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TechnoratiLONDON - The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.
![[A Shell service station seen on September 20 in Manassas, Virginia. The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London. BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
(AFP/File/Karen Bleier)]](http://www.commondreams.org/files/article_images/ShellOil1013.jpg "ShellOil1013.jpg")
BP, Shell and
ExxonMobil are all expected to attend a meeting at the Park Lane Hotel
in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.
Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.
Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.
Al-Shahristani is expected to reveal some kind of "risk service agreements" that could run for up to 20 years, with formal offers to be submitted by next spring and agreements signed in the summer.
Gregg Muttitt, from the UK-based social and ecological justice group Platform, says he is alarmed that the government is pushing ahead with its plans without the support of many in Iraq.
"Most of the terms of what is being offered have not been disclosed. There are security, political and reputational risks here for oil companies but none of them will want to see one of their competitors gain an advantage," he said.
Heinrich Matthee, a senior Middle East analyst at the specialist risk consultant Control Risks Group, also believes there are many pitfalls for those considering whether to make an offer.
"Currently it is unclear which party in Iraq is authorised to award a contract and at the same time to deliver its side of the bargain," he said. "Any contract with an independent oil company will be subjected to opposition and possible revision after pressure by resource nationalists."
Oil companies will find their reputations at risk from the actions of their Iraqi counterparties, such as joint venture partners, suppliers and agents. They will also have to contend with oil smuggling and the possibility that the ruling alliance could collapse, Matthee said.
He said that if the conspiracy theory that western oil companies egged on US and British governments to invade Iraq were true, the plan could backfire on them and benefit rivals in Asia instead. "It is possible the American army has provided the economic stability that will encourage Malaysian, Chinese and other Asian companies to become involved," he said.
There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels."
China's state-owned oil group, CNPC, has already agreed a $3bn (£1.78bn) oil services contract with the government of Iraq to pump oil from the Ahdab oil field.
The deal is the first major oil contract with a foreign firm since the US-led war and was followed up by an agreement with Shell, potentially worth $4bn, to develop a joint venture with the South Gas Company in Basra.
This deal has also triggered controversy. Issam al-Chalabi, Iraq's oil minister between 1987 and 1990, questioned why there had been no competitive tendering for the gas-gathering contract and claimed it had gone to Shell as the spoils of war.
"Why choose Shell when you could have chosen ExxonMobil, Chevron, BG or Gazprom?" he asked. "Shell appears to be paying $4bn to get hold of assets that in 20 years could be worth $40bn. Iraq is giving away half its gas wealth and yet this work could have been done by Iraq itself."
The Baghdad government says it aims to increase crude oil production from 2.5m barrels a day to 4.5m by 2013, but faces internal opposition from regional governors and political opponents.
The sale today comes as oil prices have plummeted after stockmarket turmoil on Friday. The price of crude fell by more than $4 at one point to $75 a barrel - the lowest point since September last year and a sharp drop from its peak of $147 in July. Opec, the oil producers' cartel, has called an emergency meeting to agree a cut in output to bolster prices in spite of protestations from politicians including Gordon Brown. Brown said on Friday: "We've had some success in getting the price of oil down: the price this morning is roughly $80, about half what it was a few months ago. I want these price cuts passed on to the consumer as quickly as possible.
"I'm concerned when I hear that the Opec countries are meeting, or are about to meet, to discuss cutting production - in other words, making the price potentially higher than it should be.
"I'm making it clear to Opec it would be wrong for the world economy and wrong for British people who are paying high petrol prices and high fuel prices to cut production and therefore keep prices high."
A government source said: "The one chink of light has been the fall in the price of oil. The last thing we want is to head into a difficult period with a return to high oil prices. People need to act responsibly."
41 Comments so far
Show AllThe price at the pump in the USA is down a dollar a gallon from its $4+ range in August.
Some would say this is an artificial pre-election dip orchestrated by the oil companies to benefit the GOP: having used consumer outrage over the high price of gas to steam roller offshore drilling through the Congress ("Drill, baby, drill!"), the pump price will stay low awhile, at least until the votes get counted on November 4th. Once again, the invisible hand of the market place heals all wounds.
