Tag: oil

  • Turkey, Iraq, and Oil

    Turkey, Iraq, and Oil

    Aymenn Jawad Al-Tamimi
    The American Spectator

    https://www.meforum.org/3484/turkey-iraq-oil

    Though the pace of growth of the Turkish economy has slowed significantly, one of Ankara’s priorities over the coming years is to meet the country’s growing energy demands. The clearest solution is to diversify suppliers of oil and gas, with the autonomous Iraqi Kurdistan (KRG) area being one potential source for such fuels.
    Had you asked me a few months ago about the Turkish policy on acquiring energy resources from the KRG via an independent pipeline project and against the will of the Iraqi central government, I would have said that Ankara was still ambiguous on the matter, but now it seems clear that the Turkish government under Prime Minister Erdoğan intends to move forward with such plans.

    The first sign of an advance in the framework of an informal commercial deal between the KRG and Ankara on this issue was a report by Ben Van Heuvelen for the Iraq Oil Report. Relying on the testimony of “multiple senior Turkish officials,” Heuvelen reports that the terms would include “stakes in at least half a dozen exploration for the direct pipeline export of oil and gas from the KRG.”
    Multiple other sources can be used to confirm Heuvelen’s report. Following the visit of KRG premier Nechirvan Barzani in Ankara to meet with Erdoğan on March 26 where the two leaders apparently agreed to begin implementing the energy cooperation plan, the Turkish opposition party CHP attempted to launch a no-confidence motion in parliament against Foreign Minister Ahmet Davutoğlu on account of the energy deal with the KRG. The no-confidence motion failed.
    CHP member Osman Korutürk claimed that a pipeline agreement in particular contradicted Davutoğlu’s declared principle of “zero problems” with neighboring countries, noting the objections of Baghdad and Washington to the development of energy ties between the KRG and Turkey without the Iraqi government’s consent.
    The Turkish premier’s response to this initiative by the CHP, which is similarly opposed to Ankara’s firm anti-Assad stance vis-à-vis Syria, was to indicate that the issue should be taken up with Energy Minister Taner Yildiz, who proceeded in a speech to acknowledge the idea of maintaining Iraq’s unity as one of the top priorities of Turkish foreign policy, while arguing that the KRG had a constitutional right to develop energy ties with Ankara and is entitled to 17% of Iraq’s budget as per a 2006 agreement between Arbil and Baghdad.
    In a subsequent interview with CNN Turk, Erdoğan invoked many of the same points as Yildiz in arguing that Turkey had the right to make energy agreements with the KRG, adding that under Prime Minister Nouri al-Maliki, there is no real unity in Iraq anyway.
    The point about the KRG’s budget share of 17% — invoked by Erdoğan and Yildiz — is key to Turkey’s official justification for moving forward with developing energy ties with the KRG unilaterally while also claiming to uphold Iraq’s unity. Ankara’s reasoning appears to be as follows: through developing energy ties, KRG will boost its oil production and therefore in terms of Iraq’s overall revenues, the KRG will be contributing 17% and thus match its share of the budget.
    At present, the budget share to which the KRG is entitled is well above the autonomous region’s oil output as a proportion of Iraq’s revenues, the overwhelming majority of which comes from the oil industry. Baghdad’s complaint — as reflected in the words of Abdullah al-Amir (the chief advisor to Iraq’s deputy minister for energy affairs) — is that allegedly, only a third of KRG oil revenues reach the central government.
    This complaint is not necessarily divorced from reality. In truth, the Turkish government’s official justification for implementing an energy agreement with the KRG while claiming to uphold Iraq’s unity is specious.
