[R-G] [BillTottenWeblog] Big Oil's 'secret' out of Iraq's closet

Sat Jul 5 18:30:05 MDT 2008

by Pepe Escobar

Asia Times Roving Eye (July 04 2008)

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
thirty-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 eighty percent, 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 fifty percent 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 forty percent 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 (Nimble Books, 2007). He may be
reached at pepeasia at yahoo.com.

http://www.atimes.com/atimes/Middle_East/JG04Ak03.html

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