Peter Galbraith and Oil Politics

So while Galbraith was involved in attempting to help write the Iraqi constitution he was at the same time involved with an oil company that eventually made deals with the Kurdish regional govt. As the article notes out occupiers are not supposed to do such things as change radically the laws of the country they are occupying but of course the US paid no attention to international law. It never does if international law interferes wiht what it wants to do.

US Diplomatic Adviser’s Troubling Role in Oil Politics
Posted By Helena Cobban
In 2003, US diplomatist Peter Galbraith resigned at the end of a distinguished, 24-year government career. Over the years that followed, he worked as a contract-based adviser to leaders in Iraq’s Kurdish community, while also arguing passionately in public media that Iraq’s Kurds should be given maximum independence from Baghdad – including full control over any new sources of oil.
But in June 2004, more quietly, Galbraith also established a small, U.S.-registered company, Porcupine, that held a five percent stake in a newly exploited oilfield in Iraqi Kurdistan, a Norwegian daily revealed last Saturday.
The daily, Dagens Næringsliv, had been investigating the increasingly troubled relationship between Porcupine and a privately-owned Norwegian firm, DNO, which partnered with Porcupine in the Kurdish-Iraqi oil project. Journalists at the daily said that discovering that Porcupine’s hitherto secretive owner was Galbraith came as a complete surprise.
Galbraith also won international headlines in another recent Norway-related story. In late September, he broke publicly with Kai Eide, the Norwegian head of the United Nations Assistance Mission in Afghanistan (UNAMI), over how to respond to allegations of fraud in Afghanistan’s August election.
Galbraith had been working as Eide’s deputy since March. He resigned in late September, accusing Eide of trying to hide evidence of large-scale fraud committed during the election.
There are many parallels between the constitutional/legitimization challenges the US occupation force and its allies face in Afghanistan today and those faced by the US and its allies in Iraq, 2003-08.
One key challenge for US decision-makers is how to generate a local "host nation" government using the democratic processes that most US citizens say they want – but one that is also prepared to work very closely indeed with Washington, which most citizens of the occupied countries are reluctant to do.
Prior to the 2003 US invasion of Iraq, Peter Galbraith was a strong voice advocating the invasion. Immediately after the invasion, he was one of three or four high-level US officials and advisers who started designing a completely new Constitution for the country.
(The Fourth Geneva Convention of 1949 specifies that an occupation force should keep existing governance and constitutional arrangements in place, as far as possible, until it withdraws.)
Galbraith had long been a strong sympathizer of the Iraqi Kurds’ desire for strong autonomy or even complete independence from Baghdad. In his 2006 book The End of Iraq, he wrote that he started consulting with the Kurdish leaders on constitutional issues "two weeks after the fall of Saddam Hussein."
He continued those consultations through the time of the U.S.’s promulgation of a "Transitional Administrative Law" (TAL) in March 2004 and the adoption of a more permanent new Iraqi Constitution in October 2005.
Adoption of the Constitution was achieved through an Iraq-wide referendum, conducted under the control of the US military.
In both the TAL and the 2005 Constitution, provision was made for any one of the country’s 18 provinces, or a group of them, to declare the formation of a "region" that would have extra powers of self-governance. In practice, the only "region" that has formed is the Kurdish Regional Government (KRG), comprised of Iraq’s three majority-Kurdish provinces.
In the TAL, the principles for dividing the country’s oil revenues were left vague. In the 2005 Constitution, it stated that revenues from the country’s existing oil fields, many of which were nearing depletion, would continue to be controlled by Baghdad. It said the "regions" could have a lot more control over any new oil fields to be developed – though the extent of that control was still left vague.
In the meantime, Galbraith and his Porcupine company had acquired their five percent interest in the KRG’s new Tawke oil field, and entered into its partnership there with DNO.
Galbraith also argued hard in the discussions over the 2005 Constitution for a clause defining Iraq’s governance system as a fundamentally decentralized one in which all residual powers lie with the provinces and "regions." He won that argument, and the clause was put in.