    Notice that in the interview with CNN Turk (as I have pointed out above, but was omitted in the English reports), Erdoğan said that there is no real unity in Iraq anyway. At the same time, it should be emphasized that Ankara still does not support actual Kurdish independence.
    Rather, the goal is to make the KRG a virtual client state of Turkey while ensuring that the autonomous region at least remains nominally part of Iraq. As Ben Van Heuvelen pointed out to me, this goal is “almost explicit policy” on the part of Ankara.
    In turn, Zaab Sethna draws an analogy with the Turkish-occupied territory of northern Cyprus, in relation to which Turkish officials are now pressing Israel not to develop natural gas deals with the Cypriot government without incorporating Ankara into the negotiations. Aware of Baghdad’s disapproval of dealing with the KRG unilaterally, the Turkish government appears to be trying to pursue a rapprochement with the Iraqi government anyway: perhaps to induce it to accept the Turkey-KRG agreement. The rapprochement initiative began with a meeting between Davutoğlu and Iraq’s Vice-President Khudayr al-Khozaie at the Arab League Summit in Doha at the end of last month, in which a desire to restart friendly bilateral ties was expressed — something that Khozaie acknowledged on his return to Baghdad.
    Building on these hints of rapprochement, Iraq has now put forward an offer to build an oil pipeline from Basra to Ceyhan in southern Turkey, in which Yildiz has expressed an interest. Even so, if Baghdad is hoping that this counter-offer will dissuade Ankara from proceeding to forge energy ties with the KRG, then the central government is quite mistaken.
    It seems most likely that Turkey, like Exxon Mobil with its oil contracts in Iraq, will try to have it both ways by continuing to express an interest in a Basra-Ceyhan pipeline project as well, but could also drop the proposal entirely in favor of continuing to develop the energy deal with the KRG. Further, it is improbable that a compromise will be reached on the issue: a whole series of temporary agreements have arisen in the past on oil disputes between the KRG and the Iraqi central government, but the foundations of the quarrel have never been truly tackled. There is no doubt that the dispute over the budget for this year pushed the KRG to move forward with Ankara in cementing the energy deal.
    At present, there is little the Iraqi government can do to stop Ankara beyond saber-rattling rhetoric. A violent confrontation is out of the question, and appealing to Washington to pressure Turkey to reconsider has been unsuccessful.
    This failure of persuasion demonstrates the very limited U.S. leverage in the dispute, and while Turkish officials have expressed hope that Washington will eventually take Ankara’s side, they are obviously not pleased that the Americans sided with Baghdad.
    From this point follows another conclusion: namely, it is all the more likely that Turkey will continue to resist any future U.S. or wider Western pressure to drop energy and economic ties with Iran amid the sanctions.
    Ankara may be diversifying its energy sources, but that does not translate to dropping oil imports from Iran or ending the trade in gold for natural gas. An independent oil and gas pipeline project with the KRG will take years to become fully operational, and there is no reason to assume it is mutually exclusive from continuing energy ties with Iran, just as it is wrong to presume that the KRG will end oil smuggling to Iran just because of an energy agreement with Turkey.
    Whatever disagreements Iran and Turkey have about Syria, it important to note the cases of Iraq-Jordan and Iran/Iraq-Egypteconomic ties. Strategic regional outlook is not the same as strengthening economic relations, and so one must avoid interpreting Turkey’s cultivation of energy ties with the KRG as a move away from Iran by either party.

