Oil and Gas in other parts of Asia

On each topic, the articles are in chronological order.

Oil in Southeast Asia

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China

EXXON, SHELL, BP ON LIST TO BUILD $14 BLN GAS PROJECT

Source: North Asia News, By Lim Le Min

Beijing, June 6 2001 (Bloomberg) -- Exxon Mobil Corp., the Royal Dutch/Shell Group and BP Plc, the world's top three publicly traded oil companies, are on the final list of bidders to build a $14 billion gas pipeline in China, a PetroChina official said.

PetroChina, the country's No.1 oil company, said last month it received initial bids from 12 companies in seven groups to build the 4,000-kilometer pipeline to transport natural gas from China's western province of Xinjiang to the eastern coastal city of Shanghai.

Exxon Mobil teamed up with Hong Kong-based CLP Holdings Ltd.; BP formed an alliance with Malaysia's Petroliam Nasional Bhd., and Japan's Mitsubishi Corp., Itochu Corp. and Nissho Iwai Corp.; while Shell submitted its bid alone.

‘The oil majors are flush with cash,’ said Gordon Kwan, an analyst with HSBC Holdings in Hong Kong. No other company ‘would be able to take on such a big project.’

Beijing says the west-to-east pipeline project is a chance for foreign oil companies to sell gas in China's growing market, especially its prosperous coastal provinces. China, which counts on coal for more than 70 percent of its energy, wants to quadruple use of natural gas to 8 percent by 2010.

‘The three companies were chosen based on their commercial experience and their financial strength,’ said Cao Zhengyan, a spokesman for PetroChina, which controls the project.

West Fields

Analysts say foreign oil companies are drawn by the prospect of drilling for gas in Xinjiang's Kela-2 gas field which is reserved only for the foreign company that wins the contract to build the pipeline. Chinese officials said Kela-2 is the country's largest gas field.

‘It's premature to say which of the three companies will eventually commit to the project,’ Kwan said. Much depends on the outcome of their talks with PetroChina on development of the gas fields in Xinjiang, he said. PetroChina said it has shelved talks with the other four bidders for the pipeline that didn't make it to the shortlist.

Hong Kong & China Gas Ltd., Hong Kong's sole distributor of piped gas; OAO Gazprom, Russia's No.1 natural gas company; Energomachexport Russia, an engine and equipment supplier; and Houston Inspection International Inc. had submitted separate proposals to build the pipeline.

PetroChina said construction of the pipeline is scheduled to start in the second half of this year.

PetroChina shares ended unchanged at HK$1.84 yesterday.

Caspian Sea

Afghanistan

The Enron-Cheney-Taliban Connection?

By Ron Callari. This article originally appeared in the Albion Monitor. February 28, 2002

Enron is a scandal so enormous that it's hard to wrap your mind around it. Not just a single financial disaster, it's actually a jigsaw of interlocking scandals, each outrageous in its own right.

There's Enron the Wall St. con game, where company bookkeepers used slight of hand to turn four years of steady losses into stunning profits. There's Enron the reverse Robin Hood, which stole from its own employees even as its executives were hauling millions of dollars out the backdoor. There's Enron's Ken Lay the Kingmaker, who used the corporation's fraudulent wealth to broker elections and skew public policy to his liking. And then there are the Enron coverups, as documents are shredded and the White House seeks to conceal details about meetings between Enron and Vice President Cheney.

The coverups are still very much a mystery. What were the documents that were fed into the shredder -- even after the corporation declared bankruptcy? What is the White House fighting to keep secret, even going to the length of redefining executive privilege and inviting the first Congressional lawsuit ever filed against a president? Were the consequences of releasing these documents more damaging than the consequences of destroying them?

Could the Big Secret be that the highest levels of the Bush Administration knew during the summer of 2001 that the largest bankruptcy in history was imminent? Or was it that Enron and the White House were working closely with the Taliban -- including Osama bin Laden -- up to weeks before the Sept. 11 attack? Was a deal in Afghanistan part of a desperate last-ditch ‘end run’ to bail out Enron? Here's a tip for Congressional investigators and federal prosecutors: Start by looking at the India deal. Closely.

Enron had a $3 billion investment in the Dabhol power plant, near Bombay on India's west coast. The project began in 1992, and the liquefied natural gas- powered plant was supposed to supply energy- hungry India with about one-fifth of its energy needs by 1997. It was one of Enron's largest development projects ever (and the single largest direct foreign investment in India's history). The company owned 65 percent of Dabhol; the other partners were Bechtel, General Electric and State Electricity Board.

