Date: Tue, 21 Oct 1997 19:05:49 +0100 From: New Worker Online <ncp-AT-geocities.com> Subject: M-G: Hubble, bubble, oil and trouble New Worker Online Special Feature Hubble, bubble, oil and trouble. by Steve Lawton ON SUNDAY 12th of October 1997 the USS Nimitz aircraft carrier, ordered to miss a port call, reached the oil-rich Gulf several days ahead of schedule, together with destroyers and missile frigates just as Iran's forces were conducting their own seaborne exercises. It was sent by the US administration, to reinforce an already huge US force of 20,000 under arms and 20 fighting and support ships, allegedly to keep Iran and Iraq in check for no-fly zone violations. In fact, it was yet another barely disguised strong-arm demonstration of the US intent to keep control of the Middle East in perpetuity. As we might surmise, this provocative "foreign policy" has nothing to do with supposed transgressions of unjustly imposed post-GulfWar conditions, and everything to do with oil. The Iranian Defence Minister Ali Shamkhani said that while they saw no reason for any "friction", he said "we cannot speak about the belligerence of the other [US] side." That oil is at the heart of the tensions was made plain as the fiasco over US backtracking on attempts to enforce an embargo against France's Total oil company, and others besides, was being played outwith the supposed prospect of a European trade war in the offing. Total "breached" US sanctions by concluding a gas contract worth $2 billion to develop Iran's South Pars gas field, exceeding the $40 million limit under the 1996 Iran-Libya Sanctions Act. But what's interesting about this episode is that it has been known for sometime that this deal was underway and is, more to the point, far from unique. Total signed a $600 million contract with Iran for offshore exploration of the Sirri oilfields last year after the US oil company Conoco abandoned its deal when President Clinton imposed sanctions in June 1995. But at an oil and gas conference held in Isfahan recently, many US companies attended in defiance of Clinton. Iran has also signed a $140 million oil and gas contract with a British-Canadian consortium which includes Britain's Pell Frischman and Canada's Bow Valley. In May Iran announced a total of 11 vital oil and gas projects worth $7 billion. More than 120 foreign companies were bidding. And at this moment, Total is apparently near to sealing a contract to develop a big Iraqi oil field pending the lifting of United Nations sanctions -- an issue again in the UN this week. The fall-out response of US Under-secretary of State Stuart Eizenstat to the Global Business Forum on 2 October, was revealing. Recognising the weight of European criticism, Eizenstat admitted that sanctions had damaged the US economy. He said that in 1995 they had lost $19 billion in export sales as well as 250,000 jobs -- figures derived from the President's own Export Council which also outlined points of contention over current sanctions policy. But Eizenstat wasn't apologising for the sanctions, he was simply looking to "factor" criticism into their "future work". He said he wants "to improve the way we make sanctions decisions, to ensure that sanctions are a part of a coherent strategy, to accurately measure the costs and effects of sanctions measures, to seek multilateral support where possible and to improve co-ordination between the administration and Congress." Recently, arch reactionary ideologue, former National Security advisor under President Carter and latter-day oil lobbyist Zbigniew Brezezinski made no bones about what was at stake for the US in the region. He said, quite plainly, that oil belongs to them and the way to keep it is to maintain a better-honed "dual containment" of Iran and Iraq. In the influential US journal Foreign Affairs (May-June 1997) he said: "It is imperative that all parties understand an important strategic reality: the United States is in the Persian Gulf to stay. The security and independence of the region is a vital US interest." And menacingly, he warned: "The United States should be prepared to maintain Iraq's military containment unilaterally should the will of others falter. Similarly, while there are costs to keeping Iraq's oil off the world market, retaining the economic embargo in general is necessary. Meanwhile, the US-led North Atlantic Treaty Organisation (Nato) and Western energy multinationals, are advancing eastwards into the oil-rich and increasingiy oil-geostrategic former Soviet Republics around the Caspian Sea and into Russia. The pace has been gathering momentum since the early 1990s and particularly in the wake of the Gulf War. The same oil-based motive that propelled the chief