File spoon-archives/marxism-general.archive/marxism-general_1997/marxism-general.9710, message 188


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

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Workers of all countries Unite!



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