We had a server outage, and we're rebuilding the site. Some of the site features won't work. Thank you for your patience.
imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
Features
latest news
best of news
syndication
commentary


KILLRADIO

VozMob

ABCF LA

A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List

LAAMN List




IMC Network:

Original Cities

www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities

www.indymedia.org africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles


View article without comments

Oil grab by the United States?

by Daniel Yergin Monday, Dec. 16, 2002 at 6:33 AM

'Crude' conspiracy? No: Facts don't support theory of U.S. 'oil grab'

If oil is the question, Iraq is not the answer.

Some people say the Iraq crisis has been manufactured to cloak an "oil grab" by the United States and the American oil industry. Others believe that a liberated Iraq will flood the world market with cheap oil and provide a quick fix for concerns about our energy security.

These perspectives, while very different, are based on a fundamental misperception -- of both scale and timing. Yes, Iraq is a major oil country, with the world's second-largest known reserves. But in terms of production capacity, Iraq represents just 3 percent of the world's total. Its oil exports are on the same level as Nigeria's. Even if Iraq doubled its capacity, that could take more than a decade. In the meantime, growth elsewhere would limit Iraq's eventual share to perhaps 5 percent, significant but still in the second tier of oil nations.

But even that scenario assumes that Iraq will welcome foreign investors on a reasonable timetable -- and, history tells us, that is not a foregone conclusion. After the 1991 Persian Gulf War, a liberated and grateful Kuwait announced that it would open its oil industry to foreign investment in order to boost production. Eleven years later, that still hasn't happened, owing to nationalistic opposition in Kuwait's parliament.

While this crisis is focused on overall security -- Iraq's weapons of mass destruction -- there is a clear energy dimension to the confrontation: the security and stability of the Persian Gulf region, from which flows almost a quarter of the world's oil. Saddam Hussein's drive to dominate the region is obvious and cannot be dismissed. He invaded Iran in 1980 and then, a decade later, invaded Kuwait and threatened Saudi Arabia. The other Persian Gulf states have no love for him, and with good reason.

But it requires several leaps of logic -- as well as inattention to developments in the rest of the world's markets, particularly in Russia, the Caspian region and West Africa -- to conclude that the current Iraq crisis is all about oil. No U.S. administration would launch so momentous a campaign just to facilitate a handful of oil development contracts and a moderate increase in supply -- half a decade from now.

How would a Persian Gulf without Saddam affect the future of Iraqi oil? The discussion now under way in Washington and elsewhere -- which takes place under the rubric of "the day after" -- is dominated more by the uncertainties and risks than the benefits. The most immediate question involves a possible war, and the resulting damage that it might do to Iraq's output at the very moment when a new regime would desperately need oil revenues to secure its own stability. There also is much apprehension that Saddam would torch Iraq's oil facilities in a Pyrrhic defeat. That is exactly what Iraqi forces did on their way out of Kuwait in 1991. It took eight months to extinguish the fires in the Kuwaiti oil fields. This time, however, some Iraqi commanders might be loath to obey any such orders, as they would have to answer after the war for their actions.

The next critical issue, when "the day after" arrives, will be the question of authority. Who would be in charge? If there is a temporary military government, either U.N.- or U.S.-led, it would be preoccupied with establishing firm control over Iraq's weaponry and laying the basis as quickly as possible for a new Iraqi government with broad representation. It would certainly be focused on security, including the oil facilities. After all, the country earns the bulk of its living by exporting oil. For that reason, a temporary military authority would be keen to see the "new" Iraq maximize its oil earnings. But a military authority is unlikely to want to get much involved in the decision-making about the future of the industry. Rather, it will try to push the responsibility into the hands of a new Iraqi government -- or an interim group of technocrats.

A new Iraqi government, for its part, will just as surely want to get its hands on its No. 1 economic resource so that it can generate revenue for reconstruction and development. Iraq is not Afghanistan. It has the means, through oil, to pay for rebuilding the country. At the same time, a new government would also be determined to bolster its sovereignty, legitimacy and nationalist credentials -- all of which will be essential requirements for holding the country together. This ensures that Iraq will be a very tough negotiator when it sits down with the oil companies.

