Wednesday, January 18, 2012

Western Oil Firms Big Winners in Iraq War

Contributed by Sherwood Ross

Western oil producers have emerged as the big winners of the Iraq war.

“Prior to the 2003 invasion and occupation of Iraq US and other western oil companies were all but completely shut out of Iraq’s oil market,” industry analyst Antonia Juhasz told Al Jazeera wire service. “But thanks to the invasion and occupation, the companies are now back inside Iraq and producing oil there for the first time since being forced out of the country in 1973.”

“Western producers like BP, Exxon Mobil, and Shell are enjoying their
best access to Iraq’s southern oil fields since 1972,” Business Week
noted in its issue of March 4th of last year.  (1972 was the year
Saddam Hussein nationalized Iraq’s oil fields.)

Business Week quotes Andy Inglis, BP’s chief executive for exploration
and production as saying, “We see this as the beginning of a long-term
relationship with Iraq and will continue to look for further

Dr. Abdulhay Yahya Zalloum, an international oil consultant and
economist, agrees the western firms have won contracts despite “a lack
of transparency and clarity of vision regarding the legal issues.” The
Iraqi government “gave a little piece of the cake for China and some
of the other countries and companies to keep them silent.”

A group led by BP will receive $2 billion per year to develop Iraq’s
Rumalia field and a Shell-led group is to get $913 million per year.
An Exxon-led group is to get $1.6 billion per year, Bloomberg News
reports. Each calculation is based on the agreed-to per-barrel fee
times the maximum production level, Bloomberg explains.

David Bender, a Middle East analyst at Eurasia Group, Washington,
D.C., told Bloomberg, “Iraq is one of the most attractive oil markets
in the world. The international oil companies may feel that getting in
at the beginning improves their long-term prospects.”

The only area of Iraq where oil firms fare better than fee-for-service
work is in the northern Kurdish autonomous region(KRG) where
businesses including Norway’s DNO International ASA are pumping crude
under production-sharing agreements “not recognized by the central
government,” Bloomberg reports.

It also turns out Hunt Oil Co., of Dallas, Tex., clinched a separate
deal in Sept., 2007,  with Iraq Kurdistan Regional Government. Hunt
might not have won if its chief officer, Ray Hunt,  was not President
George W. Bush’s friend and a major fund-raiser. Some folks think,
according to a front page New York Times report July 3, 2008, the deal
“runs counter to American policy and undercut Iraq’s central
government.” Apparently, Bush didn’t think so. Baghdad reportedly is
furious over it.

Hunt got this free pass to explore Kurdistan’s oil riches in Sept.,
2007, when it inked an exploration pact likely to give the firm a
share of the boodle of any future gushers. “Hunt would be the first
U.S. company to sign such a deal,” a State Department official told
the New York Times. And according to reporter Jay Price of McClatchy
News Service, the Iraqi oil minister, speaking for Baghdad, “called
the Hunt deal illegal.”

A State Department cable dated Sept. 12, 2007, and made public by
Wikileaks, “detailed official warnings from the U.S. government that
the contract, regardless of lease location, is legally risky due to
unresolved land and oil disputes between Baghdad and the KRG---and
that such a contract could further amplify conflicts between the
central and regional governments,” wrote Ben Lando of the
authoritative “Iraq Oil Report” Aug. 25, 2011. Hunt seemingly would
not have to press Bush hard for the insider’s deal.

Juhasz says that ExxonMobil, BP, and Shell aggressively lobbied their
governments “to ensure that the invasion would result in an Iraq open
to foreign oil companies” and that “they succeeded.”

She added that the U.S. and western oil companies and their
governments has been lobbying for a new national Iraq Oil Law that
would largely privatize the oil market along the lines of the old
Production Sharing Agreements---although such PSA’s have been rejected
in most countries because they provide “far more benefits to the
foreign corporation than to the domestic government.” Hunt’s deal with
KRG was of the PSA sort.

