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The Battle for Iraqi Oil

Legacy | 23.01.2003 15:47

2 essential articles (below) - a must read for everybody!!!
Firstly, there is an interview with Colin Campbell of the Association for the Study of Peak Oil and a Trustee of the Oil Depletion Analysis Center in London, which reveals the reality of oil reserves on the planet and the global politics at play over it. The second article is entitled: "U.S. corporations and Iraqi oil: Skulduggery since the 1920s", by Richard Becker - a quite excellent overview of the legacy of imperialist interference in the Middle East up to the present day.

Colin Campbell on Oil

Perhaps the World's Foremost Expert on Oil and the Oil Business Confirms the Ever More Apparent Reality of the Post-9-11 World

by Michael C. Ruppert
Taken from From the Wilderness publications
Ref:  http://www.fromthewilderness.com/free/ww3/102302_campbell.html
Oct. 23rd 2002
Colin Campbell is both an academic and a businessman. Educated at Oxford and holding a Masters degree he has served as a geologist for Oxford University, Texaco, British Petroleum and Amoco (prior to the BP Amoco merger). He has served in executive positions with Shenandoah Oil, Amoco, Fina and was Chairman of the Nordic American Oil Company. He has served as a consultant on oil for the Bulgarian government as well as for Statoil, Mobil, Amerada, Total, Shell, Esso and for the firm Petroconsultants in Geneva. He is the Convener and Editor of the Association for the Study of Peak Oil and a Trustee of the Oil Depletion Analysis Center in London.

As a member of The American Society of Petroleum Geologists, The Geological Society of London, and the Petroleum Institute of London he has delivered more than 35 lectures on oil depletion on three continents. His hosts have included universities, governments, and auto manufacturers. He has been published more than 150 times in the field including the 1997 book "The Coming Oil Crisis" (Multi-Science Publishing Co. & Petroconsultants).

Before beginning this interview it is necessary for the reader to understand several critical factors about oil and oil production. All of these factors affect how much you or industry pays for oil, how much is available, and what this life-essential commodity can do. Almost every current human endeavor from transportation, to manufacturing, to plastics, and especially food production is inextricably intertwined with oil and natural gas supplies. Commercial food production is oil powered. All pesticides are petroleum based, and all commercial fertilizers are ammonia based. Ammonia is produced from natural gas.

All oil production follows a bell curve, whether in an individual field or on the planet as a whole. On the upslope of the curve production costs are significantly lower than on the downslope when extra effort (expense) is required to extract oil from reservoirs that are emptying out. The best and easiest to produce oil is always extracted first to maximize profits. In 100 years mankind has used half of all the oil on the planet, oil that took billions of years to produce and is the result of climactic conditions that have existed at only one time in the earth's 4.5 billion- year history. Oil is a non-renewable resource.

The key event in the Petroleum Era is not when the oil runs out, but when oil production peaks, especially as demand and population are rising. World per capita oil production peaked in 1979 and has been in decline since. The peak in volume of total world oil production is upon us right now, even as the demand or better said -- the need -- for oil is increasing rapidly.

Several things are a given. First the total remaining conventional oil on the planet is estimated to be around 1 trillion barrels. Second, at present rates (not those of five or 10 years from now), the world is using close to 80 million barrels per day. At the current rate there would be only enough oil to sustain the planet for another 35 years under the best of scenarios. But the oil that remains is going to be increasingly expensive to produce and it will tend to be of a lesser quality, necessitating higher refining costs, than what has already been used. All of those costs will have to be passed on in the form of price hikes or -- in some cases -- spikes. Oil price spikes invariably lead to recession. The world's economy is based upon the sale of products that are either made from oil or which need hydrocarbon energy (including natural gas) to operate, either via internal combustion or via electricity.

Different regions of the world peak in oil production at different times. The U.S. peaked in the early-1970s. Europe, Russia and the North Sea have also peaked. However the OPEC nations of the Middle East peak last. Within a few years they -- or whoever controls them -- will be in effective control of the world oil economy, and, in essence, of human civilization as a whole. Two of the nations that will peak last are Saudi Arabia and Iraq, both of which will not peak until the middle of the next decade. Saudi Arabia contains 25 percent of all the oil on the planet. Iraq contains 11 percent of all the oil on the planet.