The fly in the ointment, however was that the Indian consumers could not afford the cost of the electricity that was to be produced. The World Bank had warned at the beginning that the energy produced by the plant would be too costly, and Enron proved them right. Power from the plant was 700 percent higher than electricity from other sources.

Enron had promised India that the Dabhol power would be affordable once the next phase of the project was completed. But to cut expenses, Enron had to find cheap gas to fuel it. They started burning naphtha, with plans that they would retrofit the plant to gas once it was available.

Originally, Enron was planning to get the liquefied natural gas (LNG) from Qatar, where Enron had a joint venture with the state-owned Qatar Gas and Pipeline Company. In fact, the Qatar project was one of the reasons why Enron selected India to set up Dabhol: it had to ensure that its Qatar gas did not remain unsold. In April 1999, however, the project was cancelled because of the global oil and gas glut. With Qatar gone, Enron was back to square one in trying to locate an inexpensive LNG supply source.

ENTER THE AFGHANISTAN CONNECTION.

Where the ‘Great Game’ in Afghanistan was once about czars and commissars seeking access to the warm water ports of the Persian Gulf, today it is about laying oil and gas pipelines via the untapped petroleum reserves of Central Asia, a region previously dominated by the former Soviet Union, with strong influence from Iran and Pakistan. Studies have placed the total worth of oil and gas reserves in the Central Asian republics at between $3 and $6 trillion.

Who has access to that vast sea of oil? Right now the only existing export routes from the Caspian Basin lead through Russia. U.S. oil companies have longed dreamed of their own pipeline routes that will give them control of the oil and gas resources of the Caspian Sea. Likewise, the U.S. government also wants to dominate Central Asian oil in order to reduce dependency on resources from the Persian/Arabian Gulf, which it cannot control. Thus the U.S. is poised to challenge Russian hegemony in a new version of the ‘Great Game.’

Construction of oil and natural gas export pipelines through Afghanistan was under serious consideration during the Clinton years. In 1996, Unocal -- one of the world's leading energy resource and project development companies -- won a contract to build a 1,005-mile oil pipeline in order to exploit the vast Turkmenistan natural gas fields in Duletabad. The pipeline would extend through Afghanistan and Pakistan, terminating in Multan, near the India border.

Multan was also the end point for another proposed pipeline, this one from Iran. This project never left the drawing boards, however; the pipeline would be much longer (over 1,600 miles) and more expensive. Still, this route was being seriously considered as of early 2001, and it increased the odds that gas would be flowing into Multan from somewhere.

Unocal wasn't the only energy company laying pipe. In 1997, Enron announced that it was going to spend over $1 billion building and improving the lines between the Dabhol plant and India's network of gas pipelines.

Follow the map: Once a proposed 400-mile extension from Multan, Pakistan to New Delhi, India was built, Caspian Sea gas could flow into India's network to New Delhi, follow the route to Bombay -- and bingo! A plentiful source of ultra-cheap LNG that could supply Enron's plant in India for three decades or more.

Besides the route to Multan, another proposed spur of the pipeline would have ended on the Pakistan coast, where an estimated one million barrels of LNG per day could be shipped to Japan and Korea, the largest consumers of LNG in the world. For Enron, there was an upside here as well. Entering the South Eastern Asian markets, which offered vast growth potential, could position Enron well in the global marketplace and offset some of their losses in other markets.

There was one gotcha: It looked like the trans-Afghan section of the pipeline might never be built. Afghanistan was controlled by religious extremists who didn't want to cooperate.

ENTER THE TALIBAN.

From 1997 to as late as August 2001, the U.S. government continued to negotiate with the Taliban, trying to find a stabilizing factor that would allow American oil ventures to proceed with this project without interference. To this end, in December 1997, Unocal invited the Taliban contingency to Texas to negotiate protection while the pipeline was under construction. At the end of their stay, the Afghan visitors were invited to Washington to meet with the government officials of the Clinton Administration.

But in August, 1998, terrorists linked to Osama bin Laden bombed two U.S. embassies in East Africa. After a few cruise missiles were fired into Afghanistan and the Pentagon boasted that we had disabled bin Laden's ‘terrorist network,’ Unocal said they were abandoning plans for a route through the country. But was such a potentially lucrative deal really dead?

Not hardly. Although Unocal had the largest share, the ‘Central Asian Gas Pipeline’ (CentGas) consortium had six other partners, including companies in Saudi Arabia's Delta Oil Company -- the next largest shareholder with 15 percent -- and groups in Japan, Korea, Indonesia, Pakistan, and Turkmenistan. They vowed to continue the project, and had strong national interests in seeing the Afghanistan pipeline built.