The distinguished Egyptian-American law professor Khaled Abou El Fadl has commented on Iraq’s constitution-writing process that it involved, "a lot of authoritative input by various elements in the US as to not just what the Iraqi commitments are going to be but what the occupying country deems to be acceptable."
The radical decentralization of powers that was written into the 2005 Constitution at a time of strong US influence in the country continues to plague Iraq today. This is so even though the US agreed last November to completely withdraw its troops from Iraq; that withdrawal is now well underway, and Washington’s power to exert direct influence over Iraqi politics has eroded considerably.
With Washington’s ability to bolster the Kurds’ position in intra-Iraq negotiations now considerably reduced, the country’s Kurds, who form under 20 percent of the national population, and its majority Arabs have gotten into a series of new tussles for power. Not surprisingly these involve both constitutional issues – and oil.
Iraq is scheduled to hold its next nationwide parliamentary election on Jan. 16, 2010. The current lawmakers had a deadline of last Thursday to finish defining the rules under which the election will be held. They missed it – though there is some hope they can reach agreement on this point within the coming days.
This disagreement is over whether the "lists" that each party or coalition will present in each of the country’s province-sized constituencies will have a list of names that is "closed," that is unchangeable, or whether on polling day voters can change the order of the names to reflect their own preferences.
This matter pits the Kurdish parties (who want "closed" lists) against all the country’s other parties, who profess to prefer "open" lists.
The Kurdish and non-Kurdish parties are at odds, too, over the potentially explosive issue of how voting rolls will be drawn up in the oil-rich environs of the mixed-ethnicity city of Kirkuk.
The province Kirkuk is located in, Salah ad Din, is not affiliated with the KRG. Most Kurds strongly want to bring it under KRG control, while most members of Iraq’s Arab and ethnic-Turkoman communities strongly oppose that. (Two deadlines for holding a citywide referendum on Kirkuk’s future, as mandated in the 2005 Constitution, long ago expired.)
Iraq’s Arabs and Kurds are also, not surprisingly, waging a stiff war over control of oil exports and revenues. Last June, the Tawke oil field (in which Galbraith once invested) was the first of the KRG’s new oilfields to come online. Its operators, who reportedly comprised a 55 percent share owned by DNO, a 25 percent share owned by a Turkish company, and a 20 percent stake directly owned by the KRG, started "exporting" oil to the main body of Iraq.
But the Baghdad government refused to pay the Tawke consortium for this oil, arguing that the whole commercial arrangement whereby the KRG had developed the field was quite illegal.
For their part, the Kurdish parties that are still strong in the central government are threatening to hold up a deal Baghdad wants to conclude with a Chinese company to develop some massive oilfields in southern Iraq.
Meanwhile, the KRG and DNO have had their own, apparently serious, falling-out, which is being litigated in London. It was by investigating the facts of that case that Dagens Næringsliv discovered the clear material interest that Galbraith earlier had in the whole KRG-DNO deal.
His Porcupine company was cut out of the deal at some point in 2008, for reasons that remain murky. But that development did not negate the fact that for the preceding four years, while Galbraith was an influential participant in Iraq-related constitutional and political discussions, he also had an undisclosed financial interest in a KRG-authorized oil development venture.
Here in the US, Galbraith has long been associated with the "liberal hawk" wing of the Democratic Party, which has argued since the early 1990s that US military power can, and on occasion should, be used to impose a U.S.-defined human rights agenda in various parts of the world.
Many members of this group have been liberal idealists – though some of those who, on "liberal" grounds, gave early support to President George W. Bush’s decision to invade Iraq later expressed their regret for adopting that position.
Galbraith has never expressed any such regrets, and last November, he was openly scornful of Bush’s late-term agreement to withdraw from Iraq completely. The revelation that for many years Galbraith had a quite undisclosed financial interest in the political breakup of Iraq may now further reduce the clout, and the ranks, of the remaining liberal hawks.