Others (like me) believe the dramatic fluctuation was primarily due to realization that Bush's plans to bomb and/or outright escalate the Iraq millitary venture into Iran had been temporarily thwarted. It was the prospect - likely disruption of Persian Gulf oil supplies - that caused the commodities futures speculators to bid the price of a barrel of crude sky high to begin with. The current drop in price at the pump for American drivers is thus just a cyclical readjustment back down to the real worldwide supply/demand level, with the speculators simply cashing in their profits while big oil laughs all the way to the bank (now that the bank has been bailed out with public funds).
Sure, peak oil and the growth of China and India explains the big petro picture. But conditioning American consumers to expect and tolerate exhorbitant pump price variations courtesy of military events on the ground in the Middle East is the real, enduring legacy of the Bush years.
Whatever the Maliki government is putting up for bids in London regarding development of Iraq's future oil reserves is a paper committment no more reliable than the stability of the US-backed Maliki regime itself. What prudent investor would take that to the bank?
Bill from Saginaw
Have you ever heard of ICE? Set up a few years ago by Major Oil, started trading futures and setting the price of oil there rather than Chicago and New York regulated commodity exchanges.
A offshore exchange, totally unregulated. I'd think oil companies wouldn't have had a lot of trouble manipulating the price, would you?
It would certainly explain the huge price increases when we were absolutely awash in oil and natural gas the last few years.
Thats my bet.
PS...I understand the Saudi's had a hand in the exchange, but its not certain knowledge.
Nietzsche
Steam power was invented over 100 years ago. It has served us well but it is time to move on. No more burning fossil fuels or running reactors to make steam. Wind, solar, waves are the only way to go and our only hope for the future, if we still have one.
Again CD missed a bigger story.
US vet claims a 5 KILO Nuke bomb dropped near Basra in 1991 . Full story to hit Italy news this Thursday . Seismic sensors in the UK picked up such a blast on the day in question at the end of the war. If this is true then the US is so guilty of a long list of crimes.
Carbon tax on large polluters and a gouge tax that can't be passed on to the public on oil companies. That gouge tax goes 2 places. One 50% of it back to each person who uses gas at income tax time and 2 the other 50% into alternative fuels with a full electric , Air , what ever. Price fixing like OPEC does has to stop. You set how much profit these guys can make, the end.
I'm really angry that the price of oil has fallen. I traded my car in and bought a horse. Now people look at me like I'm crazy. It's a nice horse too, all chestnutty. It's name's Flicka.
Parking it in the main street isn't easy and the watering troughs are all gone.
Who will I sue? George?
www.dangerouscreation.com
After the occupation started George W. Bush's first statement at his first press conference at Camp Lejeune: "Our first objective was to secure the southern oil fields, we accomplished that objective.", "hooah...woof...woof...hooah."
This sale of Iraqi oil reserves comes without the consent of the Iraqi people. The subsequent escalation of injustice/insecurity will have a double payoff for Washington/London: more profit, more terror.
"The one chink of light has been the fall in the price of oil. The last thing we want is to head into a difficult period with a return to high oil prices. People need to act responsibly."
... Right, act responsibly and use up that oil ASAP. Hit that brick wall at top speed. Don't slow down, let those corporations rip through it and pocket the bribes.
Perhaps I should conduct business deals with an armed occupation in place, I bet I could get somewhat better terms.
Funny how people get upset about Opec wanting to raise the price of oil. IMHO we *need* oil to be more expensive. Strange part is that we can have our cake and eat it too. All we have to do is the same thing the Alaskans do. Tax the oil as it comes in on tankers and pay out a dividend to all citizens. I've written up some analysis here: http://kiatoa.blogspot.com I'm particularly pleased with the price/demand chart analysis that attempts to show that we can morally and practically take the unearned profits away from the oil companies and leave them with ample profits to justify their investments.
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90% of the wealth is in 2% of the hands. Bummer to be in the majority.
"People need to act responsibly."
By "people", he means OPEC, and by "act responsibly",
he means keep production up or there's no telling
what the US/UK might do.
