Tag: Oil Industry

Why Is Iraq Oil poor?

This is from an article in Time.

Frustration over the sluggish pace of Iraq’s oil production is rising in the country and abroad as global prices soar. (At the same time, current oil revenues account for 90% of the government’s substantial budget surplus of roughly $50 billion, unspent because of inefficient infrastructure and bureaucracy.) Much of Iraq starves for electricity and fuel as vast amounts of oil and gas sit untapped in the ground. Iraq’s oil industry needs a virtual overhaul to reach a level of production that could erase chronic fuel shortages in the country and rake in windfall profits to be had on the world market. The Iraqi government and more than two dozen oil companies are in the midst of drafting plans to begin the work. But the chances of success anytime soon are far from certain. Political pitfalls in Baghdad and ground realities in areas where resources rest could undo the long awaited bonanza before it begins.

In April, Iraq’s Ministry of Oil drew up an elite roster of companies ranging from Malaysia’s Petronas to Russia‘s Gazprom. The list of 35 corporations, including six American giants, reads like a who’s who of global oil players, all of whom are invited to bid on eight major oil and gas projects Iraq wants to launch next year. The goal is to get Iraq, currently producing about 2 million barrels a day, pumping up to 3 million by the end of 2009. The eight oil projects on offer to outside companies chiefly involve refurbishing and developing various oil and gas fields in southern Iraq. American and Iraqi officials say the projects can go forward without passage of a long-delayed national oil law, as long as each contract individually is approved by the Iraqi government and endorsed by the parliament.

In the largely autonomous Kurdish territories of northern Iraq, the regional government is already moving ahead with oil deals of its own that the central government in Baghdad considers illegal. For the most part only small wildcatter firms have bypassed Baghdad for such deals, since their future legality remains uncertain in the absence of a national oil law. Most big players at present appear to be eyeing potential ventures in Iraq’s vast oil territory around Basra instead. Years of neglect have left many oil fields there looking like junkyards. Rusting vehicles, heaps of trash and pools of spilled oil litter a hazy expanse dotted with plumes of flames from gas flares. “We need equipment, we need instruments, we need a lot of technical help,” says Jabbar al-Ueaibi, the head of South Oil Company, an arm of Iraq’s Ministry of Oil.

But any oil company looking to get involved in Iraq faces some major disincentives. Without an oil law, which appears unlikely any time soon because of political bickering, companies wanting to start work in Iraq must essentially lobby both the Iraqi parliament and the government, which rarely find consensus. Two of the biggest projects, gas fields in the provinces of Anbar and Diyala, sit in territory plagued by violence and tribal politics. And none of the ventures are likely to allow companies to have a stake in any newly discovered oil reserves, the real moneymaking prize. “These deals themselves are not likely to be hugely lucrative,” says Charles Ries, the American embassy’s economic coordinator in Iraq.

Kucinich Strikes Again!

You go Dennis!

Rep. Dennis Kucinich has introduced a measure that would bar US oil companies from receiving contracts in Iraq.

The Ohio Democrat, who believes exploiting Iraq’s massive oil reserves was the primary reason we invaded, introduced a measure he says aims to keep Iraq’s oil wealth within the country.

“Iraq needs oil revenue now more than ever as they try to rebuild their country,” Kucinich said Thursday, unveiling the Oil for Iraq Liberation Act.

Kucinich noted Congress recently required Iraq to match US investments in the country’s reconstruction, and he implied that Iraq’s ability to contribute to its reconstruction was damaged because of its reliance on oil revenue

It’s unclear what effect, if any, Kucinich’s proposal would have on companies like the former British Petroleum, which is headquartered in London; Total, based in Paris; or Royal Dutch Shell, headquartered in The Hague. Of the companies reportedly in line to receive contracts, only ExxonMobil and Chevron are based in the US, but both operate around the globe.

In his floor speech, he said the bill would “discourage US oil companies from profiting from the war and will stop the further theft of Iraq’s oil resources by the very interests who have profited from the war for oil: the US oil companies.”

Candidates And Their Answers To The Fuel Problem

Just like every other social problem confronting working people—from home foreclosures, to the massive loss of jobs, the growth of social equality and the danger of war—capitalist political parties around the world have no solution for the staggering rise in fuel prices, whether they call themselves, conservative, labor, Green or socialist. Instead, they all agree working people must accept a massive reduction in consumption to pay for the crisis of the world capitalist system.

In the US neither the Republican nor the Democratic candidate for president has anything to offer. John McCain has called for a $300 million reward for the design of an electrical car, the suspension of the 18-cent federal gas tax for the summer months and lifting environmental restrictions on offshore drilling.

In an effort to pose as a populist opponent of the oil companies and speculators, Barack Obama has called for energy corporations to pay a windfall profit tax and for the closing of the so-called “Enron Loophole.” This will go nowhere, however, since large sections of Democrats, particularly from oil states, oppose any tax on the energy conglomerates, and Wall Street—which has thrown the bulk of its money behind the Obama campaign—opposes any serious regulation on speculation.

Obama himself has close ties to the bio-fuel industry and counts among his top advisors a former lobbyist from the American Petroleum Institute and ex-officials in the Clinton administration officials who played key roles in deregulating the financial markets. In order to win the approval of his corporate and financial paymasters, Obama has repeatedly insisted he will take no measures that undermine their profit interests. The Democratic candidate’s web site declares, “Barack Obama recognizes that it is critical that oil companies and shareholders have strong incentives to run well managed businesses that invest in efficiency and innovation.”

What a crock!  Just bite the bullet and nationalize the industry–bet the guys woiuld find ways to bring gas porices down and still have money for development.