“The public is against privatization,” Juhasz told al-Jazeera, “which
is one reason the (Iraqi Oil Law) has not passed. The contracts are
enacting a form of privatisation without public discourse and
essentially at the butt of a gun. These contracts have all been
awarded during a foreign military occupation with the largest
contracts going to companies from the foreign occupiers’ countries. It
seems that democracy and equity are the two largest losers in this oil

Note: the Obama regime “continues to pressure Baghdad to pass the Iraq
Oil Law” over the wishes of the majority of the Iraqi people. “Thus
far,” Juhasz said, “it has required a massive foreign military
invasion and occupation to grant the foreign oil companies the access
they have thus far garnered.”

Meanwhile, back at the pump, the boost in oil supplies has not reduced
the price of oil being extracted from American motorists. The laws of
supply and demand no longer appear to be working. According to
business writer John Egan of Technorati, the average price for a
gallon of gas last Feb. 26th climbed to $3.33, compared with $2.70 the
previous year. And wire service Agency France Presse(AFP) reports in
the Waynesville, Va., Augusta Free Press  that “Average U.S. gasoline
prices began 2012 just under $3.28 gal, the highest number ever to
mark the beginning of a year and the fifth straight weekly increase in

As for the profit-taking of the big oil firms, Egan on Feb. 26, 2011,
wrote: “While we’re paying more to fill up, the three largest publicly
traded oil companies based in the United States have been filling up
on profits. Those three companies – ExxonMobil, Chevron and
ConocoPhillips – collectively pulled in an eye-popping $58.3 billion
in profits in 2010, according to financial figures announced in
January 2011. Mind you, that’s profit – the amount of money that
companies pocket after covering their expenses.”

Gas prices reached the point last year that, according to “The
Washington Post” of last April 30th, President Obama “blasted oil
companies for enjoying gangbuster profits while pump prices surged to
nearly $4 a gallon this week, and he again urged Congress to end $4
billion a year in subsidies for the oil and gas industry.”

“When oil companies are making huge profits and you’re struggling at
the pump, and we’re scouring the federal budget for spending we can
afford to do without, these tax giveaways aren’t right,” Obama said.
“They aren’t smart. And we need to end them,” the president added.

And Greg Palast points out in his book, “Armed Madhouse”(Plume), the
oil majors are not simply passive resellers of OPEC production but
have reserves of their own which rise in tandem with oil prices.

“The rise in the price of oil after the first three years of the
(Iraq) war boosted the value of the reserves of ExxonMobil Oil alone
by just over $666-billion,” Palast wrote. What’s more, Chevron Oil,
“where (Secretary of State) Condoleezza Rice had served as a director,
gained a quarter trillion dollars in value.”

Iraq’s experience mirrors the prior overthrow in 1953 of the Iranian
government by the U.S. Central Intelligence Agency. This is recounted
in “An Enemy of The People”(Doukathsan) by Lawrence Velvel, dean of
the Massachusetts School of Law at Andover. He notes that after CIA
Mideast Operations Chief Kermit Roosevelt created a state of anarchy
in Iran that toppled the elected government, the U.S. oil companies
cashed in.

“Our oil companies---Gulf, Standard of New Jersey, Texaco and
Mobil---received a 40 percent share of the new National Iranian Oil
Co., and the shah established a tyrannical dictatorship, with the
dreaded Savak (secret police) doing dirty work for him,” Velvel
writes.  By the way, it may be noted that Iran in 1953 could not be
said to have the beginning of any nuclear weapon development as to
constitute a threat to Israel or any other country.

So what was the 1953 overthrow of Iran all about if not oil? The
pattern that has emerged over the past 60 years is that the
Pentagon/CIA have bullied their way into seizing the oil fields of the
Middle East, from which Western oil companies just happened to enrich
themselves. The history of past events in Iran and Iraq casts a
dubious light on the contemporary claims of U.S. politicians today
that Iran represents a mortal danger to Israel. The CIA overthrow of
Iran and the Pentagon attack on Iraq reveal it's all about oil.

Our contributor, Sherwood Ross, rmanages a Public Relations firm for magazine articles, socio-economic causes, colleges, universities, growing businesses and non-profit organizations. He may contacted at

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