Mission accomplished for big oil in Iraq?

Mission accomplished for big oil?

Greg Muttit in Le Monde Diplomatique:

Here, as a start, is a little scorecard of what’s gone on in Iraq since Big Oil arrived two and a half years ago: corruption’s skyrocketed; two Western oil companies are being investigated for either giving or receiving bribes; the Iraqi government is paying oil companies a per-barrel fee according to wildly unrealistic production targets they’ve set, whether or not they deliver that number of barrels; contractors are heavily over-charging for drilling wells, which the companies don’t mind since the Iraqi government picks up the tab.

Meanwhile, to protect the oil giants from dissent and protest, trade union offices have been raided, computers seized and equipment smashed, leaders arrested and prosecuted. And that’s just in the oil-rich southern part of the country.

In Kurdistan in the north, the regional government awards contracts on land outside its jurisdiction, contracts which permit the government to transfer its stake in the oil projects — up to 25% — to private companies of its choice. Fuel is smuggled across the border to the tune of hundreds of tankers a day.

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Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.

The Two Sudans in Arbitration: Corruption, Militias, and China

Hergé’s caricatured arms dealer in The Broken Ear (1937) offers oil-hungry powers an unfortunate blueprint for influence building in the two Sudans. Credit: thinmanSouth Sudanese President Salva Kiir this week addressed a letterto dozens of “former and current senior government officials” pleading with them to return an estimated US$4b in “missing” government funds. The Globe and Mail reports that the US$4b reportedly stolen would add up to approximately 2 years’ worth of oil revenues for the country, which upon seceding from Sudan took about 75% of Khartoum’s oil reserves with it (amounting to some $5b worth of annual income, according to the Petroleum Economist trade publication). Some US$60m has reportedly been recovered, but continued mismanagement, graft and badly bid contracts (most notably, for food imports) means that additional funds still remain unaccounted for and may be unrecoverable.[1]

Despite the emotional plea from Kiir, in an unencouraging sign for transparency in South Sudan this past April, the ruling Sudan People’s Liberation Movement (SPLM) Party that Kiir leads “voted against a bill seeking to make contracts and information about the young country’s oil industry more transparent by making it available to the public.”

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Iraq's oil

Occasional contributor Paul Mutter has a piece up at FPIF looking at the situation of oil major in Iraq, where the US still trails behind China in presence and can't get the kind of legislation for oil. Does that prove that the US was not after oil in Iraq, among other grand geostrategic objectives? No, it just shows there's hardly a silver lining for Americans after all the blood and treasure that was sunk into that adventure.

Dahr Jamail's report on energy majors in Iraq reminds us of one of the other, other, other reasons for the U.S. invasion of Iraq, the one nearest and dearest to neoconservatives' political action committees: oil.

Ostensibly, "oil" was part of the discussion on Saddam Hussein because of U.S. sanctions, the threat that Saddam would use oil money to bankroll terrorist organizations, and the idea that new oil revenues would help jumpstart the post-Saddam Iraqi economy.

Those were the reasons paraded around in public. Then there were the ones being discussed -- well before Condi and Dick made the Sunday morning talk show rounds -- in the arcane, interconnected world of multinational corporations, federal departments and think tanks:

Like it or not, Iraqi reserves represent a major asset that can quickly add capacity to world oil markets and inject a more competitive tenor to oil trade. However, such a policy will be quite costly as this trade-off will encourage Saddam Hussein to boast of his "victory" against the United States, fuel his ambitions, and potentially strengthen his regime.

The U.S. invasion rather nicely took care of that dilemma, and, of course, the U.S. government and U.S. oil majors moved to secure pieces of the pie before other countries could come in. Alongside other Western governments and oil majors, Washington is pushing for an Iraq Oil Law that would allow privatization and Production Sharing Agreements (PSAs), which, Jamail reports, are only used in 12% of the world's oil market. Why only 12%? Because more nationalistic individuals don't like signing off on them: in Russia, for instance, Vladimir Putin made rescinding PSAs Boris Yeltsin's government had signed with U.S. and UK firms a top priority. The law has stalled in the Iraqi Parliament. 

Read the rest here.

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Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.

New column

This comes a little bit late, as I've been in the mountains of Northern Morocco for the last few days, in a tiny village where there is no mobile phone reception or internet.

I have started writing a weekly column for al-Masri al-Youm English (which will hopefully also soon start to be picked up in the Arabic edition). The column, out every Tuesday, will cover a very wide variety of issues, both Egyptian and regional. I'm sure it will cover some of the big themes and crises of the region, but one thing I want to focus on from time to time are issues not often discussed elsewhere in the Middle Eastern media or indeed in the blogosphere: the intersection of politics, business and science and the environment.

My first column is about something I've been thinking about ever since last April: the wide-ranging ramifications of the Deepwater Horizon spill in the Gulf of Mexico on the oil industry, and what it means for countries like Egypt where deepwater fields are the next frontier (many such fields will go online in the next decade) after the exhaustion of traditional shallow water fields in the Gulf of Suez. One aspect of this issue is that there is a brewing energy crisis in Egypt; the other is that one cannot help but think of the consequences of an accident like Deepwater off Egypt's coast, where the government is much less prepared than the US and much less able to put pressure on companies. I finished writing it on Sunday, and by coincidence two news items put the column in a new perspective: one is that the first rig to leave the Gulf of Mexico because of the ban on deepwater drilling started to head to Egypt, and the second is that BP announced a $9 billion deal to develop gas fields off Egypt's Mediterranean coast. So my column was quite prescient!

You can read the column here.

Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.

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U.S. group invests tax-free millions in East Jerusalem land - Haaretz - Israel News | Prosecute them: "American Friends of Ateret Cohanim, a nonprofit organization that sends millions of shekels worth of donations to Israel every year for clearly political purposes, such as buying Arab properties in East Jerusalem, is registered in the United States as an organization that funds educational institutes in Israel." ✪ Palestinian state is not synonym for terrorist entity - Haaretz - Israel News | "The Jewish army's work in the territories we still call "Judea and Samaria" is done by non-Jews: Arab police, American instructors, European money. How has Foreign Minister Avigdor Lieberman put it? Paradise." ✪ Al-Ahram Weekly | Region | Hamas faces Gelgelt | On links between the Salafist Jihadist group and "our son of a bitch" Muhammad Dahlan. ✪ Is the Trans-Sahara Gas Pipeline a Viable Project? The Impact of Terrorism Risk - The Jamestown Foundation | To me this is a ridiculous idea but what do I know? ✪ Al-Ahram Weekly | Culture | Tractatus Franco-Arabicus | A Wittgensteinian review of Sonallah Ibrahim's latest.
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