http://www.observer.co.uk/iraq/story/0,12239,825105,00.htmlFocus: Iraq
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Carve-up of oil riches begins
US plans to ditch industry rivals and force end of Opec, write Peter
Beaumont and Faisal Islam
Sunday November 3, 2002
The Observer
The leader of the London-based Iraqi National Congress, Ahmed Chalabi,
has met executives of three US oil multinationals to negotiate the
carve-up of Iraq's massive oil reserves post-Saddam.
Disclosure of the meetings in October in Washington - confirmed by an
INC spokesman - comes as Lord Browne, the head of BP, has warned that
British oil companies have been squeezed out of post-war Iraq even
before the first shot has been fired in any US-led land invasion.
Confirming the meetings to US journalists, INC spokesman Zaab Sethna
said: 'The oil people are naturally nervous. We've had discussions
with them, but they're not in the habit of going around talking about
them.'
Next month oil executives will gather at a country retreat near
Sandringham to discuss Iraq and the future of the oil market. The
conference, hosted by Sheikh Yamani, the former Oil Minister of Saudi
Arabia, will feature a former Iraqi head of military intelligence, an
ex-Minister and City financiers. Topics for discussion include the
country's oil potential, whether it can become as big a supplier as
Saudi Arabia, and whether a post-Saddam Iraq might destroy the
Organisation of Petroleum Exporting Countries.
Disclosure of talks between the oil executives and the INC - which
enjoys the support of Bush administration officials - is bound to
exacerbate friction on the UN Security Council between permanent
members and veto-holders Russia, France and China, who fear they will
be squeezed out of a post-Saddam oil industry in Iraq.
Although Russia, France and China have existing deals with Iraq,
Chalabi has made clear that he would reward the US for removing Saddam
with lucrative oil contracts, telling the Washington Post recently:
'American companies will have a big shot at Iraqi oil.'
Indeed, the issue of who gets their hands on the world's second
largest oil reserves has been a major factor driving splits in the
Security Council over a new resolution on Iraq.
If true, it is hardly surprising, given the size of the potential
deals. As of last month, Iraq had reportedly signed several
multi-billion-dollar deals with foreign oil companies, mainly from
China, France and Russia.
Among these Russia, which is owed billions of dollars by Iraq for past
arms deliveries, has the strongest interest in Iraqi oil development,
including a $3.5 billion, 23-year deal to rehabilitate oilfields,
particularly the 11-15 billion-barrel West Qurna field, located west
of Basra near the Rumaila field.
Since the agreement was signed in March 1997, Russia's Lukoil has
prepared a plan to install equipment with capacity to produce 100,000
barrels per day from West Qurna's Mishrif formation.
French interest is also intense. TotalFinaElf has been in negotiations
with Iraq on development of the Nahr Umar field.
Planning for Iraq's post-Saddam oil industry is being driven by a
coalition of neo-conservatives in Washington think-tanks with close
links to the Bush administration, and with INC officials who have long
enjoyed their support. Those hawks have long argued that US control of
Iraq's oil would help deliver a second objective. That is the
destruction of Opec, the oil producers' cartel, which they argue is
'evil' - that is, incompatible with American interests.
Larry Lindsey, President Bush's economic adviser, recently said that a
successful war on Iraq would be good for business.
'When there is a regime change in Iraq, you could add three to five
million barrels
of production to world supply,' he said in
September. 'The successful prosecution of the war would be good for
the economy.'
Analysts believe that after five years Iraq could be pumping 10m
barrels of oil per day. Opec is already starting to implode, with
member nations breaking quotas in an attempt to grab market share
before oil prices fall.
Russian concern over a future INC-inspired carve-up of Iraq's oil to
the benefit of the US has become so intense that it recently sent a
diplomat to hold talks with INC officials. At that meeting in
Washington on 29 August the diplomat expressed concern that Russia
would be kept out of the oil markets by the US.
A model for the carve-up of Iraq's oil industry was presented in
September by Ariel Cohen of the right-wing Heritage Foundation, which
has close links to the Bush administration.
In The Future of a Post-Saddam Iraq: A Blueprint for American
Involvement, Cohen strikes a similar note to Chalabi, putting forward
a road map for the privatisation of Iraq's nationalised oil industry,
and warning that France, Russia and China were likely to find that a
new INC-led government would not honour their oil contracts.
Cohen's proposal would see Iraq's oil industry split up into three
large companies, along the areas of ethnic separation, with one
company in the largely Shia south, another for the Sunni region around
Baghdad, and the last in the Kurdish north.
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