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| World Marketplace |
Shifting Economic Sands
By Jean-Francois Seznec
04/01/2004
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With capital needs being what they are, the Ministry of Oil
(run by technocrats from the Hussein regime who have been kept in place because
no one else knows how to do their job) will probably reopen the negotiations
with the IOCs as soon as the new government is installed. There are unofficial
discussions going on already. The Coalition Provisional Authority has a number
of so-called advisors in the Ministry, including a former president of Shell
Oil. U.S. and U.K. firms are likely to be the main beneficiaries of new
production sharing arrangements, and French and Russian companies, in
particular, will find their preexisting MOUs worthless.
| Cheap feedstock could help Iraq become a major world producer of fertilizer
and petrochemicals. |
The civil servants at
the ministry might prefer to work with national oil companies from Gulf states,
such as Saudi Arabia’s Aramco, which has experience in oilfields similar to
those of Iraq. But Aramco has never invested in exploration outside of its home
country, and the general perception among the Gulf companies is that the United
States is going to keep them out.
A Perilous Divide
Investment capital for the oil industry will most likely
flow into the Shi’ite dominated south, rather than into the north. The fields of
the south have enough production potential to reach 6 million barrels a day
within five to six years, so oil producers have no incentive to venture into the
perilous north. The export routes from the southern fields to the Persian Gulf
are short, and go through territory inhabited by Shi’a Arabs, who, at this time,
are less likely than the Sunnis in the north to sabotage oil installations.
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