It is often assumed in the "it's all about oil" discussions that Iraq would turn over its current 2.8 million barrels per day of production capacity to international companies -- that this is the new "prize" up for grabs. But that's another shaky assumption. If the new Iraqi government brings in foreign companies, it will have to split revenue -- keeping perhaps 88 cents of every dollar of earnings for itself, but with 12 cents or so going to the companies. Why not keep the whole dollar for itself and simply buy what it needs in terms of technology and equipment for the existing fields?

What a post-Saddam government will need is capital -- lots of it -- for exploration and new production from its currently undeveloped fields. And that is where a new regime is likely to turn to international oil companies. But which ones?

It will have no shortage of suitors. Once things are clear, companies will be eager to get in line to sign contracts with a country that has 11 percent of the world's proven reserves. (Saudi Arabia, the highest, has 25 percent; the United States, just 2 percent.) But they will be very cautious when it comes to spending billions of dollars until they are pretty confident about security and stability -- and "stability" applies not only to the new regime but also to the contracts they sign.

Companies from several countries -- Russia, France, Italy and China, among others -- already hold contracts, but they are not operational because of U.N. sanctions still in place. Companies without contracts, including the American ones, will have to assess how much time and trouble they are willing to bear. For the oil companies, the big issue, wherever they operate in the world, is how to manage the range of risks -- from the geological to the political. In response, they often work together in consortia and partnerships. This approach hedges their bets, spreads their investments and diversifies their portfolios.

And that's likely to be the outcome for Iraq. The companies with existing contracts will likely team up with other companies -- American, European, Canadian, Australian, Japanese -- to form new partnerships. Such partnerships would meet the crucial need of a new Iraqi government, which would want to strengthen its position by dealing with a diversified political portfolio of companies representing many different nationalities.

None of this will take place swiftly. It might take a new regime a year or so just to get things organized and begin to negotiate contracts. When it does, it will have to face the deteriorating condition of the Iraqi oil industry. Production capacity has dropped from its peak of 3.5 million barrels a day in 1980, before the Iran-Iraq War, to about 2.8 million barrels per day and falling. Reservoirs have been damaged by years of mismanagement. The infrastructure -- whether wells, pipelines, pumping stations or ports --have no love for him, and with good reason.

But it requires several leaps of logic -- as well as inattention to developments in the rest of the world's markets, particularly in Russia, the Caspian region and West Africa -- to conclude that the current Iraq crisis is all about oil. No U.S. administration would launch so momentous a campaign just to facilitate a handful of oil development contracts and a moderate increase in supply -- half a decade from now.

How would a Persian Gulf without Saddam affect the future of Iraqi oil? The discussion now under way in Washington and elsewhere -- which takes place under the rubric of "the day after" -- is dominated more by the uncertainties and risks than the benefits. The most immediate question involves a possible war, and the resulting damage that it might do to Iraq's output at the very moment when a new regime would desperately need oil revenues to secure its own stability. There also is much apprehension that Saddam would torch Iraq's oil facilities in a Pyrrhic defeat. That is exactly what Iraqi forces did on their way out of Kuwait in 1991. It took eight months to extinguish the fires in the Kuwaiti oil fields. This time, however, some Iraqi commanders might be loath to obey any such orders, as they would have to answer after the war for their actions.

The next critical issue, when "the day after" arrives, will be the question of authority. Who would be in charge? If there is a temporary military government, either U.N.- or U.S.-led, it would be preoccupied with establishing firm control over Iraq's weaponry and laying the basis as quickly as possible for a new Iraqi government with broad representation. It would certainly be focused on security, including the oil facilities. After all, the country earns the bulk of its living by exporting oil. For that reason, a temporary military authority would be keen to see the "new" Iraq maximize its oil earnings. But a military authority is unlikely to want to get much involved in the decision-making about the future of the industry. Rather, it will try to push the responsibility into the hands of a new Iraqi government -- or an interim group of technocrats.

