When it's over, who gets the oil?
iht.com
Dan Morgan and David B. Ottaway The Washington
Post
Monday, September 16, 2002
WASHINGTON A U.S.-led ouster of President
Saddam Hussein could open a bonanza for
American oil companies long banished from Iraq,
scuttling oil deals between Baghdad and Russia,
France and other countries and reshuffling world
petroleum markets, according to industry officials
and Iraqi opposition leaders.
Although senior Bush administration officials say
they have not begun to focus on the issues
involving oil and Iraq, American and foreign oil
companies have already begun maneuvering for a
stake in the country's huge proven reserves of 112
billion barrels of crude oil, the largest in the world
outside Saudi Arabia.
The importance of Iraq's oil has made it potentially
one of the administration's biggest bargaining
chips in negotiations to win backing from the UN
Security Council and Western allies for President
George W. Bush's call for tough international
action against Saddam. All five permanent
members of the Security Council - the United
States, Britain, France, Russia and China - have
international oil companies with major stakes in a
change of leadership in Baghdad.
"It's pretty straightforward," said James Woolsey, a
former CIA director who has been one of the
leading advocates of forcing Saddam from power.
"France and Russia have oil companies and
interests in Iraq. They should be told that if they
are of assistance in moving Iraq toward decent
government, we'll do the best we can to ensure
that the new government and American
companies work closely with them."
But he added: "If they throw in their lot with
Saddam, it will be difficult to the point of
impossible to persuade the new Iraqi government
to work with them."
Indeed, the mere prospect of a new Iraqi
government has fanned concerns by
non-American oil companies that they will be
excluded by the United States, which almost
certainly would be the dominant foreign power in
Iraq in the aftermath of Saddam's fall.
Representatives of many foreign oil concerns have
been meeting with leaders of the Iraqi opposition
to make their case for a future stake and to sound
them out about their intentions.
Since the Gulf War in 1991, companies from more
than a dozen countries, including France, Russia,
China, India, Italy, Vietnam and Algeria, have
either reached or sought to reach agreements in
principle to develop Iraqi oil fields, refurbish
facilities or explore undeveloped tracts. Most of
the deals are on hold until the lifting of UN
sanctions.
But Iraqi opposition officials made clear in
interviews last week that they would not be bound
by any of the deals.
"We will review all these agreements, definitely,"
said Faisal Qaragholi, a petroleum engineer who
directs the London office of the Iraqi National
Congress, an umbrella organization of opposition
groups that is backed by the United States. "Our
oil policies should be decided by a government in
Iraq elected by the people."
Ahmed Chalabi, the congress's leader, went even
further, saying he favored the creation of a
U.S.-led consortium to develop Iraq's oil fields,
which have deteriorated under more than a
decade of sanctions. "American companies will
have a big shot at Iraqi oil," Chalabi said.
The Iraqi National Congress, however, said it had
not taken a formal position on the structure of the
Iraqi oil industry in the event of a change of
leadership.
While the Bush administration's campaign against
Saddam is presenting vast possibilities for
multinational oil giants, it poses major risks and
uncertainties for the global oil market, according
to industry analysts.
Access to Iraqi oil and profits will depend on the
nature and intentions of a new government.
Whether Iraq remains a member of the
Organization of Petroleum Exporting Countries,
for example, or seeks an independent role, free of
the OPEC cartel's quotas, will have an impact on
oil prices and the flow of investments to
competitors such as Russia, Venezuela and
Angola.
While Russian oil companies such as Lukoil have
a major financial interest in developing Iraqi fields,
the low prices that could result from a flood of
Iraqi oil into world markets could set back Russian
government efforts to attract foreign investment in
its untapped domestic fields. That is because low
world oil prices could make costly ventures to
unlock Siberian oil far less appealing.
Bush and Vice President Dick Cheney have
worked in the oil business and have long-standing
ties to the industry. But despite the buzz about
the future of Iraqi oil in the industry, the
administration, preoccupied with military
planning and making the case about Saddam's
potential threat, has not taken up the issue in a
substantive way, U.S. officials say.
The Future of Iraq Group, a task force set up at
the State Department, does not have oil on its list
of issues, a department spokesman said last week.
An official with the National Security Council
declined to say whether oil had been discussed
during consultations on Iraq that Bush has had
over the past several weeks with President
Vladimir Putin of Russia and Western leaders.
On Friday, a State Department delegation
concluded a three-day visit to Moscow in
connection with Iraq. In early October, U.S. and
Russian officials are to hold an energy summit in
Houston at which more than 100 Russian and
American energy companies are expected.
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