Science and the oil industry have confirmed that there is very little oil left to be found, certainly not enough to make a difference in this grim picture, a picture which goes a long way toward explaining the events of 9-11 and since.

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FTW: What will be the likely effects of hitting the downslope of production?

Campbell: Big question. Simply stated: war, starvation, economic recession, possibly even the extinction of homo sapiens, insofar as the evolution of life on earth has always been accomplished by the extinction of over-adapted species (when their environmental niche changed for geologic or climatic reasons) leaving simpler forms to continue, and eventually giving rise new more adapted species. If Homo sapiens figures out how to move back to simplicity, he will be the first to do so.

FTW: How soon before we start to feel the effects of dwindling oil supplies?

Campbell: We already are -- in the form of the threatened U.S. invasion of the Middle East. The U.S. would be importing 90 percent of its oil by 2020 to hold even current demand and access to foreign oil has long been officially declared a vital national interest justifying military intervention. Probable actual physical shortage of all liquid hydrocarbons worldwide won't appear for about 20 years, especially if deepening recession holds down demand. But people are coming to appreciate that peak is imminent and what it means. Some places like the U.S. will face shortage sooner than others. The price is likely to soar as shortage looms, which itself may delay peak.

If the U.S. does invade there will likely be a repeat of Vietnam with many years of fruitless struggle in which the U.S. will be seen as a tyrant and an oppressor, killing all those Arabs. It can't hope to subjugate the place in perpetuity as the people don't surrender easily -- as the Palestinians have shown. So when the U.S. has finally gone, Russia and China will likely be welcomed there to produce whatever is left in the ruins.

FTW: Are the major oil companies currently downsizing? If so why?

Campbell: The majors are merging and downsizing and outsourcing and not investing in new refineries because they know full well that production is set to decline and that the exploration opportunities are getting less and less. Who would drill in 10,000 feet of water if there were anywhere else easier left? But the companies have to sing to the stock market, and merger hides the collapse of the weaker brethren. The staff is purged on merger and the combined budget ends up much less than the sum of the previous components. Besides, a lot of the executives and bankers make a lot of money from the merger.

FTW: How much oil is really left?

Campbell: You have to think of different categories of oil. Speaking of conventional, which is the easy cheap stuff that has supplied most uses to date and will dominate all supply far into the future, there is about 1 trillion barrels left. To this you have to add:

A) Oil from coal, "shale," tar sands, heavy oil -- the resource is very large, but extraction rate is low and costly, sometimes giving negative net energy.

B) Deepwater oil -- (from a depth of greater than 500 meters) about 60 billion barrels

C) Polar -- about 30 billion, maybe.

D) Natural gas liquids -- about 300 billion barrels

FTW: I take it that it is a given that in any particular oil field, or globally, costs of extraction increase as one progresses down the curve. What is the usual nature of these increased costs? Do they usually require additional investment of capital for infrastructure? Is there a chart which shows how costs increase as production declines?

Campbell: Yes of course costs go up and every situation is different. In Texas they can still profitably use wells producing 5 b/d. But offshore the threshold is higher. It is more complex because they have the sunk costs of the platform and also face substantial abandonment costs. Furthermore tax distorts the picture, with most operating cost being written off against taxable income either in the host or home country or both. But reserves are defined as recoverable under current or foreseen economics, so non-economic tail-end theoretical production is not included anyway. I think the key issue is not so much the economic cut off but when production of even highly profitable oil heads into decline. The tail end, which is susceptible to economic constraints, is small and not very relevant. Oil has a polarity being either there in profitable abundance or not there at all -- mainly because it is a liquid that flows to accumulate somewhere, unlike coal where extraction is a matter of concentration in seam thickness and access.

FTW: Is all oil in the ground recoverable? If not, why not?

Campbell: Only a fraction of the oil in the reservoir is recoverable because it does not sit in one big cavern down there but in the very small pore spaces between the grains of sand. These grains are coated in water and when it coalesces, it blocks the pore spaces preventing the further movement of oil. Also there are many nooks and crannies in the rocks that are not in communication. Obviously light oil is easier to extract than heavy. You can pump in steam etc. to try and move it, which is now routinely done where feasible.

