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Oil producers - March 27

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As if gold weren’t bad enough, now they have found oil

Karl Lyimo, The East African
Ever since press reports indicated several years ago that commercial deposits of petroleum had been confirmed in Zanzibar off the shores of Pemba and surrounding areas, things have never been the same.

Before you could say “Petroleum-Ho!,” the Union government of Tanzania and the government of Zanzibar were already locking horns on the find. “Petroleum is a Union matter,” argued a delighted administration in Dar es Salaam, already seeing visions of petro-dollars. ..

That is partly why new mineral finds in Tanzania make me shudder. It makes me think that perhaps the government should be exploring other economic activities because mineral wealth does not benefit local people.
(Mar 2007)


Advocacy group urges transparency in U.S. oil payments to foreign countries
(video)
E&E TV
With some oil-rich nations being accused of corruption as a result of widespread poverty and instability in their countries, Congress is being urged to pass legislation that would require companies to report payments made to governments on a country-by-country basis. A new report released by the advocacy group Global Witness proposes a plan to strengthen an existing effort that is currently in place to provide some oversight for oil payments. During today's E&ETV Event Coverage of a recent Wilson Center discussion about the report, panelists discuss whether or not additional disclosure laws are necessary and how transparency and energy security are related. Panelists include, Princeton Lyman of the Council on Foreign Relations, and Nick Welch of Shell Corporation.
(27 March 2007)


What's happened to Iraq's oil?

Mark Gregory, BBC
Iraq's descent into violence, coupled with paralysis and corruption in government, has stymied efforts to rebuild the infrastructure of roads, schools, hospitals and industry. In many cases, there is little to show for the billions of dollars spent on reconstruction since the American-led invasion in 2003.

The oil sector is a good example of what has gone wrong.

Fixing it has been seen as a high priority, as the revenues from oil exports provide the bulk of Iraqi government income and underpin the entire economy. Yet crude production is currently still below the pre-war level.

"The Iraqi oil industry has been stuck for the last couple of years." says Manoucher Takin, an analyst at the Centre for Global Energy Studies in London.

"Nothing has really changed. It's not that officials have done nothing. The problem is, they can't do much because of the security situation." Mr Takin says the single biggest drag on the industry's recovery has been the failure to get a key export pipeline operating properly.

...At the moment, it is hard to find anyone who is optimistic about the oil industry's immediate prospects.

But no-one doubts the long-term potential: Iraq is sitting on the world's third largest proven reserves. It is widely believe there is a lot still to be discovered. What is more, Iraqi oil is generally easy to extract.

That is why so much store has been set by the terms of a new oil law. Its purpose is to set the terms to attract outside capital and expertise to develop Iraq's vast energy reserves.
(24 March 2007)


Sunni Arab politicians critical of Iraqi oil law

Monday Morning (Beirut) via Juan Cole's "Informed Comment"
Sunni Arab politicians meeting in Amman, Jordan are critical of the draft Iraqi petroleum law that has been presented to parliament by the Iraqi cabinet. The Monday Morning (Beirut) article contains these quotes:

Faleh al-Khayat, a former head of planning at the Oil Ministry, warned that “major foreign oil firms are greedy and will covet Iraq’s oil wealth” if the bill is adopted. “If Iraq’s giant oilfields are developed, they would yield 80 percent of Iraq’s proven reserves estimated at 115 billion barrels”, he argued.

MP Saleh Mutlak of Iraq’s National Dialogue Front echoed him: “We have no need of foreign companies. We’re experienced enough to reap the fruit of our wealth”. Mutlak also said he feared the bill may not live up to government hopes that it will unify Iraq. “We don’t want a new law that will further divide us. We need a law that will unite the Iraqi people”. . . Motlak said Parliament in Baghdad should not ratify the bill “until we reach the appropriate climate for investments in Iraq”.

MP Ali Mashhadani agreed. “Our oil wealth is black gold that must be kept underground until security conditions are appropriate to take advantage of it. It has been entrusted to our safekeeping by the people we represent”. According to Mashhadani “Iraq has sold 125 billion dollars’ worth of oil since the start of the US-led occupation.” The Iraqi people have not benefited from this revenue and “are eating garbage”, Mashhadani said, suggesting that income from oil sales be given to the people in the form of state-subsidized “monthly ration cards” .

27 March 2007)


Exxon Sees Technology, Local Needs as MidEast Key

Ayesha Daya, Dow Jones
Exxon Mobil Corp. (XOM) is betting that soaring domestic energy demand among the booming economies of the Middle East will spur regional leaders toward offering improved access to their energy resources, with technology the key that may unlock the door.

International oil companies searching for hydrocarbons are struggling to secure exploration rights in much of the Middle East, home to some 60% of global oil and gas reserves, as oil-rich nations emboldened by high crude prices tighten up on contract terms and access rights.

But economic growth among the 6-member Gulf Cooperation Council countries, for example, is forecast at 5% to 2010, according to Standard Chartered Bank, following high levels of growth for the past three years, placing a particular strain on the use of gas in domestic energy consumption.

Indeed, there is talk of major infrastructure-related businesses currently being built without any assurance of energy supplies to power them.

In an interview with Dow Jones Newswires, Stephen Cassiani, head of Exxon Mobil's upstream research globally says the region is still relatively undeveloped.
(26 March 2007)

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