    Aymenn Jawad Al-Tamimi is a Shillman-Ginsburg Fellow at the Middle East Forum, and a student at Brasenose College, Oxford University.

  • Turkey builds closer oil links with Kurds, angering US

    Turkey builds closer oil links with Kurds, angering US

    ISTANBUL // Turkey is pushing ahead with plans to extend economic cooperation with Iraq’s Kurdistan region, brushing aside warnings from the United States that this approach could lead to the disintegration of the Iraqi state.

    Related

    A Syrian rebel fires shots in the air as mourners carry the body of Mohammed Hafar, 20, during his funeral in the northern Syrian town of Azaz on October 29, 2012. Mohammed Hafar and his brother were killed during clashes between Kurdish militiamen and Free Syrian Army fighters near the village of Al-Kastal close to the border with Turkey, amid rising communal tensions. AFP PHOTO/PHILIPPE DESMAZES *** Local Caption *** 778087-01-08.jpg

    ■ Kurds talk of intervention in Syria, raising danger of escalation

    ■ Kurd-Turkish clashes feared along Syrian border

    Comment Kurdish killings in Paris will not derail Ankara-PKK peace

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    Iraq’s Kurdish region had become so important to Turkey, economically and politically, that Ankara was willing to risk tensions with the US, its most important ally, said Celalettin Yavuz, an analyst at a think tank in the Turkish capital.

    Taner Yildiz, Turkey’s energy minister, yesterday said that oil imports from northern Iraq to Turkey by truck had resumed after a pause of several weeks for technical reasons.

    He said Turkey was determined to sell refined-oil products to Iraqi Kurdistan, the state-run Amnadolu news agency reported.

    Oil exports from northern Iraq to Turkey have angered the central-Iraqi government. It said the trade was illegal, which Ankara denies.

    Mr Yildiz stressed that Turkey was also buying oil from southern Iraq, because doing otherwise would be “discrimination”.

    US officials are concerned that Turkey’s strained ties with Baghdad could have implications for the rest of the region.

    The Kurdish Regional Government (KRG) in northern Iraq said last week it planned to press ahead with building an oil-export pipeline to Turkey. “We want to have an oil pipeline to ourselves,” said Ashti Hawrami, the Iraqi Kurdish minister for natural resources.

    Crude from the Kurdistan region used to be shipped to world markets through a Baghdad-controlled pipeline to Turkey, but exports via that channel dried up in December, from a peak of around 200,000 barrels per day (bpd), due to a row with Baghdad over payments.

    Recep Tayyip Erdogan, the Turkish prime minister, said his country was not obliged to wait for a new agreement between the central Iraqi government and the KRG over oil exploration and export rights, even though Washington wanted Ankara to be cautious.

    “Our economic relations are getting broader, despite everything, including America,” Mr Erdogan said last week, referring to the KRG.

    Mr Erdogan, who has been careful to develop close relations with the US, freely acknowledged tensions with Washington over the issue.

    “America says: ‘What you are doing is wrong,’” Mr Erdogan said. “We are saying: ‘No, Iraq’s constitution allows it.’”

    The present constitution, drawn up after the US-led invasion in 2003, gave Iraqi Kurds the right to more than 18 per cent of the country’s oil reserves, he added.

    Mr Erdogan’s remarks followed a public warning by Francis Ricciardone, the US ambassador to Ankara. Speaking on February 5, he said a failure by Turkey and the central Iraqi government to deepen their cooperation would be dangerous for the whole region.

    “There could be more violent conflict in Iraq and the forces of disintegration within Iraq could be emboldened,” he said.

    Mr Yavuz, the deputy director of the Turkish Centre of International Relations and Strategic Analysis, said the KRG was a priority for Turkey despite US concerns.

    On the political front, Ankara was trying to secure the support of the KRG for efforts to end the Kurdish conflict in Turkey, he added.

    The Turkish intelligence service had been negotiating with Abdullah Ocalan, the jailed leader of the Kurdistan Workers’ Party, a rebel group that has been fighting Ankara since 1984.

    “The KRG is indispensable for Turkey,” Mr Yavuz said.

    That outlook collides with US interests in the region. “The USA wants to secure the Gulf and keep Iran out,” he added.

    He said Iraq was drifting towards Iran, despite the US launching the 2003 invasion that had toppled Saddam Hussein, claimed the lives of several thousand US soldiers, cost trillions of dollars and battered America’s image in the region.

    “So one may ask: why did they go into Iraq in the first place?” said Mr Tavuz. “This is what makes the US concerned. By turning away from Turkey, Iraq is turning away from the West and towards Iran.”

    About 90 per cent of Turkish exports to Iraq went to the Kurdish region, he said. KRG oil and gas could help to reduce Turkey’s dependence on energy imports from Iran and Russia.

