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Oil & geopolitics - July 28

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Russia leads race for North Pole oil

Jamie Doward, Robin McKie and Tom Parfitt; The Observer
The Arctic's untapped resources include huge reserves of fuel and minerals. Now Moscow has raised tensions by dispatching an expedition to annex a vast expanse of the ocean.
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In the darkest depths of the Arctic Ocean a new Cold War is brewing. American and British nuclear submarines lurk in the shadows, preparing for company.

'Why has Britain been sending submarines into Arctic waters?' asked Rob Huebert, associate director of the Centre for Military and Strategic Studies in Calgary. 'Because it wants to retain its capability to deal with the Russian threat.'

Such talk is redolent of a Le Carré novel. But the battle between the West and Russia over who owns the Arctic has been building for years. Last week it entered a new phase when Russia announced it was sending a miniature submarine, equipped with a team of explorers, to claim a chunk of the Arctic Ocean the size of Western Europe.

The stakes are high. The ocean is home to vast oil and mineral reserves as well as massive shoals of fish and strategically important shipping lanes. 'It could get very ugly,' Huebert said. 'Nobody knows how much oil and gas is down there. Shell, for example, is quite pessimistic, but the likes of Exxon are quite gung-ho. I've seen some people make the case that up to 18 per cent of the world's oil reserves are there - that's getting into Saudi Arabia's league.'

To symbolise its claim, Russia will plant its flag on the sea bed before taking samples it believes will prove the Lomonosov Ridge, which runs underneath the Arctic Ocean, is an extension of the Siberian continental shelf and therefore Russian territory.

The expedition is led by Artur Chilingarov, Russia's most famous explorer.
(29 July 2007)


Did Guerrillas Strike at the Heart of Mexico's Oil Industry?
Bombing Pemex--Or Not?

John Ross, CounterPunch
The flames jetting 300 meters into the night sky and the black smoke billowing over the fertile flatlands of central Mexico's Bajio were not a good omen. According to a spokesperson for the national oil monopoly PEMEX, the two explosions that rocked installations in Guanajuato and Queretero states July 5th and 10th were caused by a sudden drop in pressure in two natural gas pipelines due to "pinchazos" or illicit perforations in the ducts to siphon off fuel.

The explosions, which shredded aging, poorly-maintained infrastructure underscored the urgent need for private investment in the nationalized enterprise argued PEMEX director Jesus Heroles Jr., mimicking President Felipe Calderon's take on the subject. Calderon, who was elected a year ago in a fraud-marred vote taking, has pledged to privatize PEMEX.

But were the explosions just further mishaps in an endless skein of pipeline blowouts and toxic spills that have plagued the state oil company for years?

On July 11th, newspapers in Mexico City began receiving a series of communiqués under the rubric of the "Military Zone Command of the Popular Revolutionary Army and State Committee of the Party of the Popular Democratic Revolution" claiming credit for blowing out two 36 inch natural gas pipelines in Guanajuato (July 5th) and a key valve house in Coroneo Queretero (July 10th) that shut down gas distribution to millions in central Mexico.

The Popular Revolutionary Army or EPR for its initials in Spanish, a long dormant guerrilla whose home base is usually in the conflictive states of Oaxaca and Guerrero, explained that the two explosions had been "surgical strikes against the oligarchy" and signaled the initiation of a "national campaign of harassment" that would continued until two disappeared EPR leaders are presented by the Calderon government "with life."

...Washington has a proprietary interest in the Mexican oil flow and news of the bombings furrowed brows in the U.S. capital. As a signatory to the euphemistically named North American Agreement for Security and Prosperity (ASPAN), Mexico is designated as the U.S.'s southern security perimeter, potentially invoking military action by the United States North Command housed in Colorado should terrorist activity be detected in the neighborhood. The U.S. Department of Homeland Security regards Mexico as a potential terrorist staging area.

...The Popular Revolutionary Army's successful July jamboree shut down more than 90 manufacturing plants in central Mexican cities, sending tens of thousands of workers at such transnationals as Nissan, Honda, Vitro (Mexican owned), Kellogg, and Ideal Standard, the world's largest toilet maker, home for the day.

The precision location of the plastique charges (plastique is popular in Europe but not much used here) points to an inside job and disgruntled PEMEX workers are one object of an on-going investigation. If the EPR is really responsible for the explosions than their technical skills and ability to strike close to the heart of the economy have taken a qualitative leap since the group was last heard from.

...But whether the attack was a government ruse to reign in social discontent, induce terrorist paranoia as a tool of control, and underscore the need for opening up PEMEX to private investment or a legitimate initiative by the armed resistance, the bombings have spiced up a pot already over boiling with upheaval.
(27 July 2007)
Background on the Mexican pipeline explosion from the left-wing CounterPunch. Looks as if there is more to the story than first meets the eye. -BA


Analysis: Oil part of large Iraq conundrum

Ben Lando, UPI
Iraq's government is in the eye of a storm of deadlines and benchmarks and pressure from within and abroad. At some level, it's all about the oil.

The Parliament is to take next month off as key parties criticize the government and vow to withdraw. Washington, dragged by the Democratic Party, is looking for success or troop withdrawal. Iraq's citizens face more violence and poverty and less electricity and fuels.

...In Baghdad, parliamentarians are at a standstill over legislation splitting up revenue, most of which comes from the sale of oil, and a law governing the exploration and development of the crude. Iraq has 115 billion barrels of proven oil reserves, the third largest in the world, and last year sales of it funded more than 93 percent of the federal budget. Disputes over the oil rally around whether the central or regional/local government should control key oil fields. This dispute over federalism is inherent in the holdup of the revenue sharing law.

...All signs point to a Parliament that leaves for August recess without approving the law.
(27 July 2007)
UPDATE (July 30) Carl Etnier writes:
Here are some web pages that give a perspective on the Iraqi oil law that is rarely reported in the US: the Iraqi oil law would put the currently nationalized Iraqi oil industry into the hands of multinational companies, who could make deals lasting decades at a time when the Iraqi government is very weak:

www.iraqoillaw.com/
www.bushagenda.net/article.php?id=365
priceofoil.org/thepriceofoil/war-terror/iraqi-oil-law/

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