The Spoils of War

[Phlegm]

http://news.independent.co.uk/world/mid ... 132569.ece

Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days.

The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.

The huge potential prizes for Western firms will give ammunition to critics who say the Iraq war was fought for oil. They point to statements such as one from Vice-President Dick Cheney, who said in 1999, while he was still chief executive of the oil services company Halliburton, that the world would need an additional 50 million barrels of oil a day by 2010. "So where is the oil going to come from?... The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies," he said.

Oil industry executives and analysts say the law, which would permit Western companies to pocket up to three-quarters of profits in the early years, is the only way to get Iraq's oil industry back on its feet after years of sanctions, war and loss of expertise. But it will operate through "production-sharing agreements" (or PSAs) which are highly unusual in the Middle East, where the oil industry in Saudi Arabia and Iran, the world's two largest producers, is state controlled.

[Jay]

Again I suck at Current Events and all but does this mean we pay less for gas?

[Iccarra]

Supporters say the provision allowing oil companies to take up to 75 per cent of the profits will last until they have recouped initial drilling costs. After that, they would collect about 20 per cent of all profits, according to industry sources in Iraq. But that is twice the industry average for such deals.

Can anyone shed some light on why these companies would need twice the average? Is there some real reason or is it just because they can? Forgive me if I'm not very well informed but in any case it'd be nice to know.

[Lueyen]

Supporters say the provision allowing oil companies to take up to 75 per cent of the profits will last until they have recouped initial drilling costs. After that, they would collect about 20 per cent of all profits, according to industry sources in Iraq. But that is twice the industry average for such deals.

Can anyone shed some light on why these companies would need twice the average? Is there some real reason or is it just because they can? Forgive me if I'm not very well informed but in any case it'd be nice to know.

The quote isn't clear if the double the average refers to the 75 percent, 20 percent or both. The 75 percent is probably justifiable considering the substantial cost a company will incurr in drilling on what appears to be a large scale. Recouping the inital capital is going to be a huge concern especially if the companies can't feasibly front the capital themselves and are paying interest on it. So I think the 75 percent is probably justifiable... the 20 on the other hand if it's twice the industry average seems over the top to sweaten what is already a pretty good opportunity.

[Tikker]

anyone still think the war in Iraq was about Saddam and not the oil?

[Arlos]

Bullshit they have to drill on a large scale. The drilling facilities are there already for the most part. Guess where the ONLY places were in Iraq that US troops protected when the country dropped into anarchy when we first conquered it. Not business, not government buildings, not museums, not even electrical plants, water plants, or other major infrastructure sites, just oil sites. Troops sat at the oil sites and watched everything else get destroyed or looted, and that DIRECTLY contributed to the anti-US feelings that went into the insurgency.

That oil should be for the Iraqi people, and western oil companies shouldn't stand to make one goddamn dime of profits from it. Period. Build up local companies to generate the oil, which would give jobs to some of the millions of Iraqis that are desperate for it, and would allow them to pump the revenues back into the economy which desperately needs it. Western petro companies are already making grotesquely obscene profits as a result of the war, and now they want to hand them MORE? No, no, a thousand times no.

This *IS* proof of what I, and others, have been saying all along. The war WAS exclusively about oil, and enriching Bush & Cheney's corporate partners. Look at how much Haliburton has made, and how much they've defrauded the taxpayers out of, if you want to look at more than just the oil company profits. This is patently ridiculous, and is going to go further towards destroying our national image in the eyes of the rest of the world.

-Arlos

PS No, it won't lower gas prices. The gas companies know we'll pay current prices as it is, so why should they sell it cheaper, regardless of drops in their production costs? They need to make new record profit margins, after all! Ye gods, they make me sick.

[Zanchief]

That oil should be for the Iraqi people, and western oil companies shouldn't stand to make one goddamn dime of profits from it. Period. Build up local companies to generate the oil, which would give jobs to some of the millions of Iraqis that are desperate for it, and would allow them to pump the revenues back into the economy which desperately needs it.

I coudn't agree more.

[Martrae]

That oil should be for the Iraqi people, and western oil companies shouldn't stand to make one goddamn dime of profits from it. Period. Build up local companies to generate the oil, which would give jobs to some of the millions of Iraqis that are desperate for it, and would allow them to pump the revenues back into the economy which desperately needs it.

I coudn't agree more.

Me too. You have no idea how much this 'deal' pisses me off.

[Iccarra]

the 20 on the other hand if it's twice the industry average seems over the top to sweaten what is already a pretty good opportunity.

That's how I understood the article to read and that being the case, what a scam they have going with that deal.

[Lueyen]

First of all Arlos on a number of occasions you've dismissed articles due to their source being suspect due to bias. Would you say this source is unbiased? Frankly the article draws a lot of conclusions about a proposed law that few are privy to at this time. I reserve judgment on it once I've been able to read it myself, rather then let some journalist(s) (see biased) tell me what they think the results will be.

