http://www.observer.co.uk/focus/story/0,6903,825099,00.html

Carve-up of oil riches begins

US plans to ditch industry rivals and force end of Opec, write Peter Beaumont and Faisal Islam

The Observer Sunday November 3, 2002

The leader of the London-based Iraqi National Congress, Ahmed Chalabi, has met executives of three US oil multinationals to negotiate the carve-up of Iraq's massive oil reserves post-Saddam.

Disclosure of the meetings in October in Washington - confirmed by an INC spokesman - comes as Lord Browne, the head of BP, has warned that British oil companies have been squeezed out of post-war Iraq even before the first shot has been fired in any US-led land invasion.

Confirming the meetings to US journalists, INC spokesman Zaab Sethna said: 'The oil people are naturally nervous. We've had discussions with them, but they're not in the habit of going around talking about them.'

Next month oil executives will gather at a country retreat near Sandringham to discuss Iraq and the future of the oil market. The conference, hosted by Sheikh Yamani, the former Oil Minister of Saudi Arabia, will feature a former Iraqi head of military intelligence, an ex-Minister and City financiers. Topics for discussion include the country's oil potential, whether it can become as big a supplier as Saudi Arabia, and whether a post-Saddam Iraq might destroy the Organisation of Petroleum Exporting Countries.

Disclosure of talks between the oil executives and the INC - which enjoys the support of Bush administration officials - is bound to exacerbate friction on the UN Security Council between permanent members and veto-holders Russia, France and China, who fear they will be squeezed out of a post-Saddam oil industry in Iraq.

Although Russia, France and China have existing deals with Iraq, Chalabi has made clear that he would reward the US for removing Saddam with lucrative oil contracts, telling the Washington Post recently: 'American companies will have a big shot at Iraqi oil.'

Indeed, the issue of who gets their hands on the world's second largest oil reserves has been a major factor driving splits in the Security Council over a new resolution on Iraq. If true, it is hardly surprising, given the size of the potential deals. As of last month, Iraq had reportedly signed several multi-billion-dollar deals with foreign oil companies, mainly from China, France and Russia.

Among these Russia, which is owed billions of dollars by Iraq for past arms deliveries, has the strongest interest in Iraqi oil development, including a $3.5 billion, 23-year deal to rehabilitate oilfields, particularly the 11-15 billion-barrel West Qurna field, located west of Basra near the Rumaila field.

Since the agreement was signed in March 1997, Russia's Lukoil has prepared a plan to install equipment with capacity to produce 100,000 barrels per day from West Qurna's Mishrif formation.

French interest is also intense. TotalFinaElf has been in negotiations with Iraq on development of the Nahr Umar field.

Planning for Iraq's post-Saddam oil industry is being driven by a coalition of neo-conservatives in Washington think-tanks with close links to the Bush administration, and with INC officials who have long enjoyed their support. Those hawks have long argued that US control of Iraq's oil would help deliver a second objective. That is the destruction of Opec, the oil producers' cartel, which they argue is 'evil' - that is, incompatible with American interests.

Larry Lindsey, President Bush's economic adviser, recently said that a successful war on Iraq would be good for business.

'When there is a regime change in Iraq, you could add three to five million barrels [per day] of production to world supply,' he said in September. 'The successful prosecution of the war would be good for the economy.'

Analysts believe that after five years Iraq could be pumping 10m barrels of oil per day. Opec is already starting to implode, with member nations breaking quotas in an attempt to grab market share before oil prices fall.

Russian concern over a future INC-inspired carve-up of Iraq's oil to the benefit of the US has become so intense that it recently sent a diplomat to hold talks with INC officials. At that meeting in Washington on 29 August the diplomat expressed concern that Russia would be kept out of the oil markets by the US.

A model for the carve-up of Iraq's oil industry was presented in September by Ariel Cohen of the right-wing Heritage Foundation, which has close links to the Bush administration.

In The Future of a Post-Saddam Iraq: A Blueprint for American Involvement, Cohen strikes a similar note to Chalabi, putting forward a road map for the privatisation of Iraq's nationalised oil industry, and warning that France, Russia and China were likely to find that a new INC-led government would not honour their oil contracts.

Cohen's proposal would see Iraq's oil industry split up into three large companies, along the areas of ethnic separation, with one company in the largely Shia south, another for the Sunni region around Baghdad, and the last in the Kurdish north.


LIBERTE EGALITE FRATERNITE!!

Nothing can stop this war.

The US has just activated its reserve fighter squadrons. This is something that hasn’t been done since the Korean War. An entire Naval Air Reserve squadron has been activated to deploy on board another carrier battle group headed for the Persian Gulf. Guam has also resumed its role as a submarine base as more attack subs are sent to the region to watch Asia as the US deploys battle groups to the Middle East.

Bush is going to solve the Arab/Israeli dispute and the oil problem all in one go. Soon the Arabs will be out of it. They should not have supported and financed 911 and hindered the investigations into it. America is acting in simple self defence.

Yes I think that this is the end of OPEC and the end of Arab dominance of the oil market. I have said for months that US and Britain will occupy the oilfields and it is about to happen. I only hope that they take the Saudi oilfields as well.

