JULY 2008

SAUDIS SEND MIXED MESSAGES ABOUT THEIR OIL SUPPLY

MAY 2008

A WAR ABOUT OIL. . .AND WE LOST

DECEMBER 2007

REPORT: OIL HAS ALREADY PEAKED

NOVEMBER 2007

WHY GOING TO WAR OVER OIL DOESN'T WORK

DAVID R. HENDERSON, AMERICAN CONSERVATIVE - The case for making war for oil is profoundly weak. The pragmatic case against war for oil, on the other hand, rests on a few simple facts. First, no oil-producing country, no matter what it does to its oil supply, can cause us to line up for gasoline. Second, an oil-producing country cannot impose a selective embargo on a target country, because oil is sold in a world market. Third, the only way one country’s government can hurt another country using the "oil weapon" is by cutting output, which hurts all oil consumers, not just the target country; helps all oil producers, friend and foe alike; and harms the country that cuts its output. . .

The advocates of war for oil have never confronted some basic realities. Economists often get a bad rap for their pessimism, but an understanding of how oil markets work leads to optimism about a secure oil supply. . .

To say that a reduction in the supply of oil cannot cause a shortage is not to say that it cannot cause harm. Any country that is a net importer of a good will be harmed by the higher price if the supply of that good falls. But the key is that the supply must fall. If supply does not fall, nothing important changes.

Imagine that the government of Country A currently sells oil to people in Country B and wishes to harm people in Country B by refusing to sell or by reducing sales. What happens next depends crucially on whether Country A cuts its own oil production. Assume that Country A maintains production. This means that Country A must look around for people in other countries to sell the suddenly freed-up oil to. Here’s where it gets interesting.

In 2006, the five most important exporters of oil to the United States, in order of importance, were Canada, Mexico, Saudi Arabia, Venezuela, Nigeria, and Iraq. Total imports from these countries were 59 percent of U.S. imports. Of these five, the one most likely to want to hurt the United States is Venezuela or, more accurately, Venezuela’s government under Hugo Chavez. But interestingly, Chavez has done the exact opposite, actually subsidizing oil imports to the northeastern United States. But imagine the worst: imagine that Chavez wanted to target the United States using the "oil weapon." Say he cuts sales by half to 753,000 barrels a day. The U.S. will respond by scrambling to find other sources of oil. Where will it find them? Let’s go back to Chavez. He needs to find people in other countries to sell this 753,000 barrels a day to. Let’s say he ships the oil to buyers in China. Then those buyers in China will find that they want to buy 753,000 fewer barrels from their suppliers, say Iraq or Saudi Arabia. Presto! The American buyers’ problems are solved because they can get their 753,000 barrels elsewhere. In short, when the government of one country tries to selectively target people in another country, but still wishes to maintain output, it can’t succeed. The selective "oil weapon" is a dud. It’s like a game of musical chairs with the same number of chairs as players. The game would be awfully boring, which is why it is not played that way. But in the case of international trade, boring is good. . .

Of course, the government of an oil-producing country can do substantial harm to the people of another country by cutting the amount of oil it produces and sells. (I use the word "government" here on purpose because outside Canada, the United States, and Britain, almost all the world’s oil is produced by governments.) But any government that wants to hurt a particular country by reducing its oil supply faces three huge problems.

First, an oil producer cannot single out particular countries or consumers to hurt. If one oil producer cuts supply, then, all other things being equal, the world oil supply drops and prices rise. All oil consumers are hurt, and their hurt is proportional to the amount of oil they use. Thus the "oil weapon" is an incredibly blunt instrument that, when used, will hurt friend and foe alike.

Second, the oil-producing country, by cutting output, will cause the world price of oil to rise, which will help other oil-producing countries that don’t reduce their supply. So for example, if Iran’s government chooses to reduce its supply of oil to hurt the United States, it also helps its avowed enemy, Saudi Arabia.

Third and finally, to continue with the weapon analogy, the oil weapon blows up in its user’s face. Specifically, any country that produces less than about 10 percent of the world supply will find that the price increase it gets will not compensate for the reduction in revenues due to lower production. . .

APRIL 2007

GAO: U.S. NEEDS PEAK OIL STRATEGY

[From a recent GAO report]

Most studies estimate that oil production will peak sometime between now and 2040, although many of these projections cover a wide range of time, including two studies for which the range extends into the next century.

The timing of the peak depends on multiple, uncertain factors that will influence how quickly the remaining oil is used, including the amount of oil still in the ground, how much of the remaining oil can be ultimately produced, and future oil demand.

The amount of oil remaining in the ground is highly uncertain, in part because the Organization of Petroleum Exporting Countries (OPEC) controls most of the estimated world oil reserves, but its estimates of reserves are not verified by independent auditors. In addition, many parts of the world have not yet been fully explored for oil.

There is also great uncertainty about the amount of oil that will ultimately be produced, given the technological, cost, and environmental challenges. For example, some of the oil remaining in the ground can be accessed only by using complex and costly technologies that present greater environmental challenges than the technologies used for most of the oil produced to date.

Other important sources of uncertainty about future oil production are potentially unfavorable political and investment conditions in countries where oil is located. For example, more than 60 percent of world oil reserves, on the basis of Oil and Gas Journal estimates, are in countries where relatively unstable political conditions could constrain oil exploration and production.

Finally, future world demand for oil also is uncertain because it depends on economic growth and government policies throughout the world. For example, continued rapid economic growth in China and India could significantly increase world demand for oil, while environmental concerns, including oil's contribution to global warming, may spur conservation or adoption of alternative fuels that would reduce future demand for oil.

In the United States, alternative transportation technologies face challenges that could impede their ability to mitigate the consequences of a peak and decline in oil production, unless sufficient time and effort are brought to bear.

For example:

* Ethanol from corn is more costly to produce than gasoline, in part because of the high cost of the corn feedstock. Even if ethanol were to become more cost-competitive with gasoline, it could not become widely available without costly investments in infrastructure, including pipelines, storage tanks, and filling stations.

* Advanced vehicle technologies that could increase mileage or use different fuels are generally more costly than conventional technologies and have not been widely adopted. For example, hybrid electric vehicles can cost from $2,000 to $3,500 more to purchase than comparable conventional vehicles and currently constitute about 1 percent of new vehicle registrations in the United States.

* Hydrogen fuel cell vehicles are significantly more costly than conventional vehicles to produce. Specifically, the hydrogen fuel cell stack needed to power a vehicle currently costs about $35,000 to produce, in comparison with a conventional gas engine, which costs $2,000 to $3,000.

Given these challenges, development and widespread adoption of alternative transportation technologies will take time and effort. Key alternative technologies currently supply the equivalent of only about 1 percent of U.S. consumption of petroleum products, and DOE projects that even under optimistic scenarios, by 2015 these technologies could displace only the equivalent of 4 percent of projected U.S. annual consumption.

Under these circumstances, an imminent peak and sharp decline in oil production could have severe consequences, including a worldwide recession. If the peak comes later, however, these technologies have a greater potential to mitigate the consequences. DOE projects that these technologies could displace up to the equivalent of 34 percent of projected U.S. annual consumption of petroleum products in the 2025 through 2030 time frame, assuming the challenges the technologies face are overcome. The level of effort dedicated to overcoming challenges to alternative technologies will depend in part on the price of oil; without sustained high oil prices, efforts to develop and adopt alternatives may fall by the wayside.

Federal agency efforts that could reduce uncertainty about the timing of peak oil production or mitigate its consequences are spread across multiple agencies and generally are not focused explicitly on peak oil. For example, efforts that could be used to reduce uncertainty about the timing of a peak include USGS activities to estimate oil resources and DOE efforts to monitor current supply and demand conditions in global oil markets and to make future projections. Similarly, DOE, the Department of Transportation (DOT), and the U.S. Department of Agriculture (USDA) all have programs and activities that oversee or promote alternative transportation technologies that could mitigate the consequences of a peak. However, officials of key agencies we spoke with acknowledge that their efforts-with the exception of some studies-are not specifically designed to address peak oil.

Federally sponsored studies we reviewed have expressed a growing concern over the potential for a peak and officials from key agencies have identified some options for addressing this issue. For example, DOE and USGS officials told us that developing better information about worldwide demand and supply and improving global estimates for nonconventional oil resources and oil in "frontier" regions that have yet to be fully explored could help prepare for a peak in oil production by reducing uncertainty about its timing. Agency officials also said that, in the event of an imminent peak, they could step up efforts to mitigate the consequences by, for example, further encouraging development and adoption of alternative fuels and advanced vehicle technologies.

However, according to DOE, there is no formal strategy for coordinating and prioritizing federal efforts dealing with peak oil issues, either within DOE or between DOE and other key agencies.

While the consequences of a peak would be felt globally, the United States, as the largest consumer of oil and one of the nations most heavily dependent on oil for transportation, may be particularly vulnerable.

Therefore, to better prepare the United States for a peak and decline in oil production, we are recommending that the Secretary of Energy take the lead, in coordination with other relevant federal agencies, to establish a peak oil strategy. Such a strategy should include efforts to reduce uncertainty about the timing of a peak in oil production and provide timely advice to Congress about cost-effective measures to mitigate the potential consequences of a peak.