    The oil-exports row has also heightened existing tensions between Mr Erdogan’s government and Iraq’s prime minister, Nouri Al Maliki.

    Turkey has accused Mr Al Maliki, a Shiite, of trying to centralise power in his hands, while Mr Al Maliki has said predominantly Sunni Turkey was meddling in Iraq’s internal affairs and was a “hostile state”.

    tseibert@thenational.ae

    * With additional reporting by Reuters

    via Turkey builds closer oil links with Kurds, angering US – The National.

  • Turkey to continue its oil trade with Iraq despite US opposition, Erdogan says

    Turkey to continue its oil trade with Iraq despite US opposition, Erdogan says

    Turkey will continue its oil trade with the Kurdistan Regional Government (KRG) in northern Iraq, Turkish Prime Minister Recep Erdogan has said, while confirming the trade as legitimate, Hurriyet Daily News reported.

    Erdogan_200412

    Turkey is supporting its neighbor in its need to trade and buying petrol in return, he said during an interview with reporters on his way back from a mission to Eastern Europe yesterday. Below are his responses to questions from journalists.

    Is Turkey signing a broad energy agreement with northern Iraq?

    The central government wants to keep everything under its control. At this point they say they could do anything if the regional administration in northern Iraq does not withdraw from such business.

    “We would give gasoline if they want, we would give diesel if they want,” they say.

    But we do not have a [stance] about this [dispute], despite the American inclusion.

    America says you are doing wrong.

    No, we believe this is included in the [Iraqi] constitution. Because northern Iraq has an authorization of right on an 18 percent structure it might use this authorization with any country. And we are its neighbor. It has such a need. As their neighbor, we are helping them in meeting this need. In return we buy petrol or such things.

    What are your thoughts on Foreign Minister Ahmet Davutoğlu’s response to Iraqi PM Noiri al-Maliki?

    Maliki began to go too far. Davutoğlu’s remarks were also very hard. When Maliki sent such a message I decided not to respond him, but Davutoğlu did instead. This was Davutoğlu’s response.

    Have you had any news from Iraqi President Jalal Talabani?

    We only know that his situation is serious. Some say it is serious, some say not.

    Will the opposition in Syria talk with President Bashar al-Assad?

    The statements by [Syrian National Council Head Sheik Ahmad] Moaz al-Khatib were twisted. Al-Khatib says they would meet a government that does not include al-Assad. Not the one with al-Assad. But they have twisted it and made it look like a contact with al-Assad. Al-Khatib by no means accepts al-Assad, he says they wouldn’t talk. Such a thing cannot happen. But they might sit at the table with the other remnants of the regime. And this is a reflection of the Geneva talks.

    And the [Democratic Union Party] PYD is restless because the opposition has started squeezing the PYD. The PYD has a serious problem particularly in Qamishli and Hassake. The opposition is continuing this process [of pressure] very well. The regime is losing power in terms of air control. Of course this does not mean that they do not have any air control.

    Some say Turkey should play pioneer role in persuading allies?

    Our initial approach about going into such a tour to persuade allies has been talking with the United Nations, the Arab League, the Organization of Islam Conference, Russia and China. But we could not achieve the required result.

    Even the Arab League is not yet giving enough support. The U.N. Security Council had unfortunately not taken bunch of steps until its latest meeting in Doha.

    It is obvious who donated money at the Doha meeting: the Gulf countries and Saudi Arabia. The sum is said to be $1.3 billion as far as I remember, and a $600 million portion was promised by Saudi Arabia and Qatar alone. But despite all this, I tell you that al-Assad will go. He is not here to stay. The opposition powers are working with all they have today. After the Doha event, the support for them will grow continuously and we are continuing our humanitarian support. Our open gate policy will continue. Our spending so far has surpassed $600 million. In the upcoming period we will keep on locating [refugees] in houses or camps.

    How will the process work during a second Peace and Democracy Party (BDP) mission to İmralı?

    We will talk on the issue with colleagues tomorrow [Feb. 8]. In the meantime, maybe the MİT chairman might give a talk. He will inform us about the issue.

