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Fight for “Black-Blood” of Global
Economy in Iraq
http://www.axisoflogic.com/artman/publish/article_23751.shtml
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By Tahir M. Qazi, MD
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January 08, 2007
Hidden behind the smoke of firing guns and chaotic scenes
in Iraq is the greedy face of Multinational Corporations and their
political patrons, who have been waiting to make a killing in the oil
fields of Iraq. Oil exploration and extraction used to be a state
enterprise of
Iraq during Saddam Hussein's rule. With Saddam Hussein through the
gallows, one obstruction is cleared.
Oil, the “Black-Blood” of Global Economy, is an Iraqi
natural resource. But the draft legislation is on the table to be
presented to the Iraqi parliament to sign it into a law. It is currently
being termed as "Hydrocarbon Law". This law will allow oil-hawks to take a
bigger bite out of the energy resource in the war ridden and collapsed
state of Iraq.
It is going to be called Production Sharing Agreement (PSA). Common
practice for investments is to offers rights for extraction for 10-15 year
whereas in case of Iraq it may be up to 30 years.
Until the costs of a project have been recovered
oil companies would be allowed to keep 70% of the profit. Elsewhere 40%
would be a standard. Once the costs are recouped the companies' share
falls to 20%, which is still double other comparable agreement.
There were prophetic voices in the world alarming about
greed for oil when WMD-danger was being moved as an argument for invasion
of Iraq. British
and the US high officials, at that time, had vehemently denied any
intentions of controlling Iraqi oil. Tony Blair went to the extent of
saying that Iraqi oil should be put into a trust fund to be run by UN for
Iraqis. Obviously, it seems that the promises made before the war have
been conveniently forgotten.
There are vast oil reserves in many parts of the world.
Iraq has about
115 billion barrels, the second largest in the world. Despite the present
violence there, it appears to be most promising for future profits.
Elsewhere there are hindrances like tight controls of states, limitations
on extraction of oil as in Venezuela by Hugo Chavez, and high cost of
drilling out of North America etc. These are few factors for looking at
huge oil fields in
Iraq
where the oil geological stratum is not too far deep under the surface. It
will translate into the lowest cost of extraction in the whole world.
In a scenario where cost of extraction remains the same as
the selling price is not a viable business strategy, to state the obvious;
projections in case of Iraq are that there will be high yield with good
profit margins. Oil corporations have always been aware of this fact. This
fact alone makes the core of US Middle East foreign policy that was
turning progressively hawkish against
Iraq
over the decades, partly due to the absence of polarity in the world that
former Soviet Union provided and partly due to Saddam Hussein's
nationalism-based opposition to opening oil fields to private corporations
for extraction of oil.
Fast forward to the present; the
US did not anticipate
such a stiff resistance in
Iraq
against the most powerful military in the world. It has made the US
rethink the course by which private oil companies could be offered
security in the future Iraq. While Saddam's fate from tribunal to gallows
was fast moving towards its destiny, counselling and consultancy for draft
of legislation that is soon to be presented to the legislative body, was
being provided by the US to Iraqi administration to ensure opening oil
fields well before such recommendations appeared in the Baker-Hamilton
Commission Report on Iraq (Recommendations 62 & 63).
The importance of this fact alone can be understood by the
fact that the Baker-Hamilton Report frequently talks about the US
interests and specifically refers to oil on second page of its opening,
"It has the world's second-largest known oil reserves".
Nonetheless, the draft bill that has been obtained by Dow
Jones Newswire Service and also widely published by The Independent
newspaper details some interesting key elements that can help foresee the
future of Iraq.
There was one bill passed by the Kurdistan Regional
Government in December claiming rights to oil of the region. What is
interesting is that the Hydrocarbon Law currently under consideration by
Iraqi administration precludes any regional control of oil and stipulates
control from
Baghdad.
It sows the seed of future conflicts because the Kurdish
authority has already signed agreements with several small oil and gas
companies, including U.S.-based Calibre Energy Inc. (CBRE), Norway's Det
Norske Olje selskap (DNO.OS) and Turkey's Petoil and has signed memoranda
of understanding with Australia's Woodside Petroleum Ltd. (WPL.AU),
Canada's Heritage Oil Corp. (HOC.T) and the U.K.'s Sterling Energy PLC (SEY.LN).
The part of Iraqi hydrocarbon law, the way it has come open
to the media that describes Baghdad's control of oil has important
implications for the future: It means Iraq will not be divided into three
regions as has advocated by many including presidential candidate for 2008
Joseph Biden, Senator from the State of Delaware. Since
Baghdad wishes to
maintain control on oil, there is a good possibility of friction between
center and Kurdistan and a civil war that has engulfed Baghdad may spread
towards northern areas of
Iraq.
If a favorable deal is reached between
Baghdad and Kurdistan,
it will serve as precedence for southern Shiites who will find it hard to
stay alienated from control unless special guarantees are offered to them,
which in turn would not fare well with Sunnis, located in central Iraq.
In short, according to an old adage, “There are no friends
in oil politics, only enemies and competitors” rings true in the case of
Iraq
also. Such fears validate predictions that the US would fight viciously to
stay in Iraq
and that the black-blood of industrial civilization is firmly in the grips
of capitalism for the foreseeable future. It also measures willingness of
the US to trade human blood for its greed for oil.
(This article is dedicated to my niece Sarah
Choudhry, with love)
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