This, plus the fact that 鈥淚raq鈥檚 oil production costs are among the lowest in the world, makes it a highly attractive oil prospect,鈥� says the department鈥檚 latest country analysis. No wonder many critics believe that the campaign to topple Saddam Hussein is really a battle for Iraq鈥檚 oil.
Iraq is peppered with oil fields. The biggest are in the far south around Basra and in the Kurdish north. Military strategists predict that troops entering Iraq from the Gulf and overland from Turkey would first aim to secure these fields. The goal would be both to cut off supplies to Saddam鈥檚 military and to keep the oil safe for future use by preventing sabotage by a desperate Saddam or capture by warring factions emerging from Saddam鈥檚 shadow.
The oil fields and pipelines are in a bad state. Many were bombed during the last Gulf war and have never been repaired. UN sanctions mean many have no markets in any case. According to the Iraqi government a third are not in production.
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All that would change if Saddam were overthrown and UN sanctions ended. The world is likely to grow increasingly thirsty for Iraqi oil. 鈥淭he US in particular is ever more dependent on oil imports, especially from the Middle East, which has 70% of world reserves,鈥� says Paul Rogers of the University of Bradford鈥檚 department of peace studies. 鈥淭hirty years ago, the US was virtually self-sufficient in oil, but it now imports over 60 per cent of its needs.鈥�
With fears about global warming barely registering inside the Bush administration, the US Department of Energy says it expects US oil consumption to rise by a staggering 48 per cent between now and 2020. 鈥淭here is a deep and pervading recognition at the heart of the Bush administration that the most significant future vulnerability for the US is its steadily growing dependence on Gulf oil,鈥� says Rogers.
Rogers says securing foreign oil supplies has been a central goal of US foreign policy for 30 years. The Iraq war, from this perspective, represents a ratcheting-up of this strategy. Some hawks in Washington, such as the influential Heritage Foundation, also see it as a chance to break the grip of, or even destroy, OPEC and permanently lower oil prices by raising supplies.
This strategic insecurity is fed by growing fears about Saudi oil supplies, should radicals unseat the current regime there, and increasingly pessimistic predictions of future world oil supplies from US oil companies. Last year, Exxon admitted that new oil discoveries were falling badly behind rising demand. Worldwide, existing oilfields can only meet half the demand for oil expected by 2010, said Exxon director Harry Longwell in the journal World Energy.
Certainly, US oil companies look forward to 鈥榩rivatising鈥� the Iraqi oil industry after Saddam鈥檚 fall. They have already held talks with leaders of the Iraqi National Congress, the main opposition group. They are not alone in eyeing Iraqi oil.
French, Russian, Chinese and other oil companies have established oil links with Saddam, in the expectation of cashing in once UN sanctions are over. But many are severing those links and cosying up to the Iraqi National Congress. They will have heard CIA director James Woolsey say last autumn, 鈥淔rance and Russia鈥� should be told that if they are of assistance in moving Iraq toward decent government, we鈥檒l do the best we can to ensure that the new government and American companies work closely with them.鈥�
That could be bad news for British oil chiefs who may expect a payback for the UK鈥檚 support for the war. Recently Lord Browne, chief executive of British oil giant BP, claimed that his company was being squeezed out in deals between US oil companies and the Iraqi National Congress and called for a 鈥渓evel playing field for the selection of oil companies to go in there if Iraq changes its regime.鈥