Iraq could destabilise OPEC (destabilize)

AUSTRALIA ^ | April 7 2003 | By Robert Koch

[dennisw]

Iraq could destablilise OPEC By Robert Koch April 7 2003

A post-war Iraq could kill the Organisation of Petroleum Exporting Countries if it were to leave the cartel in a bid to produce as much oil as it can outside its quota system, analysts warn.

"If the Iraqi oil industry is privatised, forget about OPEC, it is dead," said Leo Drollas of London's Centre for Global Energy Studies.

He said that after the war Iraq was likely to demand to be allowed to export the same amount of oil as neighbouring Iran - as it did before it was kicked out of the cartel in 1990 for invading Kuwait.

Iran produces 3.59 million barrels per day.

"Iraq will want to produce as much as it can as quickly as it can to finance its reconstruction costs. Iraq will say: 'We want at least parity with Iran'," Mr Drollas said.

He added that OPEC would resist, as this would mean scaling down its other 10 members' quotas, and at this point "Iraq will have to strike a decision whether to stay or to leave".

Neil Partrik, a researcher for The Economist, said it was "very unlikely in the short term" that Iraq, a founding member, would break away from OPEC.

"Iraq's production will not exceed 3 million barrels per day for a couple of years" given the dilapidated state of its infrastructure, he said.

"But in the longer term, there is a potential for disputes with OPEC on output.

"When Iraq has enhanced its production capacities, it might want to compete with Saudi Arabia, the world's biggest oil exporter. The question will be what quota constraints will be imposed upon Iraq by OPEC and Iraq might then opt out.

"Iraq might well become a Trojan horse for the US," he said, hinting that Washington could encourage the oil market to be flooded to help it achieve its foreign policy objectives.

Some in the US administration believe certain OPEC member countries use their oil revenues to finance terrorism.

If Iraq were to rapidly increase its oil production it could flood the world market and push the price of oil below $US18 a barrel, whereas before the war started it hovered around $US30 a barrel.

The hawks are counting on such a drop in the oil price to stimulate growth in the US and the West and to devastate the economies of Iran and Libya, two OPEC members considered rogue states by Washington, and to create conditions that will help topple their regimes.

But Mehdi Varzi, from the British bank Dresdner-Kleinwort-Wasserstein, said Iraq was unlikely to leave the OPEC fold, not off its own bat, anyway.

He argued that OPEC should review its quotas as "some countries want a bigger market share. Algeria, which produces way over its quotas, and Nigeria, for instance. Saudi Arabia will have to step back."

An OPEC source, who did not want to be named, said the Vienna-based cartel was heading for a quota rethink.

Agence France Presse

[dennisw]

"If the Iraqi oil industry is privatised, forget about OPEC, it is dead," said Leo Drollas of London's Centre for Global Energy Studies.

[isthisnickcool]

Strategery.

[Walkingfeather]

YOU BET!

[Ernest_at_the_Beach]

Huh?

OFFICIAL BUMP(TOPIC)LIST

[fqued]

Yeehaw!!!

that would be just fine with me. Gas at a buck a gallon

[Enterprise]

"Some in the US administration believe certain OPEC member countries use their oil revenues to finance terrorism."

And some of us believe we are in Iraq because Saddam used oil revenues to finance terrorism. And it would behoove other Arab nations to reconsider their allocations of resources to fund terrorism.

[deport]

Sky News

British soldier at oil well

OIL GIANTS MAY HELP IRAQ

Iraqi exiles and senior US officials have agreed that international oil companies should take a leading post-war role in reviving Iraq's oil industry.

Delegates at talks in London under the auspices of the US State Department also agreed to recommend that Baghdad should stay in the oil producers' organisation Opec, though without limits on production.

Although early work will focus on the rehabilitation of existing facilities, talks with major foreign oil companies on long-term projects could start quickly, Iraqi delegates told reporters.

"It is in Iraqis' interest for an interim period of government to be as short as possible," said Dara Attar, an oil consultant representing some opposition groups.

He said foreign investment deals, most likely production-sharing contracts, with a fully-fledged Iraqi government could come within between six months and two years.

The guidance will go to a US-run interim authority, planning to move into southern Iraq early next week, and any subsequent transitional government.

Last Updated: 06:56 UK, Sunday April 06, 2003

[rhombus]

Yes sir. And cheap oil is GRRRREAT! for the world economy. Will it be timed for the 2004 election? Cross your fingers.

[joesnuffy]

Oh No!.....big surprise huh! hahahahahaha
Hopefull it destabilzes Venezuala and Chavez gets the same bums rush as Saddam

[Keith]

also...Iraq is one of the LEAST developed of the big oil reserve nations...and guess who WON'T be doing that...


...and we all know who WILL...another reason our "friends" opposed us...

[RightWhale]

OPEC is so nine-ten.

[dennisw]

http://www.moles.org/ProjectUnderground/drillbits/7_08/vs.html

Iraq holds more than 112 billion barrels of oil - the world's second largest proven reserves as well as containing 110 trillion cubic feet of natural gas.

Iraq contains 112 billion barrels of proven oil reserves, the second largest in the world (behind Saudi Arabia) along with roughly 220 billion barrels of probable and possible resources. Iraq's true resource potential may be far greater than this, as the country is relatively unexplored due to years of war and sanctions. Deep oil-bearing formations, located mainly in the vast Western Desert region, could yield large additional oil resources but have not been explored. Iraqi oil reserves vary widely in quality. Iraq's main export crudes come from the country's two largest active fields: Rumaila and Kirkuk.

 

My comment:
TotalFinaELF gets the boot. They funded Saddam and made him possible. Greedy French jackasses didn't even do proper exploration. We bring in our oil boys, UK, Aussie and Spain too, to realize Iraq's full potential. As someone said, strategery!

[ckilmer]

well actually the best way to stimulate the world economy now in the doldrums is to chop the price of oil down to 10 dollars a barrel and have that oil priced in cheap dollars.

this would be pure oxygen to the world economy.

except for Russia. Below about 18 bucks or so they don't make any money.

but oil is a completely elastic comodity. lowered prices would greatly stimulate demand for more oil so that excess capacity would be used up in a couple years and after a couple years the russians would be back in business.

the USA would meanwhile have a greatly enriched world economy to export stuff to...and that would greatly improve our balance of payments.

and we would in turn be buying ourselves time while the guys in the skunkworks figure out a way to make hydrogen fuel cells competitive--because the current US trade dependency on foreign oil is not sustainable.

[Dog Gone]

Iraq, even under US control, will want to agree to some sort of production quotas. A stable oil price, at whatever price that might be, is in the interest of consumers and producers alike.

Stability is essential for economic planning, and we don't want to bankrupt nations by flooding the world with oil.

[Ernest_at_the_Beach]

Well, I would like to see cheaper gasoline!

[SauronOfMordor]

Stability is essential for economic planning, and we don't want to bankrupt nations by flooding the world with oil.

Actually, I think it WOULD be in the US interests to reduce the revenues of the major oil producing nations (most of whom don't like us) to the point where it's much harder for them to cause trouble

[Servant of the Nine]

"If the Iraqi oil industry is privatised, forget about OPEC, it is dead," said Leo Drollas of London's Centre for Global Energy Studies.

More good news

So9

[Dog Gone]

The problem with very cheap oil is that it puts the American industry out of business, and makes us more dependent on foreign oil. Iraq is not going to become the 51st State.

Every oil glut has always resulted in an oil shortage, because it wipes out all the marginal oil producers in the world. Stability is much better.