    You had set a March deadline for the work on the new Constitution.

    This is the timing for the Parliamentary speaker. We did not set a deadline but this cannot be limitless. Keeping it limitless means diluting the process.

    via Turkey to continue its oil trade with Iraq despite US opposition, Erdogan says – AzerNews.

  • Almost Half of Turkey’s Oil Needs Supplied by Iran

    Almost Half of Turkey’s Oil Needs Supplied by Iran

    TEHRAN (FNA)- Turkey has supplied 45% of its oil needs in July from Iran, a report said.

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    According to a report by the Turkish Energy Market Regulation Board (EPDK), Turkey imported 2.9 million tons of oil from 22 countries in July 2011, and the highest amount has been supplied from Iran.

    Turkey imported 1.3 million tons of oil from Iran which was followed by Iraq with 340,869 tons. India ranked the third with 298,847 tons.

    According to the report, Iran met 45%, Iraq met 12%, India met 10% and Italy met 8% of Turkey’s oil need in July.

    Meanwhile, Turkey exported 531,281 tons of oil in July 2011, the report said.

    Iran and Turkey are major energy partners. Iran exported a daily average of more than 30 million cubic meters of natural gas to Turkey in 2010, which increased around 7 percent in the first half of 2011.

    According to the report of The National Iranian Gas Company (NIGC), Iran’s gas export to neighboring Turkey climbed by 50 percent in 2010 compared to the previous year, and by 100 percent in comparison with the 2008 figures.

    Turkey does not have sizeable domestic gas production but it is an important natural gas transit country. Iran is Turkey’s second largest supplier of natural gas after Russia.

    via Fars News Agency :: Almost Half of Turkey’s Oil Needs Supplied by Iran.

  • Former BP boss, the ‘Turkish’ conduit and the Zionist Banker

    Former BP boss, the ‘Turkish’ conduit and the Zionist Banker

    Tony Hayward in line for multimillion windfall after Iraq oil deal

    Hayward, who quit BP 14 months ago following the Deepwater Horizon disaster, will be chief executive of Genel Energy PLC, which has oil reserves in Kurdistan (sic.)

    Former BP chief executive Tony Hayward is in line for a windfall after his investment vehicle signed a deal with Turkey's Genel. Photograph: Toby Melville/REUTERS

    Tony Hayward has sealed a deal to exploit the oil fields of Iraq’s Kurdistan region, landing the former BP boss an expected windfall of around £14m.

    Hayward’s return to the oil industry was finalised on Wednesday as his new investment vehicle, called Vallares, agreed a merger with Genel Energy International of Turkey. The deal will deliver an estimated £176m windfall for Hayward and his fellow backers of Vallares, including Nat Rothschild.

    Hayward said the deal would allow Vallares to exploit “one of the last great frontiers in the oil and gas industry”.

    “Arguably, it [Kurdistan (sic.)] is the last big onshore ‘easy’ oil province available for exploration by private companies anywhere in the world,” he added.

    The combined company will be named Genel Energy PLC, and aims to join the FTSE 100 by early 2012.

    Hayward, who quit BP 14 months ago following the Deepwater Horizon disaster, will be chief executive of the combined company, sealing his return to the ranks of major oil firm bosses. On a conference call with reporters he refused to discuss how the transformation of his fortunes over the last year contrasted with the ongoing struggle faced by those affected by the oil spill in the Gulf of Mexico.

    Genel holds proved and probable reserves of 356m barrels of oil. It is well-placed to tap Kurdistan’s (sic.) huge reserves of hydrocarbons, with an estimated 40bn barrels of oil still to be discovered. Hayward compared the region’s potential to that of the North Sea.

    Vallares will issue $2.1bn (£1.3bn) worth of new shares, and use the proceeds to buy Genel in a 50:50 merger that will see the Turkish firm merge with Vallares and take its share listing through a “reverse takeover”.