The U.S. looked for other options, and the Trade and Development Agency commissioned a feasibility study for an improbable east- to- west route that would cross the Caspian Mountains and end at a Mediterranean seaport in Turkey. The company hired for that study was Enron. If that pipeline were to be constructed, Turkmenistan signed an agreement that it would be built by Bechtel and GE Capital Services -- the same American companies that were Enron's business partners in the Dabhol power plant.

No matter which direction the Central Asia natural gas would eventually flow, Enron would profit. Should it go south towards ships waiting on the Pakistan coast, it would be still only a few hundred miles at sea to Dabhol. The trip from the Mediterranean would be farther (and thus more expensive for Enron to buy gas), but it was also the least likely route to be constructed. Estimated costs were almost $1 billion more than the route through Afghanistan, and engineering plans had not even started. No, the only practical route for the Caspian Sea gas was through Afghanistan and Pakistan to the border of India. All that was lacking was the political will to make it happen.

ENTER GEORGE W. BUSH.

Bush's long and personal relationship with Enron's former CEO Kenneth Lay is now well known, as is his generous contribution of over $600,000 to advance the political career of the man who now holds the White House. Not so well known is how Bush has helped Enron.

In 1988, Bush allegedly called Argentina's Minister of Public Works to pressure him into awarding Enron a $300 million contract shortly after his father won the presidency. Rodolfo Terragno recalled that the younger George Bush said that giving Enron the project ‘would be very favorable for Argentina and its relations with the United States.’ Terragno didn't know whether this message was from the White House or whether Bush was working a business deal on his own.

(Although unlikely, it is possible that Terragno was called by brother Neil Bush, who would later seek an oil drilling deal in Argentina. The Bush Sr. campaign denied that George W. made the call. This was, however, the time period when Lay began to cultivate his friendship with George W. and there is no known association between Neil Bush and Lay. That two Bush brothers are suspects, however, speaks to the levels of power that this family wields.)

By the time George W. became president, the India project was in serious trouble. Enron's reputation as a bully in India was legion. The Human Rights Watch released a report that indicated human rights violations had occurred as a result of opposition to the Dabhol Power project. Beginning in late 1996 and continuing throughout 1997, leading Indian environmental activists and employee organizations organized to oppose the project and, as a direct result of their opposition were not paid and subjected to repeated short-term detention. One ghastly report actually states that police stormed the homes of several women in western India who had led a massive protest against Enron's new natural-gas plant near their fishing village. According to Amnesty International, the women were dragged from their homes and beaten by officers paid by Enron.

The crisis came just a few months after the Bush inauguration. Contractors walked off the job, saying they hadn't been paid for over a month. The [India state of] Maharashtra Electricity Board stopped paying for Dabhol's power in May 2001, saying it was too expensive. Enron counter-charged that the Board owed them $64 million. The plant was closed, although it is said to be 97 percent complete. All that was missing was a source for cheap, cheap, natural gas.

ENTER DICK CHENEY.

Scarcely a month after Bush moves into the White House, Vice President Cheney has his first secret meeting with Ken Lay and other Enron executives on February 22, 2001. Other meetings follow on March 7 and April 17. It is the details of these meetings that the Bush Administration is seeking to keep private.

It's clear the Cheney had his own conflicts of interest with Enron. A chief benefactor in the trans-Caspian pipeline deal would have been Halliburton, the huge oil pipeline construction firm which was previously headed by Cheney. After Cheney's selection as Bush's Vice Presidential candidate, Halliburton also contributed a huge amount of cash into the Bush-Cheney campaign coffers.

So the obvious question: Did Enron lobby Cheney for help in India? It has already been documented that the Vice President's energy task force changed a draft energy proposal to include a provision to boost oil and natural gas production in India in February of last year. The amendment was so narrow that it apparently was targeted only to help Enron's Dabhol plant in India. Later, Cheney stepped in to try to help Enron collect its $64 million debt during a June 27 meeting with India's opposition leader Sonia Gandhi. But behind the scenes, much more was cooking.

A series of e-mail memos obtained by the Washington Post and NY Daily News in January revealed that the National Security Council led a ‘Dabhol Working Group’ composed of officials from various Cabinet departments during the summer of 2001. The memos suggest that the Bush Administration was running exactly the sort of ‘war room’ that was a favorite subject of ridicule by Republicans during the Clinton years.

The Working Group prepared ‘talking points’ for both Cheney and Bush and recommended that the need to ‘broaden the advocacy’ of settling the Enron debt. Every development was closely monitored: ‘Good news’ a NSC staff member wrote in a e-mail memo: ‘The Veep mentioned Enron in his meeting with Sonia Gandhi.’ The Post commented that the NSC went so far that it ‘acted as a sort of concierge service for Enron Chairman Kenneth L. Lay and India's national security adviser, Brajesh Mishra’ in trying to arrange a dinner meeting between the Indian official and Lay.

