Thursday, April 19, 2007

Look What I Found!

The headline says it all: "Iraq May Have Massive Undiscovered Reserves." Those would be oil "reserves" we're talking about for those slow on the uptake. What a marvelous revelation. Who knew? Not that it matters to us, though. It's not like oil had anything to do with our recurring interest in that little slice of desert sandwiched between Iran and Saudi Arabia. But, you know, since we're there already, we might as well....

Some details from the article (emphasis added):

IHS Inc., an energy and engineering corporation, today announced their forthcoming release of "the first and only detailed analysis of oil reserves, production and development opportunities developed since the start of the Iraq conflict."

According to the advance notes on the report, IHS estimates that Iraq currently has 116 billion barrels in reserve, and potentially 100 billion more barrels-worth buried under the western desert.

The new assessment of previously unknown reserves is largely based on the "establishment of new play concepts in the Western Desert of Iraq, which have been generated from a recent study of the Western Arabian Platform."

Further, the report projects that with the right investment and management, Iraq's oil industry could double its output within five years.

“Most of Iraq’s oil production comes from the south of Iraq and is exported via the Persian Gulf because of repeated sabotage attacks on facilities in the north,” said Mohamed Zine, IHS regional manager for the Middle East. “This has resulted in a current production capacity of two million barrels of oil per day. However... given a stable political and civil environment, Iraq has the potential to produce four million barrels a day in the near term if necessary investments are made in repairing and modernizing facilities.”

There are a couple of subtexts at play here that are worth mentioning. First, from the most cynical view, this report could be used to justify our continued presence in Iraq and sell it to the Iraqi people - or at least the elites (we need to stabilize the place so all that newly discovered bounty can flow!). Such rationales can also be used to push the favor of Iraqi oil laws further to the benefit of foreign interests (your potential is limitless, if only you let us develop those fields for ya).

The next tier of cynicism would accept the possibility that the results of these studies could be exaggerated (either deliberately, or unintentionally due to the study's own shortcomings). The hyped up results could be used as a means of sapping some of the anxiety and fight from the Sunni insurgents. If you notice, these vast, newly discovered resources are located in Western Iraq which is the most concentrated Sunni stronghold, and would become the Sunni homeland should a partition of Iraq take place. Playing up the new fossil fuel find has its advantages. Reassuring the Sunnis in such a way may make that group more amenable to a further legal enshrinement of the de facto partition currently underway. If the current estimates of oil riches are later downwardly adjusted, the mea culpas could flow forth, but the facts on the ground would be what they were.

Here's the most optimistic take, though: if these reports are indeed accurate, and there are large quantities of oil in Western Iraq, it could very well provide a glimmer of hope that a partition of Iraq (or even the adoption of a very decentralized federation system) could be made acceptable and desirable to each of the major players.

We know that the Kurds want this desperately (leaving Turkey out of this for the moment). SCIRI has been pushing hardest for partition on the Shiite side, and Dawa (Maliki included) don't seem to find too much issue with the plan. While Sadr and Sistani mostly oppose this scheme, one could imagine those positions softening a bit due to the possibility of relief from the relentless violence and chaos. The Sunnis have been the faction most opposed to partition due, in large part, to the fear of being cut out of oil revenues from supplies that have, thus far, been almost entirely attributed to Northern and Southern Iraq (the Kurdish and Shiite strongholds, respectively).

For my part, I think such a soft separation would be the best possible outcome at this juncture. A partition would have obvious problems, and the fleshing out of the benefits, drawbacks and risks associated with such a scenario is probably worth an entire series of posts unto itself. In lieu of that, the short version of a few of the potential sticking points are as follows: For one, there would likely be further ethnic cleansing in mixed areas, though that mostly seems to be taking place right now regardless. If Iraq were partitioned, we might actually be able to facilitate migration of the various ethnicities/sects to their respective friendly regions. This would be an improvement over the hardships of forced intra-Iraq migration (without economic or logistical aid) as currently imposed via the threats of militias and death squads.

Second, there are still many Iraqi nationalists that would take issue with the concept of a disintegrated nation state. But again, given the alternatives, such sentimentalities might wane in potency over time.

Finally, the big one, would be how Turkey would react to an independent or quasi-independent Kurdistan with Kirkuk likely in its back pocket. I wish there was some easy way to deftly avoid that massive stumbling block, but I don't see it at this time. I'll take a short-cut and say let's table it for now.

It would be sort of ironic if oil actually facilitated our exit from Iraq, though. To paraphrase the gangbangers, that would be: Oil in, Oil out.

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