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March 15-22: int'l peace demo against 5 years of war & occupation of Iraq |
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News archive 2003 |
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Oil firms guage potential in Iraq With the possibility of a war with Iraq, oil companies are starting to plan and prepare for the day when they may finally get a chance to work in one of the world's most oil-rich countries. Executives are conferrring with officials from the Bush administration, Department of Defense and State Department to figure out how best to jump-start Iraq's oil industry following a possible war, industry officials say. With reserves second only to Saudi Arabia, Iraq would offer the international oil industry enormous opportunity should a war topple Saddam Hussein. But the early spoils would probably go to companies needed to keep Iraq's already run-down oil operations running, especially if they were further damaged in a war. Oil-service firms such as Halliburton Co, where Vice President Dick Cheney formerly served as chief executive, and Schlumberger Ltd are favourites for what could be as much as $1.5 billion in contracts to upgrade wells and pipes around production facilities, according to a Deutsche Bank report. The major oil and gas producers won't be far behind. "Iraq is rich in potential," said Fadhil Chalabi, formerly an acting secretary-general for the Organization of Petroleum Exporting Countries and Iraqi oil official who is now executive director of the Centre for Global Energy Studies in London. "There will be room for everybody." While the Bush administration is loath to be seen as waging war for oil, industry officials say Washington is leaning heavily on the expertise of the nation's oil industry so that it is prepared to address its top postwar priority: funding a new regime with oil revenue. "If we go to war, it's not about oil," says Larry Goldstein, president of the Petroleum Industry Research Foundation in New York. "But the day the war ends, it has everything to do with oil." Iraq produces 2.8 million barrels of oil a day, though its infrastructure has seen little investment since the Iran-Iraq conflict and the 1990 Gulf War. What's more, Iraq is thought to have done considerable damage to its three large fields in recent years with on-again, off-again production; reports say its pipelines, ports and pumping stations are in a state of disrepair. With some attention, such as modernizing the injection systems of water-logged wells, industry experts say Iraq could be producing an additional million barrels of oil a day during the course of two years. With serious investment, they say the country could be producing six million barrels a day within five years. Industry officials say the Bush administration is keen on securing Iraq's oil fields and rehabilitating them. Oil-industry officials say Mr Cheney's staff hosted an informational meeting with industry executives in October, with Exxon Mobil Corp, ChevronTexaco Corp, ConocoPhilipps and Halliburton among the companies represented. Both the Bush administration and the companies say such a meeting never took place. Since then, industry officials say, the Department of Defense, the State Department and the Bush administration have sought input, formally and informally, from executives and industry experts on how best to overhaul Iraq's oil industry. One scenario has Iraq's oil fields emerging from a war unscathed. But should Mr Hussein torch his fields in defiance, as some have suggested, industry experts say construction firms as Bechtel Group would likely play a role in rebuilding. Such companies played a large role in rebuilding Kuwait's oil industry after Mr Hussein destroyed it during the Gulf War. Other possible oil-services winners, according to the Deutsche bank report: Baker Hughes Inc, BJ Services Do and Weatherford International Ltd. The industry could face costs, too, especially if any military action affects other businesses in the region. Hailliburton says it suffered large losses in Kuwait, Qatar, Saudi Arabia and United Arab Emirates before and during the Gulf War and restoring fields didn't make up for all it lost. Short of a war, Deutsche bank predicts that an end to United Nations sanctions would lead to an opening up of Iraq's oil sector, though perhaps not to US companies. While UN sanctions have prevented large-scale foreign investment, Mr Hussein has signed $38 billion in production agreements, including contracts with China National Petroleum Co, and a Russian consortium led by LUKoil (it has since cancelled the Russian contract). Iraq has also signed less-binding memos of understanding with France's Total Fina Elf SA and Italy's ENI SPA, among others. Such companies are expected to prosper if Mr Hussein were to stay in power, while a US-led victory is expected to give US companies such as ExxonMobil and ChevronTexaco an inside track. And while denying that they are meeting with administration officials, industry executives acknowledge that the oil industry and the government have a history of sharing information, such as during the Gulf War when Mr Hussein was destroying oil fields. Copyright: The Wall St Journal FAIR USE NOTICE. This document may contain copyrighted material whose use has not been specifically authorized by the copyright owner. Boycott Bush is making this article available in our efforts to advance the understanding of US foreign politics, corporate accountability, human rights, labor rights, social and environmental justice issues. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner. |
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