A very thinly-veiled threat if I ever saw one.
We'll soon see Bush behind a banner reading "Mission 40% Accomplished!"
Where is it going to be done? On a row boat?
Thats was great!
Alan MacDonald
I've been posting this for 5 years:
The hidden secret of this 'smash and grab' OIL-WAR occurred in March of 2001 when then Exxon CEO Lee Raymond addressed Cheney's secret energy/war planning meeting (in front of Pentagon brass who Cheney strangely ordering into this supposed 'energy' meeting), and said:
"In the near future, the acquisition of oil will not be able to be achieved through 'market based' forces (IE. buying the stuff), but will need to be secured through 'extra-market based' forces" (IE. military force).
Cheney did not have to tell the Pentagon brass what Raymond meant by 'extra-market based' forces --- but the US people took 7 years, a 'false flagged' attack that killed 3000 on 9/11, an illegal preemptive war crime against Iraq, over 4000 dead US 'working-class' kids, and millions of Iraqi innocent civilian deaths --- and now a looming nuclear war with Iran, to understand what Cheney and Raymond were planning in the very first days of the Bush 'corporatist Empire'.
Alan; Nice Post-So hard to be raped at High Noon at 1st & Main, but America has been by the neoCONScum.
How complicit do you feel Cheney was in 9-11? I see his hands on remote controls, vectoring those missiles through the most heavily defended airspace on the planet-except on that day.
To An End to The Lunacy:
Obama.
And it didn't take any severe prescience for the causal observer to notice this from many other subsequent events.
snydly
Hey wait a minute---if they went in for oil, that makes somebody war criminals.
That's a serious charge. Somebody ought to look into that. How about the mis-appropriation and abuse of our Armed Forces? There are good people in gov't Agencies who could address this.
The situation is so full of ambiguities it makes one wonder how much Insider Trading ethics are involved in a deal involving so much capital and upon such short notice? The idea that knowing information about which entity has power and interest in which controlled contingencies was worth investment as soon as it was clear that this "auction" would occur. It's more of a "turkey shoot" for some than others, and in light of the various "bail-outs" going on internationally, apparently, the availability of credit itself has changed mightily in the last few months before this "public" announcement. What's to keep the Saudies or Halliburton from bidding in on this?
On the other hand, maybe this economic entanglement, maybe just the vastness of it's web itself, will bring stability to the region. But will it turn out simply to be a supra-governmental financial cartel subject to no controls at all -- terrorist capitalism so to speak?
All of this is of such pervasive significance being announced as if it were an auction for the benefit of your local homeless shelter? What can anyone do about it, influence it, etc., if one's gun wasn't loaded for this game months ago?
All these things which are part of the earth should be somehow as commonly owned.
Theories....yes people, somebody out there must still believe one of us doesn't know the truth...
so, a new Iraqi government is feathering its own nest; and what's new there?
And oil is at $80ish. Just wait, as soon as the economic shock wears off a tad and spring comes oil prices will rocket once more, and the economy will hit another buffer, and the financial world will quake, and the economy will nosedive again, and some other short-termists will make a killing, and so the spiral will descend....and then we'll fight not Iraqis, but ourselves, to survive, and so down and down we'll go...down and down and down....
bligh4
If the U.S. did have a plan for war to seize the oil -they suck at it.
With many of the contracts going to foreign countries, if we STOLE the rest of the oil it would still take several decades to generate enough profit to cover the cost of continueing this stupid war.
"... it would still take several decades to generate enough profit to cover the cost of continuing this stupid war."
But that's NOT how the game works.
Since the invasion of Iraq, the oil companies have been rewarded with all time record profits. It is the soldiers and their families, the American taxpayers, and of course the Iraqi people who bear the costs.
The oil companies get all the profits while everyone EXCEPT the oil companies pays and pays and pays.
This isn't about "covering the costs"; it's about having the American public and the American military subsidizing BIG OIL. Some might call it State Capitalism or just good old corporate welfare. The US has gone bankrupt playing this little game; which candidates have promised to end it? Which candidates have even spoken truthfully about it? This form of "subsidized empire" is killing us and neither of the two major parties, or their candidates up and down the ticket, will even discuss it.