industrialised capitalist countries headed by the US into the Gulf War, a region which has seen the world's most concentrated US military build up over the last six years, is now behind attempts to control the Caspian oil riches. Why? A burgeoning global shift in the pattern of economic power and consumption has begun to alter the oil equation that has so far assured the US its near global control. Since the demise of the Soviet Union, the Gulf War and its continuation by other means -- economic sanctions against Iraq especially, the US administration consolidated its grip on Middle Eastern oil. But that grip, since the West's socalled post-Cold War victory over the Soviet Union, is showing signs of nervousness. While the US retains a dominant international position, it is increasingly in the teeth of growing imperialist rivalry from Europe; soaring oil consumption demand among Asian nations and the huge, rapidly expanding powerhouse of China which is taking its place in the world energy demand equation as it rises to become the world's biggest economy early in the next century. Without labouring figures, British Petroleum's Statistical Review of World Energy for June 1995 shows that by the end of 1994, consumption in the three key areas was: North America (US, Canada and Mexico): 30.4 per cent; Asia Pacific: 25.2 per cent; and Western Europe: 20.5 per cent. The 1997 BP Review for the end of 1996 shows: North America: 29.8 per cent; Asia Pacific: 26.8 per cent; and Western Europe: 22.3 per cent. There had been a three per cent world consumption increase. And the Energy Information Agency estimates world oil demand rising from 73.4 million barrels a day this year to 104.6 million barrels a day in 2015. At a recent symposium held in the US Senate building on 25 September under the title: Caspian Oil -- Pipelines and Politics, Julia Nanay, director of Washington-based Petroleum Finance Company, said that an "exponential growth" in gasoline demand is expected in China and India. She said that "the net itnport requirements of the Asia Pacific region will be skyrocketing." And Iran and China were the key for Asian company oil interests. This indicates a shifting global demand trend, as an ever greater share of the global oil deposits are needed to fuel Asian development. In particular, China and India's consumption is expected to go through the roof early next century. According to the very latest figures just published by the International Energy Agency (IEA), a watchdog for the main industrialised nations, the demand growth for oil has been revised upwards for 1997 from 1.8 to 2 million barrels a day due to stronger demand from the US, China and the former Soviet Union (including the Caspian). This pattern of consumption is slowly putting pressure on advanced capitalist countries' dependence on Middle East oil. It is the cardinal reason for the US drive to harness new centres of oil production and for heightened US interest in keeping Iran and Iraq at bay, to keep the Gulf region divided and the oil flowing faster and faster to the US. Oil consumption is rising significantly in the United States itself with its limited reserves of 29.8 billion barrels. But the strategic reserve issue has long been a carefully monitored matter for the US. It has for many years been an underlying feature of ensuring sufficient oil imports, and fundamental to foreign policy. And the prospect of rival centres securing ever larger slakes in the oil scramble for vastly more consumption needs, with particular pressure in the Middle East, concentrates the US administration leaders' minds on what it must see as narrowing options for retention of a virtual global oil monopoly in the future for themselves. But pressure on European and Asian companies to exploit Iranian and Iraqi oil if sanctions are not lifted, will create even greater inter-imperialist rivalry and regional tension. And since oil is linked, to power, that also means US imperialist ambition in general is at stake. The Caspian catch By the end of last year it had become clear, though, needless to say, not as a result of any public awareness or discussion, that the sights of the West's most powerful energy companies were firmly focused on Caspian oil. The question is, how firmly? And is the pursuit of Casplan oil down to motives besides that of maximising profit? For some time, in what limited media coverage there has been of this issue, the abiding theme of all oil projects involving Western oil companies in relation to Russia, its former republics and their neighbours, has been that the area has a degree of instability which makes it difficult to predict that the Caspian could be systematically exploited by the West. Nothing was