Big Oil's 'Secret' Out Of Iraq's Closet

By Pepe Escobar
July 4, 2008
Courtesy Of Asia Times Online

NEW YORK - It is not about the "war on terror". It is not about weapons of mass destruction. It is not about "freedom and democracy to the Iraqi people", or to the "Afghan people". It is not about "Islamofascism". It is not about a Pentagon-coined "arc of instability" from the Middle East to Central Asia. New evidence shows once again both George W Bush administration wars - in Afghanistan and Iraq - above all are about oil and gas.

Those were the days - up to a few days ago, actually - when the fateful words "war" and "oil" would never have been aligned in the same sentence anywhere in US corporate media; the days when former defense secretary and Pentagon supremo Donald Rumsfeld insisted Iraq had "literally nothing to do with oil".

But now the US and European Big Oil majors that controlled the Iraqi oil industry up to the 1972 nationalization - today represented by Exxon Mobil, Shell, BP, Total and Chevron - seem to be back with a vengeance. Thus the New York Times, for instance, can redeem itself from printing Ahmad Chalabi-fed weapons-of-mass-destruction nonsense on its front page for months and actually engage in news that's fit to print.

This past Monday, the paper reported that "a group of American advisers led by a small State Department team played an integral part in drawing up contracts between the Iraqi government and five major Western oil companies to develop some of the largest fields in Iraq".

The bland language may be misleading. This is no less than the first step in the de facto de-nationalization of the Iraqi oil industry - Vice President Dick Cheney's wet dream.

As James Paul, director of the Global Policy Forum, has summarized it, this is all about:

... a new round of immensely profitable oil deals ... announced by Iraqi Oil Minister Sharistani, in which giants like Exxon Mobil can nail down long-term contracts and take away a large share of the oil from several key operating fields, like the massive Rumaila and West Qurna, some of the world's largest.

Oil can be produced in these fields for about one dollar a barrel, while its value on world markets is now around US$140. With hundreds of millions of dollars of profits at stake - and while the US occupation remains in full force - the oil giants are making their move, seeking to bypass opposition in the Iraqi parliament and ignoring suspicion and anger among the Iraqi public. With world oil supplies visibly running short and oil prices skyrocketing, this is a desperate gamble to control some of the world's largest and most lucrative fields, at huge human and environmental cost.

Meanwhile in Washington, no collective breath is being held, as it's extremely unlikely the supine US Congress will be looking closer at whether the Bush administration is bypassing the Biden amendment, which prohibits the use of US funds to "exercise United States control over the oil infrastructure or oil resources of Iraq". There's too much money to be made.

Big Oil Hardball:

Hussein al-Shahristani, the Iraqi oil minister, has always been a huge cheerleader of Big Oil taking over the Iraq oil industry. He dreams of Iraq as the world's second - or at least third-biggest - oil producer, competing with Saudi Arabia and Russia. To get there he is frantically selling out, trying to get voracious, predatory production sharing agreements (PSAs) over the heads of the Iraqi parliament and even harassing Iraqi oil unions.

At this early stage it's still about TSAs (technical support agreements); these are simple consultancy contracts to help Iraq raise its oil production by 500,000 barrels a day, not long-term contracts to develop juicy oil and gas fields.

But oops! Iraqis have not been fooled by the smoke and mirrors - nor by Big Oil hardball. At a press conference in Baghdad on Monday, Shahristani had to admit, "We did not finalize any agreement ... because they refused to offer consultancy based on fees, as they wanted a share of the oil." Big Oil, of course, wants the "Big Prize" (copyright Cheney).

What Cheney and Big Oil really want is to wallow in the extra-profitable 30-year PSAs once the new, International Monetary Fund-redacted Iraqi oil law is forced through the gorges of the Iraqi parliament, sealing a major US-European takeover - the whole thing, of course, protected by a Status of Forces Agreement with its 58 US military bases, total control of Iraqi airspace, total legal immunity for US soldiers and the right for the Pentagon to turn Iraq upside down without even asking the hosts.

And make no mistake, that's what the US power elite always wanted.

Greg Muttit, co-director of the London-based oil industry research group Platform, explains that what's at stake at the current stage are "nine-year risk service contracts for six oilfields"; these are "halfway between TSAs and PSAs". Bids are due by March 2009, with signing in June 2009. As for the technical service contracts for five of the same oilfields, these are "no-bid contracts whose terms were dictated by the oil companies themselves". In other words: Big Oil is telling the Iraqi government what it wants.

And here's the catch. Muttit says, "The tendering of these fields is a big policy change, as producing fields were supposed to be developed by the Iraq National Oil Company [INOC], with only new fields allocated to foreign oil companies." Big Oil, though, wants the whole cake. INOC gets only a shabby 25% stake. Muttit makes an enlightening comparison with Libya, "where the national oil company gets around 80%, which is much more normal for fields of this size".