In commenting on a draft of the report, the Departments of Energy and the Interior generally agreed with the report and recommendations.

http://www.energybulletin.net/27919.html

FEBRUARY 2007

IRAQ'S NEW SWEETHEART LAW FOR OIL COMPANIES

DETAILS ON IRAQ OIL SCAM

[More on the Iraqi oil and gas law that we previously reported]

JUAN GONZALES, NY DAILY NEWS - A proposed new Iraqi oil and gas law began circulating last week among that country's top government leaders and was quickly leaked to various Internet sites - before it has even been presented to the Iraqi parliament.

Under the proposed law, Iraq's immense oil reserves would not simply be opened to foreign oil exploration, as many had expected. Amazingly, executives from those companies would actually be given seats on a new Federal Oil and Gas Council that would control all of Iraq's reserves.

In other words, Chevron, Exxon Mobil, British Petroleum and the other Western oil giants could end up on the board of directors of the Iraqi Federal Oil and Gas Council, while Iraq's own national oil company would become just another competitor.

The new law would grant the council virtually all power to develop policies and plans for undeveloped oil fields and to review and change all exploration and production contracts.

Since most of Iraq's 73 proven petroleum fields have yet to be developed, the new council would instantly become a world energy powerhouse

http://www.nydailynews.com/news/wn_report/story/499339p-421044c.html

JANUARY 2007

IRAQ OIL SCAM UPDATE

INDEPENDENT, UK - Iraq's massive oil reserves, the third-largest in the world, are about to be thrown open for large-scale exploitation by Western oil companies under a controversial law which is expected to come before the Iraqi parliament within days. The US government has been involved in drawing up the law, a draft of which has been seen by The Independent on Sunday. It would give big oil companies such as BP, Shell and Exxon 30-year contracts to extract Iraqi crude and allow the first large-scale operation of foreign oil interests in the country since the industry was nationalised in 1972.

The huge potential prizes for Western firms will give ammunition to critics who say the Iraq war was fought for oil. They point to statements such as one from Vice-President Dick Cheney, who said in 1999, while he was still chief executive of the oil services company Halliburton, that the world would need an additional 50 million barrels of oil a day by 2010. "So where is the oil going to come from?... The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies," he said. . .

Greg Muttitt, a researcher for Platform, a human rights and environmental group which monitors the oil industry, said Iraq was being asked to pay an enormous price over the next 30 years for its present instability. "They would lose out massively," he said, "because they don't have the capacity at the moment to strike a good deal.". . .

James Paul, executive director at the Global Policy Forum, the international government watchdog, said: "It is not an exaggeration to say that the overwhelming majority of the population would be opposed to this. To do it anyway, with minimal discussion within the [Iraqi] parliament is really just pouring more oil on the fire."

http://news.independent.co.uk/world/middle_east/article2132569.ece

DECEMBER 2006

OIL COMPANIES PREPARING BIG TIME RIP OFF OF IRAQ SUPPLIES

JOSHUA GALLU, SPIEGEL.DE - The Iraqi government is considering a new oil law that could give private oil companies greater control over its vast reserves. In light of rampant violence and shaky democratic institutions, many fear the law is being pushed through hastily by special interests behind closed doors. . .

The draft law lays the ground work for private oil companies to take large stakes in Iraq's oil. The new law would allow the controversial partnerships known as 'production sharing agreements'. Oil companies favor PSAs, because they limit the risk of cost overruns while giving greater potential for profit. . .

It's also dangerous. It means governments are legally committing themselves to oil deals that they've negotiated from a position of weakness. And, the contracts typically span decades. Companies argue they need long-term legal security to justify huge investments in risky countries; the current draft recommends 15 to 20 years.

Nevertheless, Iraq carries little exploratory risk -- OPEC estimates Iraq sits atop some 115 billion barrels of reserves and only a small fraction of its oil fields are in use. By signing oil deals with Iraq, oil companies could account for those reserves in their books without setting foot in the country -- that alone is enough to boost the company's stock. And, by negotiating deals while Iraq is unstable, companies could lock in a risk premium that may be much lower five or ten years from now.

http://www.spiegel.de/international/0,1518,456212,00.html

SEPTEMBER 2006

TREASURY SECRETARY'S FIRM MAY HAVE PLAYED MAJOR ROLE IN GAS PRICE DROP

LE METROPOLE CAFÉ - In yesterday's WSJ in Section C there is a very, very interesting item in the article, Some Investors Lose Their Zest For Commodities. The article notes that over that past few months, commodity funds have been liquidating commodity holdings. But here's the stunner: "Consider the Goldman Sachs commodity index, one of the most popular vehicles for betting on raw materials. In July, Goldman Sachs tweaked the index's content by cutting its exposure to gasoline. Investors tracking the index had to adjust their portfolios accordingly - which sent gasoline futures prices tumbling."

Prior to Goldman's July GSCI revision, unleaded gas accounted for 8.45% of the GSCI. Now unleaded gas is only 2.30%. This means commodity funds had to sell 73% of its gasoline futures to conform to the reformulated GSCI. . .

Here we have Goldman, qua keeper of the commodities index, manipulating markets simply by adjusting index components. It is noteworthy in several respects. First, we are used to the notion of them front running market sensitive information announced by third parties, but here a glorified hedge fund - albeit one dominating central banks and finance ministries worldwide - maintains market-moving indices itself. . . . Second, it lends credence to the theory that the current well-publicized commodities decline is just a well-timed, well-orchestrated head fake to benefit the incumbents in the run up to the midterm elections - someone noted recently that Bush's ratings vary inversely with gas prices. . .

www.lemetropolecafe.com

MAY 2006

WHY GEORGE BUSH SHOULD THANK CHAVEZ

GREG PALAST - You'd think George Bush would get down on his knees and kiss Hugo Chavez's behind. Not only has Chavez delivered cheap oil to the Bronx and other poor communities in the United States. And not only did he offer to bring aid to the victims of Katrina. In my interview with the president of Venezuela on March 28, he made Bush the following astonishing offer: Chavez would drop the price of oil to $50 a barrel, "not too high, a fair price," he said -- a third less than the $75 a barrel for oil recently posted on the spot market. That would bring down the price at the pump by about a buck, from $3 to $2 a gallon.

But our president has basically told Chavez to take his cheaper oil and stick it up his pipeline. . .

Venezuela, Chavez told me, has more oil than Saudi Arabia. . . His surprising claim comes from a most surprising source: the U.S. Department of Energy. In an internal report, the DOE estimates that Venezuela has five times the Saudis' reserves. However, most of Venezuela's mega-horde of crude is in the form of "extra-heavy" oil -- liquid asphalt -- which is ghastly expensive to pull up and refine. Oil has to sell above $30 a barrel to make the investment in extra-heavy oil worthwhile. A big dip in oil's price -- and, after all, oil cost only $18 a barrel six years ago -- would bankrupt heavy-oil investors. Hence Chavez's offer: Drop the price to $50 -- and keep it there. That would guarantee Venezuela's investment in heavy oil.

But the ascendance of Venezuela within OPEC necessarily means the decline of the power of the House of Saud. And the Bush family wouldn't like that one bit. It comes down to "petro-dollars." When George W. ferried then-Crown Prince (now King) Abdullah of Saudi Arabia around the Crawford ranch in a golf cart it wasn't because America needs Arabian oil. The Saudis will always sell us their petroleum. What Bush needs is Saudi petro-dollars. Saudi Arabia has, over the past three decades, kindly recycled the cash sucked from the wallets of American SUV owners and sent much of the loot right back to New York to buy U.S. Treasury bills and other U.S. assets.

The Gulf potentates understand that in return for lending the U.S. Treasury the cash to fund George Bush's $2 trillion rise in the nation's debt, they receive protection in return. They lend us petro-dollars, we lend them the 82nd Airborne.

Chavez would put an end to all that. He'll sell us oil relatively cheaply -- but intends to keep the petro-dollars in Latin America. Recently, Chavez withdrew $20 billion from the U.S. Federal Reserve and, at the same time, lent or committed a like sum to Argentina, Ecuador, and other Latin American nations. . .

http://www.gregpalast.com/hugo-chavez-an-exclusive-interview-with-greg-palast#more-1496

SAUDI OFFICIAL ADMITS CRUDE OIL FIELDS IN DECLINE

[Platts has been covering the energy story for nearly a century]

GLEN CAREY, PLATTS, APRIL 11 - Saudi Aramco's mature crude oil fields are expected to decline at a gross average rate of 8%/year without additional maintenance and drilling, a Saudi Aramco spokesman said Tuesday. But Saudi Aramco has taken a number of measures to offset a decline in output from the country's aging oil fields, the spokesman added.

"A variety of remedial activities are always being taken in oil fields influencing their effective decline rates," the spokesman said. "The drilling of additional development wells in the producing fields is Saudi Aramco's standard practice to offset normal declines of older wells.". . .

"This maintain[ing] potential drilling in mature fields combined with a multitude of remedial actions and the development of new fields, with long plateau lives, lowers the composite decline rate of producing fields to around 2%," the spokesman said.

STUDY FINDS OIL COMPANY PROFITS NOT CRUDE PRICES DRIVING INCREASED FUEL COSTS

CONSUMER WATCHDOG - The Foundation for Taxpayer and Consumer Rights released a new study today of rising gasoline prices in California that found corporate markups and profiteering are responsible for spring price spikes, not rising crude costs or the national switchover to higher-cost ethanol, as the oil industry claims.

Independent petroleum consultant Tim Hamilton analyzed gasoline price increases from January to April to find that:

Increases in the "spot" market price of crude oil -- which is the highest price a major oil company would pay for crude oil -- accounted for only 12 cents per gallon. California's percentage sales tax increased fuel prices by another four cents per gallon. More than 40 cents of the 60-cent increase in gasoline prices over 3 1/2 months is attributable to increased refinery and marketing profit margins for the oil companies; Neither the MTBE phaseout nor the substitution of ethanol is a serious part of the increase. . .

