Reviving the Oil Empire in Iraq a Major Priority for U.S. in Post-Saddam Period
WASHINGTON – If getting Saddam Hussein is the top priority in a war with Iraq, protecting the country's oil fields is not far behind.
A U.S. task force is conferring with energy experts, industry executives and Iraqi opposition leaders on how to revive and expand Iraq's multibillion-dollar oil empire once Saddam is toppled.
With Iraq's oil reserves second only to Saudi Arabia's, the Bush administration views revenue from oil exports essential to rebuilding the country once the fighting stops.
But government officials also believe the less said publicly about Iraq's oil, the better, lest they stoke criticism, already heard in much of the Arab world and Europe, that a war with Saddam is as much about oil as it is about terrorism. Similar concerns were heard during recent anti-war protests in Washington.
"A heavy American hand will only convince (the Iraqis) and the rest of the world that the operation against Iraq was undertaken for imperialist, rather than disarmament reasons," warns Edward Djerejian, director of the James A. Baker Institute for Public Policy at Rice University. He co-authored a recent report -- with the Council on Foreign Relations -- on dealing with a post-Saddam Iraq.
That report urged that the Iraqis be allowed to keep control of their oil sector and that U.S. officials work to assure "a level playing field" for international companies competing for repair work and future exploration and development.
Meanwhile, Pentagon planners have spent long hours on a strategy for protecting the oil fields, fearing that Saddam might torch many of the 1,500 wells -- as he did to Kuwaiti oil fields in 1991. Although declining to give details, one senior defense official, speaking on condition of anonymity, says planners intend to secure and protect the fields as rapidly as possible.
The options reportedly range from dispatching special forces into the Iraqi fields during the early fighting to using electronic jamming equipment to hinder a coordinated destruction of hundreds of wells. U.S. planners also hope those who run Iraq's oil industry might balk if ordered to destroy their own wells.
"It's one thing to set the wells of another country on fire, and another to set your own on fire," said Robert Ebel, an energy expert at the Center for Strategic and International Studies.
CSIS has studied possible Iraqi war scenarios and how they might affect future oil production. But Ebel ventures no solid prediction because, he said, "We don't know what kind of Iraq we're going to have in the morning after."
What is certain, he said, is that "there will be a massive investment program to get the (Iraqi oil) industry first back on its feet and then to top it off with expansion."
The cost could reach $40 billion, according to the report Djerejian co-authored.
Energy service companies such as Halliburton and Bechtel, which oversaw the repair of Kuwait's fields, could earn billions of dollars in deals to upgrade wells, pipes, pumping stations and export terminals in Iraq.
And the world's oil giants -- from Exxon Mobil Corp., and ChevronTexaco to Russia's Lukoil -- are looking for a chance to negotiate lucrative development deals with Iraq and reap part of what some believe eventually could be a 6-million-barrel-a-day stream of oil. Last year, Iraq exported about a third of that under a U.N.-sponsored "oil for food" program.
That many of these companies have close ties to top Bush administration officials -- including Vice President Dick Cheney, who once ran Halliburton, and the president himself -- has further fueled speculation among some critics that an attack on Iraq is more about oil and imperialism than about weapons of mass destruction.
The administration strongly rejects any such intent.
"The oil fields are the property of the Iraqi people," and they will be protected and developed for the benefit of Iraq's future, Secretary of State Colin Powell has said in response to such views.
With total reserves estimated at 112 billion barrels, Iraq's major producing fields are in two areas: About 500 wells are 250 miles north of Baghdad, and about 1,000 wells are in the far south of the country. The southern fields are spread across an area about the size of New Jersey, while the northern fields are smaller, about the size of Rhode Island, Pentagon officials say. Iraq's undeveloped western desert region is also believed to contain vast amounts of yet undiscovered oil.
Who will run the oil industry in a post-Saddam Iraq and decide which companies get lucrative contracts to repair its infrastructure and develop new fields are unanswered questions. Saddam's regime funneled its oil contracts primarily to Russian and French oil companies that are determined to press their continued stake in Iraq.
Also unanswered is how a cash-starved Iraq, under pressure to pump as much oil as possible, will deal with OPEC's strategy of limiting production to keep prices steady. The Saudis and other OPEC members will not let Iraq overproduce and drive down world oil prices, one source close to the Saudi oil industry said in an interview, asking not to be identified further.
How the United States deals with these questions will be critical, Middle East experts and energy industry analyst say.