Meanwhile, In Central Asia ...

Bush/Cheney, unfazed by their own regime's death throes - and following what was already official policy under former present Bill Clinton - now are also poised to have one more crack at the New Great Game in Central Asia, trying to thwart regional energy supremacy by both Russia and Iran.

Last April, Afghanistan, Turkmenistan, Pakistan and India signed a Gas Pipeline Framework Agreement, deciding - not for the first time - to build the $7.6 billion TAP (now TAPI) pipeline that would deliver natural gas from Turkmenistan to Pakistan and probably India, cutting right through the heart of Afghanistan's Kandahar province, where the neo-Taliban are merrily running rings around the forces of the North Atlantic Treaty Organization.

Construction should start in 2010, with gas being supplied by 2015. The project is backed by the Manila-based Asian Development Bank. The government of Afghan President Hamid Karzai, which cannot even provide security for a few streets in central Kabul, has engaged in Hollywood-style suspension of disbelief by assuring unsuspecting customers it will not only get rid of millions of land mines blocking TAPI's route, it will get rid of the Taliban themselves.

Inevitably, US Assistant Secretary of State Richard Boucher weighed in, saying the US has a "fundamental strategic interest" in Afghanistan, without making a single reference to the words "oil" or "gas". In real life, with this move Bush/Cheney believe they can block the $7.5 billion Iran-Pakistan-India (IPI) pipeline, also known as the "peace" pipeline. Fat chance. The three countries are all on board and the pipeline, delivering Iranian gas to South Asia, is a go.

This new US adventure has also sent a frantic red alert right to the core of the Canadian government, which is now contemplating the geopolitical nightmare of having its troops, alongside NATO's, protecting a fragile pipeline in a war zone. The conservatives in power in Canada have committed to keep troops in Afghanistan at least until 2011.

The Canadian Center for Policy Alternatives released a report, A Pipeline Through a Troubled Land: Afghanistan, Canada and the New Great Energy Game, written by John Foster, energy economist and former lead economist of PetroCanada, depicting TAPI as turning Afghanistan into "an energy bridge" between Central and South Asia. But Foster is very worried "the quest for 'energy security' risks drawing Canada unwittingly into a new Great Energy Game".

Were investors, perhaps nursed by Afghan opium, to be delirious enough to build such a pipeline - and that's a monumental if - Afghanistan would collect a mere $160 million a year in transit fees. Well, that's maybe not so grim considering it's the equivalent of 50% of Karzai's current annual revenue. The Taliban would love to get a piece of the action.

Forget about all that old 2001 "bringing freedom to Afghan women" rhetoric. TAP's roller-coaster history goes back to the mid-1990s Clinton era, when the Taliban were wined and dined by California-based Unocal - and the Clinton machine. Unocal beat the competition, led by Argentina's Bridas. The negotiations broke down because of money - those pesky transit fees. At the Group of Eight summit in Naples in July 2001 it was decided the US would take out the Taliban by October; September 11, 2001, accelerated the schedule by a fraction.

One of the first actual fruits of the US bombing of Afghanistan in 2001 was that in December, Karzai, Pakistan's President Pervez Musharraf and Turkmenistan's wacky Nyazov (now dead) signed an agreement committing themselves to build TAP (by then known as the Trans-Afghan Pipeline). The Russians decided to wait for their counterpunch, and delivered it in style in September 2006.

Gazprom accepted a 40% price increase demanded by Nyazov for his gas. In return, the Russians got priceless gifts: control of all of Turkmenistan's gas surplus up to 2009; a preference for Russia to tap the new Yolotan gas fields; and Turkmenistan bowing out of any Trans-Caspian pipeline project. Nyazov pledged to supply all his country's gas to Russia.

Thus, dead on arrival, lay TAP, the (invisible) star of the "good" Afghan war, as Democratic senator and presidential hopeful Barack Obama now sees it. Washington's plan has always been to seduce Nyazov to provide Turkmenistan gas to the Baku-Tblisi-Ceyhan (BTC) pipeline, and then to TAP. This was part of a US grand strategy of a "Greater Central Asia" centered on Afghanistan and India.

Bush/Cheney will never give up. But India will go ahead with the Iranian pipeline. And Turkmenistan is selling all its surplus gas to Russia. Who needs a $7.6 billion, 1,600-kilometer steel serpent in a war zone?

It ain't over till the fat (oil) lady sings. But if the Bush administration "vision" of a perpetual Iraqi puppet regime, with its oil wealth confiscated and under the imperial boot, takes hold, alongside the Taliban having a long pipeline to play with in Afghanistan, the least one can expect is a lot more blood on the tracks.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge.

He may be reached at pepeasia@yahoo.com .

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