for sure. Oil companies' and Western governments' relative reticence over publicity about what the Western world's biggest energy companies are doing in the Casplan would undoubtedly be put down to that "bottom line" proviso of instability, as epitomised by Russia's war in Chechenia. And that has still not been resolved. But there has been a degree of hype about conquering new economic heights to back-up the future of the "New World Order" precisely because instability could always be "managed" This was the view of the head of the Azerbaijan International Operating Company (AIOC) oil consortium geologist Terry Adams. In early March 1996, as the Chechen war raged, he said: "It is a risk we clearly recognised when we started the project, and it will be a continuing risk we will have to manage." Later, speaking of Georgian ethnic conflicts, he said: "These areas of localised disruption will persist. But we can manage the broader picture to accommodate them." And now US forces are in place. Why else did, say, Chevron like many other key oil giants, secure a $20 billion 40-year joint-venture with the Kazakhstan government in 1992 to develop the Tengiz and Korolev oil reserves? Its peak flow of an estimated 700,000 barrels per day (bpd) is not expected for around 15 years. Overall, the sums run into hundreds of billions. This level of long-term investment is both a commercial and a foreign policy issue, which is why the initial stages of the Tengiz deal was heavily influenced by the then Secretary of State James Baker in Texan oil tycoon President George Bush's administration. In other words, the evidence suggests that the prize is clearly big enough, whatever the precise final outcome of proven oil deposits. No company worth its energy name intends to be left out of it. And while none are prepared to count their fattening chickens, neither will they remain aloof from the expected bonanza. If the prize was not dramatically profitable enough, they wouldn't be there investing billions of dollars. In fact, all the biggest oil companies are involved. Alongside this top-name political figures from past United States administration's -- and former British Prime Minister Margaret Thatcher -- are lobbying for oil interests in the Caspian: Henry Kissinger, Alexander Haig, Howard Baker and Zbigniew Brzezinski among them. The 22 September front-page report in the International Herald Tribune rather sharply, though not entirely accurately, put it: "They and every shark east of Suez have recognised that over the next decades, the greatest of games will be played around the Caspian." The implication that somehow there is an equal stake between Middle Eastern countries and the US for oil is obviously a blind. But the real "greatest of games" concerns the fact that such influential senior former administration officials, all of whom have established serious foreign policy and department of state credentials, should be raking in their consultancy fees from the Caspian region. The Caspian is neither an alternative to, nor a warning to, any potentially rebellious oil-rich Middle Eastern nation -- Iran and Iraq. The issue is about multiplying oil sources and maintaining a global-reach strategy to secure the longer term advantage over any other "spheres of influence " that may cramp US imperialism -- China in particular. An aspect of it also, of course, is price control: keeping it low. And in part this is linked to the pressure for expansion of its regional economic bloc beyond NAFTA (though this has limitations), and why US control of APEC and the Japan-US alliance is an increasingly important focus. Japan is also now cutting in on the Caspian scene as is Germany, south Korea and Malaysia. US and Western interests in Russia are also proceeding apace. US interests are now being promoted, as a result of the ninth round of Gore-Chernomyrdin talks (Russian Premier and former Soviet energy minister Victor Chemornyrdin and US Vice President Al Gore) in late September, through a special commission to be headed by First Deputy Prime Miaister Boris Nemtsov. The talks, formally under the aegis of the US-Russian Joint Commission on Economic and Technical Co-operation, are designed to facilitate increasing US oil company stakes in Russia and to overcome any Russian parliamentary resistance -- lately overcast by military forebodings. This is because of well over 130 projects, the key ones oil and gas related, Chernomyrdin said only seven, to date, have been approved. But this is not affecting the impending sale of state-owned Rosneft, one of the 10 top Russian oil companies which is receiving interest from Anglo-Dutch Shell, US investment bank Salomon Brothers and the Russian oil company Sibneft. Whether