Iraq Hydrocarbons law delayed until after Jan. election.

The oil law was one of the famous benchmarks for progress ages ago but there is still no federal law. Kurdistan went ahead with its own law and has a number of foreign contracts that have not been approved by the Iraqi federal government. As the article notes there was an auction of contracts for technical support but few oil giants bid since they are waiting for better terms and an ownership stake. No doubt after the elections whichever party is in power will try to sell out to the big oil powers. However, before they do that they will have to solve the standoff between the Kurds and the rest of Iraq as to who controls what and how revenues will be shared.

Iraq delays hydrocarbons law until after election: MP

BAGHDAD (AFP) – Iraq has delayed the discussion of a stalled hydrocarbons law, seen as key to the country ramping up its oil production, until after parliamentary elections in January, a senior MP said on Saturday.
The proposed law, which would regulate the oil sector and divide responsibility between the central government in Baghdad and Iraq's provinces, has been held up for three years due to disagreements between MPs from the country's majority Shia and minority Sunni, Kurd and other communities.
"There is no agreement on the contents of the oil law ... because this government wants the management of the oil sector to be centralised," said Ali Hussein Balo, a Kurd and chairman of the parliamentary oil and gas committee.
"Due to these conflicts, we have decided to delay the oil law enactment until after the election," he told AFP.
Iraq hopes to be able to pump six million barrels per day, up from current output of around 2.5 million, within the next four to five years as new projects come online, Oil Minister Hussein al-Shahristani has said.
The country has the world's third-largest proven reserves of oil, with more than 115 billion barrels, behind only Saudi Arabia and Iran.
But investment in Iraq's ageing energy infrastructure has been hampered by delays to the hydrocarbons law.
When the government auctioned eight major energy contracts in June, only energy giants BP and China's CNPC won a bid, agreeing to receive only two dollars a barrel to operate the giant Rumaila field, which has known reserves of 17.7 billion barrels.
It was the first big upstream deal between Iraq and foreign oil majors since nationalisation of the country's oil production about four decades ago.
The second round of bidding for Iraqi oil contracts is due in the first half of December, Shahristani said last month.
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Dubai Summit: Iraq Oil Law

Fight rages over Iraq oil law

By Ben Lando Apr 28, 2007, 1:11 GMT

COMMENT:
No one seems to remark on the irony that the Iraq oil law discussions seem to go one outside of Iraq. I suppose the big oil people are not too comfortable with the security situation in Iraq although they could always find a bunker in the Green Zone!
There is little coverage of the Dubai meetings in the mainstream press. Articles only appear in specialist journals that deal with oil matters. There is to be another big gathering the end of May. It seems as if the oil law will not make it through parliament in time for the meeting.


WASHINGTON, DC, United States (UPI) -- Discussions turned contentious among the more than 60 Iraqi oil officials reviewing Iraq`s draft hydrocarbons bill last week in the United Arab Emirates.

But the dispute highlighted the need for further negotiations on the proposed law that was stalled in talks for nearly eight months, then pushed through Iraq`s Cabinet without most key provisions.

Tariq Shafiq, one of three authors of the law, said he attended the Dubai summit 'reluctantly,' at the request of Oil Minister Hussein al-Shahristani.

'I thought it would help,' Shafiq said, hoping all Iraqi sides in the debate over its oil law would meet and iron out their differences. 'Apparently it did not.'

Petroleum Intelligence Weekly reports talks in Dubai led to 'heated exchanges.'

Instead, the voices of those who disagree with the law or, like Shafiq, oppose what it has become since the initial draft and how it was kept from the public, were not given part of the platform.

'Had there been genuine interest in having consensus,' Shafiq said, 'the two differing parties should have sat -- not publicly in front of the television -- to discuss with an open heart how you can reach a compromise. But this apparently was not their aim.'

Most of the law, which is better referred to as a regime, or a set of interworking laws, has yet to be finalized. But the main sticking points have the central government and Kurdistan Regional Government at loggerheads still.

