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2003-05-17 Iraq
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U.S. Adviser Says Iraq May Break With OPEC
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EFL
The U.S. executive selected by the Pentagon to advise Iraq's Ministry of Oil suggested today that the country might best be served by exporting as much oil as it can and disregarding quotas set by the Organization of Oil Exporting Countries. His comments offered the strongest indication to date that the future Iraqi government may break ranks with the international petroleum cartel.
Enjoy, Prince Faisal.
"Historically, Iraq has had, let's say, an irregular participation in OPEC quota systems," said Philip J. Carroll, who formerly headed Royal Dutch Shell in the United States and now chairs a commission advising Iraq's oil ministry. "They have from time to time, because of compelling national interest, elected to opt out of the quota system and pursue their own path. . . . They may elect to do that same thing. To me, it's a very important national question." In an interview held in an anteroom off a cavernous ballroom at Saddam Hussein's former Republican Palace, Carroll also signaled that oil contracts signed under the old regime are now potentially void or subject to renegotiation.
This is so enjoyable!
Hussein's government had an official policy of steering contracts for drilling services, joint production and machinery to companies based in France, Russia and China, whose governments tended to be more supportive of Iraq in the United Nations Security Council. Though Carroll did not single out any potentially imperiled contracts, he asserted that the old system of preferential treatment ended with the demise of Hussein. "There will have to be an evaluation by the ministry of those contracts and a determination of whether they were made in the best interests of the Iraqi people," Carroll said. "Certainly, where contracts are, shall we say, excessively beneficial to one party you know, like the French, and that party is not the Iraqi people, and there is a legal basis for not going forward, then I would expect that the ministry would want to have another look."
| The Frenchies and the Russers saw this coming. I have no idea why they didn't avoid it, though... |
Carroll stressed that his first priority is resuming enough production of oil, gasoline and cooking fuel to relieve painful domestic shortages. Questions about Iraqi exports and the country's participation in OPEC remain moot for now. Sanctions continue to bar sales of the country's oil abroad, except under a U.N.-governed program that allows exports to pay for food. And analysts say it may be more than a year before there is enough oil produced for export to even reach OPEC quotas. But Carroll also echoed one of the chief goals of the Bush administration — returning Iraq to its prewar export capacity as soon as possible to fund reconstruction.
And to hell with the Oil-for-Palaces program then.
Flows of Iraqi oil to the world market unconstrained by OPEC quotas could further erode the cartel's already limited ability to set prices and might even trigger price wars, eating into the profits of its member countries. Such an outcome would surely delight the Bush administration as well as buyers of gasoline in the United States. With that in mind, commentators — particularly in Europe — have contended that the real purpose of Bush's war in Iraq was to put in place a government that would break OPEC.
No, but it's a delightful side-effect.
Carroll repeatedly rejected suggestions that he is an instrument of any such policy. "In the final analysis, Iraq's role in OPEC or in any other international organization is something that has to be left to an Iraqi government," he said.
"Who will listen carefully."
Already, officials within the oil ministry — now supervised by U.S. forces — are actively considering pulling Iraq out of OPEC and exporting as much crude as possible to maximize revenue once the oil fields have returned to full capacity. Asked about those talks, Carroll said: "That is a very good debate for Iraqis to have and I think they ought to do what they believe to be in their national self-interest." Iraq's oil production historically has comprised 90 percent of its economy while bringing in nearly all of its foreign exchange. That flow of oil and money is needed more than ever, Carroll said. "I do believe the assertion that Iraq is going to need every bit of financial wealth that it can lay its hands on," he said.
If that means undercutting the Saudis and the Russians, well that's just too bad, eh?
Carroll's advisory board is today in fledgling state, counting only himself as chairman and his assistant, Fadhil Othman, a longtime official at Iraq's oil export agency. But as Carroll fills the board with others from the industry, financial experts and lawyers, he plans to embark on a series of studies to help the ministry set policy. Among the key questions the ministry will confront is whether to break up the state oil empire and put some of its pieces into private hands. All options, from maintenance of the old system to complete privatization, will be on the table, he said.
Set up a trust like the one in Alaska.
Carroll was careful to avoid endorsing any particular structure, but he warned of the pitfalls of maintaining a system dominated by the ministry and the state companies. "Highly centralized models are not always as efficient as they should be," he said. "They are prone to corruption. They tend to be more prone to the government seeing them as a cash cow for funds for other purposes."
| Kind of like what Sammy had... Matter of fact, exactly like what he had. |
Still, Carroll also suggested that an overly aggressive privatization would risk putting the oil companies "in the hands of a few people, so that the nation receives little or no benefit, but all of a sudden you get instant billionaires."
Yep. Set up the trust and put the money in the hands of the people there. They'll know what to do. 
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Posted by Steve White 2003-05-17 01:06 am||
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Posted by Scott 2003-05-17 01:30:09||
2003-05-17 01:30:09||
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Posted by Lucky 2003-05-17 11:46:00||
2003-05-17 11:46:00||
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