The Muslims have made it perfectly clear that they want a Jihad and Bush has (accidentally) told them that they are going to get a crusade. Stock up on fuel everyone, its going to get hot. Especially when saddam starts blowing up his own oil wells, which he will do. the fires of Kuwait are nothing to what comes next.

If you want to make some money, buy British Government gilts at the current low price and sell them a week after the war starts. You will make about 12% tax free plus the yield, which is about 4.5% per year. (No capital gains tax on gilt gains).

Let's see if I'm right. TR30 is approximately £104.33 as I write. Seven days after the war starts we'll check the price and I bet it will be about £105.50. If I'm wrong you can laugh at me. If I'm right, I will have made enough to buy a new car.

Buy "WAR" bond and you will make about 15% in the same time, but the downside risk is greater, so I'll leave it alone.

I agree that the war seems inevitable but there is still one massive problem for Bush and Blair - they haven't sold it to their own people, the other western countries or the UN Security Council.

I know that the UN thing is tied up with the existing oil deals that the Chinese, French and Russians have with Iraq and could be solved but what if the people still don't buy it?

This will be the third war with Stealth fighters and Tomahawk missiles and people are just not impressed by that sort of thing anymore. I don't think they'll forget what is really going on at the sight of a few military gizmos.

I suppose that if they march into Baghdad and the streets are lined with cheering, liberated Iraqis, all well and good. But if it doesn't go well and Saddam manages to embroil Israel in it and terrorist bombs start going off in Washington and London, Dubya and 'Princess Tony' could have a bit of a disaster on their hands.

Incidentally, Ariel Sharon said in The Times today that when the US is finished with Iraq it should go after Iran.

Bush does NOT need to sell it to his people. His people bought it ysterday when they swept the Republicans in to overall power in the US. Its a done deal, Bush is going to war with a mandate of election behind him.

Tony will ignore the British public as he always does and send a token of support to the Iraq war, like he did to Afghanistan, which is all that the US want. They want our SUPPORT, not our faulty radios and jamming old fashioned guns.

Now its just a question of what Saddam can pull out of the hat. Probably nothing. But of course when all this is over the Iraqi cupboard will be bare. No WMD or even research afcilities will be found. They will all be in North Korea. But by now Bush knows that.

Sharon is wrong. Iran will slowly modernise and even eventually secularise. North Korea is next on the US hit list and so it should be. I still expect a surprise attack by North Korea on Japan, possibly on the US naval base there. Sounds crazy, buy I think it may happen.

Yes. I suppose i've made this mistake three times and i'm just hedging my bets again.

Bush, Rice, Rumsfeld and Cheney are not stupid and it probably will be a short and simple war. There will be more political and public opposition at home than usual but if the Iraqi political/military establishment crumbles quickly and the people of Iraq start dancing in the street (I'm certain they will), it will play well back here and Blair and Bush will be able to say to the critics "Look, they're so pleased to see us, didn't we tell you so?". That's all part of the equation.

And whether or not there actually is a nerve gas factory or whatever is irrelevant, the CIA will 'find' something.

It will be one more gigantic reason for Muslim fundamentalists to hate us, of course. When you add up all the pros and subtract the cons it isn't much more than an act of naked colonial aggression.

Bush is an "oil" man first and last. Now he is president he sees the world's second largest oil producer up for grabs and he's found a good excuse to take it.

I'm sorry but I agree with him. These Africans and Arabs are unable to run their own countries in a civilised way and it just proves the folly of decolonialisation. We will just have to rule these people for another hundred year until they mature enough to stop abusing the power that we give them when we do let them run their own affairs.

Its quite wrong to call this racist. They are practically eating each other in some African countries and things only get worse. DR Congo is a living hell for the women as they are repeatedly raped by both sides of the war. I won't even say what else goes on there, it makes you sick with disgust.

I have spoken to Farmers from Zimbabwei who left via South Africa. They think that is will only be about another ten years before the whites will be evicted from that country and the horrors of hades descend on that once beautiful land.

But you were the person berating me for supporting the Israeli occupation of Palestine! You're a schizo!

The difference is that the Palestinians have never been given a chance to govern themselves.

The Arabs invaded the homeland that the UN gave them on 14 May 1948 and this was later taken by the Israelis in 1967 because the Arabs were using the Palestinian homeland areas to prepare to invade Israel.

Singapore, Canada, India and Australia etc. have all been given a chance to rule themselves and made a good job of it. I say that where decolonialisation has not worked and they start eating and torturing each other, we should reimpose colonial rule to protect the innocent and prevent parts of the world falling in to barbarism.

This is what we are going to do in Iraq and this should be done in most of Africa and Arabia.

Perhaps we could go further and say that ANY country in the world that does not meet certain basic standards of decent rule, such as democracy etc., should be taken over by the UN and UN rule imposed until such a country is reformed.

Racism therefore would not come into it, as it does not come into my thinking. We need basic moral standards in all countries of the world, regardless of race or colour and if they are not met, sanctions should be imposed or military force engaged.

To go back to the Palestinians, I think that we should give them a go at ruling their own homeland. If they screw up, then we take it off them. If they manage OK we will go for holidays there, like we do to Singapore and Bali. Hang on a minute, that sounds wrong.