    Vallares was created by Hayward, Rothschild and two other businessmen earlier this year, raising £1.35bn through a stock market flotation.

    Under the terms in which Vallares was created, the four co-founders will share a windfall worth 6.67% of the group’s value once it has completed its first major deal, in return for injecting a total £100m at its creation. That means the quartet will share around £170m, depending on their original stakes. The split of the £100m was not made public, but Hayward reportedly contributed £8m.

    Mehmet Sepil, the current CEO of Genel, was hit with a record fine of almost £1m for insider trading in February 2010. The Financial Services Authority imposed the penalty after Sepil, and two colleagues, bought shares in Heritage Oil following confidential test results that revealed that Heritage and Genel had made a major oil discovery. Sepil insisted that he had not realised that this breached insider dealing rules.

    Sepil will become president of the new company, but will not serve on its board. Some analysts have questioned whether, given this fine, Genel would have been allowed to list in London with Sepil at the helm.

    City grandee Rodney Chase will chair the company. He insisted on Wednesday that Genel Energy will show “total adherence” to City rules. Chase added that the merger with Genel showed that companies from around the world could be attracted to list in London.

    www.guardian.co.uk, 7 September 2011

    [2]

    The City forgives trespasses – perhaps too readily when money talks

    Only months after Tony Hayward’s near-death experience at BP, he’s back in the oil business

    Julia Finch

    Tony Hayward
    Tony Hayward is in effect using his name in the City to give cover to a chief executive who was fined £1m by the FSA. Photograph: Win Mcnamee/Getty Images

    The City is a forgiving place for those with an aptitude for making money – and losing it. Tony Hayward is set to march back into leadership with a London-listed oil company only months after presiding over a near-death experience for BP.

    The Vallares investment vehicle that Hayward recently established with his financier friend Nat Rothschild has merged with Kurdistan (sic.) oil explorer Genel Energy International of Turkey. Hayward will bring it to market under the Genel name via an initial public offering making paper profits for himself and Rothschild of many millions of pounds each.

    But Hayward is, in effect, using his name in the City to give cover to Genel’s chief executive, Mehmet Sepil. The Turkish businessman was fined nearly £1m by the UK’s Financial Services Authority for insider dealing around an earlier potential – but ultimately unsuccessful – merger of Genel with London-listed Heritage Oil.

    Sepil would probably find it very difficult to bring his company to market himself, so he needs a fine local name to front his business – especially as Genel could soon end up in the FTSE 100 group of leading companies and therefore be automatically included in many workers’ pension funds.

    Outsiders might think that Hayward is not an obvious choice. BP has sold tens of billions of pounds’ worth of assets to pay for the cost of potential liabilities in the aftermath of the Gulf of Mexico blowout. Shares in the company continue to trade some 30% below where they were before the accident 18 months ago and speculation continues that it may need to break itself up to create new value.

    Clearly, Hayward cannot be held solely responsible for the Macondo oilwell disaster. The facts suggest there were very many different parties who played a role.

    But still – like the bankers who have largely got off scot-free in the UK despite blowing up the financial system – it adds to a feeling that the City’s willingness to forgive is inappropriate, if not irresponsible. And it adds to the sense of a race to the bottom among stock markets keen to pull in petro-dollar businesses without much regard for corporate social responsibility.

    www.guardian.co.uk, 7 September 2011

  • Secret memos expose link between oil firms and invasion of Iraq

    Secret memos expose link between oil firms and invasion of Iraq

    Greg Muttitt: ‘Big oil firms are still in the driving seat when it comes to the resource war’

    Secret MemosThis week, The Independent revealed how big oil firms influenced the invasion of Iraq. Greg Muttitt, who uncovered the story, exposes the lengths to which the occupying powers went to prise the country’s oil production out of the control of the Iraqi government and into the hands of international oil companies.

    Interview by Phil England

    I would say the most surprising thing about my book is that someone else hasn’t written it in the past eight years. It’s an obvious question to ask, ‘what happened to the oil?’

