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Iraq: Warily Moving Ahead on Oil Contracts

Timothy Williams, New York Times
BAGHDAD — When Iraq puts development rights to some of its largest oil fields up for auction to foreign companies on Monday, the bidding will be a watershed moment, representing the first chance for petroleum giants like ExxonMobil to tap into the resources of a country they were kicked out of almost 40 years ago.

Yet, there are widespread doubts about whether Iraq is ready for a sudden infusion of capital from international oil corporations. The country is still not safe. Parliament has not approved a law regulating the oil industry. And oil companies are wary of corruption within Iraq’s Oil Ministry.

The oil companies are also somewhat disgruntled, being forced to compete for 20-year service contracts and not the more lucrative production sharing agreements they would prefer. Such agreements would allow them to share directly in the profits from oil production, rather than getting fixed fees.

Still, all sides want to move ahead for one simple reason: money.

… Despite the drawbacks, international oil companies see Iraq as critical for business because few other places have as much oil that is untapped and relatively close to the surface, so it can be extracted relatively cheaply. With 115 billion barrels, the country has the world’s third largest proven reserves, trailing only Saudi Arabia and Iran.
(25 June 2009)

The Dirty War Against Clean Coal

Gregg Easterbook, New York Times
WHILE President Obama’s cap-and-trade proposal to reduce greenhouse gases has been the big topic of recent environmental debate, the White House has also been pushing a futuristic federal project to build a power plant that burns coal without any greenhouse gases. Sounds great, right? Except the idea is a rehash of a proposal that went bust the first time around.

More important, the technology already exists to make huge reductions in greenhouse emissions from coal, allowing power companies to begin cutting the carbon footprint of coal today. Instead, advanced-technology coal power sits on the shelf while regulators wait to see what happens with a project that may be just an expensive boondoggle.

The big project, a public-private partnership called FutureGen, was first announced by George W. Bush in 2003. Dreading facing up to the problem of greenhouse gases from electricity generation, the Bush White House suggested that decisions should wait while FutureGen developed a coal-fired power with no emissions. FutureGen’s administrators spent five years on studies, proposals and studies of studies, but never broke ground for a test installation.

…Beyond that, the promising technology of “sequestering” carbon dioxide — pumping it back into the ground to keep it out of atmosphere — appears for technical reasons to be impractical for conventional pulverized-coal power plants. But gasification plants have technical characteristics that should make “sequestration” of carbon feasible. A gasification power plant with sequestration would have around two-thirds lower greenhouse gases than a conventional coal-fired generating station.
(28 June 2009)

A Flower Grows in West Africa

Ken Stier, Miller-McCune Magazine
Are Liberia’s new steel and rubber concessions a sign of reform — or the exception that proves corruption still rules in resource-rich countries?

It is a persuasive measure of humanity’s boneheaded venality that natural resources endowment often leads to a country’s impoverishment. A relatively benign form of the “resource curse” can be found in developed countries, as Holland found when, in 1959, a large natural gas discovery stoked an overvalued currency and eviscerated the country’s manufacturing sector, a phenomenon that came to be known as “Dutch disease.”

But in developing countries, the scourge is evinced more rapaciously. Natural resource earnings that should be earmarked for productive investments are siphoned off wholesale by those in power, who then need repressive capabilities to remain there. Nigeria is a classic case. After half a century of pumping out more than $500 billion worth of oil, the country has more poverty than ever and is wracked by corruption and violence. And the barbed blessing of natural resources endowment is at the core of what ails much of the Middle East.
(29 June 2009)