Iraqi Oil & American Interests

Iraq's new Oil Law
DOW JONES NEWSWIRES, 1/9/07. Iraq's massive oil reserves may be thrown open for large-scale exploitation by Western oil companies - which could end up grabbing up to 75% of the beleagured nation's oil profits.
A draft of this controversial law, which the U.S. government has been helping to craft, would give oil giants such as BP PLC (BP), Royal Dutch Shell PLC (RDSA) and ExxonMobil Corp. (XOM) 30-year contracts to extract Iraqi crude.
Oil industry executives and analysts say the law, which would allow Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise.
Supporters say that the 75%-profit provision will last only until they have recouped their initial drilling costs. After that, they would collect about 20% of profits, according to industry sources in Iraq. This is still twice the industry average for such deals.
Iraq's Deputy Prime Minister, Barham Salih, who chairs the country's oil committee, is expected to unveil the legislation as early as Monday and the government hopes to have the law enacted by March, according to the report.

UK Independent, Jan. 8

, UK Independent, Jan. 7

Majors were feeling competition
"Iraq is the last great frontier in the Middle East. The striking thing about other new frontier areas is how poor their record has been over the past three years in terms of discoveries. In Iraq, 80 per cent of the oil wells ever drilled have been discoveries," says David Horgan, Petrel's chief executive.

While the world's oil majors have so far shied away from investing, minnows such as DNO and Petrel Resources have taken the plunge. State-owned oil companies from resource-hungry countries such as China, India and even Russia have recently started dipping in their toes.

For these companies, the obvious risks are mitigated by the prospect of getting first dibs on a slice of Iraq's vast oil riches: not only is the country blessed with the world's second largest petroleum reserves after Saudi Arabia but much of it is "easy" oil because it is simple to extract from the ground. GulfNews.com

The U.S. has long pursued two oil interests in the Middle East:
• powerful American companies (e.g. Bechtel and Halliburton)
• the country as a whole.

The oil-danger posed by Saddam to the U.S. was limited.
• Saddam could never afford to stop producing oil.
• If he diverted oil from the U.S. we would buy it elsewhere at the same world price.

The case of U.S. companies is different.
• U.S. oil production is declining.
• They desperately need investment opportunities abroad.
• Iraq has the second largest and least developed oil reserves in the world.
• U.S. companies are anxious to enter Iraq when the U.S. provides security.

Partial Conclusion:
The interests of companies like Bechtel/Halliburton and a long-range concern with radical Islam's control of 60% of world oil supply may both have provided significan motivation for the neocons, but this needs more documentation. Circumstantial evidence for an interest in oil is provided by their focus on Iraq, Iran, Saudi Arabia, Uzbekistan, Kazakhstan, and Niger.

Neocon References to Oil:
"... if Saddam does acquire ... weapons of mass destruction, ... a significant portion of the world’s supply of oil will all be put at hazard." 1998 neocon letter to Clinton

"Combined with the potential privatization of the oil industry, such measures could provide incentive for Iraq to leave the OPEC cartel down the road, ... ensuring stable oil prices in the world market in a price range lower than the current $25 to $30 a barrel." Heritage Foundation Report, 9/24/2002

Rumsfeld Visits Saddam to Ask for Oil Pipeline Dec. 20, 1983.
Rumsfeld knew Saddam was using WMD (poison gas) against his own people almost daily, yet his visit was cordial. He assured Saddam of military assistance against Iran and sought his cooperation on an oil pipeline. Here's how a secret cable to the State Dept. summarized his talk with Saddam.

"Secret
In his 90-minute meeting with Rumsfeld, Saddam Hussein showed obvious pleasure with President's letter and Rumsfeld's visit and in his remarks removed whatever obstacles remained in the way of resuming diplomatic relations, but did not take the decision to do so. ... Rumsfeld told Saddam US and Iraq had shared interest in preventing Iranian and Syrian expansion. He said US was urging other states to curtail arms sales to Iran and believed it had successfully closed US-controlled exports by third countries to Iran. In response to Rumsfeld's interest in seeing Iraq increase oil exports, including through possible new pipeline across Jordan to Aqaba, Saddam suggested Israeli threat to security of such a line was major concern and U.S. might provide some assurance. Our initial assessment is that meeting marked positive milestone in development of US-Iraqi relations and will prove to be of wider benefit to US posture in the region."

Secret State Dept. cable quoted above.

Dec. 20, 1983 (419k PDF scan).
Secret State Dept. memo on poison gas.

Nov. 1, 1983 (86k PDF scan).
Shows Rumsfeld knew of "almost daily" use of poison gas against Iran.
NY Times report on this episode.
Rumsfeld shaking hands with Saddam.

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