Although the Bush administration, led by former U.S. Ambassador to Iraq and now U.N. Ambassador Zalmay Khalilzad, praised passage of the framework law when Iraq`s Cabinet approved it late February, it doesn`t quite qualify as one of the benchmarks he has set for success in Iraq.

'To give every Iraqi citizen a stake in the country`s economy, Iraq will pass legislation to share oil revenues among all Iraqis,' Bush said in a national address Jan. 10. But neither the KRG nor the central government has agreed on the percentage of oil revenue to be shared. The KRG wants an automatic mechanism to redistribute the funds, while the central government wants it collected to the central bank, to be doled out by the Iraqi finance minister.

Before any more development of the oil sector, struggling to produce 2 million barrels per day, both sides must agree on which of the 116 billion barrels worth of fields will be under the control of the central government -- most likely via the reconstituted Iraq National Oil Co. -- and which fields the regions and governorates will control. The Iraqi constitution, passed in 2005, was written vaguely to garner enough support, but fueled the current disagreement over control of oil reserves, the world`s third-largest.

Shahristani told reporters on the sidelines of the Dubai meeting that Parliament would take up the law this week -- which didn`t happen -- while Ashti Hawrami, the KRG`s oil minister, vowed Kurdish parliamentarians would veto it as written.

Negotiations continue on other aspects, such as the contract models allowed to sign with much-needed investors and the exact roles the federal oil and gas council, Iraq Oil Minister and INOC will play.

All this is supposed to be done by May 31, a deadline set by a Bush administration that needs a progress marker for Iraq, a fragile Iraqi central government that is falling apart and the KRG that is ready to continue development in its semi-autonomous and relatively peaceful northern region.

'I just don`t see that. It`s just too much,' said Frank A. Verrastro, director and senior fellow of the energy program at the Center for Strategic and International Studies, a centrist Washington think tank. The framework is important, he said, but it has no value standing alone.

He said at least in Dubai they realized there are 'significant issues' to resolve still.

There are many who oppose the law. Iraq`s oil unions have threatened to shutdown production if foreign companies are allowed too much control. Many political and sectarian blocs also feel that way. And Sunnis, a minority group without oil land and the power wielded while Saddam Hussein reigned, fear they`ll wind up without if the central government is weak.

'If the law does not state a precise formula for that distribution, then the law is fairly meaningless,' said Thomas Mowle, an associate political science professor at the U.S. Air Force Academy who served in the Strategy, Plans, and Assessment Division, Headquarters Multinational Force-Iraq, Baghdad, from August to December 2004.

'If the law includes the distribution of revenue from future oil projects, then the Kurds are likely to reject it as unconstitutional,' he said. 'If the law does not include such revenue, then it will accomplish little toward national reconciliation.'

Shafiq said 'the majority of the oil technocrats are against' the law as written. He said the eight months negotiators took after the drafters were finished was too long. And it was kept secret from the public and parliamentarians, which then added to the politicization.

'The weak thing about their procedure is they never published the draft,' Shafiq said. 'They should have had teams to explain this to unions, to intellectuals, to nongovernmental organizations, to the parliamentarians, and then get the gist of their reactions before they start finalizing a draft.'

And then, with the Bush administration needing results, officials leaned on negotiators to pass something. Out came the framework. Khalilzad announced its passage, and the KRG sent out a news release.

'That was a big mistake,' Shafiq said.

(Comments to energy@upi.com)

Copyright 2007 by United Press International

Iraq really is about Oil!

This is a satire from an Australian paper.