While lobbying India, it appears that the Bush Administration was also raising the heat on the Taliban to allow the pipeline.

The book ‘Bin Laden: the Forbidden Truth’ by Jean-Charles Brisard and Guillaume Dasique claims that the U.S. tried to negotiate the pipeline deal with the Taliban as late as August, 2001. According to the authors, the Bush Administration attempted to get the Taliban on board and believed they could depend upon the regime to stabilize the country while the pipeline construction was underway. Bush had already indirectly given the Taliban $43 million for their supposed efforts to stamp out opium-poppy cultivation. Was this an award -- or a bribe? The circumstances make this a valid question.

Enron was unraveling at the seams, yet in early August, Kenneth Lay seemed optimistic, even exuberant. Was he whistling past the graveyard, or did he have secret information? The last meeting between U.S. and Taliban representatives took place five weeks before the attacks on New York and Washington; on that occasion, Christina Rocca, in charge of Central Asian affairs for the U.S. government, met the Taliban ambassador to Pakistan in Islamabad on August 2, 2001. Rocca said the Taliban representative, Mr. Zaeef, was aware of the strong U.S. commitment to help the Afghan people and the fact that the United States had provided $132 million in relief assistance so far that year.

Lay's last documented e-mail was sent on August 27th, about the same time the Taliban allowed the International Red Cross to visit jailed foreign aid workers in Afghanistan. In it, Lay waxes optimistic about the strength and stability of his company, and exhorts his employees to buy into the company's stock program. Was Kenneth Lay anticipating a new pipeline deal, and an Enron contract, courtesy of George W. Bush? If a deal was at hand, he had every reason to be optimistic about the future.

Even though the trans-Caspian pipeline and the extension into India would be years from completion, Enron's conceit of working above the law was ultimately the guiding beacon in all of its transactions. They had played the game of subterfuge for so long, they were near experts at covering their tracks. Even if Lay knew at this point that bankruptcy was imminent, Enron had always survived major hurdles in the past, right? The possibility of a total meltdown was most likely not even a consideration -- there could always be an 11th hour federal bailout.

However, from all records, relationships became strained. The Taliban had demanded that the U.S. should also reconstruct Afghanistan's infrastructure and that the pipeline be open for local consumption. Instead, the U.S. wanted a closed pipeline pumping gas for export only and was not interested in helping to rebuild the country.

In turn, the U.S. threatened the Taliban during the negotiations. The directive of ‘we'll either carpet you in gold or carpet you in bombs’ was bantered about in the press to underscore the emerging willfulness of the U.S.

But sometime in late August, apparently the whole deal went sour.

Enron had one last card to play, and that was selling the Dabhol plant for quick cash -- if it could. If Enron could get its asking price of $2.3 billion, then maybe the company could pull out of its bankruptcy nose dive.

In late August, Lay appeared to threaten India in an article in the London Financial Times. We expect full price for the plant, he warned; if they received anything less, there could be backlash: ‘There are laws that could prevent the U.S. government from providing any aid or assistance to India going forward if, in fact, they expropriate property of U.S. companies,’ he said. When Indian officials called these statements ‘strong arm tactics,’ an Enron statement claimed Lay ‘was merely referring to U.S. laws.’ Again Lay appeared to threaten India in a Sept. 14 letter to the Prime Minister, insisting that the $2.3 billion price was reasonable because they had a ‘legal claim’ of up to $5 billion.

But the house of cards collapsed dramatically on November 8, when Enron disclosed that it had overstated earnings dating back to 1997 by almost $600 million. That same day, an e-mail (‘Importance: High’), whose sender and recipient are blacked out, warned, ‘President Bush cannot talk about Dabhol as was already mentioned.’ The memo also said that Bush economic adviser Lawrence Lindsey could not discuss Enron either. Lindsey had been an Enron consultant.

The end came in December 2001, as Enron fired the 300 remaining workers at the plant. Enron also filed a $200 million claim with the U.S. government's Overseas Private Investment Corporation, a U.S. taxpayer- funded insurance fund for American companies abroad, in an attempt to recoup losses from the Dabhol Power Corporation.

On the last day of the year, President Bush appointed Zalmay Khalilzad as his special envoy to Afghanistan. Khalilzad is a former Unocal consultant, whose positions on Afghanistan changed in sync with Unocal's own. When it looked like the pipeline would be built in 1996, Khalilzad advocated that the U.S. should work with moderate elements in the Taliban. By 2000 Unocal was out of the project, and Khalilzad was writing that the U.S. must undermine the Taliban.

