Friday :: Nov 25, 2005

The Sands Of Oil You Gimme

by pessimist

You're hearing this here first, so when new troubles break out over there in Southwest Asia, you will know why.

Our oil companies have a serious problem - they think they are bigger and more powerful than national governments. While a case can be made for this where the United States is concerned, one has to wonder whether the rest of the world is so acquiescent. That question is being decided as I write [with my comments]:

Oil Companies File Arbitration Against Yemen

A venture owned by the Hunt Oil Company and Exxon Mobil sought arbitration before the International Chamber of Commerce in Paris, a rare instance of oil companies taking action in an international forum against a sovereign nation [Yemen].

Last week, the Yemeni government said that a government-owned company would replace the American companies' venture, the Yemen Exploration and Production Company, or Y.E.P.C., as the operator of the area, known as Block 18 [an oil-producing field with output worth more than $1 billion a year]. Prime Minister Abd al-Qadir Ba Jamal said last week that the government company would run the block for the next 20 years.

The issue for Exxon Mobil and Hunt Oil is money:

"Since 2004, Y.E.P.C. has invested millions of dollars at the direction of the Yemeni government," said Michael Goldberg, a partner in the Houston law firm of Baker Botts, which is representing the venture.

The Yemeni government can do what it wishes, for they are ignoring the fact that their agreement with the government has no legal standing if it isn't ratified by the Yemeni parliament - which it wasn't.

According to the article:

The partnership and Yemen entered into a 20-year production-sharing agreement in 1982, Hunt Oil said. Two years later [1984], the venture discovered the country's first oil reserves of commercial significance. A five-year extension to the original agreement was signed in 2004, but the Yemeni Parliament rejected that agreement in April, according to Dow Jones news wires.

Consider this: agreements between nations always require the concent of the government. In the case of the United States, the Senate has to approve all treaty agreements made by the executive branch. In a sense, a similar agreement is being made between Y.E.P.C and the Yemeni government, and under their law, is it rash to assume that the government has to abide by the decision of the parliament? [I was unsuccessful in locating supporting evidence.]

Thus, when the agreement expired on 11/15/05, the Yemeni government was within its rights to reassign ownership of the block to another party. Can one honestly think that if some Yemeni partnership was drilling in Texas, and the local government (or the national, for that matter) decided not to renew an agreement, that the Yemenis would have to pull out in favor of, say, Arbusto?

Neither Hunt Oil nor Exxon Mobil seems to think so:

Hunt Oil, however, contends that the agreement went into effect Nov. 15, the day that its venture was replaced. "Unfortunately, Y.E.P.C. is now forced to respond to the Yemen government's failure to honor the sanctity of our legal contract by filing this arbitration," Ray L. Hunt, chief executive of Hunt Oil, said in a statement. "Up until Nov. 15, we fully expected that they would honor the contract. The government of Yemen had no right to take over this operation, and although we did not want to file an arbitration, they gave us no choice."

Sarah Tays, a spokeswoman for Exxon Mobil, said in a phone conversation from Austin, Tex., that "Exxon Mobil supports the position of Hunt Oil as the operator of Block 18."

The Yemeni decision to replace the Hunt venture with a government-owned company may be linked to the recent surge in oil prices. With production averaging over 75,000 barrels a day, revenues from Block 18 would total $1.6 billion a year, at $58.71 a barrel, Wednesday's closing price on the New York Mercantile Exchange.

Note the new tack being taken to influence public opinion:

"The present oil price climate can put tremendous political pressure on more populist governments with regard to foreign investors," said James Loftis, a partner at the firm of Vinson & Elkins in Houston. "We've seen that recently in Bolivia and Venezuela, among others, and it may be the reason in Yemen."

If I were Yemen, I would be crying foul as loudly as I could:

Mr. Loftis is also the United States delegate to the International Chamber of Commerce's Commission on Arbitration.

However, Mr. Loftis seems to agree with me that the Y.E.P.C. case has little merit - or should:

"For most of the modern period, it was rare for a private investor to seek arbitration directly with the state, usually because they had no right to do so," Mr. Loftis said.