    Published yesterday, Greg Muttitt’s explosive new history of post-occupation Iraq has been pulled together from hundreds of documents released under the Freedom of Information act – both here and in the US – as well as from numerous first-hand interviews. Muttitt was the source of The Independent’s front-page revelations on Tuesday that both BP and Shell had meetings with government officials in the run-up to the invasion of Iraq.

    With more revelations inside, his book is set to turn our understanding of the war on its head. As well as documenting just how highly oil figured in the thinking of those who led what is widely thought to have been an illegal invasion, Fuel on the Fire exposes the lengths to which the occupying powers went to prise the country’s oil production out of the control of the Iraqi government, and into the hands of international oil companies, against the wishes of the Iraqi people.

    It’s an absorbing account of what is a much more complex story than many pundits might prefer. “I didn’t feel it would be helpful to just chuck ammunition to one side in a polarised debate,” he explains. “I wanted to explore how this really works. I think it’s important to understand the nature of a resource war in the 21st century.”

    For many years Muttitt worked as a researcher and campaigner on the social and environmental impacts of the oil industry as a co-director of campaign group Platform, and in recent weeks he has been appointed campaigns and policy director for War on Want. After eight years of piecing this all together, including three visits to Iraq and several visits to Jordan, Muttitt is confident about some of his core findings. “Oil was the most important strategic interest behind the war and it shaped the decisions of the occupying powers,” he tells me. “The primary strategic interest for the US and Britain is to have a low and stable oil price. A secondary interest is for their own corporations to do well.”

    Bringing international oil companies back into Iraq, after 30 years of nationalised production, would put the country at odds with neighbouring producers such as Saudi Arabia, Kuwait and Iran, whose oil production has also been in the public sector since the 1970s. Part of the strategy seems to have been about changing that political culture.

    “In some of the documents I got hold of for the book it becomes quite clear,” says Muttitt. “The British government talks about using Iraq as a strong exemplar for the region and the International Tax and Investment Centre – the oil companies’ lobbying organisation – even described it as a beach-head for broader expansion of the oil companies into the Middle East.”

    One of the great achievements of Muttitt’s book is to have restored an Iraqi voice to a narrative from which it had largely been erased. The fact that the Iraqi people held a strong view that oil production should stay in their hands did not deter the occupying powers and international oil companies from pursuing their privatisation agenda relentlessly. But at some point it all had to come unstuck. At the heart of Fuel on the Fire is the story of the Iraqi peoples’ fight against the Oil Law – a law which would have removed the need for parliamentary approval of contracts with oil companies.

    It was a fight in which Muttitt himself played a role. At a meeting with Iraqi unions in Amman in Jordan in 2006, following his work on a report called Crude Designs, he helped make the law’s implications accessible. Although initiated by the unions, the two-year campaign which followed was joined by oil experts, religious and civil society groups, intellectuals and professionals.

    Iraq’s own oil experts, who had worked in the industry for decades, made the case against foreign investment. As Muttitt notes: “The industry was at its most effective in the 1970s immediately after nationalisation and before Saddam took the country into a series of wars.”

    Despite all the pressure brought to bear on the Iraqi government from outside the country – including aid and debt relief being made conditional on passing an oil law, direct briefings by oil companies, linking the surge strategy to passage of the oil law, and a threat to remove Prime Minister Nouri al-Maliki from office – the campaign proved too popular for parliament to pass the law.

    You might think that was enough to force a rethink, but the Iraqi government went ahead and auctioned off 60 per cent of the country’s proven reserves anyway, under contracts of dubious legality, to companies such as BP, Shell and Exxon. In what was the biggest sell-off in the history of oil, some analysts believe the financial returns for the oil companies will be 20 per cent or more.