It's clear that once again the Great Game is afoot, now that the Taliban are gone. Today, Khalilzad is the Special Assistant to the President and National Security Council member responsible for setting up the post-Taliban ‘Pro-Unocal’ regime in Afghanistan. International oil men euphemistically call the project the new ‘Silk Road.’ On Feb. 8, Afghanistan's interim leader Hamid Karzai and Pakistan's president agreed to revive plans for a trans-Afghanistan route for Iranian gas. The next day, Turkmenistan chimed in that they hoped their trans- Afghanistan route would be soon built. It's all but certain that gas from somewhere will reach Multan -- and the Dabhol plant beyond.

For investors, Dabhol should be a bitter lesson. Enron was a company known for its hubris that tried to accomplish too much, too quickly, playing too fast and loose with financial realities. In the end, Enron found that its far-reaching global clout could no longer circumvent the rules of basic economics -- nor could it count on the players they helped bring into power.

Until there is a full investigation, questions will remain about how far the Bush team went to try to save their buddies at Enron. Vice President Dick Cheney's refusal to release details about his private April meeting with Lay is suspicious. It is already known that Cheney accepted seven out of eight national energy policy recommendations made by Lay; so what are they so damned determined to keep secret? What could be more incriminating than that?

On Feb. 22, the GAO sued Cheney, who has stated that the White House will go to court to fight the release of the documents.

With recent discovery that a highest-level ‘Dabhol Working Group’ was set up in the Bush Administration, it appears that there is much more to be uncovered.

Is the White House covering up that it was molding foreign policy as well as energy policy to suit Enron? Did the Bush Administration know that Enron's collapse was coming as early as August? If any of these are true, the largest bankruptcy in American history may well connect with the greatest political scandal in American history.

Trans-Afghanistan Pipeline

By Larry Chin. CRG Online Journal 2002. The Jakarta Post. Friday May 31 2002

Gas pipeline: Pakistan President Gen. Pervez Musharraf addresses a summit attended by Afghan interim leader Hamid Karzai and Turkmenistan President Sapamurat Niyazov in Islamabad. Pakistan, Afghanistan and Turkmenistan signed on Thursday an agreement to build and maintain a 1460 Kilometres gas pipeline to supply natural gas from Turkmenistan to Pakistan via Afghanistan.

Upon successfully negotiating leases to explore in Turkmenistan, Bridas was awarded exploration contracts for the Keimar block near the Caspian Sea, and the Yashlar block near the Afghanistan border. By March 1995, Bulgheroni had accords with Turkmenistan and Pakistan granting Bridas construction rights for a pipeline into Afghanistan, pending negotiations with the civil war-torn country.

The following year, after extensive meetings with warlords throughout Afghanistan, Bridas had a 30-year agreement with the Rabbani regime to build and operate an 875-mile gas pipeline across Afghanistan.

But Unocal was not interested in a partnership. The United States government, its affiliated transnational oil and construction companies, and the ruling elite of the West had coveted the same oil and gas transit route for years.

A trans-Afghanistan pipeline was not simply a business matter, but a key component of a broader geo-strategic agenda: total military and economic control of Eurasia (the Middle East and the Central Asian republics).

As of 1992, 11 western oil companies controlled more than 50 percent of all oil investments in the Caspian Basin, including Unocal, Amoco, Atlantic Richfield, Chevron, Exxon-Mobil, Pennzoil, Texaco, Phillips and British Petroleum.

Business and policy planning groups active in Central Asia, such as the Foreign Oil Companies Group operated with the full support of the US State Department, the National Security Council, the CIA and the Department of Energy and Commerce.

Among the most active operatives for US efforts: Brezezinski (a consultant to Amoco, and architect of the Afghan-Soviet war of the 1970s), Henry Kissinger (advisor to Unocal), and Alexander Haig (a lobbyist for Turkmenistan), and Dick Cheney (Halliburton, US-Azerbaijan Chamber of Commerce).

Unocal's Central Asia envoys consisted of former US defense and intelligence officials. Robert Oakley, the former US ambassador to Pakistan, was a ‘counter-terrorism’ specialist for the Reagan administration who armed and trained the mujahadeen during the war against the Soviets in the 1980s. He was an Iran-Contra conspirator charged by Independent Counsel Lawrence Walsh as a key figure involved in arms shipments to Iran.

