What journalists should be asking about the no-bid Iraqi oil deals
by Gilbert Keith
What journalists should be asking about the no-bid Iraqi oil deals
What was the Bush administration’s involvement in the recent deals?
By Nick Turse
Jul. 14, 2008 | On June 19, the New York Times broke the story in an article headlined “Deals With Iraq Are Set to Bring Oil Giants Back: Rare No-Bid Contracts, a Foothold for Western Companies Seeking Future Rewards.” Finally, after a long five years-plus, there was proof that the occupation of Iraq really did have something or other to do with oil. Quoting unnamed Iraqi Oil Ministry bureaucrats, oil company officials, and an anonymous American diplomat, Andrew Kramer of the Times wrote: “Exxon Mobil, Shell, Total and BP … along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields.”
The news caused a minor stir, as other newspapers picked up and advanced the story and the mainstream media, only a few years late, began to seriously consider the significance of oil to the occupation of Iraq.
As always happens when, for whatever reason, you come late to a major story and find yourself playing catch-up on the run, there are a few corrections and blind spots in the current coverage that might be worth addressing before another five years pass. In the spirit of collegiality, I offer the following leads for the mainstream media to consider as they change gears from no comment to hot pursuit when it comes to the story of Iraq’s most sought after commodity. I’m talking, of course, about that “sea of oil” on which, as Deputy Secretary of Defense Paul Wolfowitz pointed out way back in May 2003, the month after Baghdad fell, Iraq “floats.”
All the News That’s Fit to Print Department
In a June 30 follow-up piece, the Times’ Kramer cited U.S. officials (again unnamed) as acknowledging the following: “A group of American advisers led by a small State Department team played an integral part in drawing up contracts between the Iraqi government and five major Western oil companies …”
In addition, he asserted, this “disclosure … is the first confirmation of direct involvement by the Bush administration in deals to open Iraq’s oil to commercial development and is likely to stoke criticism.” This scoop, however, reflected none of the evidence — long available — of the direct involvement of Bush administration and U.S. occupation officials in Iraq’s oil industry. In fact, since the taking of Baghdad in April 2003, the name of the game has been facilitating relationships between Iraq and U.S.-based and allied Western energy firms when it came to what President Bush used to delicately call Iraq’s “patrimony” of “natural resources.”
For instance, almost a year ago, the Washington Post’s Walter Pincus drew attention to a call by Bush’s Commerce Department for “an international legal adviser who is fluent in Arabic ‘to provide expert input, when requested’ to ‘U.S. government agencies or to Iraqi authorities as they draft the laws and regulations that will govern Iraq’s oil and gas sector.'” The document went on to state that, “as part of a U.S. government inter-agency process, the U.S. Department of Commerce” would be “providing technical assistance to Iraq to create a legal and tax environment conducive to domestic and foreign investment in Iraq’s key economic sectors, starting with the mineral resources sector.”
This was no aberration. Back in March 2006, for instance, the U.S. Army issued a solicitation for a two-year contract “to allow any organization or entity to support IRMO [Iraq Reconstruction Management Office] (U.S. Embassy Baghdad) to deliver an effective capacity development program utilizing predominantly U.S. and European firms, universities, institutes and professional organizations for personnel within the Iraqi Ministry of Oil …..” This was to include participation in “development programs” offered by “private companies,” long-term development through “commercial training entities in the United States and Europe for Oil and Gas specialists from the Ministry of Oil,” and the implementation of “joint government-industry activities.” Translated out of bureaucratic contract-ese, this meant that the U.S. would pay for programs to, among other things, enhance relationships between the Iraq Oil Ministry and … you guessed it … foreign firms.
In October 2006, the Department of Commerce (DOC) put out a call for experts that was nearly identical to the later solicitation discovered by Pincus. They were to aid a program facilitating “the creation of a legal and tax environment conducive to domestic and foreign investment in Iraqs [sic] key economic sectors, starting with the mineral resources sector” and provide “expertise to DOC, to other [U.S. government] agencies, or to Iraqi authorities on creating a legal and tax environment conducive to domestic and foreign investment in Iraqs [sic] oil and gas sector.” Such an individual would, in fact, act “as a liaison between [the DOC’s technical assistance arm] and key stakeholders in Iraq (such as Iraq’s Ministry of Oil, or the oil authorities in Kurdistan).”
In fact, the U.S. Trade and Development Agency notes that, in 2006 and 2007, it funded a “$2.5 million multifaceted training program for the Iraqi Ministry of Oil” to “provide critical knowledge transfer and establish long-term relationships between the U.S. and Iraqi oil and gas industry public and private sector representatives.”
