Eden Hill Journal

Comments, dreams, stories, and rantings from a middle-aged native of Maine living on a shoestring and a prayer in the woods of Maine. My portion of the family farm is to be known as Eden Hill Farm just because I want to call it that and because that's the closest thing to the truth that I could come up with. If you enjoy what I write, email me or make a comment. If you enjoy Eden Hill, come visit.

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Location: Maine, United States

Friday, January 13, 2006

Oil Truth

When your own leaders declare the truth to be the enemy, then it's time to start looking at what the enemy has to say.
I quote from this reference:
"Report outlines plans for corporate plunder of Iraqi oil"

The actual bonanza for the oil giants from the invasion of Iraq could run into the trillions. Out of the country’s 80 known fields, just 17 are currently in production. A further 63 undeveloped fields have an estimated 75 billion barrels of oil, while industry experts believe between 100 billion and 200 billion barrels lie in unexplored fields. The country also has enormous untapped reserves of natural gas.
The Platform report establishes that control over these resources was the primary motive for the war. The first chapter draws attention to the discussion in US and British ruling circles on the strategic importance of dominating the oil and gas of the Persian Gulf. It cites the May 2001 report of the Bush administration’s Energy Task Force, which was headed by Vice President Dick Cheney. The findings declared: “The Gulf will be the primary focus of US international energy policy.”

Did you catch that? At $60 per barrel the estimated worth of Iraq's unexplored oil is between 6 and 12 trillion dollars and that doesn't take into consideration the oil fields already in production or the large natural gas reserves. Considering that the war is being financed by deficit spending, how much money have investors contributed so far? 200 billion? 300 billion? Now do you understand why Wolfowitz was correct when he said oil would finance the war reconstruction?
These PSA agreements are of interest. A PSA, Production Sharing Agreement, is a contract between private corporations and the state for access to oil reserves.

Summing up the essential characteristic of a PSA, a British academic cited by Platform wrote: “The government can be seen to be running the show—and the company can run it behind the camouflage of legal title symbolizing the assertion of national sovereignty.”
The decision by the US occupation to apply this PSA model to Iraq amounts to naked corporate plunder. While common in countries that do not possess large reserves of oil and gas, or where the cost of the development of fields is substantial—such as offshore oil wells—PSAs are virtually unheard of in large oil-producing states like Iraq. Such nations either exploit their energy resources directly or use their bargaining power to negotiate far more equitable contracts.

The first PSA in Iraq was signed June 25, 2004 by DNO, a Norwegian oil company. Drilling began in November 2005 and has already yielded results.
Considering all the money involved, at least it's comforting to know that the US has a good ally in charge of the situation.

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