Richard Armitage, the current Deputy Defense Secretary, was another Iran-Contra player in Unocal's employ. A former Navy SEAL, covert operative in Laos, director with the Carlyle Group, Armitage is allegedly deeply linked to terrorist and criminal networks in the Middle East, and the new independent states of the former Soviet Union (Tajikistan, Uzbekistan, and Kyrghistan).

Armitage was no stranger to pipelines. As a member of the Burma/Myanmar Forum, a group that received major funding from Unocal, Armitage was implicated in a lawsuit filed by Burmese villagers who suffered human rights abuses during the construction of a Unocal pipeline. (Halliburton, under Dick Cheney, performed contract work on the same Burmese project.)

Iraq

It's the Oil, Stupid by Michael Klare from Foreign Policy in Focus, May 2003. Also PDF

Iraq Occupation Report: Control of Oil Revenues by Michael Renner with Erik Leaver and Bo Palmer, September 2003 (PDF)

IRAQ: the petroleum exploration and production handbook by Michael A.G. Bunter (introduction and book promo, PDF)

Considerations For the Management Of Oil In Iraq: A Human Rights Watch Background Briefing (April 2003, PDF)

Woodside announces deal with Iraqi government, Nov. 2004

Crude designs: The Rip-Off of Iraq's Oil Wealth, Platform, IPS and others, Nov. 2005

War For Oil: Iraq

From Oilwatch Network Bulletin "Resistance" Number 35, February 2003

Various reasons have been officially given for the causes of the war Bush has announced against Iraq, but it is clear that this is another oil war. An eventual overthrow of Saddam Hussein will open great possibilities for transnational oil companies, especially for US companies.

Iraq’s proven reserves reach 112,000 million barrels of crude, the largest in the world after Saudi Arabia, although it is believed, since there have been no explorations in the last 10 years, since the Gulf War, that Iraq’s reserves could be greater than Saudi Arabia’s.

The US government will doubtless be the dominant foreign power in Iraq in the post-Hussein era. Representatives of various foreign oil companies have already been meeting with leaders of the Iraqi opposition, to discuss themes of “mutual interest”.

Among these opposition groups are the umbrella organization Iraqi National Congress (INC), supported by the US government. An INC oil engineer who lives in London declared that all the oil agreements are going to be revised when there is a change of government. The leader of the INC, Ahmed Chalabi, said that he looks favorably upon the creation of a consortium led by the United States to develop Iraq’s oil fields.

It is believed that companies such as ExxonMobil and ChevronTexaco could play a new role in Iraq. Iraq’s continued presence in OPEC is also questioned.

The five permanent members of the United Nations Security Council, the United States, Great Britain, France, Russia and China, have international oil companies, with strong interests in Iraq. Of these, France and Russia have hesitated in approving an eventual warlike intervention.

On this matter, the ex-CIA director James Woolsey considers that since France and Russia have oil interests in Iraq, someone ought to say to these countries that if the government of Iraq is changed, the Unites States is going to do everything possible to ensure that US companies work closely with the government of Iraq. And if these countries do not support the overthrow of Hussein, it is going to be difficult, if not almost impossible, that the new government will want to work with them.

Russia, via Lukoil, has important economic interests in Iraq, in 1997 it negotiated a US$4,000 million contract to develop the West Qurna oil fields in the south of Iraq (with reserves of 15 thousand million barrels), but the company did not begin activities due to the sanctions imposed on Iraq by the United Nations. Iraq has threatened that it is going to rescind the contract if work does not begin immediately.

In October of last year, the Russian services company Slavneft signed a services contract for US$52 million to drill in the Tuba field in the south of Iraq, and there is a proposal between the governments of Iraq and Russia for US$40,000 million to carry out oil explorations in the western desert of the country.

Iraq has a debt to Russia of between US$7 and 8 million dating to before the Gulf War. The leader of the INC has met with the Russian Ambassador in Washington, where he noted the urgency that Russia begin a process of dialogue with leaders of the Iraqi opposition.

On another side, the French company TotalFinaElf has negotiated the rights to develop the super giant oil field Manjón near the border with Iran, which could contain some 30 thousand million barrels of crude, but Iraq announced in July 2001 that it is not going to give France the priority in developing this field, due to its decision to join the economic sanctions.

In October 2001, Thierry Desmarest of TotaFinaElf said that this was not an opportune moment to negotiate potential new contracts with Iraq. “I am waiting to see what happens in the military/political arena in the coming months. However, we have carried out studies in the two principal Iraqi fields, and thus our presence would be important for a rapid development of these fields.”