It is said that recovery has increased from 30 percent to 40 percent thanks to technology and is set to rise from more technology in the future. But most of this improvement has nothing to do with technology. It is an artifact of reporting. The industry has always made conservative initial estimates (liking to build an inventory of unreported reserves to tide them over bad years and also reduce taxes) so reserves naturally grow over time.

Besides, extracting a bit more has a minimal impact on peak, which is the critical turning point, much more important than eventually running [completely] out, which we may never do as the tail end can drag on.

FTW: What would you say to the people who insist that oil is created from magma, or that there's really so much that we don't have to worry?

Campbell: Oil sometimes does occur in fractured or weathered crystalline rocks, which may have led people to accept this theory, but in all cases there is an easy explanation of lateral migration from normal sources. Isotopic evidence provides a clear link to the organic origins. No one in the industry gives the slightest credence to these theories: after drilling for 150 years they know a bit about it. Another misleading idea is about oilfields being refilled. Some are, but the oil simply is leaking in from a deeper accumulation.

FTW: Will Central Asian-Caspian pipelines have an impact on the crisis? How long will it take them to come on line?

Campbell: There was talk of the place holding over 200 Gb [billion barrels] (I think emanating from the USGS [U.S. Geological Survey]), but the results after 10 years of work have been disappointing. The West came in with high hopes. The Soviets found Tengiz onshore in 1979 with about 6 Gb of very deep, high sulfur oil in a reef. Chevron took over and is now producing it with difficulty. But offshore they found a huge prospect called Kashagan in a similar geological setting to Tengiz. If it had been full, it could have contained 200 Gb, but they have now drilled three deep wells at huge cost, finding that instead of being a single reservoir it, like Tengiz, is made up of reefs. Reserves are now quoted at between 9 Gb and 13 Gb. BP-Statoil has pulled out. Caspian production won't make any material difference to world supply. There is however a lot of gas in the vicinity.

To put it in perspective this would supply the world for a little over a year, but it is broadly the same as U.S. potential

It is quite possible that the Afghan war was about securing a strong point in this area. But interest in it has now dwindled along with Caspian prospects as the U.S. turns to Iraq, which does have some oil. It is curious that these two U.S. military exercises had different pretexts

A) Afghanistan was to find the supposed architect of Sept. 11 -- in which it failed; and

B) Iraq is about a sudden and unexplained fear that it might develop some objectionable weapons that might pose a threat to someone in the future. North Korea, which already has nuclear weapons and long range missiles -- and isn't exactly a friendly place -- is not deemed a threat. The cynic can be forgiven for thinking there is some other motive for these military moves: could it be oil?

FTW: When and how was it discovered that the Central Asian reserves were much smaller than anticipated?

Campbell: I guess you could say over the past 24 months as the different pieces in the jigsaw fell into place. There is no single event or date, but rather an evolving picture

FTW: What about replacement sources and alternative energy? Tar sands?

Campbell: Of course there is a range of alternatives from wind, sun, tide, nuclear, etc. but today they contribute only a very small percentage, and do not come close to matching the oil of the past in terms of cost or convenience. No doubt production from tar sands and heavy oils can be stepped up in the future but it is painfully slow and expensive, carrying also environmental costs. It will help ameliorate the decline but has minimal impact on peak. The simple solution is to use less. We are extremely wasteful energy users. But it involves a fundamental change of attitude and the rejection of classical economic principles, which were built on endless growth in a world of limitless resources. Those days are over, exacerbated by the soaring population, itself now set to decline partly from energy shortage.

FTW: Has anyone determined what percentage of oil is used for military purposes worldwide? If so, how much?

Campbell: I don't know how much is used for military purposes, but it must be considerable. The U.S. has built a huge stockpile in the Middle East for the war.

FTW: Is China the end game of competition for oil?

Campbell: Yes, China is in desperate need of imports as its own supply depletes. It has been very thoroughly explored. It will be vying with the U.S. for access to foreign oil. It is already well established in Iraq.

That is about how I see it.

