The U.S. and Britain are working hard to begin Iraqi oil pumping

BAGHDAD, May 17 (IslamOnline.net & News Agencies) – The U.S. “adviser” to Iraq’s oil ministry suggested it would be better for Iraq to export as much oil as it could without being limited to OPEC quotas, a step European analysts expect would undermine heavyweight oil producers Saudi Arabia, Kuwait and Iran, a leading American newspaper reported Saturday, May 17.

“Historically, Iraq has had, let's say, an irregular participation in OPEC quota systems,” Philip J. Carroll, who formerly headed Royal Dutch Shell in the United States and now chairs a commission advising Iraq's oil ministry, was quoted as the Washington Post as saying.

“They have from time to time, because of compelling national interest, elected to opt out of the quota system and pursue their own path. . . . They may elect to do that same thing. To me, it's a very important national question.”

With such a move, postwar Iraq might break ranks with the Organization of Petroleum Exporting Countries, asserted the Post.

Flows of Iraqi oil -- the world's second-largest oil reserves -- to the world market unconstrained by OPEC quotas could further erode the cartel's ability to set prices and might even trigger a price war, eating into the profits of its member countries, said the paper.

It quoted European analysts as charging that Washington, by exploiting the Iraq war, was seeking to break OPEC, particularly the world's largest oil producers, Saudi Arabia, Kuwait and Iran.

Such an outcome would surely delight the Bush administration as well as buyers of gasoline in the United States, the world's largest oil consumer, the American daily said.

 ‘Null & Void’

Carroll, in effect, went far beyond that. He said that oil contracts signed under the old regime are now potentially null and void or subject to renegotiation.

He asserted that the old system of preferential treatment ended with the ouster of Iraqi president Saddam Hussein.

During Saddam’s era, the Iraqi government had an official policy of steering contracts for drilling services, joint production and machinery to companies based in France, Russia and China, whose governments tended to be more supportive of Iraq in the United Nations Security Council.

“There will have to be an evaluation by the ministry of those contracts and a determination of whether they were made in the best interests of the Iraqi people.

“Certainly, where contracts are, shall we say, excessively beneficial to one party, and that party is not the Iraqi people, and there is a legal basis for not going forward, then I would expect that the ministry would want to have another look,” said Caroll.

Iraq's oil production historically has comprised 90 percent of its economy while bringing in nearly all of its foreign exchange.

“That flow of oil and money is needed more than ever,” Carroll said.

“I do believe the assertion that Iraq is going to need every bit of financial wealth that it can lay its hands on,” he added.

Carroll also warned of the pitfalls of maintaining a system dominated by the ministry and the state companies, asserting the importance of privatization.

“Highly centralized models are not always as efficient as they should be…They are prone to corruption. They tend to be more prone to the government seeing them as a cash cow,” he said.

He confirmed a report in the Los Angeles Times that he continues to own substantial stock in Fluor, which has already announced intentions to bid on contracts to reconstruct Iraq's oil industry. He said he also has large holdings in Shell.

The United States and Britain worked assiduously at the United Nations to win broad international consensus for a resolution to lift economic sanctions on Iraq, in order to begin selling oil to “finance reconstruction.”