Let's take a look at another situation involving the award of drilling contracts that should have irked American oil companies. Just over a year ago, the Saudis awarded oil drilling contracts to Russians, Chinese, and Europeans - and not to American companies:

US oil companies were conspicuous by their absence and the political message was clear. ChevronTexaco had bid for all three of the latest deals but was excluded by the Saudis after several years of negotiations. That has left Chevron and other US oil companies out of the upstream gas ventures that outsiders hope will eventually give them a stake in Saudi Arabia's oil industry, which was nationalised in 1975.

Was this why the US became a might more hostile toward the Saudis?

General John Abizaid, who heads the US Central Command in the region, declared on 29 January that Saudi Arabia, along with Pakistan, is a "broader strategic problem" for the US than either Iraq or Afghanistan. That reflected growing concern in the Bush administration for the kingdom's stability and future.

Note the veiled threat.

But I digress.

I wasn't able to find an information cencerning ChevronTexaco filing a protest with the International Chamber of Commerce's Commission on Arbitration. Could it be that the US government told them not to lest all the cooperation that the Saudis truly showed this year during our troubles not materialize? Probably.

But Yemen is no Saudi Arabia, and there is still a condition of poor relations concerning the attack on the USS Cole in Aden Harbor. There would be incentive (and tacit support?) from the US government over a move to protest.

This, however, isn't going to sit well with another major Yemeni oil customer - China.

Relations between the US and China are worse off than they were before George of Iraq went there to wag his finger in the dragon's face for not allowing all those Chinese Christians to worship freely in a Buddhist country. Therefore, I expect that the situation in Syria is only going to grow more tense, as China has oil rights in Syria and are seeking more. Is it so hard to imagine that China might not aid any Syrian resistance to a US invasion? No.

In fact, Gulf sources are questioning whether or not American hands are clean in the Hariri assassination:

One wonders why the United States shows special interest in matters related to the murder of Rafik Al-Hariri, particularly when Lebanon did not demand any US interference or the involvement of the Security Council. The US behavior gives the impression that it has appointed itself as the international policeman.

The assassination of Hariri and the strange stance taken by some powerful nations has a touch of masterly cunningness. It also reveals some undeclared interests behind the tragic developments. The world has watched identical scenarios in recent history. The siege imposed on Syria and the charges against the country are reminiscent of the sanctions against Iraq before its unjustifiable occupation by the US and British forces.

It is quite naïve to suppose that Washington adopts an anti-Syrian policy just to fight the terrorist menace or as a natural reaction to the Sept. 11 attacks. It is common knowledge that the Western interventions in Arab countries have nothing to do with the war on terror; it has much more deeper designs than meet the eye. After the fall of the Soviet Union, the vast oil deposits lying buried in the depths of the Caspian Sea and surrounding countries have been an irresistible temptation for the Western powers, particularly the United States.

The US meddling in the Central Asia with efforts to bring the countries of the region to the US fold did not produce the desired results. The US feels that in addition to the Middle Eastern countries Pakistan, Iran, Turkey and Afghanistan should remain under its sphere of influence. A cursory look at the map of the region shows that all these countries are strategically placed on the road to the valuable resources in the Caspian region.

This is the obvious reason why Washington grabbed the opportunity offered by the Sept. 11 attacks to raise the bogey of international terror and start an all-out war. The real goal is to gain the control of the region in a phased manner.
In brief the Western attacks in the Middle East is neither for the sake of fighting terror nor for imposing democracy. It is in fact to enrich the American economy and ensure cheap and uninterrupted fuel supply, particularly after China has notched up to the second position among the world powers.

Thanks to the bungling of Bu$hCo, the lame justification of threats to our way of life are becoming reality. Rather than contest for every drop of petroleum, what if an equal expendature of capital and brain power be used to create alternatives to oil to power this nation?

Think about this for a second. With US government backing, scientists created the atomic bomb from mere theories in 1942 into a terrible reality by July of 1945 - two and one-half years - during a war which was taking every dime America had to spend.

Also, American technology lifted man onto the surface of a galactic body that was not Earth, beginning with the first tenative steps in 1961 to Neil Armstrong's announcement from Tranquility Base in July of 1969 - just over eight years.