[A more detailed discussion of the world oil crisis, its connections to 9-11, and its implications for the future will be contained in FTW Editor Michael C. Ruppert's forthcoming book, "Across the Rubicon: 9-11 and the Last Empire," scheduled for release by Feral House in spring 2003.]

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Skulduggery since the 1920s
U.S. corporations and Iraqi oil
By Richard Becker
Ref.  http://www.workers.org/ww/2002/iraqoil1031.php
Taken from the Oct. 31st 2002 issue of Workers World newspaper


How and why did U.S. involvement in Iraq begin?

In all the countless hours the corporate media devote to broadcasting the Bush administration's lies and deceits about Iraq, that simple and crucial question is almost never addressed. And for good reason.

Since its very beginning eight decades ago, U.S. policy toward Iraq has been intensely focused on one objective: taking control of that country's rich oil resources.

The roots of U.S. intervention in Iraq lie in the aftermath of World War I. It was a war between capitalist empires. On one side were the German, Austro-Hungarian and Ottoman (Turkish) Empires. On the other side was the British-French-Russian imperial entente. Most of the Middle East was under Ottoman control.

The British, through their agent T.E. Lawrence--known to moviegoers as "Law rence of Arabia"--promised Arab leaders that if they fought with Britain against their Turkish rulers, the British would support the creation of an independent Arab state after the war.

At the same time, the British, French and Russian foreign ministries were secretly signing the Sykes-Picot agreement. Sykes-Picot re-carved the Middle East. The agreement was made public after the Russian Revolution of 1917 by the Bolshevik party, which denounced it as imperialist.

Mass revolts broke out all over the Middle East when the Arab and Kurdish peoples discovered their betrayal at the hands of the imperial "democracies." The rebellions continued throughout the colonial period. Repression was brutal in the extreme. In 1925, for instance, the British dropped poison gas on the Kurdish town of Sulaimaniya in Iraq, the first time that gas was deployed from warplanes.

Britain, France divide Middle East

After the war ended in 1918, Britain and France proceeded with their plans. Lebanon and Syria, they agreed, would be incorporated into the French Empire. Palestine, Jordan and the two southern provinces of Iraq--Baghdad and Basra--would become part of the far-flung British Empire.

What they didn't agree about was who would get Mosul province, the northern area of present-day Iraq. According to the Sykes-Picot accord, it was part of the French "sphere of influence." The British were determined, however, to add Mosul, which was mainly Kurdish in population, to their new Iraq colony. To back its claim, the British army occupied Mosul four days after the Turkish surrender in October 1918--and never left.

The resolution of the inter-imperialist struggle between Britain and France over Mosul brought with it the beginning of the U.S. role in Iraq.

Mosul's importance to the big powers was based on its known but as of then largely undeveloped oil resources. The United States had entered World War I on the side of Britain and France in 1917, after both its allies and enemies were largely exhausted. U.S. conditions for entering the war included the demand that its economic and political objectives be taken into account in the post-war world. Among those objectives was access to new sources of raw materials, particularly oil.

In February 1919, Sir Arthur Hirtzel, a top British colonial official, warned his associates, "It should be borne in mind that the Standard Oil Company is very anxious to take over Iraq." (Quoted in Peter Sluglett, "Britain in Iraq, 1914-32," London, 1974)

In the face of the British-French domination of the region, the United States at first demanded an "Open Door" policy. U.S. oil companies should be allowed to freely negotiate contracts with the new puppet monarchy of King Faisal, whom the British had installed on the throne in Iraq.

The solution to the victorious allies' conflict over Iraq was found in dividing up Iraq's oil. The British kept Mosul as part of their new Iraq colony.

Not one drop for Iraq

Iraq's oil was split five ways: 23.75 percent each to Britain, France, Holland and the United States. The remaining 5 percent went to an oil baron named Caloste Gulbenkian, known as "Mr. Five-Percenter," who helped negotiate the agreement.

Exactly zero percent of Iraq's oil belonged to Iraq. That's how it was to stay until the revolution of 1958.

In 1927, major oil exploration got under way. Huge deposits were discovered in Mosul province.

Two years later, the Iraqi Petroleum Co.--composed of Anglo-Iranian (today British Petroleum), Shell, Mobil and Standard Oil of New Jersey (Exxon)--was set up. Within a few years it totally monopolized Iraqi oil production.

