Central Ohio Relocalization Effort (CORE), Columbus, Ohio

October 1, 2006
Came across the attached report, Future World Oil Supply, just today. It's uncanny how these folks were aware of our current dilemma waaaay back in 2002. Of particular interest (at a time when political ads supporting the War on Terrorism are all over our TV stations in Ohio - just a month away from mid-term elections) was this conclusion: "These fields are increasingly scarce and only available in regions which have already been known for decades, mainly in Iraq."

Excerpts:
The main facts, and conclusions are:
• The peak of oil discoveries was reached in the 1960s. This is a historical fact.
• This peak in discoveries has to be followed by a peak in production, since we can only produce what has been found before.
• The production peak of individual fields is a historical fact, almost all large oil fields have already passed their production maximum and are in decline.
• The aggregation of the production profiles of individual fields (with their individual peaks) sums up to a production peak of individual oil regions. Historically peak production was reached e.g. in Austria in 1955, in Germany in 1968, in the USA in 1971, in Indonesia in 1977. Recent regions joining the club of countries with declining production rates are Gabon (1997), UK (1999), Australia (2000), Oman (2000) and Norway (2001).
• The aggregate decline of mature regions is getting steeper with every new “member of the club“ . In order just to keep overall production flat ever fewer regions have to increase their production.
• This pattern can already be observed over more than thirty years. Even the quantitative estimates of peak oil production have been sufficiently accurate for more than 20 years. It is very likely that the peak of world oil production will be reached by 2010 at the latest.

Due to diminishing exploration successes, the financial situation of oil companies is deteriorating.
An escape out of this dilemma is only possible for a limited time. These are the main options:
• Companies merge to increase their individual production and reserve situation by simultaneously downsizing their staff.
• Discovery and or development of new large fields with a favourable return on investment. These fields are increasingly scarce and only available in regions which have already been known for decades, mainly in Iraq. The frontier areas (Caspian and deep sea drilling) do not belong to this category.
• Dramatic price increases to compensate for higher production costs. That might be a reason why Exxon has started to point out the fact of oil depletion: perhaps they want to prepare the public for higher prices in future.

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When you compare the conclusions of the attached report AND this Joshua Holand story, The Great Iraq Oil Grab, things look a bit different than the US news reports would have us believe. If you add to the mix the points made in the movie Syriana . . .

http://www.alternet.org/story/36463/
May 22, 2006

Excerpts:
That's the central tenet of corporate globalization. Trade deals like NAFTA -- and the agreements implemented by the WTO -- are designed to "harmonize" countries' domestic laws regulating everything from capital flow to food safety to the environment in order to make them friendly to international investment. In Iraq, that philosophy was taken to an extreme, at gunpoint and with disastrous consequences.

Oil -- the engine that drives Iraq's potentially rich economy -- was the prize that made it worth a full-scale commitment of American armed forces.

~Rewarding the corporations

Saying that Iraq's vast oil reserves -- projected by some analysts to be the largest in the world, greater than Saudi Arabia's -- was the sole motivation for the U.S. invasion of Iraq simplifies a complex issue. Opening Iraq's economy has the potential to reward the Bush administration's corporate allies with enormous windfalls as the country rebuilds after 25 years of war. Iraq has a well-educated work force and is well-positioned on global trade routes. Oil is the cherry on the sundae.

That's why Iraq's new oil laws have to be viewed in a larger context. Gaining control of the bulk of Iraq's oil was a key part of a broader economic invasion of the country, launched by an administration dominated by ideologues who view the agenda of corporate globalization as a vital part of the United States' national, as well as economic, security.

The Coalition Provisional Authority, under L. Paul Bremer (who U.N. envoy Lakhdar Brahimi called the "dictator of Iraq") instituted an infamous set of "100 rules" -- rules that privatized Iraq's state companies, threw open its economy to foreign investment, established a flat tax and instituted a dozen other measures that the big-business right has lobbied for around the world -- largely unsuccessfully -- for decades.

They not only slashed corporate taxes and allowed foreign multinationals to take 100 percent of their profits out of the country, they also gave them -- by law -- the same status as Iraqi firms. That means that all the things countries like Iraq do to direct a portion of their foreign investment income into developing their domestic economies are off the table: Foreign firms can't be asked to invest in the local economy or buy goods from domestic firms or hire a certain number of Iraqi workers or build schools and health clinics or any of the other strategies that are common in poor but resource-rich countries. Saudi Arabia's tax on foreign energy producers would violate Iraqi law.

The same company that's helping draft Iraq's permanent oil law, BearingPoint Inc., planned Iraq's entire economy under a previous contract. All of the Bremer rules worked their way into the Iraqi Constitution as well; Chapter 6, Article 126, specifies that although the rest of the orders issued by the Transitional Authority are canceled, the "100 orders" remain on the books.

~Oily new laws
I recently conducted an interview with Juhasz, who explained the details:

The United States crafted a new oil law for Iraq that provided for production sharing agreements (PSAs), which are contractual terms between a government and a foreign corporation to explore for, produce and market oil. Production sharing agreements are not used by any country in the Middle East or, in fact, by any country that's truly wealthy in oil. They're used to entice investors into an area where the oil is expensive to produce or there isn't a lot of oil.

But Iraq's oil reserves are very easy and cheap to get to. You essentially just stick a pipe in the ground and you get oil. There's absolutely no reason for Iraq to enter into PSAs, but there's every reason for Western oil companies to want them -- they provide the best terms short of full privatization of the oil.

[It's estimated that] Iraq has 80 oil fields. Seventeen of them have been discovered. Under the new oil law -- written into the constitution -- those 17 will be under the control of the Iraqi national oil company.

All undiscovered oil fields are now open to the PSAs. That means, depending on how much oil there is in Iraq, foreign companies will have control over at least 64 percent of Iraq's oil and as much as 84 percent.

PSAs are the worst possible deals for countries; in Latin America some of the worst PSAs gave domestic governments royalties of just one percent of their natural gas revenues.

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Sure prefer Relocalization and Conservation over the infernal wars being waged by the Corporate Transnationals and the governments who support them.

I still remember the slogan from the 60's - "War is Unhealthy for Children and Other Living Things!"
AL