Iraq's Oil - A
Enormous
Treasure
By
Sajid Rizvi
United Press International
12-11-02
- LONDON (UPI) -- Iraq is
poised to emerge as a major player on the international oil scene, a
critical energy supplier of the West, if it secures a future without
President Saddam Hussein in a swift U.S-led campaign of high-pressure
diplomacy or contained conflict.
That was an overwhelming view as
American and European oil experts met at a London think tank Wednesday
to consider the potential impact on energy security of a regime change
in Baghdad.
Echoing assessments by analysts on both sides of the
Atlantic, the experts could not however agree on how best that "regime
change" could be brought about -- through dialogue or war.
The
conference on "Gulf Oil, Global Politics: The Future of Energy Security
in the Middle East" took place at London's Royal United Services
Institute against the backdrop of intense diplomatic moves at the United
Nations to defuse the Iraq crisis and head off a U.S.-led military
operation.
Oil traders have speculated over the possible effects
of a Gulf conflict, but their fears have been largely allayed so far by
oversupply in the face of weak demand for crude oil, a response to slow
global economic growth.
Iraq is a member of the Organization of
Petroleum Exporting Countries, better known as OPEC, but can only sell
oil under a U.N.-administered program, part of the sanctions in force
since its 1990 invasion of Kuwait.
A war in Iraq would disrupt
Iraqi oil supplies in the short term but what conference attendees
deemed its successful outcome -- a change of government in Baghdad --
could enable Iraq to bounce back with higher than current output,
depriving suppliers in and outside OPEC of their market share, said the
experts.
Iraq currently supplies about 9 percent of OPEC's total
oil production of about 27 million barrels a day, but has about 14
percent of OPEC's total reserves of 819 billion barrels.
Industry
analysts noted that Iraq is sitting on unquantified but likely vast oil
and gas reserves. Iraqi-born Mohammad Al-Gailani, a London-based
consultant, said only a fifth of Iraq's oil deposits had been drilled
and more than 100,000 square miles awaited exploration by companies
likely to be allowed in after a government change. He added oil
exploration in Iraq had the highest success rate with exploration costs
of 50 cents a barrel -- the cheapest in the world.
Manouchehr
Takin, senior analyst from the London Center for Global Energy Studies,
asserted that concern over energy insecurity was often exaggerated:
Oil-producing countries had to sell oil to survive and would always find
the means to deliver the commodity to the consumer, he
said.
However, should Iraq's isolation end -- and that includes
the sanctions -- the expected major new finds would almost certainly
lead to key geopolitical realignments in the Gulf, challenging neighbors
Iran and Saudi Arabia in particular.
In some strategists' view,
Iraq after a regime change could prove to be more reliable a partner for
the West than Saudi Arabia, which currently holds the greatest clout in
OPEC. Other experts attributed that position to minority conservative
American view.
Joseph Barnes from the Baker Institute for Public
Policy at Rice University, Houston, said that U.S. dependence on the
Middle East oil and Washington's "special relationship" with Saudi
Arabia was under constant review since the Sept. 11, 2001, terrorist
attacks on the World Trade Center and the Pentagon.
"Despite
protestations to the contrary in both Riyadh and Washington, Saudi
Arabia is seen by many, including apparently some in the administration,
to be an unreliable ally in the war on terrorism," Barnes
said.
In contrast, a successful U.S. occupation of Iraq could
lead to higher oil production and help lower global oil prices, said
Barnes, a view echoed by several others at the
conference.
Although actual presentations were on record,
analysts' answers to questions could only be quoted under "Chatham House
rules," which cloak such comments in anonymity.
The experts,
agreeing that no one can predict the future, outlined a range of
scenarios, from a peaceful removal of Saddam Hussein to what Dutch-born
energy guru Hermann Franssen described as a "worst-case" scenario of war
in Iraq spinning out of control and engulfing the whole
region.
Bruce Riedel, a former member of the U.S. National
Security Council who served former presidents George Herbert Bush and
Bill Clinton, said in his remarks that the Middle East in general was
"on the edge of a fundamental transformation."
He said, "This
change is almost a certainty. The change will manifest itself over
years, not over months." However, he added, "This change will not change
Saudi Arabia's central position as the principal U.S.
partner."
Pointing out that the situation held too many
imponderables, Barnes said, "It is a cliche that it is easier to say
where a war begins than where it ends. World War I is a case in point.
Did it end with armistice of 1918? With the Versailles peace treaty?
With the end of the Russian Civil War? Or (Turkish leader Kemal)
Ataturk's defeat of the Greeks? The final suppression of the Germany's
European ambitions in 1945? Or the collapse of the Soviet Union -- very
much a creature of World War I -- just over a decade ago?" He concluded,
"On a lesser but still important scale, a U.S. invasion and occupation
of Iraq introduces similar uncertainties, not just for the geopolitics
of oil, but for the broader geostrategic environment."
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