Oil politics 101

Oil and Conflict in Persian Gulf

Notes by Dr. Eric T. Karlstrom, professor of Geography at CSUS, for Human Ecology class (GEOG 3020) ca. 2000

ETK Introduction:

These notes provide a very brief introduction to “petro-politics” in the Middle East. Certainly, oil and natural gas are among the primary reasons that the U.S.A. repeatedly invades, occupies, and dismantles sovereign nations in the Middle East such as Iraq and Afghanistan. There are also other important factors in play, such as the Jewish neocons’ drive to establish overwhelming American dominance in the 21st century (the so-called “New American Century”) that also includes the establishment and protection of “Greater Israel” (Eretz Israel). However, these factors can be seen as overlapping and roughly complimentary.

About 2/3 of world’s oil supply is in the Persian Gulf. The world’s economy runs on oil and fossil fuels. The first petroleum was discovered there in 1908 in Iran. And the oil is quite close to the surface here so it’s easy to drill and recover.

Country amount of oil in billion barrels (bbl) % or world’s proven reserves

Saudi Arabi 263.5 25
Iraq 112.5 11
United Arab Emirates 97.8
Kuwait 96.5
Iran 89.7

If you include Bahrain, Oman, Qatar, and Yemen, these 9 countries possess 673 billion barrels of untapped oil- or 65% of world’s supply. They produced about 21.3 million barrels of oil/day in 1999, or 30% of world’s oil. They can continue to produce at this level for several decades maybe.

The U.S. currently produces 2.8 bbls/year. U.S. reserves are estimated at 28.6 bbl.

U.S. Dept. of Energy predicts that worldwide consumption of oil will increase 55% between 1997 and 2020. Hence, Persian Gulf oil is expected to increase its contribution of worldwide oil consumption from 27% in 1997 to 39% in 2020. Also, global imports of Gulf Oil are expected to more than double from 16.3 mmb/day in 1997 to 36.4 mmb/day in 2020. China, especially, is expected to increase its imports by nearly 10 times in that time period.

American “vital interests:” Pres. Jimmy Carter, in 1980, made a speech in which he described the Gulf as a “vital interest” of the U.S. He warned that the US would use military force to repel an attack on this area. He authorized an expanded US military presence in the area. Now (as of 2001), currently US troops are stationed in Saudi Arabia, Bahrain, Qatar, Kuwait,

General Anthony C. Zinnni, commander in Chief of US Central Command (CENTCOM) stated” America’s vital interests (in the Gulf) are long-standing. With over 65% of the world’s oil reserves located within the Gulf states, the U.S. and its allies “must have free acess to the region’s resources”. After it won the 8-year war against Iran, Iraq was the strongest country in the Gulf region. It enjoyed a good standard of living, with universal health care and near equality of the sexes. It began issuing threats to Kuwait and Saudi Arabia.

Operation Desert Storm set the model of warfare in the Gulf, which includes rapid deployment of air, sea, and ground forces, and a crushing offensive employing high tech weaponry. The US deployed depleted uranium, cluster bombs,
in all killing about 60,000 Iraqi soldiers and another 140,000 civilians in Operation Desert Storm (1990-1991). Less than 50 US casualties occurred, according to the carefully controlled press accounts.

To “degrade” the capabilities of Iran and Iraq- an approach known as threat reduction- the US has imposed economic and trade sanctions in addition to conducting air and missile strikes against military targets. The UN estimates that over a million Iraqis – half of them under 5- have died due to the sanctions.

The key to US strategy has been to project overwhelming and decisive military power and to act unilaterally to create “decisive victory”. In Jan. and Feb. of 1998, the US deployed substantial force in the Gulf to conduct sustained air and missile attacks on Iraq. The strikes were made in December, 1998. This “Operation Desert Fox” was designed to cripple Iraq’s nuclear, chemical and biological weapons programs and its military capabilities.