During the same period the al-Saud family, with Washington's backing, conquered much of the neighboring Arabian peninsula. Saudi Arabia came into being in the 1930s as a neocolony of the United States. The U.S. embassy in Riyadh, the Saudi capital, was located in the ARAMCO (Arab American Oil Co.) building.

But the U.S. oil companies and their government in Washington weren't satisfied. They wanted complete control of the Middle East's oil, just as they had a near-monopoly of the Western Hemi sphere's petroleum reserves. This meant displacing the British, who were still top dog in the region.

The U.S. opportunity came as a result of World War II. While the United States and British are generally depicted as the closest of wartime allies, the fact is that they were at the same time fierce opponents.

The war greatly weakened the British Empire both at home and in the loss of key colonies in Asia. In the early stages of the war, 1939-42, it was a question whether Britain would survive. It it was never to fully recover its former dominance.

The United States, on the other hand, grew increasingly powerful throughout the war--which the Washington rulers had once again bided their time before entering.

In the latter stages of World War II, the Roosevelt and Truman administrations, dominated by big banking, oil and other corporate interests, were determined to restructure the post-war world to ensure the dominant position of the United States.

The key elements in their strategy were: 1) U.S. military superiority in nuclear and conventional weaponry; 2) U.S.-dominated corporate globalization, using the International Monetary Fund and World Bank, created in 1944, and establishment of the dollar as the world currency; and 3) control of global resources, particularly oil.

While the fighting was still raging on the battlefields, a behind-the-scenes struggle for global economic control was unfolding between the United States and Britain. So intense was this battle that on March 4, 1944--three months before the D-Day invasion at Normandy--British Prime Minister Winston Churchill sent a message to President Franklin Roosevelt that was unusual in its imperialist content and hostile tone:

"Thank you very much for your assurances about no sheep's eyes [looking enviously--RB] on our oilfields in Iran and Iraq. Let me reciprocate by giving you the fullest assurance that we have no thought of trying to horn in upon your interests or property in Saudi Arabia. My position in this as in all matters is that Great Britain seeks no advantage, territorial or otherwise, as a result of this war. On the other hand she will not be deprived of anything which rightly belongs to her after having given her best services to the good cause, at least not so long as your humble servant is entrusted with the conduct of her affairs." (Quoted in Gabriel Kolko, "The Politics of War," New York, 1968)

What this note clearly showed was that the U.S. leaders were so intent on taking over Iran and Iraq, both important neocolonies of Britain, that they had set off alarm bells in British ruling circles.

Despite Churchill's bluster, there was nothing the British could do to restrain rising U.S. power. Within a few years, the British ruling class would adapt to the new reality and accept the role of Washington's junior partner.

U.S. role expands after WW II

In 1953, after the CIA coup that put the shah (king) in power, the United States took control of Iran. By the mid-1950s, Iraq was jointly controlled by the United States and Britain.

Washington set up the Baghdad Pact, which included its client regimes in Pakistan, Iran, Turkey and Iraq, along with Britain, in 1955. The Baghdad Pact, or CENTO--Central Treaty Organization, had two purposes.

First was to oppose the rise of Arab and other liberation movements in the Middle East and south Asia. The second purpose was to be another in a series of military alliances--NATO, SEATO and ANZUS were the others--encircling the socialist camp of the Soviet Union, China, Eastern Europe, north Korea and north Vietnam.

Iraq, the core of CENTO, was independent only in name. The British maintained military airfields in Iraq. While the country was extremely rich in oil--10 percent of the world's reserves--the people lived in extreme poverty and hunger. Illiteracy was over 80 percent. There was one doctor for every 6,000 people, one dentist for every 500,000.

Iraq was ruled by a corrupt monarchy under King Faisal II and a coterie of feudal landowners and merchant capitalists.

Underlying Iraq's poverty was the simple fact that Iraq did not own its vast oil reserves.

The Iraqi Revolution

But on July 14, 1958, Iraq was rocked by a powerful social explosion. A military rebellion turned into a countrywide revolution. The king and his administration were suddenly gone, the recipients of people's justice.