Assault & Armed Robbery, Big-Time!
World News by monsveneris - Apr 21, 2007 - 12:14 PM

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Having lost control of its catastrophic wars of choice in Afghanistan and Iraq, the rogue Bush Administration flounders about in a sea of blood and oil, desperate to "get out", desperate to "finish the job", and just plain desperate. Borrowing from Israel's disasterous policies, US occupation forces are constructing concrete walls around suburbs in an attempt to isolate insurgents - that is, Iraqi nationalists - while popular opposition to Bush's failed smash-and-grab grows with the body count. Time - and history - is on the side of the Iraqis...
Time to Do the Math in Iraq
by Ted Nace
Published on Wednesday, April 18, 2007 by CommonDreams.org

In 1532, after capturing the Inca emperor Atahualpa, the Spanish conquistador Francisco Pizarro issued an unprecedented demand: fill a room, 22 feet long, 17 feet wide, and 8 feet tall, with gold. The Incas complied, but Pizarro executed Atahualpa anyway and promptly shipped the tribute to Spain. At today’s prices of gold, the value of the ransom (3,000 cubic feet of gold at $10 million per cubic foot) would be approximately $30 billion.

That’s a lot of money, and it confirms that as conquerors the Spaniards had a clear vision of what they were up to. Conversion of heathens was fine. Conversion plus precious metals was even better.

Applied to the Iraq War, the traditional logic of imperial conquest clears out the rhetorical cobwebs and clarifies the mind. After all, when you rule out “senseless violence,” there are really only two reasons that human beings fight. One has to do with abstract things-honor, dignity-as in “My family’s venerable name has been besmirched. Scoundrel, we meet at dawn.” The other has to do with concrete things-stuff-as in the actions that typically follow upon a sentence like, “Give me your shoes, punk.”

But most compelling of all is a conjoining of the abstract and the concrete, as in: “We’re spreading democracy-oh, and by the way, there’s a lot of oil in Iraq.”

Of course, everyone is aware of that oil, but it’s fair to guess that if pressed to calculate its actual value, most Americans would probably plead for mercy.

That number, however, can hardly be lost on the leadership of the United States. Bush, Cheney, and Rice, of course, all hail from the oil industry. They do know the value of a barrel, and they know how to measure a reserve. Though Bush may claim to dislike “fuzzy math,” it’s doubtful that he’s lost in the zeros on this one.

For the rest of us, it’s time to do the math.

According to a 2002 estimate by the Energy Department, the quantity of proven, probable, and possible reserves in Iraq is approximately 330 billion barrels. At today’s $64 per barrel, that’s $21 trillion dollars worth of oil.

By the way, that’s $70,000 per U.S. citizen or $200,000 per household (according to population estimates for 2007). Certainly enough to solve most people’s credit card issues.

Maybe this “war for oil” wasn’t such a bad idea after all!

But wait a minute. Are we really in Iraq to grab the oil? After all, America may be an empire, but is it really just like those ancient empires where the victor returned to parade through the streets with legions of captured slaves, tied together at the neck, and wagons obscenely piled with tribute?

Donald Rumsfeld, for one, denied the accusation in no uncertain terms. When asked by NBC’s Steve Kroft his response to those who claimed it was a war for oil, Rumsfeld retorted: “Nonsense. It just isn’t. There are certain things like that, myths, that are floating around. I’m glad you asked. It has nothing to do with oil, literally nothing to do with oil. … Oil is fungible, and people who own it want to sell it, and it will be available.”

Rumsfeld was correct in saying that whether or not the U.S. invaded Iraq, it would in all likelihood still have access to Iraq’s oil over the long term, simply by buying it on the open market. But the comment was disingenuous in that it ignored the immense potential for whoever controlled the resource to extract profit-today’s equivalent of slaves and glory wagons. And Iraq’s oil, which ranks among the cheapest in the world to pump ($.50 to $1.00 per barrel), is nothing if not profitable.

More telling than such disavowals are actual pieces of legislation currently pending in both the United States and Iraq. On the U.S. side, a little-reported portion of both the Senate and the House versions of the current appropriations supplemental, currently headed for conference committee, is a “benchmark” requiring the Iraqi Parliament to pass a new statutory framework for its oil industry known as the Iraq Oil Law.