Then the US strategy: includes economic and trade sanctions, naval blockade to enforce trade embargo, the enforcement of a no-fly zone and no-strike zone over southern Iraq, a no-fly zone over northern Iraq, and periodic air and missile attacks on military installations, pre-positioning of US military equipment in Kuwait and Qatar, and constant rotation of American combat units throughout the region. Our “peacetime commitment” has been the permanent deployment of over 20,000 US soldiers in the Gulf and the expenditure of many billions of dollars per year. By Jan, 2000, in “Operation Southern Watch” the US Air Force had flown over 240,000 individual flights over the exclusion zone and often dropped missiles. Between Dec. 98 and Aug. 99, US and British aircraft fired a total of 1,100 missiles against 350 targets.

Between 1990 and 1997, the US provided $42 billion worth of arms to its allies (the Gulf Cooperation Council)- GCC- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) inlcuding F-15 and F-16 fighter aircraft, M-1 tanks, Ah-64 Apache attack helicopters, and the Patriot air-defense missiles.

Washington’s role in the Gulf has evolved. For years, it has used a “Surrogate Strategy”- a policy of using friendly local powers as the “guardians” of Western interests with US military assistance and direction. These two main countries were Iran and Saudi Arabia.

Since OPEC oil price rises in 1972-73 gave them extra income, nations of this area have spent hundreds of billions of dollars on imported arms. This fueled the expansionist tendencies of both the Shah of Iran and Iraq’s Saddam Hussein. (the Iran-Iraq war of 1980-88 produced an estimated one million deaths and over $100 billion in property damage).

Britain and the US have both chosen to intervene in local disputes which might threaten their oil supplies.

The Three-war scenario: Plans are drawn up to conduct up to 3 wars simultaneously based on possibilities of: 1) Iraqi aggression against a neighbor, 2) an effort by Iran to close the Strait of Hormuz, or 3) internal revolt within Saudi Arabia threatening the House of Saud Royal Family.

2) Scenario 2: Iran closes Strait of Hormuz, at 6 miles wide, the narrowest point in the Persian Gulf. It is the world’s most important oil choke-point. Over 15 mb/day go through this point. Iran has over 60 million people and it has the potential to become a real regional power.

3) Protect the Saudi Regime: Since 1945, there has been an unspoken quid pro quo- the US protects the House of Saud against its enemies in return for US corporations’ access to Saudi oil. Now the greatest threat to the regime may be internal because the royal family is so corrupted by its massive oil wealth. So we have been selling them all the military hardware they need to maintain tight internal security and put down rebellions.

Caspian Sea Basin oil

Russia, Iran, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan: This area is thought to hold second or third largest reserves of petroleum and a vast supply of natural gas. The Soviet Union had dominance of the region until its breakup in 1989. And it still has the upper hand in developing reserves in some areas. But American corporations have moved in as well and there is a battle for hedgemeny over the area’s reserves. AMOCO, CHEVRON< EXXON-MOBILE, BRITISH PETROLEUM, UNOCAL, ROYAL DUTCH/SHELL, are all players. Total investments are slated to reach $50 billion by 2010. Thus, here is an area of long-term power struggle between the US and Russia. This is essentially The Great Game II. There is a power struggle to see where the oil pipelines go and who controls the oil. The area an an important geopolitical prize in the new, post Cold War era.

Russia’s objective is for a significant portion of Caspian energy to travel through the existing Russian pipeline system to the Black Sea and Europe. Russia maintains a military presence in Armenia, Azerbaijan, Georgia, Kazakhstan and Tajikistan. As of late 1999, at least 22,000 Russian troops were still stationed in these areas.

The US strategy is to develop Caspian Basin supplies as an alternative to Gulf oil supplies, to ensure that Caspian oil and gas travel to markets in the West without passing through Russia or Iran. Energy Sec. Bill Richardson: “This is about America’s energy security, which depends on diversifying our sources of oil and gas worldwide”. It’s also about preventing strategic inroads by those who don’t share our values”. So the US wants major oil consortia to build new oil and gas pipelines beneath the Caspian Sea from Kazakhstan and Turkmenistan to Azerbaijan and then to Georgia and Turkey.

Turkey is the US strategic partner in the area- having received billions in US armaments in the 90’s. We now have troops in Uzebekistan and Afghanistan. Pakistan has been an ally for years. It has stepped up its military aid to the area- a billion in last several years. In 1997, the US Dept of State told Congress than the Caspian Basin holds as much as 200 billion barrels of oil, or about a third of the Gulf’s total reserves.

