www.csua.org/u/61b -> www.currentconcerns.ch/archive/2004/01/20040118.php
William Engdahl Today, much of the world is convinced the Bush Administration did not wage war against Iraq and Saddam Hussein because of threat from weapons of mass destruction, nor from terror dangers. Still a puzzle, however, is why Washington would risk so much in terms of relations with its allies and the entire world, to occupy Iraq. There is compelling evidence that oil and geopolitics lie at the heart of the still-hidden reasons for the military action in Iraq. It is increasingly clear that the US occupation of Iraq is about control of global oil resources. Control, however, in a situation where world oil supplies are far more limited than most of the world has been led to believe. If the following is accurate, the Iraq war is but the first in a major battle over global energy resources, a battle which will be more intense than any oil war to date. It is about fixing who will get how much oil for their economy at what price and who not. Never has such a choke-hold on the world economy been in the hands of one power. The era of cheap, abundant oil, which has supported world economic growth for more than three quarters of a century, is most probably at or past its absolute peak, according to leading independent oil geologists. If this analysis is accurate, the economic and social consequences will be staggering. This reality is being hidden from general discussion by the oil multinationals and major government agencies, above all by the United States government. Oil companies have a vested interest in hiding the truth in order to keep the price of getting new oil as low as possible. The US government has a strategic interest in keeping the rest of the world from realising how critical the problem has become. At that point, the world economy will face shocks which will make the oil price rises of the 1970s pale by contrast. In other words, we face a major global energy shortage for the prime fuel of our entire economy within about seven years. Peak oil The problem in oil production is not how much reserves are underground. The problem comes when large oilfields such as Prudhoe Bay Alaska or the fields of the North Sea pass their peak output. Much like a bell curve, oil fields rise to a maximum output or peak. In terms of reserves remaining it may seem there is still ample oil. The oil production may hold at the peak output for a number of years before beginning a slow decline. Past the peak, there is still oil, but each barrel becomes more difficult to exploit, and more costly, as internal well pressures decline or other problems make recovery more expensive for each barrel. The cost of each barrel past peak is increasingly higher as artificial means are employed to extract it. After a certain point it becomes uneconomical to continue to try to extract this peak oil. Because most oil companies and agencies such as the US Department of Energy speak not of peak oil, but of total reserves, the world has a false sense of energy supply security. In 1991 the largest discovery in the Western Hemisphere since the 1970s, was found at Cruz Beana in Columbia. But its production went from 500,000 barrels a day to 200,000 barrels in 2002. In the mid-1980s the Forty Field in North Sea produced 500,000 barrels a day. One of the largest discoveries of the past 40 years, Prudhoe Bay, produced some 15 million barrels a day for almost 12 years. The giant Russian Samotlor field produced a peak of 3,500,000 barrels a day. In each of these fields, production has been kept up by spending more and more to inject gas or water to maintain field pressures, or other means to pump the quantity of oil. The worlds largest oil field, Ghawar in Saudi Arabia, produces near 60 of all Saudi oil, some 45 million barrels per day. To achieve this, geologists report that the Saudis must inject 7 million barrels a day of salt water to keep up oil well pressure, an alarming signal of near collapse of output in the worlds largest oil kingdom. The growing problem of peak oil has been known among oil industry insiders since the mid-1990s. In 1995, the leading oil consulting firm, Petroconsultants in Geneva, published a global study, The World Oil Supply. In 1999 Campbell testified to the British House of Commons, Discovery of new oil reserves peaked in the 1960s.
Over the past 20 years despite investment of hundreds of billions dollars by major oil companies, results have been alarmingly disappointing. The worlds major oil companies - Exxon-Mobil, Shell, ChevronTexaco, BP, ElfTotal and others - have invested hundreds of billions of dollars in finding enough oil to replace the existing oil supply sources. Between 1996 and 1999, some 145 companies spent $410 billion to find enough oil only to keep their daily production stable at 30 million barrels a day. From 1999 to 2002, the five largest companies spent another $150 billion and their production grew only from 16 million barrels a day to 166 million barrels, a tiny increase. With the collapse of the Soviet Union in the early 1990s, western oil companies placed high hopes on the oil potentials of the Caspian Sea in Central Asia. Disappointing Caspian results In December 2002, just after US troops took Afghanistan, BP, a major oil company announced disappointing Caspian drilling results which suggested that the oil find of the century was little more than a drop in the ocean. Instead of earlier predictions of oil reserves above 200 billion barrels, a new Saudi Arabia outside the Middle East, the US State Department announced, Caspian oil represents 4 of world reserves. PetroStrategies published a study estimating that the Caspian Basin contained a mere 39 billion barrels of oil, and of a poor quality. Soon after this news, BP and other western oil companies began reducing investment plans in the region. Interest in West Africa One of the most active areas of new exploration is in the offshore region of West Africa from Nigeria to Angola. President Bush made a high profile trip to the region earlier in the year, and the US Pentagon has signed military basing agreements with two small strategic islands, Principe and San Tome, insuring a military presence should anything threaten the flow of oil across the Atlantic. Yet, while the volume of oil is important, it also is hardly a new Saudi Arabia. Geologist Campbell estimates that if all deepwater oil, perhaps 85 billion barrels, were produced from fields off Brazil, Angola and Nigeria, it would meet global demand for 3-4 years. Growing energy demand Against the prospect that many of the largest oil fields today are in a marked decline in output, world demand for oil is rising ruthlessly, marked by the growing economies of China, India and Asia. Even at todays weak GDP growth rates, economists estimate that world demand for oil at todays prices will rise by some 2 per year. Beginning 1993 however, China began to import oil to meet its economic needs. By end 2003 China has surpassed Japan to be the second largest oil importer next to the USA. China oil imports are rising now by 9 a year and this is predicted to rise significantly in the coming decade, as China emerges as the worlds largest industrial nation. Combined they account for some 25 billion of the world population. Little wonder that China vehemently opposed the US unilateral war against Iraq in the UN Security Council. The China National Petroleum Company had long sought to secure major oil supply from Iraq. What Cheney knew in 1999 In a speech to the International Petroleum Institute in London in late1999, Dick Cheney, then chairman of the worlds largest oil services company, Halliburton, presented the picture of world oil supply and demand to industry insiders. By some estimates, Cheney stated, there will be an average of two percent annual growth in global oil demand over the years ahead, along with, conservatively, a three percent natural decline in production from existing reserves. Cheney ended on an alarming note: That means by 2010 we will need on the order of an additional fifty million barrels a day. Perhaps it was no coincidence that Cheney, as Vice President, was given as his first major assignment the head o...
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