The profit increase of 42 cents, on top of record profits last year, means California gasoline will cost consumers approximately $546 million more in April 2006 than in April of last year. . . Oil companies are opportunistically using the rising world price for crude oil as an excuse to excessively raise gasoline prices and pump up their profits, even though the spot market price for crude has gone up far more slowly than gasoline prices," said FTCR President Jamie Court. "In addition, the spot price is higher than most oil companies pay, since they either harvest their own crude or pay more stable and often much lower contract prices.

http://www.consumerwatchdog.org/energy/pr/?postId=6133

JANUARY 2006

REPORT: KUWAITI OIL RESERVES HALF THAT CLAIMED

REUTERS - OPEC producer Kuwait's oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly. "PIW learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records," the weekly PIW reported on Friday. . . PIW said the official public Kuwaiti figures do not distinguish between proven, probable and possible reserves. But it said the data it had seen show that of the current remaining 48 billion barrels of proven and non-proven reserves, only about 24 billion barrels are so far fully proven -- 15 billion in its biggest oilfield Burgan.

DECEMBER 2005

IRAQ OIL INDUSTRY IS A MESS

HEIKO FLOTTAU, ISN SECURITY WATCH - Two-and-a-half years after the US invasion of Iraq, the country's oil industry is still in disarray. An official of the Oil Ministry in Baghdad told ISN Security Watch, on condition of anonymity: "We do not know the exact quantity of oil we are exporting, we do not exactly know the prices we are selling it for, and we do not know where the oil revenue is going to."

According to Baghdad press reports, export revenues are still not sufficient to cover the Iraqi state budget. The government is forced to take loans from international banks to cover its running expenses.

Although the US invested around US$1.3 billion in the rehabilitation of oil plants damaged by lack of maintenance during 13 years of UN sanctions, the daily output of approximately 1.3 million barrels remains far below Iraq's pre-war production level of 2.5 million barrels.

The production goal for December 2004 of 3 million barrels per day, set by the US and the Iraqi government, cannot be reached in the near future, according to experts within the Iraqi Oil Ministry who talked to ISN Security Watch. . .

The seizure of the Iraqi oil fields and the raising of the country's oil production were two of the most important motives for the US invasion of Iraq. When asked, in September 2002, whether the US could afford a costly military operation like the one planned in Iraq, White House economic adviser Larry Lindsay told the Wall Street Journal: "We can afford it."

Lindsay added that, after a regime change in Iraq, three to five million barrels per day could be added to the world oil supply and that Iraqi oil would bring in over US$50 billion in coming years. Lindsay said that Iraq would easily be able to pay for the reconstruction effort.

Michael T. Klare, a Professor of Peace and World Security at Hampshire College and author of the book "Blood and Oil", wrote that it is "an article of faith among America's senior policymakers - Democrats and Republicans alike - that military force is an effective tool for ensuring control over foreign sources of oil."

He predicts that the US will continue to send troops into politically fragile regions in future due to the dilemma of US dependence on oil sourced from these areas.

However, Klare concludes that "the growing Iraqi quagmire has demonstrated that the application of military force can have the very opposite effect; it can diminish - rather than enhance - America's access to foreign oil."

http://www.isn.ethz.ch/news/sw/details.cfm?ID=13770

WAITING FOR OIL PEAK IS TOO LATE, WHENEVER IT IS

LEWIS L SMITH - "Peak oil" is an economic concept, not a physical one. Physically most oil in a field gets left in the ground. A world average is probably around 70%.

To project the coming peak in the world production of crude oil, one should have the following information about each of the world's principle oil fields ---

[1] Historic - oil pumped, additives, gas and water injected.

[2] Current - data for some 15 parameters.

[3] Future - probable shape of the production decline curve, probable results of exploration and development projects under way in the field and elsewhere, probable impact of new E&D technologies.

Most of the people who have this kind of information, have it only for their own country, and almost none of them are talking. Some consultants claim to have such information for more than one country, but persons who are clients of at least two of these consultants say that they don't agree on either the peak year or the rate of decline. Also projecting decline curves is tricky. There are at least four different patterns which a field can follow, and sometimes a field "switches curves" in the middle of the decline.

By and large, the people who are talking are retirees [whose access to current information is uncertain] , people with "axes to grind" and/or people who work from published data. [The latter is the largest group of all]

The use of published data in the oil industry is fraught with peril. Most current data is not very accurate, and most accurate data is not very current. But some important historical data is inaccurate too, such as monthly Saudi production of crude oil. Indeed on several occasions, the OPEC Secretariat has complained publicly that its members lie to it. Also the figures for some countries' reserves are highly suspicious, even at the aggregate level. Last but not least, the principle sources of published data sometimes copy from one another, so circularity is always a threat. . .

Moreover, pinpointing the peak year for world crude production is not very important. The important thing is the shape of the aggregate decline curve.

If world production declines slowly, we will spend more money than we had planned, but will probably "muddle through." If it does anything else, we could easily have a world crisis.

Unfortunately the shape of the decline curve is indeterminate ---

[1] For the reasons mentioned above.

[2] Because production tends to follow demand and prices.

[3] Because the demand for crude is itself indeterminate.

The demand for crude is indeterminate for two reasons:

[1] There are lots of good alternatives to oil and lots of good reasons for using them but for financial and technical reasons, they cannot be deployed fast enough if the decline curve is steep. It is not enough to have new technologies that are commercially and technically feasible. One must create, equip, staff and finance the organizations that are going to use them.

[2] In the long run, diesel, kerosene, naphtha and other middle distillates can all be produced from other sources, by well proven, commercial, gas-to-liquids technologies. These sources are gasification of biomass, gasification of coal, extraction of methane from methane hydrates and gas fields economically stranded without GTL. And for diesel there are also triglycerides and insect larvae. Except for submarine methane hydrates, all the necessary technologies are technically and [in most cases] commercially feasible. [Note that kerosene is the basis for civilian jet fuel, and naphtha for military jet fuel and for petrochemicals.]

The only accurate statement that we can make about world crude-oil production is that it will peak forever sometime within our children's lifetimes.

But we should not wait for the peak. Instead we should replace petroleum fuels as soon as possible. My reasons are as follows ---

[1] It takes time to permit, construct and bring on line energy projects of any kind.

[2] It takes extra time when these projects incorporate new technologies.

[3] Energy projects all kinds are frequently subject to delays and cost overruns.

[4] The evil consequences of global warning are sneaking up on us faster than we realize.

[Lewis L Smith is an energy economist, an energy advisor to the government of the Commonwealth of Puerto Rico and a former director of what is now PR's Energy Affairs Administration]

THE HIDDEN ISSUE IN IRAQ

JAMES HOWARD KUNSTLER - Oil trade has now become a dead heat race between supply and demand, with demand looking like the stronger horse coming into the home stretch. As it overtakes supply, even more strange changes will unfold on the world scene. These are likely to take the form of fierce geopolitical struggles to gain favor in or control those regions that still have a lot of oil, foremost the Middle East, with Iraq located at dead center of it.

There is really only one condition that will allow us to pull out of Iraq. That is if we make an enormous collective effort to change our behavior here in North America; if we break free from an economy pegged to suburban sprawl, reform the way we do agriculture and retail trade, make substantial investments in public transit and railroads in particular, and practice fiscal restraint at every scale, including an end to the reckless creation of mortgages. Unless we face these facts and the tasks associated with them, then we will find ourselves at the center of that geopolitical struggle.

Right now, nobody from any political stance is talking about these facts and these tasks. Those in the anti-war movement are by-and-large people who enjoy the same suburban "entitlements" as the war-hawks. The anti-war leadership is even worse than the pro-war leadership, because the war-hawks don't even pretend to be interested in reforming the way we live -- they've declared it "non-negotiable."

If the anti-war movement has a different idea, they sure haven't expressed it. If the Democratic party were to take the lead in the anti-war movement, they would have to start negotiations for changing the way we live in this country. To evade the responsibility for this would simply be cowardice. Leading sometimes means taking public opinion into territory it hasn't been to before.

We're now entering that territory, by the way. Stealthily over the past week, the price of natural gas has crept above $14 a unit (one million btu's). Half the houses in America are heated with the stuff. 90 percent of America's farm fertilizers are made out of it. Above $14 really is uncharted territory.

http://jameshowardkunstler.typepad.com/clusterfuck_nation/

NOVEMBER 2005

REPORT SHOWS IRAQ WILL BE THE LOSER IN THE WAR FOR ITS OIL

CONTROL OF IRAQ'S FUTURE OIL WEALTH is being handed to multinational oil companies through long-term contracts that will cost Iraq hundreds of billions of dollars, according to a new report published in London.

Crude Designs, published jointly by a number of activist organizations, reveals that current Iraqi oil policy will allocate the development of at least 64% of Iraq's reserves to foreign oil companies. Iraq has the world's third largest oil reserves. The report states that:

- The estimated cost to Iraq over the life of the new oil contracts is $74 to $194 billion, compared with leaving oil development in public hands. These sums represent between two and seven times the current Iraqi state budget.
- The contracts would guarantee massive profits to foreign companies, with rates of return of 42% to 162%.