Russia's economically blitzed condition fails to match the incoming clout of US oil money and expertise, and the Russian oil and gas sector gradually rolls over, remains to he seen. Russia s Lukoil, which has key stakes in the Casplan, will have opened up 100 filling stations in Virginia, United States by the end of 1997, with plans to expand into 14 other states constructing a further 2,000 stations. Gazprom and Lukoil may have the capacity to move into Western markets, but that's a far cry from what we used to associate with world-class Soviet economic power which, more to the point, benefited Soviet people. And one indication of the seriousness of Russia's position is clear from Lev Mironov, chairman of Russia's Oil and Gas Workers' Union, who estimates that fixed asset depreciation in the oil and gas industry is currently running at a rate three times greater than new investment. And where US oil companies have contractual problems, the commission is there to "smooth out" hitches. This is precisely what is happening with Exxon which set up a contract to develop oilfields in Russia's central Khoreyver depression in the north western Timan Pechora region. Exxon's production sharing agreement was cancelled on tax grounds, Exxon objected to Chernomyrdin in September and Chernomyrdin handed it to Nemtsov's commission to decide. And in respect of their longer-term objectives, the role of many of the Western oil companies has been consistent from the moment they launched themselves on a drive to secure early deals with former Soviet Republics, and Russia: Gaining a decisive foothold in another energy source -- and that includes gas -- to fuel the US and Western capitalist economies further into the future alongside the Middle Eastern oil. And Britain's presence is significant too. According to the British government's new trade secretary John Battle, speaking at the annual Caspian oil and gas show in Baku, 55 companies have set up to date in Azerbaijan itself. But the role of the Asian nations and China especially in the global process cannot he overestimated. And in relation to the Caspian, China has just concluded a major oil agreement with Kazakhstan. Chinese Premier Li Peng met Kazak President Nazarbayev in Kazakhstan on 24 Septernber. Regarded as a landmark in Kazakh-China relations, a "cross-century" contract was signed between China National Petroleum Corporation and the Kazakh Ministry of Energy and Natural Resources. The two countries will carry out exploration of the western area and build pipelines to pump oil to China's Xinjiang Uygur Autonomous Region. It's a contract believed to be bigger than the 10-company Western AIOC Azerbailjan consortium. US Unocoland Amoco were the losers in the bid for two big oilfields. US military presence It is no accident that Russian reports revealed that the Pentagon had set-up a predominantly US-led and financed military force to conduct the largest field exercises in the region during September, called Centrazbat '97, which were aimed at protecting US "vital interests". The central Asian "peace-keeping" battalion consisted overwhelmingly of US officers and troops of the elite 82nd airborne division, flown in from Fort Bragg, and which has seen service in the Middle East. The battalion included token combatants from Russia and Turkey. Turkey is under Nato pressure to play a dominant role in central Asia. The exercises had the agreement of the leaders of Kazakhstan, Kirghizia and Uzbekistan, backed by the US-dominated United Nations. But "peace-keeping" seemed to be a loose phrase -- many of the military activities were considered to be offensive operations. These exercises parallel the Sea Breeze '97 Nato naval manoeuvres which took place earlier in the Ukraine, a country 90 per cent dependent on Russia for its oil. The Ukrainian-US exercises were primarily, in fact, land-based. It ranged from the nearby ICBM missile silos in the Nikolayev region to desert terrain and mountainous areas. Here (in Uchkuduk and Zeravshan) is where the world's cheapest production of gold and uranium ore is to be found. The US "interest" is both nuclear and industrial, but especially the latter. And there is no doubt what is meant by the industrial US "interest" in the central Asian countries of Azerbaijan, Kazakhstan, Turkmenistan, Uzhekistan, Georgia, Armenia and Chechenia. The US military presence in the region represents the early stages of a forward base of a secured oil operations environment. The numbers game The oil issue, in a way, begs the question: Is there anywhere where there isn't any oil? It's not such a simplistic point, because discoveries large and small are occurring all over the world outside the known dominant