Bullshit they have to drill on a large scale. The drilling facilities are there already for the most part.

Great, then the 75 percent cut won't be in place for long will it? It's not unreasonable to allow oil companies to quickly recoup their costs. The article also mentions loss of expertise as part of the problem that needs to be rectified to get Iraq's oil production back on it's feet. Presumably this is addressing another cost of operation in not only the employees brought in to maintain wells (which means higher wages paid to those workers to entice them to relocate for a number of years), but also the costs involved in training native employees. There will be a substantial cost for any oil company to commence startup operations regardless of existing equipment and wells. If you don't believe there will be then you are clueless about oil field startup operations.

The after cost recovery percentage of 20 percent may or may not be out of line with industry standards. The article is not clear if the double the average is referring to the initial 75 or the latter 20, and frankly I think the unclear wording is on purpose (see my comments about biased sources).

Guess where the ONLY places were in Iraq that US troops protected when the country dropped into anarchy when we first conquered it. Not business, not government buildings, not museums, not even electrical plants, water plants, or other major infrastructure sites, just oil sites. Troops sat at the oil sites and watched everything else get destroyed or looted, and that DIRECTLY contributed to the anti-US feelings that went into the insurgency.

In the early stages of the first Gulf war, Saddam set fire to the Kuwaiti oil fields. The effects on the environment were devastating, it took months and in some cases extreme risk to American troops and workers to stop the fires. Given the ramifications for Saddam at the onset this time, and his reactions in the past, reason and logic dictated that oil fields be a primary concern. Oil Plants are not part of city infrastructure, culture, or government. They are generally located not only outside of cities, but a fair distance from them. Stabilizing the area around and inside an oil field can be done much more quickly then any urbanized area. The other locations you mentioned, are by nature located within or near a city. You used the word conquered, but the destruction and looting you cite took place before coalition forces had control of those areas, not because we didn't want to but it is much more difficult and time consuming to establish a foothold in urban environments. Preventing the Saddam regime from executing some sort of "scorched earth" plan, and establishing complete order are two different things.

That oil should be for the Iraqi people,

And the democratically elected Iraqi parliament representing the Iraqi people will the the ultimate decision maker on what happens regarding oil in Iraq.

and western oil companies shouldn't stand to make one goddamn dime of profits from it. Period. Build up local companies to generate the oil, which would give jobs to some of the millions of Iraqis that are desperate for it, and would allow them to pump the revenues back into the economy which desperately needs it.

And companies should go in and do all of this for free or at a substantial loss for themselves? I know your not much into capitalism, but it is the basis for our economy. Expecting western oil companies to go in, incur start up and training costs with no profit or a substantial loss is naive and idealistic. Perhaps you think we should let companies from countries who were opposed to our actions (many of which it was proven were unlawfully exploiting or getting around UN sanctions and who's interests contrary to their idealogical arguments were firmly based in financial deals) take on the rebuilding role... you think they will do it for free? Iraq on it's own does not have the capability to revitalize it's oil operations without outside help, the majority of which will likely be US companies, however we can not expect them to do what is necessary without some real incentive, and your "not one god damed dime" approach isn't going to cut it.

Western petro companies are already making grotesquely obscene profits as a result of the war, and now they want to hand them MORE? No, no, a thousand times no.

Ah, the ever popular vilification of oil companies for making money. Perhaps you think they should sell oil below market value to offset some of their profits with losses? I'd love to see any CEO of any major company say that, investors would have a fit. Market prices of oil are not controlled by Western oil companies they are controlled by OPEC, supply and demand also comes into play. World oil prices have been driven up no only by the whim of the various OPEC nations, but also by an increased demand of an ever growing Chinese appetite for it. The only way Western Oil companies are going to have any real influence on the oil market is if their home crude production is a significant portion of the market, of course we aren't willing to let that happen (see efforts to open up drilling in Alaska).

The bottom line is that the ever rising price of oil driven by the demand for fuel products is not the fault of the oil companies, look a little closer to home. If you've bought new vehicles in the last several years, were they gasoline powered? Do you make use of public transportation at all possible opportunities. In short are you doing everything possible to decrease or eliminate your dependency on petroleum products, if not then you are part of the problem. As one of the largest petroleum consumers in the world, if our country substantially decreased our demand for petroleum products it would drive the price down, as it is the price is dictated as a maximization of what we are willing to consume at a given price. The effect of the situation in Iraq on world oil production is obviously a decrease, getting things rolling there as quickly as possible is although a temporary fix, still an important one. Leaving it to Iraq without outside aid of major oil companies would result in a snails pace revitalization of production.

This *IS* proof of what I, and others, have been saying all along. The war WAS exclusively about oil, and enriching Bush & Cheney's corporate partners. Look at how much Haliburton has made, and how much they've defrauded the taxpayers out of, if you want to look at more than just the oil company profits. This is patently ridiculous, and is going to go further towards destroying our national image in the eyes of the rest of the world.

