Posted on 04/27/2003 10:25:51 AM PDT by Calamari
Iraq may have to leave the Organisation of Petroleum Exporting Countries so it can pump out extra oil to pay for the country's reconstruction, says a former Iraqi oil minister who is now a key adviser to the American government.
The extra oil needed would be more than twice Iraq's pre-sanctions Opec quota and almost triple the present output of about 7 million barrels a day, said Fadhil Chalabi, who rejected a US invitation to become interim head of his country's oil sector.
Chalabi, who served on the US State Department's Future of Iraq Oil and Energy Working Group, says the Iraqi industry must be privatised to attract foreign investment following the war.
In the right hands the output of 7 million barrels a day is achievable in about six years. Such high production would, however, place a strain on Iraq's relations with Opec and threaten a slump in world oil prices.
Chalabi's preference would be for Iraq to stay in the cartel. However, he said: 'Iraq must maximise revenue from its oil. I would choose maximising the revenue through oil, with or without Opec.
'If it is within Opec it would be better, but it may not be possible.'
Chalabi, cousin of Ahmed Chalabi, the Pentagon's choice to head the country, said he would be prepared to serve the Iraqi oil industry if a democratically elected government was in place.
He said selling off Iraq's oil assets was the only way to secure investment in his country. 'Iraq is going to need a lot of money in the next five years, up to $300bn.
'Privatisation or partial privatisation is the way to secure this investment.
Chalabi added: 'The nationalised oil industry [in the Middle East] I believe has led to shrinkage of the share of Middle Eastern Opec countries in the world market to the benefit of non-Opec producers - the growth of the oil industry outside the Gulf.'
However, he believed that strong 'oil nationalist' opinion in Iraq would make such a move difficult in the short term.
| OPEC cuts oil output ^ |
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| Posted by JohnHuang2 On 04/24/2003 11:28 PM PDT with 2 comments Washington Times ^ | Friday, April 25, 2003 | By Patrice Hill |
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| Iraq could destabilise OPEC (destabilize) ^ |
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| Posted by dennisw On 04/06/2003 6:00 PM PDT with 55 comments AUSTRALIA ^ | April 7 2003 | By Robert Koch |
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| OPEC interests a possible war casualty ^ |
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| Posted by Shermy On 04/10/2003 4:18 PM PDT with 3 comments Asia Times ^ | April 11, 2003 |
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| Venezuela's Chavez says Iraq war hurts U.N., OPEC ^ |
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| Posted by kattracks On 04/11/2003 2:28 PM PDT with 14 comments Reuters | 4/11/03 |
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| Preview: Focus on Opec meeting and US earnings ^ |
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| Posted by DeaconBenjamin On 04/20/2003 6:11 PM PDT Financial Times ^ | April 20 2003 14:36 | By Kevin Morrison in London |
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| Iran wants UN recognised Iraq govt at Opec ^ |
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| Posted by areafiftyone On 04/21/2003 8:19 AM PDT with 9 comments Financial Times ^ | 4/21/03 |
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| With the War Largely Over, OPEC Fears Oil Price Drop ^ |
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| Posted by Pokey78 On 04/20/2003 6:51 PM PDT with 12 comments The New York Times ^ | 04/21/03 | NEELA BANERJEE |
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| Opec calls crisis meeting to cut production as oil price tumbles ^ |
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| Posted by Calamari On 04/07/2003 5:13 PM PDT with 48 comments independent.co.uk ^ | 08 April 2003 | By Philip Thornton |
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| OIL: OPEC Agrees to Cut Output By Two Million Barrels A Day ^ |
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| Posted by Ernest_at_the_Beach On 04/24/2003 7:48 PM PDT with 22 comments Yahoo via Dow jones ^ | Thu Apr 24, 4:33 PM ET | Stella Farrington of Dow Jones Newswires |
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The extra oil needed would be more than twice Iraq's pre-sanctions Opec quota and almost triple the present output of about 7 million barrels a day, said Fadhil Chalabi, who rejected a US invitation to become interim head of his country's oil sector.
Iraq's oil production is just over 2MBPD, tripling it will take it to about 7MBPD, not 21MBPD!
In 2001, according to "Statistical Review of World Energy June 2002" by British Petroleum global oil production was 74.5 MBPD (million barrels per day, a barrel is 159 liters). Of this, 30 MBPD (40.7% of the total) was produced by the OPEC countries.