    Iraqi MP Shatha al-Musawi attempted to bring a legal case against the first contract: BP’s joint deal with the China National Petroleum Corporation for the Rumaila field. But the Supreme Court said this would cost her $250,000. Her fellow parliamentarians were supportive and promised to help raise the money, but that commitment fell apart as parties jostled for position after the March 2010 elections. After she decided not to re-stand for election, al-Musawi told Muttitt: “Most of the governing institutions are working without law and violating the constitution every day because they decided not to have an effective parliament. We really have a dictatorship.”

    Muttitt worries about the lack of effective political oversight at a time of massive outside investment in Iraq’s oil resources. Studies of the “resource curse”, including the World Bank’s Extractive Industries Review show that effective governance is needed before you bring in tens of millions of dollars. “Unless you manage it effectively you get a distortion of the economy, you get corruption and you get investors that don’t serve national interests.”

    The Iraqi street worries about it, too. On 25 February people across the country protested against corruption and for better services in a “day of rage” where a number of people were killed by security forces. The slogans included: “The people’s oil is for the people not the thieves.” Sami Ramadani, a London-based Iraqi exile who writes regularly about the occupation, told me: “The general feeling is that Iraq’s oil is being given away and whatever is being retained in terms of income is being squandered by the regime. In terms of services, wherever you turn there is a very sharp deterioration – health, education, employment, clean water and so on.”

    The legitimacy of the post-Saddam regime is coming increasingly into question. After a “million person march” against the occupation led by the Sadrists on 9 April in Baghdad (Ramadani estimates the turnout was in the hundreds of thousands), a new military order was issued that decrees that demonstrations can only take place within designated football fields. One demonstrator who defied the ban one week later quipped: “Are we going to play a football match with the police?”

    Last week oil minister Abdul-Karim al-Luaibi announced another auction, this time for 12 “exploration and production” contracts, which are expected to go under the hammer in November. “Iraq has the greatest unexplored potential of any country in the world,” says Muttitt. “Most geologists reckon there’s about as much still to be found as currently exists in proven reserves. So this would tie up another chunk of Iraq’s future economic potential for 20-30 years.”

    This is on top of the massive planned increase in production from 2.5 million barrels per day to 12 million bpd, already implied by the existing contracts. Even the small number of Iraqi oil experts who supported privatisation are now arguing that such a rapid increase is not in Iraq’s interest as it will likely lead to a crash of the oil price.

    Muttitt says the government has been very effective in breaking organised opposition to the oil law. “The oil workers trade union still exists [although, like all trade unions in Iraq, is illegal] but has come under enormous pressure. The large group of oil experts that opposed the oil law, meanwhile, have been co-opted and broken apart. A lot of them have been offered very lucrative roles with multinationals and so on.”

    Nevertheless, he still has faith in ordinary Iraqis to deal with their problems. After all, it was civil society that won the fight against the oil law and it was a coalition of civil society groups that forced Iraq’s politicians to finally form a government after five months of post-election wrangling last December. “This struggle is not over and there is hope for the future. If Iraqi civil society is given the chance and the right kind of international support, these issues are still up for being contested. In spite of the politicians, there is cause for hope in Iraq.”

    “Fuel on the Fire: Oil and Politics in Occupied Iraq” by Greg Muttitt is published by The Bodley Head

    www.independent.co.uk, 22 April 2011
     

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    • John Hawkins 4 days ago
      Oil is the primary resource in the world today, those who complain about oil company actions would soon change their tune if they could not fill their car tanks every week.
    • tomfrom66 3 days ago in reply to John Hawkins
      They would also complain if there was no artificial fertilizer – Haber Bosch process – to put food on their tables, and no plastics. 

      They might also – if the facts were put in front of them – be very afraid of what life is going to be like when oil becomes to so prohibitively expensive it cannot ‘fund’ all three aspects of the economy.

      Oil is not some self-replicating substance, John.

    • John Hawkins 3 days ago in reply to tomfrom66
      “Oil is not some self-replicating substance” 

      I agree Tom and did not intend to suggest oil could be used profligately, just that it is the ultimate essential to our present lifestyle.

      For good or bad, bad in my view, we have put ourselves in the hands of oil producers and bankers.