29 April 2007

Breaking the logjam of Iraq

One of the major things that is putting Iraq at risk is, needless to say, oil.

Now, beyond a ready petrochemical basis for funding, the actual stuff itself is useful, but only after going through refineries and such, which is being targeted by the various terrorists, militias, and insurgents. Crooks leave it alone as it is a source of revenue, by and large. And the reason so much violence gets concentrated in Baghdad is that it is the seat of government and has all that lovely oil wealth running through it. Getting an equitable oil deal for sharing profits is seen as a major necessity for the Nation for two reasons:

1) It will ensure that all of those who have stayed through all of the troubles get recompense and will deny returnees and criminals of funds, and,

2) It gets the money out of Baghdad.
What has been going on, however, is political posturing and stonewalling by oil secure areas, mostly the Kurdish region and Arab Shia region, to get a 'bigger slice of the pie', or all of it for their regions. That has left the Arab Sunni population out in the cold as a sort of 'political revenge' and for a few other reasons this has been lagging in parliament. A very touchy issue there, to say the least.

That, however, may just change due to this little report from IHS via the TMCnet Business Wire for a report of 18 APR 2007. They have just come out with their Iraq Atlas of oil reserves and where does oil look to be available in great quantities? Well, read on:
The Iraq Atlas, which will be available from IHS on May 9, is a unique overview of all known prospects and fields in Iraq, and estimates oil reserves at up to 116 billion barrels, ranking the country number three in the world. The Iraq Atlas estimates that there could potentially be another 100 billion barrels of oil in the Western Desert of Iraq.


-- The Western Desert of Iraq, which is believed to hold exploration potential of approximately 100 billion barrels of oil and a large amount of gas


"Most of Iraq's oil production comes from the south of Iraq and is exported via the Persian Gulf because of repeated sabotage attacks on facilities in the north," said Mohamed Zine, IHS regional manager for the Middle East. "This has resulted in a current production capacity of two million barrels of oil per day. However, the Iraq Atlas estimates indicate that given a stable political and civil environment, Iraq has the potential to produce four million barrels a day in the near term if necessary investments are made in repairing and modernizing facilities."

Zine added: "The cost to produce oil in some Iraq fields is less than $2 per barrel according to our estimates and investments involved in developing the fields are minimal."
And who, praytell, inhabits the western desert area? Arab Sunnis! This is al-Anbar province and such. Which suddenly puts a whole different complexion on the entire al Qaeda in Iraq trying to take over Anbar and environs. And that amount? Well if 116 billion gets you up to #3... then you are looking at a totally differnt complexion to the Nation which, out in the western desert regions, there appears to be a whole SECOND #3's worth sitting around waiting to be explored fully. Even at 1/5 that size, a mere 20 billion barrels, you are looking at a sizeable amount of available oil.

And who is on hand to help out?

The one Nation that has been giving the shaft to Iran by denying it funds to explore and upkeep its equipment and encouraging its trading parterns to do likewise: Japan.

From the visit of al Maliki to Japan and meeting with Japanese officials (Via TMCnet and Japan Economic Newswire Via Thomson Dialog NewsEdge):
Japanese Prime Minister Shinzo Abe on Monday promised visiting Iraqi Prime Minister Nouri al-Maliki that Japan will continue to support reconstruction efforts in Iraq and the two leaders agreed to further build a "long-term strategic partnership" to strengthen political and economic ties.

"Stability in your country is essential for the stability of the Middle East region, is extremely important for the world as a whole and is linked to Japan's national interests," Abe told al-Maliki at the outset of their talks. "We would like to continue to fully support your efforts as prime minister."

In response, al-Maliki described Japan's assistance as a symbol of bilateral friendship and said, "Iraq is in a new era and facing a lot of new challenges, but we would like to overcome the difficulties in order to realize to the fullest the potential that our country possesses."


Japan views building a strategic partnership with Iraq as important as Iraq's oil supply and its stability greatly affects the national interests of Japan, which is heavily dependent on energy resources from the Middle East.

Japan was among the staunchest supporters of the United States, its closest ally, in the war in Iraq, sending ground troops on an aid mission to southern Iraq and air troops to operate between Kuwait and Iraq. It has also provided financial support to Iraq in the form of yen loans and debt relief.

Amid withdrawals by other countries that sent forces to Iraq, Tokyo pulled out ground troops from the southern Iraqi city of Samawah last summer but has since expanded the air operations.
Right now the money is minimal and going to water projects and the such like, but this is just a few days before the IHS announcement and these things *must* get a government OK and review, so it is more than likely that Japan now has a good and solid inside track on investing in the oil infrastructure in Iraq.

America seems to forget that we have vital allies *also* helping us out and one of them is Japan which has been stoutly enforcing a no-investment policy in Iran for years and that has been hurting Iran deeply. Japan has had to weather higher oil prices and pressure to end that as they see a long term benefit in removing support to the regime in Iran. They still need the oil, but that does not mean they are going to further help a regime that can't manage its own finances. Now here comes Iraq with the possibility of a whole new set of oil fields easily able to replace the Iranian oil supply and stabilize market prices in the next 5 years or so, if the insurgents, terrorists and militias can be put to rest.

Running out and leaving *that* to al Qaeda to try and establish a base upon over that same timeframe should be an absolute non-starter.

Unless, that is, you really look forward to al Qaeda having a its very own oil funding stream.

If the provincial elections can be held and figured out by the end of the year, which should be very possible in most of Iraq, then the entire political center of the Nation gets an easing as money no longer *ends* in Baghdad but then goes outwards to the Provinces. And that will change the complexion of what Iraq is, more than anything done heretofore. As these umbrella National parties suddenly find themselves in purely *local* politics.

That political logjam will give out, one way or another.

Because 'all politics is local'.

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