Unocal spent billions to develop a pipeline that would take the oil from the Dauletabad field in east Turkmenistan to Multan in Pakistan through the middle of Afghanistan. UNOCAL suspended operations in the late 90’s due to the instability of the Taliban government.

Natural Gas- According to DOE, Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan together possess proven reserves of 236 to 337 trillion cubic feet (tcf) of gas, equivalent of reserves held in North america. and may have as much as twice that- or equiv. Of North and South America.

Already, Chevron signed a $20 billion deal with the Kazakh government to develop the Tengiz oil field on Kazakhstan’s Caspian Coast. Caspian Pipeline Consortium (CPC) was slated to build a $2.2 billion pipeline to carry Tengiz oil to Russian Black Sea port Novorossiysk. Similar projects have been arranged with the govt. of Azerbaijan.

The Hubbard Curve suggests that oil production worldwide will peak in the year 2006. World population will peak decades later. Oil in the OPEC countries will peak last. especially Iran, Iraq, and possibly North Korea (Bush’s “axis of evil”).

Oil and drug money converge, as in Vietnam and Laos. GOD = gold, oil and drugs.

Eurasia has 3/4 of known energy resources. The Caspian Basin has has estimated $5 trillion (US) in gas and oil reserves. These include known reserves of 6.6 trillion cubic meters of natural gas and 10 billion barrels of undeveloped oil reserves.

The US has only 3% of world’s known oil reserves but consumes over 25% of the world’s oil consumption. Imports account for 60% of America’s daily oil consumption. 13% of that comes from the Persian/Arabian Gulf States, which produce 18% of the world’s supply. We had US troops in Uzebekistan before 9-11.

The real motive for the 1991 Gulf War was to maintain full control of the Persian/Arabian Gulf oil. 2/3 of known oil reserves in the world lie in that region. The U.S. Gulf war allowed the Pentagon to establish numerous military bases in Saudi Arabia, United Arab Emirates, etc.

The next key strategic area for fossil fuel reserves is the Caspian Region of Tajikistan, Kyrgyzstan, Kazakhstan, Uzbekistan, Turkmenistan, Khzakhstan, and Azerbaijan. The potential value in oil and natural gas is $5 trillion. Six US oil giants- including Unocal, Total, Chevron, Pennzoil, Amoco, and Exxon, have invested heavily in the these ares. These former Soviet states share a border with Afghanistan. And the US had already established military bases in Uzebekistan and Khzakstan prior to 9-11 and is now proceeding even more rapidly.

Unocal Oil Corp. spokesman John J. Maresca testified to the House of Rep Committee on International Relations in Feb. 1998:

“The Caspian region contains tremendous untapped hydrocarbon reserves… proven natural gas reserves… equal to more than 236 trillion cubic feet… and oil reserve estimates are as high as 200 billion barrels.”

When Secretary of State Madeleine Albright heard of the potential bonanza in fossil fuels she stated: “Working to mold the area’s future is one of the most exciting things we can do” (Time, May 1998).

However, a serious drawback is the problem of getting the supplies to the right market, the energy-hungry Asian Pacific economies, and principally China and Japan. Afghanistan is the only Central Asian country with very little oil. However, it is by the far the best route transport the oil to Asia.

ENRON, the biggest single contributor to Bush-Cheney, conducted a feasibility study for a $2.5 billion trans-Caspian gas pipeline (involving Turkmenistan, Bechtel, and General Electric Capital Services).

U.S. firms which have moved into the area to exploit the potential have directors who include:

Vice President Dick Cheney, who in 1994, as CEO of Haliburton, a multi-billion dollar oil and gas services company, helped broker a deal between Chevron (now Chevron-Texaco) and the state of Kazakhstan when he sat on the country’s Oil Advisory Board.

Former Reagan, Bush and Clinton advisors Gen. Brent Scowcroft, Zbigniew Brzezinski, Former White House Chief of Staff John Sinunu, former Defense Secretary and Vice President Richard Cheney, Former Secretary of State James Baker, former Clinton treasury secretary, Lloyd Bentsen, Donald Rumsfeld,

Who’s Who in government and Industry?

V.P. Dick Cheney: The former CEO of Halliburton sat on Khazakhistan Board of Oil Resources.