Not the US, Cheney & Co. And no-one is claiming they were smart, just greedy.
Was there ever any doubt???? How about the "theories" about how the WTC buildings on 9/11???
I read the PNAC docs back in early 2000, so when the WTC collapsed and the war against Iraq started - I knew it was the neo-cons just following their plan for US/sole superpower hegemony around the globe:
1. have a "New Pearl Harbor" to scare the bejeebus out of Americans
so they'll sign up to fight a pre-emptive war for oil;
2. invade Iraq, steal the oil, build huge permanant military bases
from which to move east and steal more resources, etc..
End of story - written and perpetrated by lying, cheating, arrogant, evil men!
All the oil companies need now is Pat Lamarche. She has become a shill for the
Casino Companies..Will she keep writing religion for Common Dreams?
This is great the Jews run the banks, the Muslims own the oil, and young Christians boys spill their blood to keep the game going on.
Take your nasty anti-semitism somewhere else. Hate and racism don't belong here.
.Excuse me sir, would you mind opening a window as the stench of your post is rather overpowering? Thanks much.
.
We see things, not as they are, but as we are.
Anais Nin
New roadmap - a coalition of organizations calling for five principles in foreign policy being firlded by the American Friends Service Committee - Friends Committee on National Legislation. Keep the pressure on.
http://www.roadmapforpeace.org/
King George and Darth Cheney are using the Debt Bomb just as they did in the First Oil War.
Mission accomplished.
Afraid CheneyOilCo is not done yet... still have a few weeks of sociopathic button-pushing agenda to survive... and then, they've already got the next puppets strung up and ready to go after that disaster point.
ain't no chicken gonna get accross that road for a looooong time.
"People need to act responsibly."
That would mean driving MUCH less.
Brown's statement implies there's been coordinated effort to drive oil price down.
The only people saying the war wasn't for oil are those paid to say so.
As soon as some semblance of stability returns to the financial system, oil price will rise again for the same reason it did previously--there's not enough supply to satisfy demand, particularly at the low price of $80/bbl. This is the fundamental aspect of the internal OPEC debate: "The price will rise soon enough, so production doesn't need to be lessened"; and, "the lower price now will cause a resurgence in demand, which will then cause the price to rise again to its previous level"; versus, "We must have a higher price soon in order to continue to finance the many projects (of all sorts, including those oil-related) we've already started."
Given the steep Russian export decline, I think OPEC will not lower production, officially. Personally, I think oil will be back over $100 by year end, likely sooner. Brown's further demand that lower prices be passed on ASAP is an indirect admission to the economy's weakness. But if people save the monies not spent on driving, the effect will be the same as if no drop in price occured.
Theories??!! Theories??!!!! Oh, puhleeeeeeeze...
That's the one that caught my eye. The dismissive tone towards 'theories' in the headline.
----------------------------
"To know, and not to do, is not to know"
www.samsonsworld.blogspot.com
Who are these Iraqis who would bring foreign armies their shores to rape and pillage their own people and give their sovereignty and wealth away in order to enrich themselves and their immediate families?
.Yeah, imagine the nerve, oh wait, invited guests? Any chance they'll reimburse the US and Britain for the cost of raping their nation?
.
We see things, not as they are, but as we are.
Anais Nin
Are there still people who don't know that the war was for oil? Too bad Iraq waited so long to sell. Had they sold several months ago they could have sold the oil for double the money!
Dave
http://daveeriqat.wordpress.com/
That's exactly why they waited so long. We don't want the oil companys to pay too much do we? It might take away some of their profit margin...
Alan MacDonald
Dave, yes there are such people, and it's still not nice to say "oil-war".
This war is not about oil. They just don't like our democracy and remember 9/11. Obama is really going to bring change. And we all know that Nader was responsible for Gore losing and not because Gore picked Lieberman as VP.
I see no reason why we should impeach Bush. The FISA act is really protecting us. And we need to bail out Wall Street, though we can't afford universal health care.
See, it all makes sense.
www.NotOneMore.US