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Iraqi Oil: More Plentiful Than Thought

Vivienne Walt, TIME Magazine
While the war in Iraq stretches into its fifth year, a less bloody battle is raging over what lies beneath the carnage: oil.

Last week a Colorado energy consultancy firm, IHS, stunned some of Iraq’s politicians and oil engineers by declaring that the country’s oil reserves were about 215 billion barrels – about double the estimates that have held for Iraq for years. That would make Iraq a giant oil power, second only to Saudi Arabia. If the estimates prove true, Iraq’s potential would outstrip its other neighbor Iran, which sits atop about 136 billion barrels of oil. The IHS engineers examined 438 undrilled fields and used new technology to recalculate old reservoirs.

But for Iraqi politicians the more dramatic news might be where the country’s unexpected reserves lie, rather than their size. The report says about 100 billion barrels of oil and a large amount of gas lie in the Sunni-dominated Al-Anbar province. Until now, Sunni politicians have feared economic devastation if Iraq divided into a federation or imploded into disparate ethnic states, since the territory dominated by their ethnic group was thought to be the only one without large reserves of oil. (Both the Shi’ite south and Kurdish north have productive fields.)
(24 April 2007)

Iraq: Big contracts for Big Oil

Becca Fisher, Corporate Watch
After a 35 year wait, American and British oil corporations are on the verge of securing control of Iraq’s vast oil reserves. Becca Fisher reveals how the unholy alliance of Big Oil, government and the IMF is getting closer to its goal of reconstructing the Iraqi state to gain secure oil supplies.
The new law would allow foreign oil companies to sign long term contracts, giving them exclusive rights over Iraq’s huge oil fields. Its very terms reflect the public opposition to privatisation in Iraq, as the proposed contracts carefully ensure that the state still owns the oil whilst the company controls production, secures huge rates of profit, and is immune from Iraqi state regulation. As former Iraqi oil minister, Ibrahim Bahr al-Uloum, puts it, ‘The Iraqi oil sector needs privatisation but it’s a cultural issue'[1]. The solution has been to disguise the plunder in this covert form of privatisation. As Professor Thomas Wälder, oil law expert at the University of Dundee, explains:

‘The government can be seen to be running the show and the company can run it behind the camouflage of a legal title symbolising the assertion of national sovereignty.'[2]

Iraqi sovereignty in the oil industry can thus be removed under the guise of state ownership. This smokescreen operates on another level: the law itself is an instance of a wider removal of Iraqi sovereignty, under the guise of democracy.
(no date – April 2007?)

A warning over good news on Iraqi oil ‘wealth’

Alfred Nassim, Financial Times (Letter to the Editor)
Sir, Your prominent report (front page, April 19), which began “Iraq could hold almost twice as much oil in its reserves as had been thought”, should have been given some sort of a health warning.

Most readers don’t know that IHS, the consultancy that conducted the study into Iraq’s resources, owns CERA, the consultancy that has been giving optimistic forecasts of the world’s oil reserves.

It forecast in 2002 that gas production in the US would increase by 15 per cent by 2010 and it has since declined by 4 per cent – most gas wells there deplete in 12 months now. Nor do most readers know that the clients of IHS are the very same people who would like to get their rigs on to Iraqi soil.

The use of language such as “oil production” is inaccurate when referring to non-renewable resources. Oil is extracted, not produced.

Advanced extraction methods such as “horizontal drilling” do not increase “production” – they merely speed up depletion and ensure that when it approaches it is sudden, and not gradual as with conventional drilling.

If in any doubt, witness what is happening with Cantarell in Mexico: the world’s second most prolific oil field is declining by 20 per cent annually. Nevertheless, CERA believes Mexico’s oil extraction will remain level until 2015.

The fact is that the media are being massaged by a steady drip of “good news” on the energy front. Each drop – the hydrogen economy, clean coal and, more recently, ethanol – serves merely to confuse us and to distract us from the big picture.
(24 April 2007)
Contributor Alfred Nassim writes:
I was rather surprised that they published my letter