In case anyone still doesn't know why the draft
dodgers on the bu$h regime have violated International
Law, wasted hundreds of BILLIONS of desperately needed
U.S. taxpayer dollars, killed or crippled well over ten
thousand U.S. soldiers, and murdered tens of thousands
of innocent Iraq civilians with their illegal, immoral,
and globally condemned terror campaign in Iraq, the answer
is detailed in the article below.
http://www.wsws.org/articles/2005/dec2005/oil-d08.shtml
Report outlines plans for corporate plunder of Iraqi oil
By James Cogan
8 December 2005
A report published in November by the London-based environmental and
social justice network Platform makes clear that the invasion and
occupation of Iraq was, and remains, a war for oil. The document,
entitled “Crude Designs: the rip-off of Iraq’s oil wealth”, is a
concise review of how Iraq’s vast energy resources, worth hundreds of
billions of dollars, will be handed to transnational companies over
the next several years.
“Crude Designs” found that if just 12 of Iraq’s undeveloped fields are
contracted in a similar fashion to comparable oil fields in Libya,
Oman and Russia, transnationals will reap profits of between $74
billion and $194 billion in 2006 dollars over a 30-year period. The
estimate, which the report describes as “conservative”, is based on an
oil price of $40 per barrel. The current price is closer to $60 per
barrel.
The actual bonanza for the oil giants from the invasion of Iraq could
run into the trillions. Out of the country’s 80 known fields, just 17
are currently in production. A further 63 undeveloped fields have an
estimated 75 billion barrels of oil, while industry experts believe
between 100 billion and 200 billion barrels lie in unexplored fields.
The country also has enormous untapped reserves of natural gas.
The Platform report establishes that control over these resources was
the primary motive for the war. The first chapter draws attention to
the discussion in US and British ruling circles on the strategic
importance of dominating the oil and gas of the Persian Gulf. It cites
the May 2001 report of the Bush administration’s Energy Task Force,
which was headed by Vice President [censored] Cheney. The findings declared:
“The Gulf will be the primary focus of US international energy policy.”
The terror attacks on New York and Washington on September 11, 2001,
just four months later, were used to set in motion long-held plans for
the military conquest of the region.
In the months before the March 20, 2003 invasion, the looting of
Iraq’s oil was the key consideration in Washington. The US State
Department established a “Future of Iraq” project as early as April
2002. The project’s Oil and Energy group decided in four meetings
between December 2002 and April 2003 that Iraq’s oil industry “should
be opened to international oil companies as quickly as possible after
the war”.
Among the group’s participants was Ibrahim al-Uloum, an Iraqi exile
with a PhD in petroleum engineering from New Mexico University.
Al-Uloum was appointed oil minister in the US-controlled Coalition
Provisional Authority (CPA) and, with US backing, fills the same post
in the current “transitional” government of Prime Minister Ibrahim
al-Jaafari. The reason for Washington’s support is not hard to
explain. In September 2003, Uloum told the British-based Financial
Times that American energy companies should have “priority” over Iraqi
oil fields.
The contractual form agreed on by the US experts and Iraqi exiles for
the development of Iraq’s oil industry was the Production Sharing
Agreement (PSA).
Platform characterises PSAs as an “ingenious arrangement”. They were
first introduced in the 1960s as a means for circumventing
constitutional obstacles or political opposition to the privatisation
of nationalised oil industries. Under a PSA, the oil remains legally
the possession of the state where it is extracted. Only the operation
of the field is controlled by the foreign operator, generally for a
period of 25 to 40 years.
PSAs have proven to be a far more lucrative form of contract for
transnational energy conglomerates than royalty arrangements. Under
most royalty deals, the state takes a fixed percentage of the value of
each barrel of oil extracted, regardless of the company’s costs or
profit margin. Under a PSA, because the state still ostensibly “owns”
the oil, the revenue from sales is firstly used to pay the company in
full for its exploration, production and other capital costs. The
remaining profits are split between the state and the company,
according to an agreed ratio.
The profit split generally appears to be to the advantage of the state
with ratios of 60:40 or even higher. The companies, however, are
guaranteed a return, as all their costs are covered before any
profit-sharing begins. Moreover, they can increase their share of the
total revenue by inflating their costs or by subcontracting work to
their own subsidiaries.
A PSA contract can also contain clauses that overtly advantage the
company. One such PSA was signed by the Russian government during the
1990s. The agreement, which gave Shell control of the Sakhalin II
project near Sakhalin Island in Russia’s Far East, stipulated that the
Russian government would receive no share at all until the company had
achieved a specified profit margin.
Moreover, the Platform report notes that a PSA can specify that any
disputes be resolved in international tribunals such as the US-based
International Centre for the Settlement of Investment Disputes or the
French-based International Chamber of Commerce. These bodies are
controlled by the major powers rather than the nation-state where the
oil is being extracted.
Summing up the essential characteristic of a PSA, a British academic
cited by Platform wrote: “The government can be seen to be running the
show—and the company can run it behind the camouflage of legal title
symbolising the assertion of national sovereignty.”
Naked corporate plunder
The decision by the US occupation to apply this PSA model to Iraq
amounts to naked corporate plunder. While common in countries that do
not possess large reserves of oil and gas, or where the cost of the
development of fields is substantial—such as offshore oil wells—PSAs
are virtually unheard of in large oil-producing states like Iraq. Such
nations either exploit their energy resources directly or use their
bargaining power to negotiate far more equitable contracts.
Platform points out that of the seven largest oil producers—Saudi
Arabia, Iran, Kuwait, Iraq, the United Arab Emirates, Venezuela and
Russia, which collectively sit on top of 72 percent of the world’s
known reserves—only Russia has ever signed PSAs. During the first
stage of capitalist restoration in the 1990s, when the Stalinist
regime literally liquidated the state-owned assets of the former
Soviet Union, Moscow entered three such agreements. All have cost the
Russian state billions of dollars in lost revenues and are the subject
of bitter recriminations.