The kinds of contracts that will provide these returns are known as production sharing agreements. PSAs have been heavily promoted by the US government and oil majors and have the backing of senior figures in the Iraqi Oil Ministry. Britain has also encouraged Iraq to open its oilfields to foreign investment. However PSAs last for 25-40 years, are usually secret and prevent governments from later altering the terms of the contract. decades."

http://www.crudedesigns.org/

WORLD'S SECOND LARGEST OIL FIELD UNABLE TO MEET PRODUCTION PREDICTION

AME INFO - It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field. The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.

He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.

However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.

Forecasts wrong Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?

The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy' claims that the aging Saudi oil filed also face serious production falls.

The implications for the global economy are indeed serious. If the world oil supply begins to run dry then the upward pressure on oil prices will be inexorable.

http://www.ameinfo.com/71519.html

IRAQ, OIL AND CHALABI

CBS 60 Minutes December 15, 2002

STEVE KROFT, co-host: If and when the United States decides to take military action against Iraq and get rid of Saddam Hussein, the Iraqi dictator will leave something behind: oil, and lots of it, 112 billion barrels of proven reserves, the second-largest supply in the world, behind Saudi Arabia. What happens to all that oil if Saddam goes, and what role is it playing in the current showdown with Iraq? If you ask anyone in the Bush administration about the importance of oil in the current crisis, as I did of Secretary of Defense Donald Rumsfeld a few weeksago during an interview for Infinity Radio, you get this answer. Mr. Secretary, what do you say to people who think this is about oil?

DONALD RUMSFELD (Defense Department): Nonsense. It just isn't. There--there--there are certain things like that, myths that are floating around. I'm glad you asked. I--it has nothing to do with oil, literally nothing to do with oil.

(Footage of oil worker; oil well; refinery)

KROFT: (Voiceover) Nothing? If you ask people in the oil industry, you'll get a slightly different answer. They'll tell you it definitely has something to do with oil.

Is oil part of the equation here?

Mr. PHILLIP ELLIS (Boston Consulting): Of course it is.

KROFT: No doubt?

Mr. ELLIS: No doubt.

(Footage of Phillip Ellis; Ellis and Kroft)

KROFT: (Voiceover) Phillip Ellis is head of global oil and gas operations for Boston Consulting, based in London. He travels the world planning strategies for large international oil companies. Ten days ago we went with him to get a glimpse of Saddam Hussein's oil, traveling north from Kuwait City on what is still called the Highway of Death, towards the Iraqi border. . .

KROFT: (Voiceover) Because of the UN embargo and a 20-year estrangement from Western oil technology, Ellis says Iraq is producing less than half of the oil it's capable of. He doesn't believe the US is interested in controlling Iraqi oil fields, even if it could. The United States, he says, now gets only about12 percent of its oil from the Middle East and is only interested in insuring reliable supplies at stable prices. But if there were to be a regime change in Iraq, its oil would become a prize worth billions of dollars for nations and corporations on the winning side of any conflict.

Mr. ELLIS: If Saddam's out of power, there's a friendly Western government, there's going to be technology coming from all over the world into Iraq, which they desperately need, to rebuild their--their industry.

KROFT: And presumably, some US participation in that rebuilding and reconstruction.

Mr. ELLIS: No doubt. No doubt. There's plenty of room in Iraq for every--every nationality of--of oil company and oil service company and--and financial institution. There is an enormous amount of oil in Iraq that hasn't been discovered yet, a huge amount. And not only that exploration, but the rebuilding of what's already there is going to take more capital than any one country or certainly any small handful of companies can possibly muster. It's got to be a global effort.

(Footage of oil wells; refinery)

KROFT: (Voiceover) It may take a decade or more, but Ellis says all of that Iraqi oil is going to come on the market one way or another. It's just a question of who gets most of the business.

(Footage of Saddam Hussein)

KROFT: (Voiceover) If Saddam could somehow manage to satisfy the United States and the world that he has no weapons of mass destruction, sanctions would be lifted, and the biggest contracts would go to Russian and French oil companies who already have signed contingency agreements with Saddam. But if Saddam is deposed and a new government installed, it could be a whole new ballgame.

(Footage of Ahmed Chalabi and Kroft; oil tanker trucks)

KROFT: (Voiceover) Ahmed Chalabi, the head of the Iraqi National Congress, an umbrella organization of Iraqi opposition groups, says all oil contracts negotiated by Saddam's regime will be up for review.

Mr. AHMED CHALABI (Iraqi National Congress): Any contracts are either illegal or unfair, and no Iraqi government is bound by them once Saddam goes. This isour belief, and of course, it is up to the Iraqi government in the future to decide those things.

(Footage of Chalabi)

KROFT: (Voiceover) It's impossible to know whether Chalabi or the Iraqi National Congress would be part of a new Iraqi government, but Chalabi says he has already held informal discussions with international oil companies eager to explore opportunities.

KROFT: Can you tell me which oil companies?

Mr. CHALABI: No.

KROFT: American oil companies?

Mr. CHALABI: Some.

(Footage of American gas stations; Chalabi)

KROFT: (Voiceover) The US government wouldn't allow American oil companies to deal with Saddam, and it's unlikely he would have signed contracts with them anyway. But Chalabi makes no secret of his willingness to let Americans share in the profits of a post-Saddam oil boom.

Mr. CHALABI: American companies did very well by abstaining from dealing with the illegal regime of Saddam, and American companies, we expect, will play animportant and leading role in the future oil situation in Iraq.

KROFT: You would be willing to tear up the contracts, let's say, of the Russians or the French and give those deals to the United States?

Mr. CHALABI: It's up to the future Iraqi government to do that. But my view is American companies must be introduced and given a chance to--to bid and to negotiate for the same things that these people do. The future democratic government in Iraq will be grateful to the United States for helping the Iraqi people liberate themselves and getting rid of Saddam. . .

KROFT: If Saddam Hussein is removed and a democratic government takes power in Iraq, isn't that a huge improvement in the strategic landscape for the United States as far as oil is concerned?

Mr. ELLIS: I think it is. I think it is. Given that the region is going to see several regime changes coming up in the next decade, having a--a partner would be a--a good counter to the--at least the--the--the possible downsides that we might see in other countries in the region.

KROFT: (Voiceover) Phillip Ellis is talking about Saudi Arabia. In a post-9/11 world, there are serious questions to be raised about the kingdom's political stability and uncertainties about the future of the Saudi royal family.

(Footage of oil refineries; OPEC meeting)

KROFT: (Voiceover) Right now Saudi Arabia pumps about 7.4 million barrels of crude oil every day, about 10 percent of the world's output. A fully operational oil industry in Iraq, under a new regime, with lots of Western investment, might be able to produce up to six million barrels a day within the next decade. That would weaken Saudi Arabia's dominant role in OPEC, put downward pressure on oil prices, and lessen US reliance on Saudi oil.And you could make the argument that the United States seems to be distancing itself from Saudi Arabia and not counting on Saudi Arabia anymore.

Mr. ELLIS: I think we're spreading the risk, actually. It's important not to have all--all your eggs in--in one basket.

MAY 2005. . .

SAUDIS SAY THEY WON'T BE ABLE TO MEET OIL DEMAND

FINANCIAL TIMES - Private warnings point to a worsening long-term outlook, with Saudi officials saying that the Organization of the Petroleum Exporting Countries will be unable to meet projected western demand in 10 to 15 years.

At today's prices, the world will need the cartel to boost its production from 30m to 50m barrels a day to 50m by 2020 to meet rapidly rising demand, according to the International Energy Agency, the energy watchdog for consuming countries. But senior Saudi energy officials have privately warned US and European counterparts that OPEC would have an "extremely difficult time" meeting that demand. Saudi Arabia calculates there is a 4.5m b/d gap between what the world needs and what the kingdom can provide.

http://news.ft.com/cms/s/e0cdc282-ee47-11d9-98e5-00000e2511c8,dwp_uuid=bf499000-f5eb-11d8-b814-00000e2511c8.html

MAINSTREAM MEDIA NOTICES WE MAY BE RUNNING OUT OF OIL
http://news.yahoo.com/s/ap/oil_gone

MATT CRENSON, AP - Some observers of the oil industry think so. They predict that this year, maybe next - almost certainly by the end of the decade - the world's oil production, having grown exuberantly for more than a century, will peak and begin to decline. And then it really will be all downhill. The price of oil will increase drastically. Major oil-consuming countries will experience crippling inflation, unemployment and economic instability. Princeton University geologist Kenneth S. Deffeyes predicts "a permanent state of oil shortage."

According to these experts, it will take a decade or more before conservation measures and new technologies can bridge the gap between supply and demand, and even then the situation will be touch and go. . .

There are many who doubt the doomsday scenario will ever come true. Most oil industry analysts think production will continue growing for at least another 30 years. By then, substitute energy sources will be available to ease the transition into a post-petroleum age. . .

People who consider economic forces most important believe that prices are high right now mostly because of increased demand from China and other rapidly growing economies. But eventually, high prices should encourage consumers to use less and producers to pump more. But Deffeyes and many other geologists counter that when it comes to oil, Mother Nature trumps Adam Smith. The way they see it, Saudi Arabia, Russia, Norway and other major producers are already pumping as fast as they can. The only way to increase production capacity is to discover more oil. Yet with a few exceptions, there just isn't much left out there to be discovered.

