Plutocrats Gushing Over Iraqi Oil
While Iraqis have to wait for the most essential services to be restored, British and American oil companies are profiting from the flow of Iraqi crude, which is being restored by the Army Corps of Engineers at U.S. taxpayers’ expense.
Exclusive to American Free Press
By Christopher Bollyn
Big Oil is already profiting from discounted and subsidized Iraqi crude provided by the U.S. Army Corps of Engineers (USACE) while the population of occupied Iraq lacks the most basic services: security, water and sewage, electricity, and telecommunications.
American consumers and taxpayers are picking up the tab for the reconstruction of Iraq, directly and indirectly, as the congressionally-funded USACE is working to increase the flow from Iraqi oilfields.
The abundant oil of southern Iraq is flowing again, thanks largely to the USACE, which was commissioned by the Department of Defense and the secretary of the Army to restore Iraq’s oil production.
USACE was given the task to repair Iraq’s oil infrastructure in “February or March,” USACE Lt. Col. Gene Pawlik told American Free Press. “We will be there until we restore oil production to pre-war levels,” although he couldn’t say how long it would take to reach the pre-war level of 2.5 million barrels per day.
Vice President Dick Cheney said on April 9, when Baghdad fell to coalition forces, that by the end of the year Iraq’s oil production would reach 3 million barrels a day. To meet that goal USACE is working with Kellogg Brown & Root (KBR), a Houston-based engineering firm and subsidiary of Halliburton, the oil-services company formerly headed by Cheney.
Pawlik said the USACE today is primarily civilian with only 600 uniformed personnel and about 34,500 civilian employees.
The Army effort headed by USACE is known as Task Force RIO (Restore Iraqi Oil) and is being directed by Brig. Gen. Robert Crear.
The fact that Iraq may have even more oil than Saudi Arabia, something AFP has reported for months, is now being mentioned by the mainstream media: “The shattered nation [Iraq] may have the world’s largest reserves of oil,” read the headline of The New Yorker on July 21. The informative article noted that the abundant oil of the Basra area “has the cheapest production costs in the world, at about a dollar a barrel.”
All the Iraqi oil currently being exported is from the Basra area, near the gulf coast in the extreme south of the country, where a cluster of rich oil fields, including the “super giant” Rumaila and Majnoon fields, are found. The Basra area is reportedly producing 350,000 to 400,000 barrels a day.
While the United States has some 150,000 troops stationed in Iraq, the combined coalition allies have less than one-tenth that number in the country. Despite the minute size of the British contingent in Iraq, the occupied oil-rich Basra area is primarily under British military control, Pawlik told AFP.
Not surprisingly, a British-owned tanker was the first to load Iraqi oil since the beginning of the war.
A British Petroleum (BP) tanker “lifted” 2 million barrels of high-quality Basra light crude oil at the gulf port of Mina al-Bakr on July 13. ChevronTexaco was scheduled to load 2 million barrels on July 21, and Shell to take its share the following week. A fourth bidder, a “Swiss trading firm” called Taurus, was also involved in the July sale of 8 million barrels of Iraqi crude. Who the Geneva-based Taurus is, however, remains unknown.
The July sale of freshly pumped Iraqi crude was sold for less than $25 per barrel, “more than $5 per barrel below standard U.S. crude prices,” The Observer (UK) reported on July 13, adding, “British and American tankers making off with the first few million barrels of Iraqi oil are only likely to confirm long-held suspicions of war skeptics,” it reported.
At least three-quarters of the new Iraqi oil will be heading for the U.S., while Iraqis are reportedly now paying five times more for gas than they did under the former Ba’ath regime.
BP, which enjoyed record profits of more than $3 billion in the first quarter of 2003 “due to higher worldwide refining margins and improved retail margins, particularly in the USA,” reportedly planned to ship its Iraqi crude to the United States. Across the United States, BP has 14,900 service stations under the new dandelion-like yellow and green logo.
BP spokesman, Scott Dean, told AFP that the new logo, which does not identify the company as “British Petroleum,” had met with “positive” responses from consumers.
Through mergers and acquisitions, formerly American-owned oil companies such as Amoco, ARCO, Burmah Castrol and Vastar, made the London-based British Petroleum the largest oil and gas producer in the United States and one of the largest gasoline retailers by 2001.
BP has some $40 billion of fixed assets in the United States, with operations in almost every state, including the Alaska pipeline, which it operates, and 42,000 U.S.-based employees.
The July sale indicated USACE and KBR had quickly completed the necessary repairs of the Basra area pipelines, processing plants and pumping stations for the oil to be fed to the offshore terminal at Mina al-Bakr.
The occupying powers say the Iraqi oil sales under the coalition represent the first time that proceeds from the country’s oil wealth would directly benefit its people.
“Most of the $200 million proceeds from the sale will go into the coalition-controlled Development Fund for Iraq,” The Observer reported, “though some will be diverted to Kuwait to pay reparations for Saddam’s invasion of the country in 1991.”
Despite promises to use the oil revenues to benefit the Iraqi people, a senior source with the U.S. Agency for International Development (USAID) told The Observer that restoration of essential infrastructure for the civilian population of Baghdad could take as long as a year: “He believed it could take a year just to get the water treatment system in Baghdad functioning again.”
Deputy Secretary of Defense Paul Wolfowitz said that production of Iraqi oil had surpassed the 1 million barrel per day mark when he gave a rosy briefing to Pentagon reporters about his four-day “whirlwind tour” of Iraq on July 23.
“There is no humanitarian crisis. There is no refugee crisis. There is no health crisis. There has been minimal damage to infrastructure; minimal war damage, lots of regime damage over decades, but minimal war damage to infrastructure except for telecommunications, which we had to target,” Wolfowitz said.
Luke Zahner, spokesman for USAID, told AFP the Baghdad sewage system has “not been functioning for 10 years” and that tons of raw sewage are being dumped into the Tigris River every day.
The lack of functioning water treatment facilities is the primary reason for an epidemic of water-borne diseases that has worsened since the war began.
Asked if it would take a year to restore Baghdad’s water treatment system, Zahner said he would not “stand by” the reported statement. The essential infrastructure was “gradually” being repaired, Zahner said, by the U.S.-based Bechtel company, which received a controversial $680 million contract for work in Iraq, without having to compete with other bidders.
After throwing BP out of Iraq in the 1970s, the Ba’ath regime used oil revenues to finance a nationwide development program, building infrastructure projects, dams, factories, schools and hospitals.
It was this investment that brought prosperity to Iraq and raised the Iraqi standard of living to a Western level.
“Although rarely presented as such,” the promise of the occupying authorities to use the oil revenues to rebuild Iraq’s infrastructure and help the Iraqi people would “represent a return to the policies that the Ba’ath regime followed before Saddam embarked on his disastrous military campaigns,” John Cassidy wrote in The New Yorker.
It would be a return—except for the middleman.
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