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- TRRT Online Edition | July 1-7
U.S. gets help from Saddam
U.S. gets help from Saddam
By Joe Baker, Senior Editor
While UN arms inspectors report their initial findings in Iraq, guess what the U.S. government is doing? It has turned to Saddam Husseins regime to help it alleviate its worst shortage of oil stocks in 27 years.
With an invasion very near, Iraq has doubled its exports of oil to this country, thereby helping U.S. refineries deal with a shortfall of Venezuelan oil.
Venezuelas oil production dropped by 1.5 million barrels per day (bpd) in December. The price of crude headed for Mars and scarce reserves threatened the domestic refinery and pipeline structure. At that point, President Bush quit adding to the 700 million barrel strategic reserve.
The Observer reports principal oil companies such as Chevron, BP, Exxon and Shell doubled their imports from Iraq from half-a-
million barrels in November to one million barrels per day to solve the problem.
The publication said U.S. importers diverted half-a-million barrels of Iraqi oil each day from shipments bound for Europe and Asia. That trade is legal under terms of the UNs oil for food program, even though Americas military intends to launch 300 cruise missiles per day on Iraq if Bush gives the word.
Iraq has the second largest proven reserves in the world112 billion barrels and another 100 billion of unproven reserves, according to the U.S. Department of Energy. Iraqi oil is less costly to extractaround $1 a barrelcompared with $6 a barrel for Russian oil. The source of that oil is a priority in any war strategy, and British and American forces have those reserves as one of the primary objectives.
The Pentagon said last week that military planners have crafted strategies that will allow us to secure and protect those fields as rapidly as possible in order to preserve them before destruction.
Military authorities deny that plan is a grab for oil. They say its a security issue because they have intelligence reports that Saddam intends to damage or destroy his oil fields in the event of invasion. That could cause up to $30 billion damage to the U.S. economy, not to mention environmental damage.
The scramble to get a piece of the action before a few companies gobble it all up is in high gear. A Russian delegation flew to Baghdad about a week ago to negotiate on retaining a lucrative contract to develop the West Qurna oil field. Oil is vital to Russias budget, and it requires a price of at least $18 per barrel. The Russians are fearful the U.S. will get control of a large amount of cheap crude and send prices sliding downward.
Saddam, however, has offered rich contracts to firms from France, China, India and Indonesia in addition to Russia. Only the major oil companies based in America and Britain lack access to Iraqi fields.
Those companies are soon to report a huge leap in profits. ChevronTexaco is enjoying a 300 percent increase. That company used to employ Condoleeza Rice, now President Bushs National Security adviser.
Meanwhile, continuing of three years of sluggish performance, the U.S. economy is about to report zero growth. Cheap oil would add a sharp boost since the country imports half of its daily consumption of 20 million barrels.
The battle for Iraqi oil has just begun.