THE TRUE REASONS FOR WAR

The Ba’ath regime is brutally tyrannical, there is no doubt of that, and for may years it was an ally of the West. From them the regime received the know-how and the precursors for developing the chemical weapons that serve to repress the Kurdish population, the same people who were massacred with mustard gas.

Today, Iraq is accused of possessing the technology to develop weapons of mass destruction, including chemical, biological and nuclear weapons, and thus, of constituting a threat to planetary security. (On this subject, the White House astonished the international community last year when it rejected any new proposal to strengthen the agreement on biological weapons. The obstacle was the theme of the processes of verification, which would permit inspection of the work that US biotechnology companies do. These companies made it very clear that they would not tolerate a monitoring of their installation for fear that their commercial secrets would be stolen. It is also ironic that in the war that is being planned, impoverished uranium could be used, which is a weapon of mass destruction, and that the United States has the largest arsenal of nuclear weapons and is, up to now, the only country which has used these kind of weapons against a civilian population).

However, it is a secret from no-one that the true cause is oil, as has been the case in all the wars in which Iraq has been involved in the last few years.

As Faisal Qaragholi, leader of the INC, has declared, oil has been a curse for the people of Iraq. In fact, oil has been a curse not only for the Iraqis. All the conflicts that exist in the Middle East have had as their origin manipulation exercised by European and US empires with the goal of having access to and control of the oil resources that exist there.

When the Ottoman Empire was defeated and fragmented, its administration was divided among several European countries.

England played a very important role in this division and from the beginning controlled oil production in northern Iraq (in Kurdish territory). Production increased with the construction of the Kirkuk oil pipeline to the Mediterranean. All this production was in the hands of British Petroleum, Shell, the French company Campaignie Francaise des Petroles and the US Near East Development Corporation.

With the new world leadership in the hands of the United States after the Second World War, it strengthened its presence in the Middle East, with the goal of maintaining control over production and over the important crude reserves in the region.

With major diplomatic pressure, the US achieved that 23.75% of the shares be handed over to US companies. In 1952 Iraq became one of the major crude exporters of the world.

In 1958 there was a revolution in Iraq led by Qasin, with one of its objectives being the reduction of the power which oil companies had had in their country up till that time, to renegotiate all the contracts and to use the foreign exchange from oil to reconstruct the failing Iraqi economy... A new legislation was developed and other measures were taken which were very well received by the Iraqi population.

In 1963 the Ba’th party still in power today carried out a bloody coup d’état, but maintained the nationalist policies of Qasin. In 1972 oil was nationalized.

Shortly afterward the Arab Israeli war took place, and the Arab oil-producing countries launched an oil embargo against the West. This increased the price of crude, and Iraq began to receive important foreign exchange for this resource, which greatly strengthened the Ba’th regime.

Its oil earnings were only interrupted by the Iran-Iraq war. This war also has oil origins. When the British divided up the Ottoman Empire, they left Iraq without a port on the Persian Gulf. Basora is 20 miles away from Shatt al Arab, but they inherited the right to use the coast and water, which gives them right of use up to a few meters out to sea. At the same time, all the oil tankers which have to leave via Abadan, Iran’s main oil refinery, have to pass by there, creating a new source of conflict. On the other hand, in this Iran-Iraq war, they fought for a strip of territory on the border between the two countries, where Iraq’s most important oil reserves could be found.

In the Iran-Iraq war, the Iraqi oil industry suffered great losses, since at the start of the War, the refinery in Basara was bombed. Two oil terminals in the south: Mina al-Bakr and Khor al-Amaya, as well as the southern section of an oil pipeline which joins the terminals with the oil fields in the north; the pumping stations and petrochemical plants, all were targeted by aerial bombing. Later Syria closed the Kirkuk flow of crude to the Mediterranean, which forced Iraq to work only with a small oil pipeline that crosses Turkey.

There was also the Iraqi invasion of Kuwait, on August 2, 1990. During the Ottoman dominion, Kuwait was administered from Basora and Baghdad, but this did not accord with Western imperial interests. They considered that such important oil reserves should not be just in one country (in this case Iraq), and thus they promoted the creation of Kuwait as an independent country. Iraq never accepted this division, and what they call the separation of their southern province of Kuwait.

The subsequent Gulf War in 1991, in which the United States and NATO invaded Iraq in retaliation for their invasion of Kuwait, had as its ultimate goal the weakening of OPEC.

This new war is also an oil war. A HIDDEN WAR

The bombing of Iraq since the Gulf War in 1991, has been more prolonged than that experienced by Vietnam. Since 1991, but especially in the last 4 years, the worst campaign of aerial bombing since the Second World War has been carried out by the United States and the United Kingdom.

