and Dubya's big oil buddies will have to suck hind spigot on the global energy cash cow.

And what to my wondering eyes should appear, but THIS NYT headline & article:

Deals With Iraq Are Set to Bring Oil Giants Back

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production. ...

For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity.

While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world’s oil patch becomes off limits. Governments in countries like Bolivia and Venezuela are nationalizing their oil industries or seeking a larger share of the record profits for their national budgets.


Any Western oil official who comes to Iraq would require heavy security, exposing the companies to all the same logistical nightmares that have hampered previous attempts, often undertaken at huge cost, to rebuild Iraq’s oil infrastructure.

[So, looks like we'll need U.S. armed forces in Iraq for a LONG time now - MG]


Yet at today’s oil prices [apx $135 pb] , there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.


The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

[Because oil is worth a lot more than dollars]


... In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”

[This article leads me to speculate, that PERHAPS the American Invasion of Iraq was, after all, at least a little bit, about -- OIL]