A new Iraqi government, for its part, will just as surely want to get its hands on its No. 1 economic resource so that it can generate revenue for reconstruction and development. Iraq is not Afghanistan. It has the means, through oil, to pay for rebuilding the country. At the same time, a new government would also be determined to bolster its sovereignty, legitimacy and nationalist credentials -- all of which will be essential requirements for holding the country together. This ensures that Iraq will be a very tough negotiator when it sits down with the oil companies.

It is often assumed in the "it's all about oil" discussions that Iraq would turn over its current 2.8 million barrels per day of production capacity to international companies -- that this is the new "prize" up for grabs. But that's another shaky assumption. If the new Iraqi government brings in foreign companies, it will have to split revenue -- keeping perhaps 88 cents of every dollar of earnings for itself, but with 12 cents or so going to the companies. Why not keep the whole dollar for itself and simply buy what it needs in terms of technology and equipment for the existing fields?

What a post-Saddam government will need is capital -- lots of it -- for exploration and new production from its currently undeveloped fields. And that is where a new regime is likely to turn to international oil companies. But which ones?

It will have no shortage of suitors. Once things are clear, companies will be eager to get in line to sign contracts with a country that has 11 percent of the world's proven reserves. (Saudi Arabia, the highest, has 25 percent; the United States, just 2 percent.) But they will be very cautious when it comes to spending billions of dollars until they are pretty confident about security and stability -- and "stability" applies not only to the new regime but also to the contracts they sign.

Companies from several countries -- Russia, France, Italy and China, among others -- already hold contracts, but they are not operational because of U.N. sanctions still in place. Companies without contracts, including the American ones, will have to assess how much time and trouble they are willing to bear. For the oil companies, the big issue, wherever they operate in the world, is how to manage the range of risks -- from the geological to the political. In response, they often work together in consortia and partnerships. This approach hedges their bets, spreads their investments and diversifies their portfolios.

And that's likely to be the outcome for Iraq. The companies with existing contracts will likely team up with other companies -- American, European, Canadian, Australian, Japanese -- to form new partnerships. Such partnerships would meet the crucial need of a new Iraqi government, which would want to strengthen its position by dealing with a diversified political portfolio of companies representing many different nationalities.

None of this will take place swiftly. It might take a new regime a year or so just to get things organized and begin to negotiate contracts. When it does, it will have to face the deteriorating condition of the Iraqi oil industry. Production capacity has dropped from its peak of 3.5 million barrels a day in 1980, before the Iran-Iraq War, to about 2.8 million barrels per day and falling. Reservoirs have been damaged by years of mismanagement. The infrastructure -- whether wells, pipelines, pumping stations or ports -- is in poor shape. Equipment is rusting and malfunctioning. Environmental considerations are widely ignored.

To get back to 3.5 million barrels could take three years or more, at an estimated cost of at least $7 billion. This would put Iraq back into the leagues of Norway, Iran, the United Arab Emirates, Mexico and Venezuela. Another 2 million barrels per day would require a major push, and it would still leave Iraq several rungs below the capacity of the Big Three producers -- Saudi Arabia, the United States and Russia. Making that leap to 5.5 million barrels a day would come sometime after 2010 -- at a cost of upward of $20 billion.

As its output increased, Iraq would begin jostling its neighbors for market share. That would not, however, give Iraq enough clout to be an OPEC-buster. It would not have the ability to "flood" the market. Nor the desire. Its intense need for revenues would make it much more interested in oil at $20 or $25 a barrel, rather than at a cut-rate $10.

By the year 2010, world oil demand, driven by countries such as China and India, could be almost 90 million barrels a day -- 17 percent greater than today. And where will that oil come from? Here's where the picture grows more complex.

One can already see the beginning of a larger contest. On one side are Russia and the Caspian countries, primarily Kazakhstan and Azerbaijan; on the other side, the Middle East, including Iraq. Over the past three years, spurred by what has been called "the miracle in the Russian oil fields," Russian output has increased by about 25 percent, to 8 million barrels a day. The race heated up with the recent announcement by four Russian oil companies of their intention to build a new Arctic port to export directly to the United States.

