Bulletin de liaison et d'information - Institut kurde de Paris

REVUE DE PRESSE~PRESS REVIEW.BERHEVOKA ÇAPÊ~RIVISTA STAMPA.DENTRO DE LA PRENSA.BASIN ÖZETi
INTERNATIONAL HERALDTRIBUNE, TUESDAY, MAY 9,1995
EUROPE
Saddam Is the Belle of the BaU
Iraq's Oil Riches Lure Suitors; U.S. Firms Stay Home
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By Daniel Southerland
WarhillglOlI Pœl Sn1Iice
WASHINGTON - Stretching for
miles through the abandoned battlefields
of southern Iraq lies a vast oil field called
Majnoon - Arabic for "the crazed one."
Given the tension it is causing in the
international oil business, the field might
better be called "Saddam's Revenge."
The riches of Majnoon and other Iraqi
oil fields are making Baghdad a popular
destination - at least among the giant oil
companies that hope to do business with
Iraq once the United Nations lifts sanctions
against it. Indeed, a conference in
Baghdad in March on the future of the
Iraqi oil industry was attended by representatives
of 35 oil companies.
Elf Aquitaine of France already is negotiating
a $2.5 billion deal to develop
Majnoon. Elf, along with its French n-
val, Total SA, started the negotiations
with Iraqin May 1991,just three months
after. Operation Desert Storm. Meanwhile,
Italian, Brazilian, Spanish and
Russian companies are pursuing other
deals to develop Iraq's vast oil reserves,
which analysts calculate are second only
to those of Saudi Arabia.
U.S. companies, by contrast, are sitting
on the sidelines as their competitors
rush to woo Baghdad. Although some
U.S. giants, such as Mobil Corp., had
close ties with the Iraqis before the Gulf
War, none of them attended the Baghdad
conference. The American concerns
are blocked by their government, which
- nearly alone among its allies - insists
that the UN economic sanctions against
Baghdad should continue indefinitely.
"The U.S. companies are gomg to be
way behind once the sanctions are lifted,"
said Lawrence Goldstein, president of the
industry-supported Petroleum Industry
Research Foundation. "On Iraq, the U.S.
oil companies clearly have to follow the
administration, and the administration is
not going to budge on this."
Iraq may be one of the last great prize.s
in the oil business. At a time when giant
oil fields are increasingly difficult to find
around the world, Iraq claims at least
nine of them. Some analysts place Majnoon
in the so-called super-giant category,
capable eventually of producing
600,000 barrels a day.
Before the Iraq-Iran war began in 1980,
Iraq was pumping 3.5 million barrels of
crude oil a day. But the subsequent 15
years of war and economic sanctions have
Once sanctions are
lifted, Iraq could become
the most important and
unpredictable factor in the
oil market.
left the country's oil infrastructure in disarray.
Once sanctions are lifted, however,
much of the damage could be repaired
within a few years, making Iraq the most
important and unpredictable new factor
in the international oil market.
Iraqi officials say their aim is to expand
output to 6 million barrels per day by the
next decade, a production levelthat would
be nearly equal to that of Saudi Arabia.
The Iraq bonanza brings the danger of
oversupply to the oil market. Analysts
worry that Iraq's return will flood the
market with oil and lead to a sharp drop
in prices. Even without Iraq, the OPEC
oil-producing nations have been unable
to keep the price of oil above $20 a
barrel. On an inflation-adjusted basis, oil
now costs less than it did in 1973.
Analysts also caution that deals made
now with President Saddam Hussein
might prove to be risky investments. The
Iraqi leader remains intensely unpopular
at home and abroad, and a future Iraqi
government might not look favorably on
Western oil companies that rushed to do
business with Mr. Sadd am.
The financial risks will be high, as
well. Iraq's goal of producing 6 million
barrels a day would require a minimum
of $25 billion in investments during the
next 10 years, analysts say. Because Iraq
already is heavily in debt, the foreign
companies would have to provide most
of the financing before they made their
profit.
Despite these dangers, the lure of Iraqi
oil seems irresistible because Iraqi crude
is so easy to find and so cheap to produce.
The Iraqi fields are also relatively
undeveloped, unlike those of neighboring
countries such as Iran, Kuwait and
Saudi Arabia.
Oil-producing companies such as Elf
Aquitaine are not the only ones that will
profit from Iraq's return to the market.
European oil-service companies also are
likely to win big contracts from drilling
and exploration. So will the construction
companies hired to build highways, power
plants, export terminals and pumping
stations.
But for U.S. companies that would
like to share in the spoils, Iraq appears to
be a no-win situation. Industry executives
say that, given Mr. Saddam's unpopularity
in the United States, American
companies are in no position to
lobby for an easing of U.S. restrictions
on dealings with Iraq. The prospect that
Mr. Saddam would use his oil revenue to
rebuild his war machine poses an additional
problem.
The existing U.N. trade embargo
against Iraq prohibits all trade and financial
transactions, ex~t for relief
aid, and bans Irag from selling oil except
under U.N. conditions that Iraq has refused
to accept.
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