APRIL 2005

SIGN OF TROUBLE: COMPANIES GOING FOR DEEP OIL
http://www.missoulian.com/articles/2005/04/23/business/biz04.tx

MARY PEMBERTON ASSOCIATED PRESS - BP and Conoco Phillips are betting that heavy oil in Alaska will result in a big payoff.
Heavy oil - which has the consistency of thick molasses instead of olive oil - lies in sandstone above the huge reservoir of North Slope light oil that has been flowing down the trans-Alaska pipeline since 1977. With that reservoir being drawn down, the companies are turning to hard-to-pump heavy oil to extend the life of the oil fields.

Viscous oil makes sense because of increases in worldwide oil demand, said Phil Flynn, senior energy analyst for Alaron Trading Co., a Chicago-based futures brokerage firm. "These alternative fuels that we thought just a few years ago would never be profitable to get out of the ground, at $50 a barrel it is," Flynn said. "We are going to find more and more situations where we are going to squeeze every barrel out of the ground." The companies describe their joint effort as unprecedented. So far, they've spent over $1 billion on heavy oil and are putting millions more into the effort.

HOW MOONSHINING CAN HELP YOU WITH THE FUEL CRISIS
http://www.flashnews.com/news/wfn1050414J12180.html

WIRELESS FLASH - Americans who want to fight back against high gas prices are taking a tip from moonshiners. That's according to an unemployed Michigan ditch-digger who is using his time off to build personal home distilleries that let folks turn corn, potatoes or other starchy materials into ethanol - an alcohol that can be used to power cars. It's basically the same process used to make moonshine, except you mix a little bit of gasoline in the final product so it will burn properly in an auto engine.

Inventor Paul Cavalloro's Micro Fuel Plant can produce four gallons of fuel per day from 20 gallons of liquified apples, corn or other raw materials. . . Cavalloro says he's had 36 orders for the stills since he started selling them for $250 a pop a few days ago, mostly to people in high gas price hubs like California.

DECEMBER 2004

NO ESCAPE FROM OIL DEPENDENCY

MICHAEL KLARE, TOM DISPATCH - America is more dependent on foreign oil than ever before and the Bush administration has no exit strategy for getting out of the perpetual crisis. . . The onset of this new energy crisis was first signaled in January 2004, when Royal Dutch/Shell - one of the world's leading energy firms - revealed that it had overstated its oil and natural gas reserves by about 20 percent, the net equivalent of 3.9 billion barrels of oil or the total annual consumption of China and Japan combined.

Another indication of crisis came only one month later, when the New York Times revealed that prominent American energy analysts now believe Saudi Arabia, the world's largest oil producer, had exaggerated its future oil production capacity and could soon be facing the wholesale exhaustion of some of its most prolific older fields. Although officials at the U.S. Department of Energy insisted that these developments did not foreshadow a near-term contraction in the global supply of energy, warnings increased from energy experts of the imminent arrival of "peak" oil - the point at which the world's known petroleum fields will attain their highest sustainable yield and commence a long, irreversible decline.

How imminent that peak-oil moment may in fact be has generated considerable debate and disagreement within the specialist community, and the topic has begun to seep into public consciousness. A number of books on peak oil - "Out of Gas" by David Goodstein, "The End of Oil" by Paul Roberts, and "The Party's Over" by Richard Heinberg, among others - have appeared in recent months, and a related documentary film, "The End of Suburbia," has gained a broad underground audience.

As if to acknowledge the seriousness of this debate, the Wall Street Journal reported in September that evidence of a global slowdown in petroleum output can no longer be ignored. While no one can say with certainty that recent developments portend the imminent arrival of peak oil output, there can be no question that global supply shortages will prove increasingly common in the future.

Nor is the evidence of a slowdown in oil output the only sign of an unfolding energy crisis. Of no less significance is the dramatic increase in energy demand from newly-industrialized nations - especially China. As recently as 1990, the older industrialized countries (including the former Soviet Union) accounted for approximately three-quarters of total worldwide oil consumption. But the consumption of petroleum in developing nations is growing so rapidly - at three times the rate for developed countries - that it is soon expected to draw even.

NOVEMBER 2004

CHINA'S OIL NEEDS SOARING

TELEGRAPH, UK - China's insatiable demand for energy is prompting fears of financial and diplomatic collisions around the globe as it seeks reliable supplies of oil from as far away as Brazil and Sudan. . . Increased car usage in China is creating a high demand for petrol . . .

The Brazil trade deal included funding for a joint oil-drilling and pipeline program at a cost that experts said would add up to three times the cost of simply buying oil on the market. The West, however, has paid little attention to these developments. For the United States and Europe are far more concerned with the even more sensitive issues of China's relations with "pariah states." In September, China threatened to veto any move to impose sanctions on Sudan over the atrocities in Darfur. It has invested $3 billion in the African country's oil industry, which supplies it with seven per cent of its needs. Then, this month, it said that it opposed moves to refer Iran's nuclear stand-off with the International Atomic Energy Agency to the United Nations Security Council.

A week before, China's second biggest state oil firm had signed a $70 billion deal for oilfield and natural gas development with Iran, which already supplies 13 per cent of China's needs. China has its own reserves of oil and natural gas and once was a net oil exporter. But as its economy has expanded by an average of nine per cent per year for the last two decades, so has its demand for energy. This year it overtook Japan as the world's second largest consumer of energy, behind the US.

SEPTEMBER 2004

FORGOTTEN BUSH 2000 CAMPAIGN DOCUMENT REVEALS OBSESSION WITH IRAQI OIL

Unnoted during the 2000 campaign, and forgotten since, is a remarkable document the Bush campaign released on September 29 of that year in Saginaw, Michigan: "A Comprehensive National Energy Policy." In the context of the campaign it was just another report, but in retrospect it was a canary in the mine shift, warning of Bush's obsession with Iraq and its importance in the country's oil supply. The document lends support to those who argue that the Iraq war was mainly about oil. Some excerpts:

- "To promote the development of U.S. oil and gas resources, and to meet the electricity needs of the new economy, Governor Bush will open only 8 percent of the Arctic National Wildlife Refuge to environmentally responsible exploration, which could replace the oil that the U.S. now imports from Iraq."

- "Internationally [the Clinton-Gore Administration] has squandered U.S. credibility with oil-producing nations in the Persian Gulf that can influence OPEC policies. This leadership failure has increased Iraqi leverage over the U.S. and international economies."

- "Increasing OPEC and Iraqi Influence. . . When the Clinton-Gore Administration took office in January of 1993, the Gulf War coalition was intact, economic sanctions were in place against Iraq, UN weapons inspectors were operating in Iraq, there was an active Iraqi opposition, and U.S. influence in the Gulf was at an all-time high. Almost eight years later, due to the failed leadership of the Administration: the international coalition assembled during the Gulf War has come apart; UN inspectors have not set foot in Iraq for almost two years, failing to monitor any attempts to produce weapons of mass destruction; the Administration has spent only a negligible amount of the $97 million appropriated by Congress under the Iraq Liberation Act to support the Iraqi resistance; U.S credibility in the Gulf is so low that the United Arab Emirates and Bahrain-once critical members of the Gulf War coalition-recently restored full diplomatic relations with Iraq."

- "As U.S. influence in the Gulf has waned, Iraq's relative influence as an oil supplier to U.S. and world markets has increased: Iraq is now the fastest growing oil supplier to the United States, selling 850,000 barrels of crude oil a day to the United states in June or over seven percent of total imports. . . As spare production capacity becomes tighter, Iraq is moving into a position to become an important "swing producer," with an ability to single handedly impact and manipulate global markets. . . "Perhaps most ominously, Saddam Hussein is threatening to cut back production is again claiming that Kuwait is stealing Iraq's oil--the same claim Iraq made in 1990."

BUSHS ENERGY PROGRAM

JULY 2004

UN AUDITORS HIT SPENDING OF IRAQ OIL REVENUES

FINANCIAL TIMES - United Nations-mandated auditors have sharply criticised the US occupation authority for the way it has spent more than $11bn in Iraqi oil revenues and say they have faced "resistance" from coalition officials.

In an interim report, obtained by the Financial Times, KPMG says the Development Fund for Iraq, which is managed by the US-led Coalition Provisional Authority and channels oil revenue into reconstruction projects, is "open to fraudulent acts".

The auditors criticise the CPA's bookkeeping and warn: "The CPA does not have effective controls over the ministries' spending of their individually allocated budgets, whether the funds are direct from the CPA or via the ministry of finance."

The findings come after US complaints about the UN's administration of the oil-for-food programme under Saddam Hussein.

JUNE 2004

HOW MUCH OIL IS LEFT?

ADAM PORTER, BBC - How long will the oil keep flowing? If you think oil prices are high at $40 a barrel then wait till they are four times that much. How will you pay to run your car? How will you get the children to school? How will you heat your house? How much will transported food go up in price? How will we pay for plastics, metals, rubber, cheap flights, Simpson's DVDs, 3G phones and everlasting economic growth?

The basic answer is, we won't. This is the message from the Association for the Study of Peak Oil. The group of oil executives, geologists, investment bankers, academics and others has been warning the world of high oil prices, and the ensuing fallout, for some years now. People like Ali Bakhtiari, head of strategic planning at Iran's National Oil Company , Dr Colin Campbell, a former executive vice president of Total-Fina, and Matthew Simmons, an energy investment banker and adviser to the controversial Bush-Cheney energy plan.

They are united by one idea, that global oil production is about to peak, which in turn will signal the permanent end of cheap oil. And they warn that this is the foundation of the current rise in oil prices. . . The adherents of the peak oil theory warn the decline of world oil output will force oil prices higher for good, and that the knock on effects could be catastrophic. In my opinion, unfortunately, there will be no linear change," says Iran's Ali Bakhtiari. "There will only be sudden explosive change."

"The people who will be least affected will be the super poor, who already have no access to energy, and the super rich who do not care if oil is $100 a barrel." "It is everyone who is in the middle who will be hurt the most," says Mr Bakhtiari. "When the crisis comes there will be enormous changes."

Much of ASPO's predictions stem from the calculations of Dr Campbell. His work on oil reserves has long suggested that many official oil data are either flawed estimates or at worst downright lies. Scandals like the 23% of 'lost' reserves at Royal Dutch Shell have helped to boost interest in his work. Dr Campbell's conclusion: oil production and consumption should be regulated by governments.

MAY 2004

CHENEY'S OIL FIELDS

APRIL 2004

OIL RESERVES OVERSTATED

Jane's Foreign Report - The oil industry has been gripped by scandal since Royal Dutch/Shell twice this year downgraded its proven oil reserves by 20 per cent, or nearly 4bn barrels. Shell may not be alone.

Other companies and even governments have hyped up the estimates of how much oil they have, which is a vital factor in measuring their economic health. If exaggeration proves to be widespread, it would have an immense impact on the Middle East, whose economic weight is almost totally dependent on oil and natural gas.

Geologists and analysts have been saying for some time that estimates of global oil reserves may be dangerously exaggerated. If you take oil prices currently at around US$37 a barrel, the highest for nearly 15 years, US petrol prices at record levels and you add terrorist attacks and diminishing supplies, you have a recipe for inflation and economic slowdown. The question of reserves becomes a much more important factor.

Earlier this month, The New York Times reported that internal documents and other data indicated that Shell had over estimated its proven oil reserves in Oman by as much as 40 per cent. But that seems to have been done because everyone hoped that the latest drilling techniques would reach more deposits than in the past and merit upgrading the estimates of reserves.

The Oman estimates were based on assessments made in May 2000 by a senior Shell executive who was subsequently fired. He was among several executives who were said to have known about the unrealistic estimates of reserves and to have done nothing about it. . .

As the world's natural resources shrink and global warming changes the environment, competition for unimpeded access to them has intensified and will continue to do so. About four-fifths of the world's known oil reserves lie in politically unstable or contested regions.

EXPECTED OIL RESERVES
MORE BBC CHARTS

BANDAR SAYS SAUDIS READY TO LOWER OIL PRICES TO KEEP BUSH IN OFFICE

SIXTY MINUTES - Saturday, Jan. 11, with the president's permission, Cheney and Rumsfeld call [Saudi Arabian Prince] Bandar to Cheney's West Wing office, and the chairman of the Joint Chiefs, Gen. Myers, is there with a top-secret map of the war plan. And it says, 'Top secret. No foreign.' No foreign means no foreigners are supposed to see this," says Woodward.

"They describe in detail the war plan for Bandar. And so Bandar, who's skeptical because he knows in the first Gulf War we didn't get Saddam out, so he says to Cheney and Rumsfeld, 'So Saddam this time is gonna be out, period?' And Cheney - who has said nothing - says the following: 'Prince Bandar, once we start, Saddam is toast.'"

After Bandar left, according to Woodward, Cheney said, "I wanted him to know that this is for real. We're really doing it."

But this wasn't enough for Prince Bandar, who Woodward says wanted confirmation from the president. "Then, two days later, Bandar is called to meet with the president and the president says, 'Their message is my message,'" says Woodward.

Prince Bandar enjoys easy access to the Oval Office. His family and the Bush family are close. And Woodward told 60 Minutes that Bandar has promised the president that Saudi Arabia will lower oil prices in the months before the election - to ensure the U.S. economy is strong on election day.

FEBRUARY 2004

FORECAST OF RISING OIL DEMAND CHALLENGES TIRED SAUDI FIELDS

JEFF GERTH, NY TIMES - Ever since its rich reserves were discovered more than a half-century ago, Saudi Arabia has pumped the oil needed to keep pace with rising needs, becoming the mainstay of the global energy markets. But the country's oil fields now are in decline, prompting industry and government officials to raise serious questions about whether the kingdom will be able to satisfy the world's thirst for oil in coming years. Energy forecasts call for Saudi Arabia to almost double its output in the next decade and after. Oil executives and government officials in the United States and Saudi Arabia, however, say capacity will probably stall near current levels, potentially creating a significant gap in the global energy supply.

DECEMBER 2003

THE LOOMING OIL DISASTER

GEORGE MONBIOT, GUARDIAN - The oil industry is buzzing. On Thursday, the government approved the development of the biggest deposit discovered in British territory for at least 10 years. Everywhere we are told that this is a "huge" find, which dispels the idea that North Sea oil is in terminal decline. You begin to recognize how serious the human predicament has become when you discover that this "huge" new field will supply the world with oil for five and a quarter days.

Every generation has its taboo, and ours is this: that the resource upon which our lives have been built is running out. We don't talk about it because we cannot imagine it. This is a civilization in denial. Oil itself won't disappear, but extracting what remains is becoming ever more difficult and expensive. The discovery of new reserves peaked in the 1960s. Every year, we use four times as much oil as we find. All the big strikes appear to have been made long ago: the 400 million barrels in the new North Sea field would have been considered piffling in the 1970s. Our future supplies depend on the discovery of small new deposits and the better exploitation of big old ones. No one with expertise in the field is in any doubt that the global production of oil will peak before long.

The only question is how long. The most optimistic projections are the ones produced by the US Department of Energy, which claims that this will not take place until 2037. But the US energy information agency has admitted that the government's figures have been fudged: it has based its projections for oil supply on the projections for oil demand, perhaps in order not to sow panic in the financial markets. Other analysts are less sanguine. The petroleum geologist Colin Campbell calculates that global extraction will peak before 2010. In August the geophysicist Kenneth Deffeyes told New Scientist that he was "99 per cent confident" that the date of maximum global production will be 2004. Even if the optimists are correct, we will be scraping the oil barrel within the lifetimes of most of those who are middle-aged today.

The supply of oil will decline, but global demand will not. Today we will burn 76 million barrels; by 2020 we will be using 112 million barrels a day, after which projected demand accelerates. If supply declines and demand grows, we soon encounter something with which the people of the advanced industrial economies are unfamiliar: shortage. The price of oil will go through the roof.

JUL 2003

HOW IMPORTANT IS AFRICAN OIL?

BBC - President George W Bush is in Africa to launch HIV/Aids, development and anti-terrorism initiatives. But his visit has also highlighted the growing importance of oil imports for the United States. The US imports two thirds of its oil needs. About 15% of that amount comes from West Africa and that figure is projected to rise to 25% in the next 10 years. The oil sector in Sub-Saharan Africa is one of the fastest growing in the world. Production has taken off in the Gulf of Guinea which includes Nigeria, Equatorial Guinea, Cameroon, Gabon, Angola and Congo.

By the end of 2003, hundreds of thousands of barrels of crude will be flowing from oil fields in Chad, through rain forests in Cameroon to tankers docked off the Atlantic coast.

. . . America may even eventually increase its military presence in the region to secure its oil supplies. Sao Tome - which has big oil reserves - has invited the US Navy to build a port from which to patrol the Gulf of Guinea. But some analysts say investing in African oil reserves will not solve all America's energy problems.

. . . Africa and Russia are not going to replace Saudi Arabia which has excess capacity which can stabilize the market Professor Paul Stevens, Dundee University "There is a move to reduce reliance on the Middle East but Africa also has its problems. Look at the recent strikes in Nigeria."

MAR 2003

RUMSFELD TRIED TO EMBED BECHTEL AND HIMSELF
WITH SADDAM AS IRAQ GASSED IRANIANS

[A stunning new report shines new light on the involvement of Donald Rumsfeld and Bechtel with the Saddam Hussein regime in the 1980s, giving lie to the Bush administration's insistence that the war on Iraq has nothing to do with oil. In fact, the war can be seen in part as an attempt to complete a business deal that Rumsfeld started back then. The report was issued by the Sustainable Energy and Economy Network and the Institute for Policy Studies]

REPORT - Our examination shines a new spotlight on the revolving door between Bechtel and the Reagan Administration that drove U.S.-Iraq interactions between 1983 and 1985. The men who courted Saddam while he gassed Iranians are now waging war against him, ostensibly because he holds weapons of mass destruction. To a man, they now deny that oil has anything to do with the conflict. Yet during the Reagan Administration, and in the years leading up to the present conflict, these men shaped and implemented a strategy that has everything to do with securing Iraqi oil exports. All of this documentation suggests that Reagan Administration officials bent many rules to convince Saddam Hussein to open up a pipeline of central interest to the US, from Iraq to Jordan. This project, the Aqaba pipeline, was critical not only because it would mean more oil flowing to Western markets; crude would also avoid the thorny Persian Gulf and Straits of Hormuz altogether by passing, instead, through the Red Sea. . .

[This paper] notes that the break in US-Iraq relations occurred not after Iraq used chemical weapons on the Iranians, nor after Iraq gassed its own Kurdish people, nor even after Iraq invaded Kuwait, but rather, followed Saddam's rejection of the Aqaba pipeline deal. Finally, this paper shows that the main actors in the 1980s drama are now back on center stage, this time justifying military action against Iraq in terms of national security. These men's conduct during the Reagan administration - when they negotiated a major oil pipeline deal on behalf of Bechtel with Iraq - belies their present insistence that Saddam Hussein must be toppled because he holds weapons of mass destruction and is tied to terrorists. Among our key findings, confirmed by never-before published government and corporate documents:

1. Secretary of State George Shultz orchestrated the initial discussions with Iraq. Out of public view, he pushed the pipeline project on behalf of his former company, Bechtel. Behind the scenes, Shultz composed Donald Rumsfeld's pipeline pitch to Saddam. (At the time, Rumsfeld, officially, was a special envoy on a peace mission to the Middle East.)

2. From 1983 to 1988, Iraqi warplanes dropped over 13,000 chemical bombs. Iran first reported Iraq's use of chemical warfare well before Rumsfeld met with Saddam in a great victory. Reagan's envoy recorded no discussion of this horror. Instead, Rumsfeld impressed upon Saddam the U.S.'desire to help Iraq increase its oil exports.' He reiterated this desire in a March 26, 1984, meeting with Iraqi Deputy Prime Minister Tariq Aziz, the same day that a UN panel unanimously concluded that Iraq dropped chemical munitions on Iranian troops.

3. Four days after officially condemning Iraq for using chemical weapons on the Iranians, the State Department desk officer for Iraq pressured U.S. Export-Import Bank to initiate short-term loans for Iraq "for foreign relations purposes" - to build a pipeline from Iraq to Jordan.

4. Following Hussein's use of chemical weapons on the Iranians, the only response was instructions, recorded by Shultz, to the Iraqis that they not put Americans in the "embarrassing situation" of buying future chemicals that could be the "source of supply for anything that could contribute to production of CW [chemical weapons]." Reagan officials spent much more time decrying the role of "Iranian revolutionaries" in fostering bloodshed. In private, they forged ahead with the pipeline plan and assured the Iraqis that "we do not want this issue to dominate our bilateral relationship."

5. The U.S. Export-Import Bank and U.S. Overseas Private Investment Corporation, two government-backed export guarantee and credit agencies, were pressured by the Reagan Administration and private individuals lobbying on behalf of Bechtel to provide over $500 million in financing and insurance to the Aqaba pipeline.

6. Government officials and pipeline agents attempted several dubious methods of assuaging Hussein's concerns about a possible Israeli attack on the pipeline. These included secret plans to funnel pipeline income into the Israeli Labor Party and to assign U.S. aid to Israel or U.S. Defense Department funds as collateral in case of an attack on the pipeline. Judge William Clark, while on the payroll of the Bechtel pipeline promoters, flew to Baghdad as a representative of President Reagan and the National Security Council.

7. Two years after Rumsfeld first pitched the plan, Saddam issued a terse rejection. U.S.- Iraqi business relations have never been the same.

8. Many of the same U.S. officials and quasi-officials involved in the Aqaba pipeline project have orchestrated the current Bush/Cheney initiative against Iraq. In recent months, these men have denied any linkage between oil and war; but in previous years, these men repeatedly invoked the Iraqi threat to global energy security as a just cause for war. The hard lesson of the Aqaba pipeline project, it seems, is that an "evil dictator" is a friend of the United States when he is willing to make a deal, and a mortal enemy when he is not.

BUSH POST WAR PLANS AMOUNT
TO HISTORY'S BIGGEST GIVEAWAY
TO POLITICAL BUDDIES

DIANA B. HENRIQUES, NY TIMES - War began last week. Reconstruction starts this week. That, at least, is how it looks to government contract officers, who in the coming days plan to give American companies the first contracts to rebuild Iraq, a task that experts say could eventually cost $25 billion to $100 billion. It would be the largest postwar rebuilding since the Marshall Plan in Europe after World War II. . .

The companies that have been invited to bid on the work include some of the nation's largest and most politically connected construction businesses. Among them are Halliburton, where Vice President Dick Cheney served as chief executive from 1995 until mid-2000; the Bechtel Group, whose ranks have included several Republican cabinet alumni; and Fluor, which has ties to several former top government intelligence and Pentagon procurement officials.

Others bidding on reconstruction business are the Parsons Corporation, the Louis Berger Group and the Washington Group International, which absorbed Morrison-Knudsen in 1996. . .

No company has firmer political connections than Kellogg Brown & Root, the engineering and construction arm of Halliburton. Besides its links to Mr. Cheney, the company has been a major military contractor since World War II. Most recently, it handled the high-speed construction of the Guantánamo prison compound for terror suspects .

But since last May, the company has also come under scrutiny by the Securities and Exchange Commission, which is investigating how the company has accounted for cost overruns on its construction and engineering work since 1998. And this spring, its shareholders will vote on a proposal, sponsored by two giant New York City pension funds, calling for a review of Halliburton's previous business ties to Iran.

Louis Berger, based in East Orange, N.J., could be a dark-horse contender in the Iraq reconstruction sweepstakes. Besides its work on an ambitious pipeline to carry oil from Tengiz, Kazakhstan, to a deep-water port on the Black Sea in Russia, the privately held firm has been an important government contractor in the Balkans for years. More recently, it won a contract to oversee extensive infrastructure development in postwar Afghanistan. The centerpiece of the $300 million contract was the rebuilding of a shattered 600-mile highway from Kabul to Herat. . .

Bechtel is considered the largest contractor in the country, and one of the largest in the world. Its board includes a former secretary of state, George P. Shultz, and its ranks once included a former defense secretary, Caspar W. Weinberger. . . It is facing a political meltdown of its own in Massachusetts, where it is under severe criticism by the state's inspector general for more than $1 billion in cost overruns on the tunnel and highway construction project in Boston, the so-called big dig. Governor Mitt Romney of Massachusetts has ordered an independent review of the project, which was managed for the Massachusetts Turnpike Authority by Bechtel and its joint venture partner, Parsons Brinckerhoff - which is not related to the Parsons Corporation that is bidding on the Iraqi work. . .

Fluor, based in Aliso Viejo, Calif., is not currently working on any Agency for International Development projects, but it has extensive experience building petroleum facilities in difficult places. It is building an enormous plant on Sakhalin Island, off Russia's Pacific coast, for an international consortium that includes Exxon Mobil, and is developing oil and gas fields in Kazakhstan for a consortium whose largest member is ChevronTexaco.

Last April, Fluor hired Kenneth J. Oscar, who as acting assistant secretary of the Army oversaw the Pentagon's $35 billion-a-year procurement budget. Its board includes Bobby R. Inman, a retired admiral who was also former director of the National Security Agency and deputy director of the Central Intelligence Agency.

Fluor is currently in arbitration to untangle a dispute with Anaconda Nickel in Australia over Fluor's work on a $615 million nickel-cobalt processing plant in western Australia. Fluor has disputed the accusations of poor workmanship, but Anaconda has collected millions of dollars in compensation in the first phase of the arbitration.

A spokesman for Fluor, Jerry Holloway, confirmed that it had been invited to bid on the work in Iraq but said he could not comment on the scale or scope of the contracts.

Parsons, an employee-owned company based in Pasadena, Calif., is one of Bechel's most formidable rivals in the construction market. . . It does not have the prominent political connections that Bechtel and Fluor have, though the labor secretary, Elaine Chao, served on its board for about a year before joining the cabinet in January 2001.

In 1998, Parsons won a contract to take over the vehicle inspection program in New Jersey, a deal that has mired the company in a long dispute over delays and malfunctions. But last year, the state renewed the company's contract for another two years, though it cut the company's pay rate and established penalties for poor service. . .

Confidential contract documents indicate that companies will be paid under an arrangement known as "cost plus fixed fee." Once the cost of a project is established, the contractor is entitled to recover those costs plus a fee that is a fixed percentage of those costs. That percentage is generally 8 to 10 percent, although the security precautions required under the Iraq contracts might justify a higher fee in some cases, construction industry analysts said.

The fast-track reconstruction bidding is already drawing fire in Congress. "We can't tell the taxpayers in this country, who are going to be asked to foot the bill for all of this, what the charge is going to be in the aftermath," Senator Christopher Dodd, a Connecticut Democrat who is on the Foreign Relations Committee, complained recently. "Apparently, I think the administration believes that they can get away with it, that the Congress will not do anything about it."

CARLYLE GROUP CASHING
IN AS TANKS ROLL

Jamie Doward, OBSERVER - It is the sort of thing they really could have done without. For 15 years one of America's most powerful venture capital groups has tried to play down suggestions that its multi-billion dollar funds get fat on the back of global conflict. But now, with the invasion of Iraq under way, a new book chronicling the relatively short history of the Carlyle Group threatens to draw attention to the company's close links with the Pentagon. Dan Briody, author of the Iron Triangle, Inside the Secret World of the Carlyle Group, alleges the company's executives were so worried about his book they told staff not to talk to him. The Carlyle Group rejects this and argues the book is little more than a cuttings job based around some of the more crazy conspiracy theories found on the internet. It also points out that only around 7 per cent of its funds are invested in defense companies, far less than several other venture capital groups. . .

But Briody's account of how an upstart venture capital firm went from nothing to managing funds of nearly $14 billion in just 15 years, earning investors returns of around 36 per cent, is likely to reinforce the controversial image of the Carlyle Group and raise concerns about its influence in Washington and beyond.

Sometimes called the Ex-Presidents Club, Carlyle has a glittering array of ex-politicians and big league bankers on its board. Former secretary of state James Baker is managing director while ex-secretary of defense Frank Carlucci is chairman. George Bush senior is an adviser. John Major heads up its European operations. To give the conspiracy theorists plenty of ammunition, US newspapers have also highlighted the fact that current Defense Secretary Donald Rumsfeld was a wrestling partner of Carlucci's at Princeton and the two have remained close friends ever since.

Perhaps Carlyle's most famous acquisition was United Defense in 1997. The company had developed a huge 40-ton howitzer, the Crusader, which, despite widespread opposition from the army, was commissioned by the Pentagon. The $665m contract was signed just two weeks after the attacks on the twin towers and less than a month later Carlyle decided to take the company public in a move that was to earn the group nearly $240m. Months later the Crusader program was scrapped while United Defense was handed a new contract to build a lighter gun. . .

In the wake of 11 September came a fear of anthrax attack. One company that benefited was Pittsburgh- based IT Group, which won a number of contracts to clean up anthrax-infected buildings, including the Hart Senate Office Building. Carlyle owned 25 per cent of the firm, which it subsequently sold on. Likewise its investment in US Investigation Services, a company that specializes in checking the background of employees, saw business improve dramatically. . .

Last month it bought CSX Lines, an ocean carrier firm that specializes in shipping heavy equipment. One of its biggest customers is the US military. Late last year it bought Firth Rixson, a specialist engineering firm that makes aerospace parts. It also has a 33 per cent stake in Qinetiq, the government's Defense Evaluation and Research Agency. Whatever Carlyle says, its image as being at the apex of what Eisenhower termed the 'military industrial complex' endures.

DENNIS KUCINICH
ON THE OIL CONNECTION

[Although Dennis Kucinich was aggressively attacked by Washington Post columnist Richard Cohen for suggesting that the preemptive strike on Iraq was based on oil, the Post refused to print the presidential candidate and Ohio Democrat's response.]

REP. DENNIS KUCINICH, ALTERNET - Is President Bush's war in Iraq about oil? Of course it is. Sometimes, the obvious answer is the right one: Oil is a major factor in the President's march to war, just as oil is a major factor in every aspect of U.S. policy in the Persian Gulf. Ask yourself:

What commodity accounts for 83 percent of total exports from the Persian Gulf? What is the U.S. protecting with our permanent deployment of about 25,000 military personnel, 6 fighter squadrons, 6 bomber squadrons, 13 air control and reconnaissance squadrons, one aircraft carrier battle group, and one amphibious ready group based at 11 military installations in the countries of the Persian Gulf? . . .

What was Iraq's number one export when the U.S. made an alliance with Saddam Hussein, sold him biological and chemical weapons agents, and then did not object when he gassed his own people? For what major Iraqi resource has Saddam Hussein denied contracts with the largest U.S. and U.K. multinational companies? . . .

How do the White House and State Department plan to pay for a post-Saddam occupation and reconstruction?
The answer to all of these questions is oil, of course. Oil obviously drives U.S. policy in the Middle East. So who can doubt that this war in Iraq concerns oil?

FEB 2003

ECONOMIST - Whether the current high level of oil prices, constitutes a big economic shock is unclear. Indeed, it is not wholly clear why prices are quite so high. Uncertainty about war with Iraq is a factor: oil traders are worried that military intervention would interrupt the supply of oil from Iraq, currently running at around 2m barrels a day. They also wonder whether a prolonged conflict would affect supplies from other Middle Eastern oil producers, either because of physical damage to oilfields or because of some sort of political embargo on oil supplies. The Malaysian prime minister has already floated the idea of Muslim countries imposing such an embargo on Western consumers.

But Iraq doesn't wholly explain the recent spike in prices. Three other factors are also in play. One is the coldest winter in the northern hemisphere for many years. Demand for oil, always higher during the northern winter, has risen sharply. Another factor is the big drop in American oil stocks, now at their lowest level for years. Even the Bush administration's declared readiness to release some of America's massive contingency reserve of oil has failed to calm fears about the impact war might have on already tight supply.

The third factor keeping the oil market tight is supply constraints outside the Middle East. The lengthy strike in Venezuela had a big impact, especially in America, its main customer. Although the strike has finally ended, experts reckon it could be months before Venezuelan exports are back to pre-strike levels. And traders are now getting rattled about possible interruptions to supplies from Nigeria if there is trouble there in the run-up to the presidential election in April.

Those with long memories - and an inclination to fear the worst - keep recalling the oil-price shock of 1973-74 when, in the aftermath of the Arab-Israeli war, the Organization of Petroleum Exporting Countries used its muscle to quadruple prices within a very short space of time. This stopped the world economy dead in its tracks and gave economists a new phenomenon to worry about: stagflation (no economic growth combined with high inflation).

All the economic evidence shows that sustained oil-price rises have a big negative impact on economic growth: similar effects were seen after the next big price hike in 1978-80. More recently, the pick-up in prices in the late 1990s helped end the long boom which, in America and parts of Europe and Asia, then turned into recession. The fact that recovery since then has been so tentative explains why the recent surge in prices has alarmed some economists.

U.S. MEETS FUEL SHORTAGE WITH OIL FROM IRAQ

STATE DEPARTMENT PLOTS IRAQ OIL FUTURE

YOU MEAN LIKE THOSE INDIAN TRUST FUNDS?

ASSOCIATED PRESS - Mr Powell, offering the most explicit US assurance to date about the future of Iraq's oil industry, said future production proceeds would be held 'in trust' for ordinary Iraqis.

WAR IN IRAQ COULD BE BOON TO OIL SERVICE COMPANIES

OIL AND GAS INTERNATIONAL - France and Russia have been warned they must support the US military invasion and occupation of Iraq if they want access to Iraqi oilfields in a post-Saddam Hussein Iraq. According to a report in today's Tehran Times, US Senator Richard Lugar, a leading member of the Bush administration and Republican Party chairman of the Senate Foreign Relations Committee, said Russia and France "must be ready to stand shoulder-to-shoulder in any US-led military intervention" if they want a share of Iraqi oil. The paper quoted Lugar as saying that Paris and Moscow oil companies will be deprived of Iraqi oil and have no share in the country's resources if they refuse to join in the US war to oust Hussein.

source unknown

JUN 2002

PETER SYMONDS, BANGKOK POST - A little publicized agreement signed in the Pakistani capital of Islamabad has highlighted once again the real motives behind the US military intervention into Afghanistan - access to and domination of Central Asian oil and gas. The deal between Pakistan, Afghanistan and the Central Asian republic of Turkmenistan establishes the basis for construction of a $1.9 billion pipeline from the Turkmen natural gas fields at Daulatabad through to the south-western Pakistani port of Gawadar. A parallel oil pipeline as well as road and rail connections are also being considered, along with processing facilities at Gawadar to enable the shipment of liquefied gas. All three leaders _ new Afghan President Hamid Karzai, Pakistani President Pervez Musharraf and Turkmen President Saparmurad Niyazov _ anticipate substantial benefits from the project. War ravaged Afghanistan is hoping to garner at least $100 million a year in government revenue from transit fees and to create up to 10,000 jobs in the construction and maintenance of the pipeline and associated industries. The World Bank and Asian Development Bank have already indicated backing for the project.

The lion's share of the profits, however, will not go to the three countries but to the transnational energy giants that have been scrambling for ways to exploit the huge oil and gas reserves in Central Asia - the world's second largest after the Middle East.

. . . Bush and Vice President Dick Cheney's ties to the US oil industry are well known, but the connections do not stop there. Bush's special envoy to Afghanistan is Zalmay Khalilzad, also a key adviser to the National Security Council. In the mid-1990s, Khalilzad was the Unocal consultant hired to push through the pipeline project in Afghanistan. Ten days after the fall of Kabul to the Taliban in 1996, he wrote a comment in the Washington Post extolling the virtues of the pipeline for Afghanistan. But he added, referring to the Taliban: "These projects will only go forward if Afghanistan has a single authoritative government."

. . . Most of the major energy giants including Chevron Texaco, Exxon Mobil, BP and Halliburton have invested substantial sums in the region. Over the last five years, total US investment in Central Asia has risen from incidental sums to $20 billion, with the largest amounts destined for oil-rich Kazakhstan. And while it pays lip service to the ``war on terrorism'', [A recent article in Business Week] pointed to the underlying purpose of the US military presence: ``What is fast evolving is a policy focused on guns and oil. The guns are to protect the local regimes from Islamic radicals and to provide a staging area for attacks on Afghanistan. . . The guns, of course, will also protect the oil _ oil that Washington hopes will lessen the West's dependence on the Persian Gulf and also lift the nations of the Caucasus and Central Asia out of their grinding poverty."

MAY 2002

GIVE ME A PIPELINE OR GIVE ME DEATH

BBC: Afghanistan hopes to strike a deal later this month to build a $2 billion pipeline through the country to take gas from energy-rich Turkmenistan to Pakistan and India. Afghan interim ruler Hamid Karzai is to hold talks with his Pakistani and Turkmenistan counterparts later this month on Afghanistan's biggest foreign investment project, said Mohammad Alim Razim, minister for Mines and Industries told Reuters. "The work on the project will start after an agreement is expected to be struck at the coming summit," Mr Razim said. The construction of the 850-kilometre pipeline had been previously discussed between Afghanistan's former Taliban regime, US oil company Unocal and Bridas of Argentina. The project was abandoned after the US launched missile attacks on Afghanistan in 1999. Mr Razim said US energy company Unocal was the "lead company" among those that would build the pipeline, which would bring 30bn cubic meters of Turkmen gas to market annually. Unocal - which led a consortium of companies from Saudi Arabia, Pakistan, Turkmenistan, Japan and South Korea - has maintained the project is both economically