Right now, Russia and the Caspian nations seem to have the edge in this race. All that, however, is subject to change. The outcome will be determined not only by geology and the balancing of opportunity and risk by companies, but also by political and economic stability and by the decisions governments make.

The current crisis is not even at its denouement. But the prize is very tangible -- by 2010, an additional $100 billion or more a year in oil revenues flowing into national treasuries. After "the day after," Iraq will be in a better position to compete for its share. But it will be only one of several strong contestants.

Yergin, based in Washington, D.C., is author of The Prize: The Epic Quest for Oil, Money, and Power, which won the 1992 Pulitzer Prize for nonfiction. He is co-author of Commanding Heights: The Battle for the World Economy (Touchstone).
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


So what IS it about then?

by Skeptical Sally Monday, Dec. 16, 2002 at 4:25 PM

Suppose we buy the thesis that it's not about oil, then what IS it about? It can't be weapons of mass destruction because Iraq has barely got a regular army let along WMDs. So what is it? Bush distracting the people from the Enron/Arthur-Andersen scandal with a war? The need to look like a world superpower (Chomsky's "mafia boss" theory of credible enforcement)?
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


..........

by .......... Tuesday, Dec. 17, 2002 at 9:18 AM

What makes you so blindly believe Bush is telling the truth? Do you have even a scrap of evidence to prove he is beyond such a thing?
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


.

by lynx-11 Tuesday, Dec. 17, 2002 at 3:47 PM

"Dr. Yergin is a member of the Board of the United States Energy Association and a member of the National Petroleum Council. He is also a member of the US Secretary of Energy's Advisory Board and chaired the US Department of Energy's Task Force on Strategic Energy Research and Development."

he is also Chairman of Cambridge Energy Research Associates

check out his work

Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


OneEyedMan

by KPC Wednesday, Dec. 18, 2002 at 12:34 AM

What makes the BushBlower trust Bush?....'cause he's a friggen halfwit, that's why.....
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


.

by lynx-11 Wednesday, Dec. 18, 2002 at 1:14 AM


"it's all about the oil"
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


.

by lynx-11 Friday, Dec. 20, 2002 at 3:30 PM

"A New Pearl Harbor"
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Outstanding

by Sheepdog Friday, Dec. 20, 2002 at 3:48 PM

Thank you Lynx!! These are GREAT deeplinks.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Pet Goat Story

by Lies of Our Times Friday, Dec. 20, 2002 at 10:04 PM

"I don't believe your information sources compare with GWB's."


"IMMEDIATELY FOLLOWING THE FIRST ATTACK, I IMPLIMENTED OUR GOVERNMENTS EMERGENCY RESPONSE PLAN"
--GW Bush, Sepetmber 11, 2001



What did he *really* do immediately after the *first* attack, BA?


What did he do immediately following the *second* attack?
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


the lunatic in the mirror

by lies of our times Tuesday, Dec. 24, 2002 at 7:45 AM

the lunatic in the m...
mirror_lunatic.jpg, image/jpeg, 300x388



Hmmm....no answer to my reasonable questions yet......I wonder why not?
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Tell it to the Xmas bunny

by Sheepdog Tuesday, Dec. 24, 2002 at 9:58 AM

Has anyone noticed that if you follow our
resident campers, BA & SS advice at 180 degrees ( that’s reverse, to the above mentioned entities) we receive some fair advice. Useful for knowing what is trash
( because they advocate it ) and useful for
general comedy as they label and liable the
few non corporate uncontrolled media sources they find uncomfortable. Those I
always check out. ( thanks for the yucks )
I never really appreciated the resource.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


thanks 'Sheepdog'.....

by lynx-11 Saturday, Jan. 04, 2003 at 7:25 PM

gaps:

"....Daniel Yergin maintains that Chomsky's "formulation of 'transformational grammar' has been acclaimed as one of the major achievements of the century. Where others heard only a Babel of fragments, he found a linguistic order. His work has been compared to the unraveling of the genetic code of the DNA molecule." Yergin further contends that Chomsky's discoveries have had an impact "on everything from the way children are taught foreign languages to what it means when we say that we are human...."


-------------------------------------------------------------------------------------------------
anticrisis
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy