Bush & Blair scramble for oil: despite protestations to the contrary, evidence is mounting that the US and Britain are resolved to push ahead with securing future oil supplies by any means. (Business & Finance).
More importantly than just a quest to control Iraq's own massive oil fields, it has to do with the Bush Administration's new global energy policies, including the goal of reducing US reliance on oil from the Arab and Islamic states of the Middle East and North Africa, a policy that also appears to have the support of some senior figures in the Blair government. The primary aim of this new geostrategy is to ensure the US is in a position to determine which of the main consuming countries of the 21st Century--Russia, India and China, as well as the US itself, Israel and Europe--get access to a strategic commodity that will be in increasing demand in the coming decades.
The irony is that while the Bush Administration is pushing new oil frontiers in non-OPEC areas it had neglected in the past, such as Central Asia, the Caucasus and sub-Saharan Africa, the main Gulf producers--Saudi Arabia, Iran, Kuwait and, of course, Iraq, still hold the key to world's energy supplies--gas as well as oil--and to its price. So it is perhaps not surprising to learn these stalwarts of OPEC are also quietly being supported by some of the world's biggest oil corporations, including such powerful US players such as Exxon Mobil, ConocoPhillips and Marathon, and possibly BP--formerly British Petroleum--and BG (British Gas).
According to industry sources and diplomats in London and Washington, sub-Saharan Africa, Central Asia and the Caucasus are now seen as the main regions where non-OPEC oil reserves are likely to increase and where the US, together with Britain, can increase their access and control. "The US has identified increasing African oil imports as an issue of 'national security' and has used diplomacy to court African producers". The Bush administration is committed to playing an important strategic role in the continent. The US-African Business Summit in Washington in June was a successful gathering of high level American and African officials and businessmen. President Bush, Secretary of State Colin Powell and many other powerful US politicians attended the Summit along with major oil industry players, including the big American companies present in Africa. In early July, President Bush visited Africa, visiting Nigeria, the sixth largest oil producer in the world, South Africa and four other African states.
A year ago, The Times of London also turned its eyes on the Bush Administration's rising interest in the continent in an article entitled "US presses Africa to turn on the tap of crude oil." It reported the US Under Secretary of State for African Affairs, Walter Kansteiner, as saying "African oil is of national strategic interest to us, and it will increase and become more important as we go forward."
A new report by Ian Gary, Bottom of the Barrel published by the Catholic Relief Services, highlights the way in which oil revenues have fuelled corruption and actually increased poverty in many of the oil producing countries of Africa, Asia and Latin America. The report adds that the drive for African oil is taking on a much greater American character. "New fields are being aggressively pursued by ExxonMobil, ChevronTexaco and by smaller firms such as Amerada Hess, Ocean and Marathon," Gary notes.
Industry analysts who watch the world's financial markets in oil, gas and energy, have already noted for some time that while it takes about six weeks for oil from the Gulf to reach American shores, deliveries from West Africa can reach the US in just two weeks. In addition, they have pointed out (in specialist briefings usually available only to their clients) that West African reserves could become vital to supplying Europe and Israel through the Mediterranean should their current supplies of oil and gas from OPEC producers in North Africa--such as Algeria, Libya, Tunisia and Egypt--be threatened.
Diplomats and officials have also noted that the major oil installations in West Africa are in direct and immediate reach of US naval forces, already stationed in the Atlantic Ocean. The fact that such forces could act unilaterally, without the need to form international coalitions--as was necessary to secure vital military supply lines in the case of Iraq--makes securing these oil fields even easier. Additional pressure, could be brought on these countries to avoid any alliances with OPEC and to ensure that their revenues from oil and gas remained tied to the US dollar, rather than to the Euro.
While Africa as a whole has only about 8% of the world's current proven oil reserves--compared to 25% for Saudi Arabia and 11% for Iraq, the US moves reflect the growing optimism that new finds will be made and developed, especially now that new technology enabling exploration and production in deep offshore waters has become available and at costs substantially lower than was the case when other deep water reserves, such as in England and Norway's sectors of the North Sea, were developed.
In addition to Nigeria, Angola, and Gabon, investments are pouring into Equatorial Guinea, Benin, Congo Brazzaville, Cameroon and Sao Tome and Principe. By the year 2015, Africa is expected to supply 25% of all US oil imports, compared with 15% today, according to industry sources. The African countries themselves are expecting revenues totalling 200bn [pounds sterling] in the next decade as new fields are brought on stream and exports commence.
In Central Asia and the Caucasus, both the Bush and Blair Administrations have been actively wooing Kazakhstan, Azerbaijan and, to a lesser extent, Turkmenistan. These three Caspian Sea countries, together with Russia and Iran, are sitting on some of the world's last remaining undeveloped large scale oil fields yet. Kazakhstan alone, thanks to the discovery of the massive Kashagan reserves in the northern Caspian, which were only confirmed two years ago, is expected to be exporting some 3.5m barrels a day in 2015. In addition to Kashagan, supplies will come from two other giant fields currently being developed by US and European companies--the Tengiz onshore oil field and the Karachaganak gas reserves.
"American soldiers, oil-men, and diplomats are rapidly getting to know this remote corner of the world, the old underbelly of the Soviet Union and a region that has been almost untouched by western armies since the time of Alexander the Great," the influential US publication, Business Week, observed. "The game the Americans are playing has some of the highest stakes going. What they are attempting is nothing less than the biggest carve-out of a new US sphere of influence since the US became engaged in the Mid-east 50 years ago."
Like the increasing military links with Africa, US officials have already held talks with President Nursultan Nazarbayev and President Haydar Aliev of Azerbaijan about joining NATO. Both immediately rushed, in the days following the 11 September tragedies, to offer military facilities, including air fields, to President Bush, despite the danger that this could have posed for their own security and economic interests given Moscow's view that these countries lie within its "sphere of influence."
Elsewhere in the Caspian, BP Amoco, the joint US/British conglomerate, is already developing three very large oil fields in the southwest, off the Azeri coast, along with a massive newly discovered gas field. Shipments from other new gas reserves currently being brought into production in Turkmenistan are already being allocated to a transcontinental pipeline planned by the Bush Administration to supply Pakistan and other Asian buyers through Afghanistan. The fact that the substantial transit revenues involved would help to fund the US's latest ally in the region--Afghanistan--is another key part of the US strategy, helping to reduce the costs of reconstruction on the American taxpayer.
BP Amoco is also leading a consortium consisting of US, Italian, Norwegian, Japanese, Turkish, Azeri and Saudi companies which is planning to build two strategic pipelines--one for oil and another for gas--across the Caucasus through Georgia to export terminals on Turkey's Mediterranean coast. Costing some $4 to 6bn, the two links would ensure an outlet for Caspian energy exports, also controlled by the US and its allies. This is one of the reasons the projects have been so ardently pushed in the past five years by both the Clinton and Bush administrations.
Such links would also help the White House deliver on its pledge to ensure oil supplies to Israel--as first agreed by US Secretary of State Henry Kissinger in 1975, a promise that has been renewed and improved ever since--in addition to the new NATO members of Eastern Europe--Poland, Hungary and the Czech Republic. Additional supplies for Israel could also come from the revitalisation, or reconstruction, of a disused pipeline running from the fields of northern Iraq through Syria to the Israeli port of Haifa, or by building new links from Iraq to Israel through Jordan.
Whatever the source of new, non-OPEC supplies from outside the Middle East and North Africa, the occupation of Iraq's fields and the development of new US-controlled fields elsewhere is also firmly part of Bush and Blair's "war on terrorism." The neo-conservative Pentagon advisers led by Paul Wolfowitz are reported to have convinced the White House that 'terrorism' cannot be defeated without cutting off the terrorists sources of finance. Most of these, they are said to insist, come from the revenues accruing to the Arab oil producing countries in the Middle East and North Africa.
It has became apparent that, in addition to reducing the West's energy dependence on this region and expanding US operations in non-OPEC countries, Blair and Bush are starting to focus on controlling these revenues as well. Blair led the way by launching his new 'Extractive Industries Transparency Initiative' (EITI) at a meeting with oil company executives and officials of oil exporting countries in London in June.
But while many aid agency officials were disappointed appointed that the plan was not tougher on corruption in the oil producing countries (as well as in the western oil companies themselves), the initiative marks the first step in a joint US-UK plan to find out exactly where these revenues are going, and who benefits. Complaints by governments and officials in these countries that this represents a diktat which offends their own sovereignty, and disregards their own reforms, have been ignored. Countries that fail to comply could find themselves cut off from vital foreign investments, technology and markets given the pressure that Washington and London could bring on US and British oil companies to avoid, or withdraw from, operations in these countries.
But what both the US and Britain seem to have forgotten is that the countries of the Middle East and Africa, too, have a few cards up their sleeve. And these go beyond what European diplomats and virtually all oil company executives know in their bones: That Saudi Arabia and Iran not only have the world's largest reserves in OPEC (outside Iraq), but that, because of this, they also control the prices and will continue to do so as long as they remain in control of their own resources.
Saudi Arabia's opening up of its main gas producing fields to foreign investors is just one of the new carrots on offer to western oil companies scrambling to get a piece of this multi-billion dollar cake. Despite the collapse of current talks on this opening, companies such as Shell, TotalFinaElf, ConocoPhillips and even Exxon Mobil are reportedly still hopeful that an accommodation can be reached.
Even more importantly is the promise of a Saudi privatisation of its massive national oil company, Saudi Aramco. The world's fiercely competitive major oil companies would dearly love to get their hands on a piece of the Saudi Aramco pie. Even more so given that the cost of producing oil in Saudi Arabia is a fraction of what it costs elsewhere, especially in areas such as the Caspian or the Gulf of Guinea.
Before 11 September, 2001, indications of a falling out between some of the US oil companies and their supposed friend in the White House were already making the rounds of the international oil industry. These centred on US concerns over construction of a pipeline from the new Caspian fields in Kazakhstan, Azerbaijan and Turkey through Iran, rather than through the Caucasus to Turkey. Such a line, they maintained, would not only be substantially cheaper to build and operate, it would also enable exports to go where they will be most needed in the 21st Century: the Indian sub-continent and China.
Now, it appears they may be even more disgruntled by the militarisation of US policy and its control by ideologues, rather than the usual Republican pragmatists of the past. Ideologues are never good for business and attempts to put further pressure on Saudi Arabia, they insist, are counter to America's own vital interests.
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|Comment:||Bush & Blair scramble for oil: despite protestations to the contrary, evidence is mounting that the US and Britain are resolved to push ahead with securing future oil supplies by any means. (Business & Finance).|
|Author:||Smith, Pamela Ann|
|Publication:||The Middle East|
|Date:||Aug 1, 2003|
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