deposits of the Middle East. So far that level of concentration has not been bettered. It may well never be. Regional geologic assessments of the Middle East have clearly been highly intensive and probably historically the most sustained of all outside the US, especially because the United States relies so heavily on this region for its oil. It must also be stressed that company statistics are not sacrosanct. The oil industry takes as a given that the phrase "proven reserves", invariably means the figures will quite often prove to be a gross underestimate of the actual deposit. Technological capability is constantly improving extraction techniques and oil flow can rise significantly from the same well. The BP's 1997 Statistical Review of World Energy up to the end of 1996 states that the world's proven oil reserves were 1,039 billion barrels (1,009bn in 1993). The Middle East consists of 65 per cent of the world's known reserves. At the end of 1996 the Gulf region held 672 billion barrels. And its probably a lot bigger than that. Figures for Iraq, for instance, are usually put at between 100 and 112 billion barrels. Well informed views suggest it may be as high as 214 billion barrels -virtually double. Iranian proven oil stands at 93 billion barrels by the end of 1996. The potential again is another issue. And there are unproven oil riches in Yemen. Department of Energy estimates sug gest that reserves for Saudi Arabia, Kuwait and Abu Dhabi alone stand at 400 billion barrels. So there appears to be fluid assessments of oil statistics all round. And at the same time, while proven fields in the Caspian have so far shown a much less significant capacity -- by comparison some would say insignificant -Nanay said Caspian oil could yield anything up to 200 billion barrels. That and slightly higher figures have been suggested by oil company representatives for sometime, certainly during last year, so there is nothing remarkable about this disparity between proven and estimated. Whereas the Caspian seminar's Julia Nanay believed central Asia could be the next North Sea, some views from the Caspian "wild oil frontier" actually suggest the prospect of a double North Sea oil capacity being brought on stream in the Azerbaijan sector alone. The Kazak steppe is believed to hold between 50-100 billion barrels. The seminar also suggested Russia itself had 40 billion barrel reserves, but again this is hardly a figure to settle for. Russian Deputy Fuel and Energy Minister Garipov said that there had been no oil and gas exploration at all during 1996. Much Soviet-era exploratory knowledge has not been made public, but we know that many Soviet-period plans of exploration did pass into Western oil companies' hands. We do not know what they reveal in their entirety, but it is clear the Caspian's overall capacity figures may well be underestimated rather than overestimated. We know, for instance, that Siberia has vast untapped proven oil fields ranging over three million square kilometres and that the former Soviet Arctic and Far East have barely been explored. Containment or co-operation? President Clinton's "multi-pipeline" strategy adopted in the early 90s to maximise the options forgetting the oil out of the Caspian region, must be seen in the context of diversifying supply routes. This is what US actions over Iran and Iraq suggest. The burning issue is whether needs and detnands are satisfied through cooperation or through conflict. And this is where China's place is of central importance. It is a question of example. The economics of oil as a commodity is one thing, but what is done with it and who benefits? China, the economic giant of Asia's future, with its multi-polar approach to world development, may well become a significant moderating force against the most rapacious of imperialist designs. The message Chinese Premier Li Peng gave at recent World Bank and International Monetary Fund meetings held in September was clear. He said: "There are about 200 countries in the world, and all of them, big or small, rich or poor, strong or weak, are equal members of the international community. Trade discrimination and exchange of unequal values in economic relations should be opposed. "Practices such as bullying weaker or less fortunate members by dint of one's power or wealth should not go unchecked. Neither should countries be allowed to impose sanctions, or threaten to do so, at every turn." New Communist Party of Britain Homepage http://www.geocities.com/CapitolHill/2853 http://ncp.home.ml.org A news service for the Working Class! Workers of all countries Unite! --- from list marxism-general-AT-lists.village.virginia.edu ---
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