In The Guardian Seumas Milne has forensically demolished the idea that the Iraq War was primarily about anything other than oil. Back in 2003, before the action began, I did the same. I claimed no special insight and used no insider knowledge in making my charge. But it didn’t play too well in the corridors of power in Shell Centre and The Hague with the then head of Corporate Affairs threatening any Shell employee with instant dismissal if they so much as spoke to me! Whist all of us like to be proved to be right – and as the four big Multinationals, ExxonMobil, BP, Shell and Total line up next week to receive their “dues†I suppose that even the most churlish Shell director would have to admit that I was right! But then they knew this all along, that’s why they were so sensitive.
The sheer effrontery of all this defies belief. The days when a Western Oil company could negotiate a “Production Sharing Agreement†(PSA) with a backward Sheikh or Bedouin Emir are long gone. The windfall profits that Shell and the others now enjoy are certainly based on such deals from the past – in Oman or Brunei or Nigeria for example. But Shell won’t be able to negotiate PSAs ever again and, as Sakhalin proves, if they do try and get an unequal contract and somehow succeed this success will be very short-lived. The Oil producing nations are wise to these tricks – the National Oil Companies (NOCs) and their Governments are sophisticated animals in the 21st Century. They won’t be fooled again by neo-colonial (or neo-conservative) oil men in big hats!
What can Shell and the rest offer uniquely that would make a producer sign a deal which generously rewards them? Technology? Not at all. None of the Western multinationals has any distinctive technologies that can’t either already be found in an NOC or bought in from a third party supplier or developed swiftly in house by them. Money? Of course not. If you are sitting on hydrocarbon reserves of billions of barrels you can find a thousand banks and finance houses to lend you the moolah if you need it. Experience? Also no. The big NOCs are pretty experienced businesses now and if they do need to shore up their expertise in a particular area they have the resources to buy that experience in. Markets? Nope. Oil markets are the purest market you can get and there are no special marketing outlets that a multinational has access to that an NOC cannot also tap.
Iraq is one of the world’s biggest “Major Resource Holders†(MRH). This means that they are sitting on huge reserves and they have the capability to turn these reserves into income to rebuild their country and look after their people. They should be allowed to keep as much of the oil revenues for themselves as they can. That, after all, is what is happening with MRHs almost everywhere else in the world (a few colonial hangovers excepted). On the fringes there may be some legitimate opportunities for participation of Western Oil companies in some aspects of the exploitation of Iraq’s oil resources. If so they should compete with one another and the Iraqis should pay a fair price – one that is the outcome of competition. But that is not what is about to happen.
The western Oil companies are going to try and cream off a significant share of the Iraqi oil revenues in the years to come not because they have unique abilities or talents or expertise. No, the reason that Shell and ExxonMobil and the rest are confident of riches is because they have the best supporter of all to guarantee it for them. The United States military. Iraq needs Uncle Sam’s tanks and planes and missiles and guns – for the foreseeable future. And in return Uncle Sam still, remember, led by an ex Oil man President and with plenty of others with Oil industry track records close by (Condoleezza et al) wants some nice oil at a special price and with some helpful future profit streams. To the “victor” the spoils – evne if the “victory” leaves half a million dead along the way. A small price to pay for future oil company profits….
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1 user commented in " Guns and Oil: How The Multinational Oil Companies Are Queuing For Their Rewards "
Follow-up comment rss or Leave a TrackbackThe writer of this article has absolutely no idea of what the International oil industry is all about, and re-prints the tired old anti-Big Oil comments which make good political reading.
Firstly: Huge amounts of capital are required to first explore for and then produce oil. With offshore wells costing in excess of US$30 million, and production facilities in the hundreds of milions, and even billions, no commercial bank nor national treasury would be well advised to bankroll any exploration projects.
Secondly, technology: While it is true that technology can be bought in today’s oil industry, it is still easy to buy the wrong and ineffective technology, and it is in its application by well-trained geologists and engineers that the techology is most effective.
Thirdly: Management capabilities. The international oil industry has a very big pool of well trained and seasoned managers; a pool none of the National Oil Companies can match.
Finally, the anti-corruption laws of the United States and the European Union countries ensure that in almost all cases, internatonal oil operations by the international oil companies are well managed and transparent; something few of the national oil companies can claim.
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