Old research habits die hard. Actually, it’s my belief that knowledge should not be compartmentalized – you know what you know, and latent awareness can only help. Now, why does my linguistic training apply to fossil fuel?
I can read the new Iraqi oil law in its original form.
My Arabic is passable on a street-conversation level, largely confined to buying food, asking directions, and looking for old record albums. So how can I read a long series of “whereas” clauses from an Arab country?
Because it was written in English.
That’s right, the draft legislation approved this week by Iraq’s cabinet was apparently hewed by Anglophones and only later honed by officials in Baghdad.
Iraq’s oil supply, the world’s #3 in terms of traditional crude reserves, is now going to be subject to production-sharing agreements that are almost as much of a dying breed as the dinosaurs that comprise the fossil fuel itself.
In countries like Venezuela and Ecuador, PSAs are being restructured with less favorable terms to foreign (primarily American) oil companies operating in those fields. Russia’s gas giant Gazprom has used environmental regulations cynically in order to renegotiate PSAs it signed under unfavorable terms when fuel prices were low in the 90s.
These days, national governments want to take advantage of skyrocketing demand in China and India in order to maximize the return on black gold they struck long ago. In the days of sub-dollar gasoline here in the States, road trips were easy to finance and al-Qaeda was barely a glint in Osama’s eye.
But by the same token Moscow and Caracas had to sweeten deals in order to get Big Oil and Gas to even drop a drill down. Exploration just wasn’t worth it at the time.
Today, Iraq could be in the money from its oil. If things settle down, there will be more Texans heading for the Green Zone than for a football game in Houston (and not just because the team isn’t doing so hot).
When I told Energy and Capital publisher Brian Hicks about the original English draft of the Iraqi oil law, he responded with a prescient quip: “Not so long from now the oil laws will be written in Mandarin.”
And who could fault those in a position to drive demand for wanting to control the verbiage of supply? When the Chinese build schools and hospitals in Khartoum despite Sudan’s status as a pariah state over the Darfur genocide, I guarantee that plenty of American policy wonks and oil-thirsty businessmen wish they could do away with their country’s pesky political compunctions and chase the prize they are paid to keep their eyes on. From Sudan to Shanghai, the universal language is money.
Iraq may yet emerge from its civil war. It may happen that the federal system currently in the works will successfully separate the warring factions in to nice and neat sub-entities (after millions are ethnically cleansed from each region). The likely extended outcome is that those regional governments will cease to be anything known as Iraq. It will be “former Iraq,” just as we refer to the “former Yugoslavia.”
There will not be civil war, because the war will be between or among countries. The Kurds will be prone to draw Turkey in, as the Kurdish north breaks away from that country as well, and the city of Kirkuk (where Iraq’s first oil was found) becomes a rope, ripe for tug-o-war with a new southern Shi’ite country or Iranian annex.
Then who will these production sharing agreements apply to? What will they share? I can’t help but think that the English-speaking planners and their eager Iraqi followers are getting ahead of themselves here, counting their chickens before they hatch yet again. Does “Mission Accomplished” ring any bells?
But hey, at least chaos is never lost in translation.
Regards,
Sam Hopkins
