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The struggle for Iraq’s oil flares up as Kurds open doors to foreign investors
Michael Howard, The Guardian
Baghdad is trying to reassert central control of reserves run by Kurdish authorities
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…The much-delayed hydrocarbons legislation, which was supposed to have gone before the Iraqi parliament before its summer recess, was one of the main US benchmarks for Iraq’s ethnic and sectarian communities to heal their divisions. Likewise, many Iraqis are banking on oil as the country’s best chance to guarantee economic and social stability.
Instead, the protracted negotiations over the law have underlined the deep mistrust between Shia and Sunni Arabs and Kurds in the national unity government as well as their mutually contradictory political visions for post-Saddam Iraq. The struggle for Iraq’s oil is not simply the one often depicted: war-weakened Iraqis versus rapacious western oil moguls. “It is a clash not just of politics but also of investment culture, one that mirrors the broader and crucial debates on Iraq’s future,” said Bill Farren-Price, deputy editor of the Middle East Economic Survey, an oil industry newsletter.
The Kurdistan region’s 4 million inhabitants live atop what Ashti Hawarami, natural resources minister in the Kurdistan regional government (KRG), estimates to be at least 25bn barrels of oil. Mr Hawrami told the Guardian that he wanted the region to produce 1m barrels a day in five years’ time. And to achieve that target, Kurds, who have historically been kept out of the Iraqi oil sector by central governments, must throw open their doors to outside investors, he said.
(7 August 2007)
Power Cuts Worsen as Iraqi Grid Nears Collapse
Steven Hurst, Guardian
BAGHDAD – Iraq’s power grid is on the brink of collapse because of insurgent sabotage, rising demand, fuel shortages and provinces that are unplugging local power stations from the national grid, according to officials.
Aziz al-Shimari, an electricity ministry spokesman, said at the weekend that power generation nationally was only meeting half the demand, and there had been four nationwide blackouts over the past two days. The shortages across the country were the worst since the summer of 2003, shortly after the US-led invasion to topple Saddam Hussein, he added. 0806 02
Power supplies in Baghdad have been sporadic all summer and now are down to just a few hours a day at most. The water supply in the capital has also been severely curtailed by power blackouts and cuts that have affected pumping and filtration stations.
(6 August 2007)
Venezuela Tries To Create Its Own Kind of Socialism
Chávez Taps Oil Wealth in Effort to Build System That Favors ‘Human Necessities’
Juan Forero, Washington Post
…Like the Venezuelan economy itself, the assembly line here is designed to put workers ahead of the bottom line and, in the process, serve as a building block in Chávez’s dream of constructing what he calls 21st-century socialism. According to a 59-page economic blueprint for the next six years, free-market capitalism’s influence will wane with the proliferation of state enterprises and mixed public-private firms called social production companies, the objective being to generate funding for community programs.
…In year nine of Chávez’s presidency, Venezuela’s economy is undergoing a sweeping, if improvised, facelift as a president with powers to pass economic laws by decree enacts wholesale changes.
…Venezuela’s state oil company, the engine for what Chávez calls a peaceful revolution, will have an even bigger role: The president has approved the creation of seven subsidiaries of Petroleos de Venezuela to grow soybeans, build ships and produce clothing and appliances.
Venezuela has also taken majority control of the oil sector, driving out Exxon Mobil and ConocoPhillips. Venezuelan officials hint that the government might nationalize production of natural gas by the end of the year. Chávez and other officials have also raised the possibility that the government will inject itself in banks, steel production and private hospitals.
(6 August 2007)
Related from Bloomberg: Venezuela `Oil Socialism’ Boosts Income $5.8 Billion.
Report: Venezuelan Oil Subsidies to Cuba Top $3 Billion
Matthew Walter, Bloomberg
Venezuelan oil subsidies to Cuba rose to $3.4 billion in 2006 and may top $4 billion this year, as the Caribbean nation’s reliance on aid from ally Hugo Chavez intensified, according to a University of Miami study. ..
State-owned Petroleos de Venezuela SA yesterday began searching for light oil off the coast of Cuba, another sign of strengthening economic ties between the government’s of Venezuelan President Chavez and Cuba’s Castro, both harsh critics of the United States.
The study extrapolated the value of oil subsidies to Cuba using market values. Cuba is probably not paying for imports of crude oil and refined products with hard currency, representing a significant loss of revenue for Venezuela, according to the report.
(2 Aug 2007)