The most expansive period in the history of the Iraqi oil industry was
between 1970 and 1979. Financed directly by the government, the
state-owned Iraqi National Oil Company increased production from 1.5
million barrels per day to 3.7 million barrels per day, and explored
eight of the largest new fields that still have not been developed.
Iraq’s new constitution, however, was written by US officials and
Iraqi collaborators with the occupation to exclude any possibility of
this being repeated.
The clauses referring to oil and gas establish the legal mechanisms
for PSAs. Article 108 proscribes the direct privatisation of the
energy resources by declaring that oil and gas “are the ownership of
all the people of Iraq in all the regions and governorates”. Clause
two of Article 109, however, stipulates that the different branches of
Iraq’s government “formulate the necessary strategic policies to
develop the oil and gas wealth in a way that achieves the highest
benefit to the Iraqi people using the most advanced techniques of
market principles and encourages investment” (emphasis added).
Under PSAs, the transnational companies will not “own” Iraq’s oil and
gas. Rather, they will develop the reserves according to “market
principles” on the basis of one-sided contracts that “encourage
investment”.
Furthermore, the first clause of Article 109 stipulates that the Iraqi
federal government only has authority over the “management of oil and
gas extracted from current fields”. Article 111 declares that “all
powers not stipulated in the exclusive authorities of the federal
government shall be the powers of the regions and governorates”. The
implication is that the federal government will control the 17
currently producing fields, while the 63 undeveloped fields, as well
as any new discoveries, will be under the jurisdiction of the regions
and provinces.
In other words, PSAs can be signed for the exploitation of new fields
with regional governments such as the Kurdish Regional Government
(KRG) in northern Iraq, or the provincial governments in the
predominantly Shiite Arab and oil-rich south. The Platform report
notes that of the 25 new fields named by the Iraqi Ministry of Oil in
1995 for “priority development”, 11 were in the south, 11 in the north
and just 4 were in the central region.
The constitution was ratified by referendum on October 15. Significant
portions of Iraq’s oil can therefore be hived off to transnational
energy giants regardless of who makes up the government in Baghdad
after the elections on December 15, or how long the anti-occupation
insurgency continues in the predominantly Sunni Arab provinces of
central Iraq.
Last week, this process began. The KRG announced that drilling had
begun on the Tawke field in northern Iraq on the basis of a PSA signed
with the Norwegian company DNO in June 2004. The agreement gives 60
percent profit to the Kurdish region and 40 percent to the company.
The project is the first oil development by a foreign company in Iraq
for 20 years.
A veritable rush of PSAs can be expected over the coming period, with
the terms likely to be even more favourable to the transnational
companies than anything seen elsewhere.
“Crude Designs” states: “The key issue here is bargaining power. The
Iraqi state is new and weak, and damaged by ongoing violence and by
corruption, and the country is still under military occupation ... the
oil companies will inevitably wish to focus on the current security
situation to push for a deal comparable to—or better than—that in
other countries in the world, while downplaying the huge reserves and
low production costs that make Iraq an irresistible investment.”
The report points to a blatantly neo-colonial contractual clause that
is likely to be inserted into PSAs on the demand of the US and other
occupying powers—a stipulation against government interference over
oil production rates.
Platform observes: “Iraq would not be able to control the depletion
rate of its oil resources—as an oil dependent country, the depletion
rate is absolutely key to Iraq’s development strategy, but would be
largely out of the government’s control. Unable to hold back foreign
companies’ production rates, Iraq would also be likely to have
difficulty complying with OPEC (Organisation of Petroleum Exporting
Countries) quotas which would harm Iraq’s position within OPEC and
potentially the effectiveness of OPEC itself.”
A key objective of the major powers since the oil crisis of the 1970s
has been to shatter the ability of the main oil-producing states to
ever again ration world oil supplies.
In the lead-up to the March 2003 invasion, the propaganda of the Bush
administration and its international allies was that the war was
motivated by the need to eliminate the threat posed by Iraq’s “weapons
of mass destruction”, particularly its alleged efforts to acquire
nuclear weapons. The invading powers also claimed to possess evidence
of links between the regime of Saddam Hussein and the Al Qaeda
terrorist network.
These lies were the justification for a predatory and illegal war.
While Platform did not dwell on the report’s political implications,
“Crude Designs” provides ample data to underscore that the unanimity
in the American political establishment that the occupation of Iraq
must continue is bound up with vital economic and strategic interests
of the most powerful sections of the American corporate and financial
elite.
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Here's what happens to steel framed buildings exposed
to raging infernos for hours on end.
http://davesweb.cnchost.com/nwsltr69c.html
On 9-11-01, WTC7, a 47 story steel framed building, which
had only small, random fires, dropped in perfect symmetry
at near free fall speed as in a perfectly executed controlled
demolition.
http://911research.wtc7.net/talks/wtc/videos.html
http://www.physics.byu.edu/research/energy/htm7.html
http://wtc7.net/articles/FEMA/WTC_ch5.htm
Ever wonder who benefits from the 150 MILLION
U.S. taxpayer dollars spent each DAY in Iraq?
http://www.commondreams.org/views04/0223-08.htm
http://www.corpwatch.org/article.php?list=type&type=21
"They are waging a campaign of murder and destruction. And
there is no limit to the innocent lives they are willing to
take... men with blind hatred and armed with lethal weapons
who are capable of any atrocity... they respect no laws of
warfare or morality."
-bu$h describing his own illegal invasion of Iraq.
http://www.robert-fisk.com/iraqwarvictims_mar2003.htm