Between August 1, 1992 and December 16, 1998, the United Kingdom had dropped 2.5 tons of bombs over the zone of the south of Iraq, that is an average of 0.025 tons per month. In the 18 months following, between the United States and the United Kingdom, 400 tons of bombs and missiles were dropped, because Iraq had not cooperated with the United Nations inspectors, who were looking for weapons of mass destruction.

The justification has been that these two countries have a mandate from the United Nations to patrol the so-called “aerial exclusion zones”, which gives them control over the majority of Iraqi air space. On this matter, the Secretary General of the United Nations, Boutros- Ghali, declared in 1992 that the subject of the exclusion zones was not covered when Resolution 688 of the UN Security Council was approved with relation to Iraq.

Tony Blair added that these exclusion zones allow the United States and the United Kingdom to accomplish a vial humanitarian function to protect the Kurds in the north of Iraq. Ironically, both countries give immense support to Turkey, the country which serves them as the base for their military incursions into Iraq, and Turkey is the country which has most persecuted, massacred and denied the rights of the Kurdish people.

It is important to mention that the most important oil reserves being exploited at the moment in Iraq are found in Kurdish territory, including the Kirkuk field, with 10 thousand million barrels of proven reserves.

In August 1999, The New York Times reported that US airplanes have been methodically attacking Iraq. In the last few months 1100 missiles have been dropped against 359 objectives.

Bombing has increased 300%. From August to December 2002 there have been 62 attacks by US airplanes (F-16) and Tornadoes of the Royal Armed Forces of the United Kingdom. According to declarations by the British Ministry of Defence, 124 tons of bombs have been dropped during this period.

The sanctions laid out in the “food for oil” program, which began in 1996, permit US$4,000 million a year in exports to Iraq, but it is calculated that the needs to cover the minimum necessities of the country reach up to US$7,000 million. A decade of sanctions has meant the greatest mortality in a stable population. It is calculated that this has reached 2 million people. UNICEF calculates that the sanctions have meant the death of around half a million children, but this number could be higher.

Another consequence of the sanctions has been the deterioration of all the oil infrastructure.

THE COST OF THE WAR

In a planning report of the United Nations it is estimated that the military campaign against Iraq could put some 10 million Iraqi civilians, including population of refugees and displaced persons, at risk of hunger and epidemics and in urgent need.

The United Nations calculates that the number of refugees could reach 900,000 Iraqis who would be forced to migrate to neighboring countries, of which some 100,000 would need urgent medical attention. Another 2 million will be internal refugees, and would also need help.

The report says that children younger then 5 years old, pregnant and breastfeeding women will be especially vulnerable due to the collapse of the primary health system which will happen as a consequence of the war.

As for infrastructure damages, the UN believes that during the invasion, oil production will be suspended in the country, their electricity network will be seriously damaged and the capacity of the Iraqi government to continue to distribute food rations as part of a humanitarian program supervised by the United Nations will be destroyed. It is likely that epidemics will be unleashed, including cholera and dysentery in epidemic and even pandemic proportions.

ANOTHER WAR FOR OIL

According to projections made for the year 2020, the United States will buy two out of every three barrels of oil which it consumes, and thus the president of the United States has declared that “energy security” is one of the principal keys of its foreign policy. Thus war and oil go hand in hand.

Vice-President Cheney warned that in 2001, the United States confronted its most serious lack of energy since the oil embargos of the 1970s, and that dependence on crude increases when foreign powers do not always have the United States in their hearts. In the year 2000, 55% of crude imports came from just 4 countries: Canada, Saudi Arabia, Venezuela and Mexico.

They see that it is therefore urgent to diversify their sources, and it is thus that world oil has become a national matter for the United States, and four strategic zones have been determined for the supply of oil and natural gas. These are: the Middle East, Africa, especially the deep sea reserves of the Atlantic coast, the Caspian and other production regions in the Western region.

In this context, an act of war against Baghdad has as its objective the taking of control over the vast oil resources of that country for the benefit of the US economy.

“When a change of regime occurs in Iraq one will be able to add between three and five million barrels of production to the world supply (of oil), a successful outcome of the war would be good for the economy” declared Larry Lindsay, ex-economic adviser to George W. Bush.

IRAQ’S OIL RESERVES

Iraq says that its proven reserves are around 112 thousand million barrels, the second largest in the world. The Iraqi government considers that if they initiate new exploratory campaigns, these reserves could reach up to 300 thousand million barrels.

Although only very limited explorations of gas have been made, the estimated reserves are of 10 trillion cubic feet, with a probable increase up to150 trillion cubic feet.

PRINCIPAL OIL FIELDS IN IRAQ

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
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