Meanwhile, in Iraq, after years of behind-the-scenes drafting directed by the occupation authorities, the text of the Iraq Oil Law was leaked to the media shortly before being sent to Parliament by Prime Minister Maliki’s cabinet. The most notable feature of the law is a revival of an exploitive type of contract widely used prior to the rise of Arab nationalism in the 1960s, known as a production sharing agreement. Although the Oil Law uses an alternative term, “exploration and production contract,” the effect is the identical. The new arrangement would allow the bulk of Iraq’s reserves to be controlled by outside oil companies, privatizing what has until now been a nationalized resource under the auspices of the Iraq National Oil Company. It specifies the royalty that will be paid to Iraq: “12.5 percent of gross production, measured at the entry flange to the main pipeline.” And as if the rest of the law were not already explicit enough, Article 35(A) reiterates: “Holders of exploration and production rights may transfer any net profits from petroleum operations to outside Iraq after paying taxes and fees owed.”

If the law is passed, Iraq will part ways with the other major Middle Eastern oil producers, including Saudi Arabia, Kuwait, Libya, and Iran. Those countries all maintain national control over oil, bringing in foreign corporations only as needed using technical service contracts, under which control is not relinquished and there is no sharing of profits.

Significantly, the Democratic leadership brushed off suggestions by Congressman Dennis Kucinich that the Oil Law benchmark be deleted from the supplemental. Thus, when it comes to supporting the privatization of Iraqi oil, it’s hard to find even a crack of daylight between the positions of the Bush Administration and the Democratic Party leadership.

Why are we in Iraq? Sometimes the simplest explanations are the best. Philosophers call that the lex parsiminiae principle; others call it horse sense.

It really is the oil, stupid.

And by the way, stand back Pizarro. Your ransom doesn’t look so fantastic any more. You brought home $30 billion. We’re on the verge of $21 trillion. That room full of gold was a nice start. Let’s see: according to my arithmetic you only need to fill up 699 more rooms like that and you’ll tie our new record for spoils of war.

Ted Nace is the author of Gangs of America: The Rise of Corporate Power and the Disabling of Democracy (Berrett-Koehler, 2003, 2005).

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Chevron key sponsor of Iraq Oil, Gas, Petrochemical and Electricity Summit

Perhaps the big players expect the Oil law to have passed through parliament by that time. No word on what is happening to the bill.


Chevron confirmed as key sponsor of Iraq Oil, Gas, Petrochemical & Electricity Summit

Posted: 13-04-2007 , 16:36 GMT


Chevron has confirmed its role as a sponsor of the forthcoming Iraq Oil, Gas, Petrochemical & Electricity Summit, which will take place on 28-30 May 2007.

The summit has been organised to bring together key Iraq Government decision makers in the energy sector and international operators seeking partnership opportunities in both the upstream and downstream industry.

The summit will welcome representation from the Iraqi Ministries of Oil, Industry & Minerals and Electricity, as well as the Iraq Energy Council, Investment Promotion Agency and the Kurdistan Regional Government (KRG) Ministries for Natural Resources, Industry and Electricity. It will also host many of the state companies operating under the Iraqi Ministry of Oil and senior representatives from the Iraq Reconstruction Management Office (IRMO).

This historic landmark event will be the first of its kind for the most important sectors of the Iraqi economy.

Chevron Corporation is one of the world's leading energy companies. With approximately 56,000 employees, Chevron subsidiaries conduct business in approximately 180 countries around the world, producing and transporting crude oil and natural gas, and refining, marketing and distributing fuels and other energy products. Chevron has been a partner in the Middle East for over seven decades with major operations currently in Saudi Arabia, Kuwait, and Qatar.

With the world’s second largest proven oil reserves, Iraq is well positioned to be a major contributor to global energy markets. International companies have the unique opportunity to help Iraq rebuild and develop its energy resources for the benefit of the Iraqi people. With the recent developments around a national hydrocarbon law, the timing of the summit could not be better.

For more information about Chevron, please visit: www.chevron.com










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