Another item covered in Ben Lando's http://www.iraqoilreport.com that has been almost completely unnoticed in the MSM is that on August 6, the Kurdistan Regional Government (KRG) passed an oil law, in sharp contrast with the central Iraqi government, which has so far failed to do so. In the wake of its passage, the KRG is apparently making a deal with Hunt Oil Company of Dallas, which the Oil Minister of Iraq, Ali Shahristani, is threatening to declare illegal because it does not apparently contain a provision for sharing revenues with the central government, although the KRG has issued a statement saying that it is in principle willing to do so, especially if no oil deals are allowed in the Kirkuk region, containing the second biggest pool of oil in Iraq, and which the KRG is hoping a referendum will hand over to the KRG.
Actually, the KRG has since May 2006 cut deals with five oil companies, most of them wildcatter operations not from the US, with the first (and the first to start production) being DNO from Norway, with the others from Canada and Turkey. The early prospects have been favorable, with "gushers" reported coming in from parts of Iraqi Kurdistan in the fields operated by DNO, and the KRG apparently hoping to have 200,000 barrels per day (bpd) going by the end of this year and 2 million bpd in five years, out their own pipeline through Turkey (assuming that taking Kirkuk does not anger the Turks too much, who are worried about the Turkmen population there). Reportedly the DNO contract gives the company 10-30% of the revenues as profits, with the rest going to the KRG, and none to the central Iraqi government.
So, this may be the economic beginning of the "ground-up" partition of Iraq that seems to be going on more widely. The SIIC in the south is pushing for a separate entity there, which region has the largest oil pool. And the tribal Sunni sheiks in al-Anbar are getting armed by the US (which arming could have been done without the surge). Today they fight al-Qaeda in Iraq (which Juan Cole has long claimed would have happened sooner if US troops had completely withdrawn sometime ago, and their move to do so predated the surge), but tomorrow they will be able to fight an increasingly Shi'i-dominated central government, especially if the other regions take all the oil revenues for themselves. leaving nothing for the Sunni Arabs in the center, who remain alienated by the ongoing de-Baathification Commission, led by Chalabi.
More bad wording by me, "their move to do so" refers to the Sunni tribal sheikhs turning against al-Qaeda in Iraq. Bush and Petraeus are somehow trying to convince everybody that this turn was due to the surge. It is not at all. It was going to happen anyway, and all the huffing and puffing about al-Qaeda in Iraq simply covers the fact that they are a minor factor in the insurgency, although Bush and Co continue to try to convince most people that the war there is all about 9/11, something still nauseating on the 6th anniversary of that event.
ReplyDeleteAnother correction. The Iraqi oil minister is Hussain al-Shahristani. He is in Vienna right now. The KRG has denounced him since he threatened to declare as illegal their oil contracts. Part of the denunciation has been on his failure to rein in the black market in oil that is operating in much of Iraq, especially in the south.
ReplyDeleteAnother perspective on the contract between Hunt Oil and the KRG would be the significance of Hunt Oil getting such a contract in the first place. Is this the real reason for the Iraqi Debacle? CEO of Hunt, Ray Hunt I believe his name is, plays a role on the National Security Agency, holds a seat on the Board of Halliburton and is a significant financial backer for George W.
ReplyDeleteJack,
ReplyDeleteI doubt that this explains the whole debacle. However, the Hunt brothers (and their late dad) have long been heavies in the Texas oil industry and pals with Bush et al, with Ray indeed on the Halliburton board. We certainly have seen a small set of companies doing well out of this, Halliburton especially, although the big oil companies have not particularly.
BTW, the NSA that Hunt is associated with is the "Naval Support Activity," not the National Security Agency, although that association probably reflects his deep Bush et al connections.
Barkley,
ReplyDeleteThanks for pointing out that he tribal sheiks 'turn' predated the 'surge' (into Anbar), and did so by ~6 months.
juan,
ReplyDeleteYou're welcome, an obvious point not noted much by the supine MSM.
BTW, today (Sept. 14) Juan Cole reports that negotiations between the KRG and the central government have collapsed over the oil issue. The KRG signed a contract with Hunt Oil and Impulse Energy on Sept. 8. Apparently that deal included a 17% share of revenues to go to the central government. I do not know what share goes to the oil companies.
The KRG has demanded the resignation of Iraqi Oil Minister Hussein al-Shahristani, after he denounced the KRGB oil contracts as "illegal" while in Vienna. Word is also out that the referendum on the status of Kirkuk will be postponed, with KRG president Massoud Barzani declaring that failure to resolve that issue could lead to a "real civil war."
Links on these matters are provided on Juan Cole's blog.
Oh, and just in case anybody does not have it, the url for Juan Cole's valuable Informed Comment is
ReplyDeletehttp://www.juancole.com.