MUDDY MIX: OIL, POLITICS
Critics say Bush's interest in Iraq has more to do with its vast
petroleum reserves than with its arsenal.
January 26, 2003
Iraq has the world's second-largest proven oil reserves.
The United States has the world's greatest thirst for oil.
And that, say some critics, is the true driving force behind
President Bush's Iraq policy.
Iraq has reserves of 113 billion barrels — about 11 percent of
the world's supply. Experts believe that there may be that much again
still undiscovered in the country, enough to rival Saudi Arabia, the
world's largest oil repository.
Oil politics has played a major role in the area since before
Iraq's creation following World War I. Before the collapse of the
Ottoman Empire, British-controlled Turkish Petroleum Company held oil
concessions in Mosul, the Kurdish area in what is now northern Iraq.
In a series of agreements and trade-offs after the war, Turkish
Petroleum became Iraq Petroleum Company (IPC), still controlled by the
British and holding the concession for Mosul oil. Turkey and France,
another player in the region, got pieces of Iraq Petroleum and Iraq got
the Mosul region — and its Kurdish populace — as a province.
In 1961 Iraq took over 99.5 percent of the IPC's area, leaving
it to operate only in the area it was currently drilling. By 1972, Iraq
had completely nationalized the IPC and formed the Iraq National Oil
Company to control the resource.
Today, critics say that it is no coincidence that the U.S. and
Britain, home to the world's four largest oil companies, are the
staunchest foes of Iraqi leader Saddam Hussein. And it is no
coincidence that Russia, France and China were less eager for action
Russia's largest oil company, Lukoil, signed a 23-year, $3.5
billion deal with Iraq five years ago to rehabilitate the country's
giant West Qurnah oil fields.
France had an even larger deal as its state-owned TotalFinaElf
company was negotiating to explore the Majnoon field, which has
estimated reserves of 20 billion to 30 billion barrels.
And China National Petroleum has a contract to develop part of
the Rumaylah area, a production area substantially damaged during the
1991 Persian Gulf War.
Skeptics also question the administration's reported strategy of
immediately moving to protect oil fields, so that Saddam cannot destroy
them, in the event of a war. The administration says that oil revenue
will be desperately needed to rebuild the country. Skeptics
say the fields are being protected for outside oil interests.
Still, the oil issues are not cut and dried. Iraq's oil industry
has deteriorated drastically after two decades of strife. Where its
capacity before the Iran-Iraq war was 3.5 million barrels of oil a day,
it reached a low of perhaps 1.2 million. It might take $5 billion and
three years to restore production to pre-war levels. To reach 6 billion
barrels a day within 10 years could cost $50 billion. Foreign oil
companies might not gamble that much on an unstable, post-war Iraq.