As of the 10th anniversary of the beginning of that war the answer is China, defnitely not the US, irony of ironies.
While the war was still in full swing, I used to post a lot about the details of what was going on in the oil sector in Iraq, possessor of the fifth largest oil reserves in the world. Most of those posts date back to when MaxSpeak was operating as the predecessor of this blog, with them unfortunately largely inaccessible, although I did sometimes here on Econospeak as well. In any case, this anniversary seems an appropriate time to revisit that issue. I shall strut a bit and note that most of what is true now, I called from soon after the war started and largely held to as the situation progressed, with a few minor amendments needed, mostly having to do with Kurdistan.
Many readers of this blog, and many very sophisticated and knowledgeable observers around the world, Juan Cole being just one example, argued from the beginning and occasionally still argue, that the war was "all about oil," or more precisely, the control of Iraqi oil. I argued that this was not the case at the proximate level, that it was about George W. Bush proving that he was more of a man, a Ronald Reagan even, than his father, who did not have the balls to go to Baghdad like Dick Cheney and other hawks wanted. But at a higher level, oil was very much the ultimate root of it because Bush, Sr. fought the first Gulf war due to there being so much oil there. He and the Saudis were afraid that Saddam was not going to stop in Kuwait, but was going to go for the whole oil well by rolling down the coast into Saudi Arabia to get al-Ghawar, by far the largest pool in the world. However, once Saddam was not only stopped from doing that, and was also pushed back from Kuwait and its large Burgan pool, there was no need to go to Baghdad since Saddam provided a useful balance to Iran, an argument made by the Saudis to both him and his son, although the son would ignore that advice, only to end up with a very pro-Iran regime in power after the war.
As it was, while there were neocons like Wolfowitz who seemed to be more concerned about Saddam's support for the Palestinians, and others who were worked up about possible links to al-Qaeda, and of course even more worked about the non-existent Weapons of Mass Destruction, there was at least one member of the administration who fit the image seen by those who thought that the war was really All About Oil, and immediate control of Iraqi oil by US oil companies. That would be then Vice President Dick Cheney, who also played on the fears about al-Qaeda. We still do not know what went on in the meeting Cheney had with oil company executives soon after the Bush administration came to power. Maybe they discussed Iraq; maybe they didn't. But Cheney clearly had in mind that US oil companies would get to make money in Iraq, and his own company Halliburton certainly made lots of money from the war, if not directly from the oil sector in Iraq. In any case, the fact that the US military went out of its way not to damage the Oil Ministry building in Baghdad in the initial invasion led many to think that this plot of Cheney's was what was key, although this was also consistent with the Paul Wolfowitz delusion that the Iraqis themselves would pay for the war like the Kuwaitis had for the first Gulf war out of their oil revenues, which most definitely did not transpire.
A curious thing at the time, despite this push by Cheney, is that the major US oil company executives did not in general join the war whooping that was going on then, and even expressed some cautious reservations. They foresaw disruption in the world oil markets and feared possible repercussions on their activities in other parts of the world. They were right about that, although it turned out that for quite a few years they made money from those disruptions, which included most significantly a major collapse of Iraqi oil production, which led to much higher oil prices and thus higher oil company profits. When I pointed all this out years ago, some commented that this proved that the conspiracy by them and Cheney was successful and that this is what they plotted. I do not know really what the oil company execs thought would happen, but I do not think this was what Cheney had in mind, who I am reasonably certain saw them at least getting preferential treatment on oil contracts, if not some more direct ownership or control of the Iraqi oil industry, none of which has remotely come to pass. And to the extent the oil motive was mentioned by anybody in the Bush administration, it was to "guarantee secure oil supplies" and thus to keep the price of oil down, not to push it up, thus harming voting American consumers.
So, more precisely, what has happened, and how do I need to modify my study and predictions about the oil sector in Iraqi Kurdistan? For what is the situation in the main non-Kurdish part of Iraq, let me quote from an article in yesterday's (March 18) Financial Times, "Hottest ticket in town cools for western groups," by Guy Chazan:
"When Iraq held its first round of postwar oil licensing in June 2009, groups such as ExxonMobil, Royal Dutch Shell and BP flocked to Baghdad for what was one of the most eagerly anticipated events in the oil industry calendar.
At the fourth round last May, none of them bid.
The poor attendance epitomizes a general disenchantment with Iraq's oil sector...the widely predicted bonanza for western oil companies in postwar Iraq has failed to materialize.
Political instability, poor contractual terms and infrastructure bottlenecks have sharply reduced the country's appeal to Big Oil. Many companies have shifted their attention to the semi-autonomous Kurdistan region, angering Baghdad."
Among those very recently has been ExxonMobil, the biggest of all the US oil companies, indeed, the biggest US company period.
In non-Kurdish Iraq, the biggest players by far are CNPC and PetroChina, both of China.
Which brings us to the question of Kurdistan. I am one who accurately warned of many of the bad things that happened in Iraq as a result of the invasion when it happened, although not all of them (not going to dredge through that whole list here). One item I did not forecast that has turned out to be more or less a good thing, and not much mentioned in the current discussions, is what happened in the Kurdish region. In contrast with the rest of Iraq, the Kurdish region is reasonably well governed and reasonably prosperous, and certainly in much better condition than when Saddam was oppressing and gassing its citizens, although there are problems and the ongoing possibility of the region getting into war with the rest of Iraq.
One of the sources of its prosperity is its growing oil industry. While all of this is declared to be illegal by the central Iraqi government, the Kurds have been arranging deals and contracts with foreign oil companies. In the beginning while the war was still going on, although largely finished in the Kurdish region, most companies stayed away due to the declarations from Baghdad. Small foreign companies made the deals, such as ones from Norway and Canada. The one US company in there was Hunt Oil, which raised some hackles at the time as one of the senior Hunts was on Bush's Foreign Intelligence Advisory Board, which led many to conclude that he was using inside information to decide that the US government was going to support the Kurds against Baghdad in the end, not something that was officially stated US policy at the time. Nevertheless the deals have continued.
Where I was wrong was that I did not foresee that eventually even Big Oil would follow, that the central Iraqi government simply never would get it together sufficiently to cut deals with western Big Oil, although some deals were made, with the large Rumaila field being co-developed by BP along with CNPC. But most, particularly the US majors, never really got in there.
As it is, most of the US majors are still not going into Kurdistan, but with ExxonMobil breaking the ice, I shall not be surprised if we now start to see some others getting in where they previously feared to tread, and Chevron is now joining the rush as well. There is no question that the Kurds are a lot easier to deal with than the bunglers in Baghdad. And other major companies and operators are in there as well, including companies that were operating in Iraq under Saddam from France and Russia, such as Total SA and Gazprom Neft.
So, there you have it. The big winners in the oil industry in Iraq are the Chinese, followed by the old Saddam era operators from France and Russia, along with upstarts from Norway and Canada. The US companies are only now beginning to get any pieces of the action, but not in the largest producing areas in the main parts of Iraq, but in the one part of Iraq that clearly can be said to be in better shape now than prior to the US invasion, the semi-autonomous Kurdish region of Iraq that was not on anybody's radar screen before as a major possible oil producing region. I am quite certain this is not what Cheney either expected or hoped for.