Saturday, April 21, 2007

Iraq may have even greater oil reserves

This is from Arab newspapers. As the one article mentions if many of the new reserves are in the western desert this will be in mostly Sunni territory and will make the oil law perhaps a bit more palatable to them. However, the Kurds are not satisfied with it as it is.



Daily Column
Iraqi Papers Saturday: Oil Politics
In Opinion Piece, al-Hayat Writer Lambasts Fouad Ajami
By AMER MOHSEN 04/20/2007 8:12 PM ET
Az-ZamanAl-Mada newspaper quoted, on its front page, a recent report by IHS, an energy-focused firm, affirming that Iraq’s oil reserves may exceed 200 billion barrels. The report also claimed that Iraq’s Western Desert, which has not been extensively explored for oil resources, may hold over 100 billion barrels of crude oil. For the sake of comparison, US oil reserves stand at a little over 20 billion barrels.

Another element of the report, emphasized by al-Mada, was the fact that the cost of oil production in Iraq is extremely low (estimated by the report to be under two dollars per barrel), and that oil production can be doubled within a short span of time once the oil infrastructure is updated.

IHS’s report confirmed Iraqi claims from the 1980s that the country holds over 200 billion barrels in oil reserves. At the time, many oil experts assumed that the Iraqi estimations were exaggerated, and meant to increase Iraq’s production quota in OPEC. However, Iraq remains notably under-explored for oil reserves, and all estimations of possible crude deposits in the west of the country rely on geological data and projections that cannot be proven until test wells are drilled and actual deposits are verified.

The report comes at an opportune time, when the Iraqi parliament is debating the new proposed oil law, which the government is adamant to pass. Its conclusions can have a political significance on several levels.

On the one hand, the claim about large deposits in the Western Desert can reassure Sunni Arabs that the new oil law (which gives larger control over oil contracts and production to the local governments) will not leave them at a disadvantage compared to the Southern and Kurdish provinces. Most of the areas west of the Euphrates are largely inhabited by Sunni Arabs.

On the other hand, the report’s claims about the low cost of production and “minimal investment” needed to tap into Iraq’s oil wealth may undermine the government’s argument for passing the oil law. The Iraqi government claimed that foreign companies should be charged with the exploitation of Iraq’s reserves because of the need for sophisticated technology and massive investments in the oil sector. The fact that oil may be extremely cheap to produce will make it hard to justify generous packages for foreign investors (some Iraqi deputies claimed that oil companies may receive up to a 40% cut of the oil they produce –- which massively exceeds international industry standards).

In al-Hayat, Raghida Dirgham, the newspaper’s New York correspondent, wrote a long opinion piece critiquing those who present the Iraq war as a victory for Shi'as against Sunnis.

Dirgham’s piece was a thinly-veiled attack against the recent writings of Fouad Ajami, professor of politics at John Hopkins and staunch supporter of the invasion of Iraq. Dirgham used a play on words to refer to 'Ajami: “such people are known for never challenging Israel, not even once, in their political, intellectual and academic history. They are also known for an intense and automatic hatred towards anything that is Palestinian, despite their 'Ajami-Arab origins.”

The term “'Ajami” used by Dirgham has a double connotation: it refers to Professor 'Ajami’s last name, but is also a classical Arabic term for “Persian.” Perhaps a reference to the fact that Fouad 'Ajami was born to a Shi'a family in Southern Lebanon whose name points to Iranian roots.

Dirgham argued that a discourse of a “Shi'a victory” in Iraq will only lead to further civil strife and fragmentation in the region as a whole, and will benefit Iran and Israel. In practical terms, such a strategy will reinforce militias and local identities at the expense of the state and national cohesion, said Dirgham.

Furthermore, such a logic, Dirgham claimed, will “implicate” the US in perpetual wars in the region, and will not benefit the Shi'a minority, which will be seen as “isolationist” and combative by the Sunni majority in the Middle East.

The “promoters” of such a discourse, Dirgham affirmed, do not bear the interest of Shi'as or the US in mind. They simply want to increase their clout within the US administration, using their status as “self-hating” Arabs and proponents of Israel as a “condition of admission” into the American halls of power, she writes. “The complex that these men suffer from,” Dirgham added, “is their deep hatred for anything that is Arab.”

Lastly, Al-Mada reported that the government’s answer to the latest bombings in Baghdad will be the installation of bomb detectors at the capital’s entrances. Such measures, officials believe, will prevent terrorists from bringing explosive-laden vehicles into the city.

In parallel, al-Mada said, the large 'A'dhamiya district in central Baghdad will be surrounded with a 3-meter-high concrete barrier that extends over five kilometers, encircling the district. The newspaper added that the construction of the wall has begun on the 10th of April by a US army engineering unit.

Plans to surround “hot” neighborhoods with walls and barriers have been discussed in the media lately, but al-‘A'dhamiya will be the first Baghdad neighborhood to witness such a project.

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