| Country | Date Joined OPEC | Location | 2001 Oil Production (MBPD) | 2001 Oil Production (% Of World Total) |
2001 Population (Million) | 2001 Total GDP (Unadjusted MUSD) |
2001 GDP Per Capita (Unadjusted USD) |
National Oil Income (Unadjusted MUSD) |
Annual Per Capita Oil Income (Unadjusted USD) |
2001 GDP Per Capita (PPP-USD) |
| Saudi Arabia | 1960 * | Middle East | 8.768 | 11.8 | 22.8 | 186,489 | 8,179 | 80,063 | 3,512 | 10,600 |
| Iran | 1960 * | Middle East | 3.688 | 5.1 | 66.1 | 114,052 | 1,725 | 33,676 | 509 | 6,400 |
| Venezuela | 1960 * | South America | 3.418 | 4.9 | 23.9 | 124,948 | 5,228 | 31,211 | 1,306 | 6,100 |
| Iraq | 1960 * | Middle East | 2.414 | 3.3 | 23.3 | NO DATA | NO DATA | 22,043 | 946 | 2,500 |
| United Arab Emirates | 1967 | Middle East | 2.422 | 3.2 | 2.4 | NO DATA | NO DATA | 22,116 | 9,215 | 21,100 |
| Nigeria | 1971 | Africa | 2.148 | 2.9 | 126.6 | 41,373 | 327 | 19,614 | 155 | 840 |
| Kuwait | 1960 * | Middle East | 2.142 | 2.9 | 2.0 | 32,806 | 16,403 | 19,559 | 9,780 | 15,100 |
| Libya | 1962 | Africa | 1.425 | 1.9 | 5.2 | 34,137 | 6,565 | 13,012 | 2,502 | 7,600 |
| Indonesia | 1962 | Asia | 1.41 | 1.9 | 228.4 | 145,306 | 636 | 12,875 | 56 | 3,000 |
| Algeria | 1969 | Africa | 1.563 | 1.8 | 31.7 | 54,680 | 1,725 | 14,272 | 450 | 5,600 |
| Qatar | 1961 | Middle East | 0.783 | 1 | 0.77 | 16,454 | 21,369 | 7,150 | 9,285 | 21,200 |
| TOTALS | 30.18 | 40.7 | 533 | 750,245 | 275,590 | |||||
Sources: List of OPEC countries from OPEC - (*) indicates a founder member . Population figures and PPP GDP estimates from the CIA World Factbook via theodora.com. The unadjusted GDP figures are from the World Bank. The unadjusted GDP per capita is calculated by dividing total unadjusted GDP by the population. Oil production figures are from BP; please note that there are slight discrepancies in some of the percentages; Indonesia has a higher % than Algeria, but a lower MBPD figure, likewise Iraq vs. UAE. I am awaiting corrected data from BP. The errors are slight and do not affect conclusions drawn.
Populations: Several OPEC states have large populations of non-nationals. The population figures above include 5.4 million non-nationals for Saudi Arabia, 1.6 million for UAE, 1.2 million for Kuwait and 0.66 million for Libya. These populations have been included when calculating the GDP per capita figure.
National Oil Income USD: This figure is calculated using the formula Income = Production_in_MBPD * $cost_per_barrel * 365.25. Cost per barrel is set at $25, in line with recent oil prices. Since extraction costs are ignored, the result actually inflates the oil income slightly. The over-estimate is minor for the Gulf states, where extraction costs are $2 to $3 per barrel, but rather more for non-Gulf countries. No allowance has been made for export of refined products rather than raw oil - refined products are more valuable than raw oil. Also, no allowance has been made for domestic consumption. Dividing the figure in this column by the population gives the per capita oil income.
I have highlighted the countries where oil income per person is at a level which I consider significant from a Western perspective.
Kuwait, UAE and Qatar stand out as societies that generate truly impressive income per person, even by Western standards, however they all have tiny populations. Indonesia, Iran and Nigeria have large populations and correspondingly small incomes per person. Saudi Arabia stands out for combining a moderate population and high oil income, fulfilling its reputation as the 800 pound gorilla of OPEC. Opinion varies as to what is the "natural" market price of oil, i.e. what would the average price be if the international market were fully efficient and free from the distorting impact of OPEC. A figure of $20 is often mentioned, yet the oil price was as low as $10 as recently as 1998. If $10 pertained, then these figures would need multiplying by 0.4. Such a factor would leave only Kuwait, UAE and Qatar as having a significant per-capita oil income!
One figure not shown in the table is population growth rate, but all the countries have positive population growth. The Gulf States have some of the highest rates in the world - 2-5% - their populations will double in about 20 years at such rates, and all other things being equal their oil income per person will therefore halve during that period. This is not a new trend, it has been in place for many years. Historical data is hard to come by, but Iran's oil income per person income in 1995 was less than 10% of what it was in "the boom years" of the 1970s. According to The Economist's survey of the Gulf Cooperation Council countries, Saudi Arabia's GDP per head is now half its 1980s peak. This combination of rising populations and declining oil prices constitutes a severe, ongoing and worsening problem for the OPEC countries.
The per capita incomes for Iran and Iraq are notably low, given the prominence these two countries usually receive as "oil titans". The Iranian figure of $509 is so low as to make it debatable whether Iran should be considered a petro-economy at all. Iraq's production could well double in the next decade as sanctions are lifted, modern technology is introduced and the country seeks to rebuild, but this will still not propel the country into a sybaritic life of pleasure and ease.
Bush should help make this happen!
Don't tell that to sugar farmers or dairymen.
According to the Clintons, they were the energy source behind the economic boom then.
The "oil glut" of 98 was blamed on the "recession and stock market bubble bursting" in Asia.
It is interesting that an oil glut(i.e low gas prices) happened while Clinton was fighting for his Presidency(1998, the year of Monica), IMO.
JMO, but it seems that the Saudi's were thankful to Clinton for giving lip service to mid-east terrorism and doing nothing about it.
Once again, several FReepers predicted the fall in crude price, the unraveling of OPEC and associated matters relative to oil & gas prices.
this is to the lamestream press & DU lurkers
WE FRIGGIN" TOLD YOU SO
FReeRepublic is show prep for world events.
Bush should help make this happen!
I notice that Iraq is about fourth in oil production--
whereas it's rated second in reserves!IMHO Iraq's ramping up to second place in production would break, or certainly marginalize, OPEC.
In the meantime Bush should sell off the Strategic Petroleum Reserve--no boon to OPEC, that--and lend the money to Iraq. With a view to taking repayment in sweet light crude to refill the SPR in coming years.
Maybe and most likely.
Damn, that Dubya' is impressive!
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