Supply will surely rise with the Iraq auction of oil contracts.
During an auction of Iraq’s best undeveloped oil fields that concluded Saturday, Baghdad awarded international companies development rights to seven fields that within a few years could nearly double the country’s oil production.
It's very unclear who got what, but considering the billions the U.S. has poured into Iraq, one would think we would at least get the oil. We spend trillions in Iraq so China can develop the oil?
The corporations that won represented a diverse group of nations, including Angola, Malaysia, Turkey and China. They were vying for 20-year service contracts that will pay them a fee for each barrel they produce above a government-set baseline.
Despite what are expected to be slim profit margins for the companies, the auction’s biggest winners appeared to be Petronas, a state-owned Malaysian company that was part of three separate consortiums that won the rights to three fields; Sonangol, an Angolan company that will develop two fields; and Lukoil, the Russian oil company, which won the rights to part of the West Qurna field in southern Iraq, the most sought prize of the auction.
The Washington Post has more, including speculation on why U.S. companies did not win the bids and a map of some of the fields involved in this auction.
Yet who really owns that oil?
First we need to realize, that this is to service the pipelines, with the possible potential of oil revenues. Saying that, this highlights the great geopolitical shift in mindset about the rise of new powers like China, and the relative decline of the US. Also, the majority of these contracts went to consortiums, and only China I believe was the outside player. This speaks volumes, first in that China had the cash to go it alone, but also the sense of urgency in their bid.
We all know that China needs fuel, and it hopes by servicing the sites that when Iraq allows foreign nations to pump oil for their demand, that Beijing gets a shot. Despite it's big moves, the Peoples Republic of China is a rookie at this, albeit a very aggressive and quick learning rookie that is eating everyone's lunch. Now this is all guess work, but my suspicion on the reason why the others (mainly European and US petrol firms) went the consortium route was for risk sharing.
Iraq, for all the talk of a new federal government, is still a country that is fragile. The peace is shaky at best, and no one truly knows what will happen when the Coalition forces (i.e. US) moves out. A new era of stability? Perhaps, but the folks in these companies believe something else could happen. Nobody wants to invest potentially billions only to find out it all went to dreck. We're living in an age where these agreements can disappear with a change of attitudes by the host government. One need only look at Venezuela. The big question centers on who truly owns what in northern Iraq. The Post article hinted at that, and if I were an oil executive I would want to know.
I just feel sorry for the poor foreign petroleum engineers out there in the field who may end up as targets in a pseudo civil war between Baghdad and Kurdistan.
Where's Jerome A Paris when you need him?
He actually has an account on here, but the only site I Know who really tracks the oil situation is The Oil Drum.
If you noticed, even though global oil demand is at a major low, the commodity reasonably low, you know that's going to heat up.
So check out the FNV this week. It's all about China grabbing every physical oil field they can and this has been going on for some time.
It's frightening because we know whoever controls the oil, controls the world.
Yeah, that was the discussion a civil war, sabotage but China has been very busy making a point to all sorts of rogue nations they don't give a rats ass what they are doing, including genocide.
Deals or not
It is only a matter of time until a government changes were they have a deal. Then they're going to face something that many in the West have, "what do you mean my country had a deal? I don't recall such a thing." Now it gets interesting, and one wonders how China will react. Meanwhile, China's shopping spree is fueled by their exporting, that is until domestic consumption can replace it. But even China admits that's a decade away at least.
Getting back to those resource deals, China is playing the same game we used to do decades back. Read up on Patrice Lumumba. Eventually, whatever dictator takes hold in those countries, they will be tied to China by the people. Do you know why there's a sense of despisement towards the US in Latin America or the Middle East? Because the folks know we put in many of those authoritarian regimes they either experienced now or in the past. China is doing no different and it will bite them in the ass. Actually, they're doing one worse. In many of the deals, in fact in most in Africa, Beijing isn't even employing the locals but importing Chinese labor. There are parts of Africa that are virtual Chinese colonies.
on yeah
Both India and China do all sorts of games to deal with their surplus labor and we know Mexico's game. Remittances are a huge deal.
Right, but even worse, China has the U.S. and it's imperialism to control the global oil supply as a great learning tool. The commodity has only been vital for about 100 years, so China has so far been a pretty quick study.
But who controls the oil really does control the world so ....
Didn't the U.S. destroy so much Iraqi infrastructure there was disease and hunger? Didn't they get an outbreak of cholera as an example?
While I'll bet China imports all of their labor which will piss the Iraqi's off (only in the United States are you name called a racist xenophobe for making similar complaints) if they don't destroy Iraqi infrastructure (wasn't this rebuilt on the U.S. dime again?) They might not get such unrest.
Besides, the hatred of the U.S. is so strong, maybe some of these nations will egg China on to defeat the U.S. economically (which they are doing a great job obviously).