The Non-OPEC Countries - A New Survey.

Editor's Note: This is a continuation from the OPEC countries survey carried out in 2002 (Vols. 43 & 44). To be carried out on a country-by-country basis, this survey will review the way each non-OPEC country, with emphasis on the Middle East and North Africa, is adapting to the challenges posed by the growing geo-political uncertainties in the region. This is combined with reluctance among public opinion in the West to become more dependent on oil from the Middle East on the one hand, and an inevitably increasing dependency based on projected demand for oil on the other. The survey will also carry a who's who of the key decision makers on oil policy in each of the countries.

With the US now poised to get rid of Saddam and put in place a pro-American administration, the oil and gas strategic scenario in the region will change in a dramatic way. American dependence on the Saudi alliance will decline, relatively speaking, as it gets direct control over Iraqi reserves - which have been estimated at being the second largest in the world next to Saudi Arabia. Some experts say it could be bigger than those of Saudi Arabia in view of the potential for new finds in the unexplored Western Desert of Iraq.

If a pro-US regime comes into being in Iraq before the end of 2003, it would mean that for the first time in 30 years American (and allied) oil multinationals would have direct access to Iraqi oil - in financial terms, this would be a windfall worth hundreds of billions of dollars, higher than the cost of a campaign of a few months at most to oust the Baathist regime. While post-Saddam stability cannot be taken for granted, it is virtually certain that the US will be able to secure the oil zones from serious confrontation at least as effectively as Saddam Hussein managed since 1979.

The implications for the region will be immense if a pro-Western Iraqi opens up the oil sector to foreign part-ownership and development. It may well spark in both OPEC and non-OPEC countries a wave of liberalisation measures aimed at staying competitive, which could change the course set since the nationalisations of the early 1970s. It is important to note that, as much as the principles involved, rival oil interests have been a key factor behind the way the permanent members of the UN Security Council have positioned themselves for or against a military assault on Saddam's regime. Apart from the US and Britain, the only two countries openly suggesting a war against Iraq, the other three members have already got contracts in place ready to be implemented once the sanctions are lifted. For them, the ending of the Baathist regime means uncertainty about the depth of their future role in the Iraqi oil sector.

For the non-OPEC countries in the MENA region and beyond, it means an additional layer of competition for market share and investment funds. Unlike the OPEC members, they would be mostly on their own in dealing with such challenges. Their strategies for the future and the diplomacy to implement them would have to take into account the diversification in terms of (a) oil sources, with Central Asian producers gradually stepping up output; (b) resources, with many countries shifting as much as possible to gas, along with other promising new areas of energy research being developed, and (c) legislation, as countries try to discourage the use of oil through taxation and other means.