Wrong, it's proof that we have interest in oil, no secret there. By your logic we should have by now toppled every government in the middle east to be replaced with a democratic government friendly to the west, or even better outright annexation to bring them completely under our control. There is no doubt that part of our interest in Iraq is oil, but it's not exclusive, if you believe that you are completely off your rocker.

PS No, it won't lower gas prices. The gas companies know we'll pay current prices as it is, so why should they sell it cheaper, regardless of drops in their production costs? They need to make new record profit margins, after all! Ye gods, they make me sick.

Do you look on yourself in the same light when you do well on investments you make? I'm sorry capitalism makes you sick, I kinda like it, even when I'm grumbling at the gas pump.

[Tikker]

ps

Saddam lit the Kuwait oil fields on fire, not the iraqi

[Lueyen]

ps

Saddam lit the Kuwait oil fields on fire, not the iraqi

Thanks, fixed it.

[Tikker]

seriously tho

do you still honestly think that oil was just a nice benefit to going into Iraq?

Oil was the primary reason~

[Lueyen]

seriously tho

do you still honestly think that oil was just a nice benefit to going into Iraq?

Oil was the primary reason~

The reasons for any ware where nations are involved can usually be boiled down into two categories where the attacker(s) is/are concerned for the most part, economic and idealogical. To wage any successful campaign both are needed and of equal importance. In the majority of cases it is the ideological reasons that are given "publicly", and the monetary reasons are treated as a dirty secret... sort of like the elephant in the living room no one talks about but everyone knows is there.

The idealogical reasons for Iraq can be found here:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ243.107

There is of course no officially publicly stated list of monetary reasons, of course everyone knows the main one, and I suspect if you dig deep enough you could find at least a few others.

To deny that oil had any impact on the decision to attack in Iraq would be foolish and blind.

That being said, no I don't believe it was the primary reason, but I also don't believe the idealogical reasons were primary, in short you need both to wage war. Honestly to a large extent I see the primary reason we are in Iraq now as being due to a failure to finish it the first time. Of course if you take it back to the reason of the first Gulf War you find much the same thing, duality of reason, economic and idealogical.

Without either of these you would not likely have seen a declared war, and most likely a police action of some sort (yes I know the two can be difficult to draw a finite line at times).

The average US citizen that supports the war supports it not for the monetary reason, but for the idealogical one. Government wages war for both, to protect the countries interest in both realms.

So I guess to really answer your question:

My support for actions in Iraq is based on the Idealogical, oil is only a "nice benefit". But I'm under no illusions about why my government declared war, and when it did so it only stated half of the equation which is throughout history par for the course.

[brinstar]

SURPRIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIISE!!!!!!!!!!!!!!!

[Zanchief]

And the democratically elected Iraqi parliament representing the Iraqi people will the the ultimate decision maker on what happens regarding oil in Iraq.

bullshit

[Evermore]

And the democratically elected Iraqi parliament representing the Iraqi people will the the ultimate decision maker on what happens regarding oil in Iraq.

bullshit

i agree the new government will be pro-us. i bet it will be a puppet as well.

[Lueyen]

And the democratically elected Iraqi parliament representing the Iraqi people will the the ultimate decision maker on what happens regarding oil in Iraq.

bullshit

How so? Nearly 80 percent voter turn out for the parliamentary elections, and the article did state that the proposed law would go before the parliament.

[Zanchief]

And there won't be any wink wink nudge nudge for the Americans?

[Scatillac]

The problem isnt the oil companies, the problem isnt the government. The problem is us, we keep laying around bitching and moaning, not doing anything about it, driving around in suvs and trucks. I cant tell you how much i get pissed off at people bitching about this bullshit. If everyone is so against it, buy a fucking hybrid, switch out all the bulbs in the house with halogens, and get active and tell others that wil listen to YOU and trust YOU to do the same. if you cut the carbons you produce in half, then you are in a position to point a finger.

[Gaazy]

I like my truck and I dont point fingers, so fuck you

[Tikker]

To deny that oil had any impact on the decision to attack in Iraq would be foolish and blind.

but that's what you and all the other right wing wingnuts have been doing for the last couple of years

[Lueyen]

To deny that oil had any impact on the decision to attack in Iraq would be foolish and blind.

but that's what you and all the other right wing wingnuts have been doing for the last couple of years

Show me where I said oil had NOTHING to do with it. Granted I've probably stated as I just have that I don't think it's the only or the primary reason, and that it is definetly not what I base my personal support for, but that is far from denial that it is a factor.

Others may have agrued it was a complete not factor, but I don't recall myself ever having argued that, nor even having that opinion.

[Scatillac]

I like my truck and I dont point fingers, so fuck you

evolve or die.

[Evermore]

I like my truck and I dont point fingers, so fuck you

evolve or die.

then, by this logic, it would be time to evolve away from fossil fuels all together.