Wednesday, February 19, 2020

Who "Got" Iraqi Oil?

Not the US.

Dick Cheney collaborated with US major oil companies in a plot to at least take over operating the oil production in Iraq, OPEC's second largest producer and exporter, if not get to own the oil itself outright (which has not happened as oil in the ground was and remains owned by the Iraqi government, which is they way it is in pretty much all OPEC members).  Of all people, Juan Cole and many other progressives agreed that the war was all about controlling Iraq's oil.  So the US overthrew Saddam Hussein, but then what followed was civil war and discombobulation, and oil production was seriously disrupted for a long time, with those US oil companies not getting any business for a long time.

Of course, Donald Trump has repeatedly argued that the worst thing about the Iraq war was that "we did not get thee oil."  Of course, the only reason he has left any troops in northeastern Syria is that somwbody told him there is oil there and he should leave troops there to keep terrorists from getting at the oil.  So there we have US troops occupying some of these wells, although there is basically no way they will ever be operated by US companies, much less owned by them.  Trump is deluded if he thinks "we have got" that oil.

So what about now?  According to the Iraqi Oil Ministry, there are 23 foreign corporations operating in the Iraqi oil sector.  Four of these are Chinese, three are Russian, and one is American: Exxon Mobil.  Last year Exxon Mobil reduced its workforce in Iraq due to security issues.

But now Russian interests are increasing their presence.  Yesterday Simon Watkins reported that the Russian Oil Ministry has announced that several Russian oil companies are planning to spend US$20 billion in Iraq.  That this is happening reflects a shift in attitudes in Iraq as well.  Watkins reports that the Iraqi leadership is upset by two things coming out of the US.  One is Trump's sudden abandonment of the Kurds in northeastern Syria.  The other, of course is Trump's attack without justification that killed both Iran's General Soleimani as well as Iraqi General al-Muhandis. 

Trump may want Iraqi oil and think that this is the most important reason for US being involved there.  But his own actions have led to US companies being shut out in favor of Russian ones.

Barkley Rosser


pgl said...

In 2004 Lawrence Kudlow was so happy we invaded Iraq as he predicted that Iraq would literally quadruple its pre-invasion oil production which would lower oil prices to $12 a barrel. How did this forecast turn out? said...

A not widely known fact is that apparently when Cheney was having his secret meetings with various US oil company CEOs prior to the invasion, and he was touting how they were going to get all these wonderful contracrs, if not outright control of Iraqi oil, many of them were apparently not all that enthusiastic, foreseeing disruptions in production and contracts and other elements of the system. As it was, the only major US oil company that made any substantial amount of money during the was was Halliburton, Cheney's own company, with that money coming from military contracts, not the oil industry in Iraq, which basically turned into a mess.

Regarding Kudlow's hilariously wrong forecast, the oil companies did make some money as a result of the war. But it had nothing to do with contracts in Iraq. It was due to the fact that the reductions in production from the war pushed the price of oil up, and generally oil companies make more money as the price of oil rises. So while those CEOs were worried about production disruptions, in fact those disruptions made them money.

pgl said...

From late summer of 2019:

“Iraq hit record production figures in August with an output of 4.88 million barrels per day (bpd), according to S&P Global Platts, amid an OPEC drive to cut production…To put Iraq’s 4.88 million bpd figure in perspective, the country’s output five years ago was 2.96 million bpd, and between the 2003 U.S. invasion of Iraq and 2010 it veered between less than half a million barrels per day to barely touching 2.5 million.”

Kudlow’s $12 per barrel forecast came along with his prediction that Iraq would be producing 12 million barrels of oil per day. “Hilariously wrong forecast” indeed!