It’s worth recalling that Iraq’s oil bureaucrats, about to receive such “critical knowledge” and “expertise,” were not exactly neophytes in the world of oil management. They had effectively managed the Iraqi oil industry from the time the five oil majors now slated to receive those “service contracts” were tossed out of Iraq, when its industry was nationalized in 1972, until the invasion of 2003. They had kept the country’s oil infrastructure going even after the disaster of the first Gulf War of 1990-1991, even through all the desperate final years of sanctions against Saddam Hussein’s regime.
The Pentagon-Petroleum Partnership
Another connection, long ignored in the mainstream, that reporters like Kramer might consider pursuing when it comes to the complex ties among Iraqi officials, the Bush administration, the Department of Defense (DoD) and Big Oil is the overt Pentagon connection. The DoD is, as national security expert Noah Shachtman notes, “the world’s largest energy consumer.” And, when it comes to Pentagon gas-guzzling, its post-9/11 wars and occupations, especially in Iraq, have been a boon. While the Bush administration has been working overtime to clear the path for Big Oil’s return to Iraq, the Pentagon has been paying out staggering amounts of U.S. taxpayer dollars to the very oil majors now negotiating with Iraq’s Ministry of Oil.
According to recent reports, the proposed Iraqi service contracts, which may be paid off in cash or crude oil, will be worth $500 million each. That is roughly what the Pentagon paid out on June 18 alone — the day before the Times broke its story about Big Oil’s return to Iraq — for natural gas and aviation fuel. Over half the total amount, in excess of $268 million, was handed over to one of the oil giants set to benefit from the Iraq deal: BP (formerly British Petroleum). Only days earlier, two of the other majors from the coterie of potential no-bid contractors, Exxon Mobil and Chevron, nabbed contracts from the DoD — in Exxon Mobil’s case, a $73 million deal for gasoline and fuel oil; in Chevron’s, a $16 million contract for aviation fuel.
Keep in mind, however, that — although you won’t learn this in your daily paper — this has long been standard operating procedure. Each of the oil giants named in the original New York Times piece — Exxon Mobil, Shell, Total, BP and Chevron — regularly show up on the Pentagon’s payroll. In fact, last year, Iraq’s new fave five took home more than $4.1 billion from the DoD — with Shell leading the way with $2.1 billion.
It’s no secret that the Pentagon relies on vast quantities of oil to power the ships, planes, helicopters, heavy armor and other ground vehicles essential to its occupation of Iraq, nor that it regularly pays out vast sums of taxpayer dollars to the very companies that U.S. advisors have aided in working out oil deals with the Iraq Oil Ministry. Despite ample evidence of the Pentagon connection, this circular and mutually reinforcing relationship has been almost totally ignored in the mainstream media. But think of it this way: Your tax dollars have given the Pentagon the opportunity to use up oil — bought from the oil majors, in prodigious quantities — in order to create a situation in Iraq in which those same majors will soon receive no-bid contracts to make money off the Iraqi oil industry and, if all goes well, get far better, longer-term deals in the near future.
One Big, Happy, Oily Family
It turns out that, despite that story the Times broke as if something totally new were on the horizon, the Bush administration has been facilitating ties between the Iraqi government and foreign oil companies for years, and the same companies now likely to nab a no-bid toehold in Iraq’s oilfields are intimately tied in to the Pentagon to the tune of billions of dollars annually. It’s worth noting that most of these firms have also been closely connected to Vice President Dick Cheney from the early days of the Bush administration. In fact, executives from Exxon Mobil, Shell and BP met behind closed doors with Cheney’s energy task force in 2001, when the administration was pounding out its energy policies, according to a White House document obtained by the Washington Post. The Government Accountability Office also found that Chevron was just one of several companies that “gave detailed energy policy recommendations” to the task force.
It’s almost impossible to tease out all the interconnections between Big Oil, the White House, the Pentagon, and the Iraqi Ministry of Oil, since they are tied together in a web of contracts and mutually supporting relationships built up over many years. However, just in case the Times wants to set its staff loose on the recent past, there is no mistaking the many ties that exist. (A small tip for Times researchers: Skip the Times archives. They will be of little help.)
Should further evidence be necessary, when it comes to those U.S. advisors at work in Iraq, mainstream reporters need look no further than the solicitations sent out by the Iraqi Ministry of Oil itself. Consider, for instance, a recent “tender” for a contractor to drill “two deep exploration wells” in the South Rumaila and Luhais oil fields in the Basra District of southern Iraq. Not only does the solicitation (the deadline for which is July 27, 2008) contain special instructions for “Companies outside Iraq,” but it asks potential contractors to send their bids to the Ministry of Oil not in Arabic, but “in the English language.”
— By Nick Turse