Washington and Wall Street were stunned. In the week that followed, the New York Times, the U.S. "newspaper of record," had virtually no stories in its first 10 pages other than those about the Iraqi Revolution.

While another great revolution that took place just six months later in Cuba is better remembered today, Washington regarded the Iraqi upheaval as far more threatening to its vital interests at the time.

President Dwight D. Eisenhower called it "the gravest crisis since the Korean War." The day after the Iraqi Revolution, 20,000 U.S. Marines began landing in Lebanon. The day after that, 6,600 British paratroopers were dropped into Jordan.

This was what came to be known as the "Eisenhower Doctrine." The United States would intervene directly--go to war--to prevent the spread of revolution in the vital Middle East.

U.S. and British expeditionary forces went in to save the neocolonial governments in Lebanon and Jordan. Had they not, the popular impulse from Iraq would have surely brought down the rotten dependent regimes in Beirut and Amman.

But Eisenhower, his generals and his arch-imperialist Secretary of State John Foster Dulles also had something else in mind: invading Iraq, overturning the revolution and installing a new puppet government in Baghdad.

Three factors forced Washington to abandon that plan in 1958: the sweeping character of the Iraqi Revolution; the announcement by the United Arab Republic, which bordered Iraq, that its forces would fight the imperialists if they sought to invade; and the emphatic support of the People's Republic of China and the Soviet Union for the revolution. The USSR began a mobilization of troops in the southern Soviet republics close to Iraq.

The combination of these factors forced the U.S. leaders to accept the existence of the Iraqi Revolution. But Washington never really reconciled itself to the loss of Iraq.

Over the next three decades, the U.S. government applied many tactics designed to weaken and undermine Iraq as an independent country. At various times--such as after Iraq completed the nationalization of the Iraqi Petroleum Co. in 1972 and signed a defense treaty with the USSR--the United States gave massive military support to right-wing Kurdish elements fighting Baghdad and added Iraq to its list of "terrorist states."

The United States supported the more rightist elements within the post-revolution political structure against the communist and left-nationalist forces. For example, the United States applauded the suppression of the Iraqi Communist Party and left-led labor unions by the Ba'ath Party government of Saddam Hussein in the late 1970s.

In the 1980s, the United States encouraged and helped to fund and arm Iraq in its war against Iran. U.S. domination of the latter was ended by Iran's Islamic revolution in 1979. In reality, though, the U.S. aim in the Iran-Iraq war was to weaken and destroy both countries. Ex-Secretary of State Henry Kissinger revealed the real U.S. attitude about the war when he said, "I hope they kill each other."

The Pentagon provided Iraq's air force with satellite photos of Iranian targets. At the same time, as the Iran-Contra scandal revealed, the United States was sending anti-aircraft missiles to Iran.

The Iran-Iraq war was a disaster, killing a million people and weakening both countries.

Collapse of USSR and Gulf War

When the war finally ended in 1988, developments in the Soviet Union were posing a new and even graver danger to Iraq, which had a military and friendship treaty with the USSR. In pursuit of "permanent détente" with the United States, the Gorbachev leadership in Moscow began to cut its support for its allies in the developing world.

In 1989, Gorbachev went further and withdrew support for the socialist governments in Eastern Europe, most of which then collapsed. This sharp shift in the world relationship of forces--culminating with the collapse of the Soviet Union itself two years later--constituted the greatest victory for U.S. imperialism since World War II.

It also opened the door for the U.S. war against Iraq in 1991, and more than a decade of sanctions/blockade and bombing that have devastated Iraq and its people.

Today, the Bush administration is seeking to win public support for a new war against Iraq by talking about "weapons of mass destruction" and "human rights." The reality is that Washington is concerned about neither Iraq's diminished military capacity nor human rights anywhere in the world.

What moves U.S. policy toward Iraq in 2002 is the same objective that motivated Washington and Wall Street 80 years ago: oil.


- END -

Reprinted from the Oct. 31, 2002, issue of Workers World newspaper
(Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail:  ww@wwpublish.com. Subscribe  wwnews-on@wwpublish.com. Unsubscribe  wwnews-off@wwpublish.com. Support independent news  http://www.workers.org/orders/donate.php)

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