With this sort of a track record, why is it that our wrong-wing friends still insist on belittling the possibilities of creating alternatives? Are they on oil company payrolls?

One has to wonder.

But we digress.

I've been reading about Syriana, George Clooney's movie about oil and its connection to terrorism. It has opened here in LA, and the reviews pique my interest. From the tenor of these reviews, it sounds like Clooney has another political blockbuster on his hands, which when coupled with Good Night, And Good Luck (very highly recommended, by the way!), puts him in the Michael Moore's Fahrenheit 9-11 category. All of these movies present complex situations dealing with conservative excesses in digestible form, and have changed minds (anecdotal evidence from personal conversations) about certain 'truths' we're expected to believe.

Believe this: no matter how much Condi prattles about how we are going to reduce the numbers of troops in Iraq, don't believe it for a minute. No one in Southwest Asia does. The demands upon the American people are only going to increase, and at some point, offers of plastic surgery in trade for an enlistment (alluded to here and here even though CNN doesn't seem to have this on their site anymore) aren't going to work any more.

The draft will come. There will be no other way for Bu$hCo to achieve even some of their grandiose goals without it. those radical Commie pinkos over at the Heritage Foundation are asking the question Is Iraq a Poor Man's War?

On November 7, the Heritage Foundation’s Center for Data Analysis released its 21-page “Who Bears the Burden?” report on military recruitment. This report uses Department of Defense data on all active-duty enlistees in FY 1999 and the January to September period of 2003.
The report’s key finding is that “There are slightly higher proportions of recruits from the middle class and slightly lower proportions from low-income brackets,” and its lead author (also the author of this paper) suggested that “Congress needs to remain steadfast in opposing coerced conscription ..."

In addition, those Marxist-Leninists over at the Ludwig von Mises Institute agree:

[S]ince government is always an agency which plans to use and, indeed, must use force, we have noted that government derives its power from a compulsory unification. All persons under the jurisdiction of a particular government are compelled to agree with whatever that government does.

The agreement can be enthusiastic, tacit, or reluctant. But the agreement must be there. Government's power to protect is based upon that agreement, however secured. Power, to be effective, cannot permit exceptions.

We come at once to government's classic usage, that of making war upon government's enemies. Whether we begin our examination of government as a warmaker in tribe, clan, city, state, or nation, or even as a body of nations joined together, we find this the single most costly and terrible function that government can ever attempt. Aggressive warfare is always the exclusive prerogative of government. Mobs, groups, families, or individuals may fight. They may riot, destroy, pillage, and perform in any wanton way. But it takes a government to conduct a war. Only government has the capacity, extended through both time and space, to organize sufficient force and violence to sustain a war.

One of the most serious mistakes the citizens can ever make is to grant to their government the power of a draft. Governments which can forcefully enlist the citizens under them, can shoulder their way truculently among all foreign powers, confident that they can compel a final showdown to their liking.

Our problem is to prevent the evils of conscription which hamper true defense, create armed forces which contain aggressive potential, and create a drain of economic wealth beyond all other actions. We must be vigilant that we are not lured into hostile poses by a fearful or belligerent government.

Even sitting Congressmen are against the draft. Take that Commie pinko Libertarian Rep. Ron Paul (R-Tx), for instance, speaking out against the draft:

The Crime of Conscription

To get more troops, the draft will likely be reinstated. The implicit prohibition of “involuntary servitude” under the 13th Amendment to the Constitution has already been ignored many times so few will challenge the constitutionality of the coming draft.

It’s said that the 18-year-old owes it to his country. Hogwash! It just as easily could be argued that a 50 year-old chicken-hawk, who promotes war and places the danger on innocent young people, owes a heck of a lot more to the country than the 18-year-old being denied his liberty for a cause that has no justification.

All drafts are unfair. All 18- and 19-year-olds are never drafted. By its very nature a draft must be discriminatory. All drafts hit the most vulnerable young people, as the elites learn quickly how to avoid the risks of combat.

A government that is willing to enslave a portion of its people to fight an unjust war can never be trusted to protect the liberties of its own citizens. The ends can never justify the means, no matter what the Neo-cons say.

Syria, Yemen, Central Asia, Taiwan - America cannot fight so many wars, at least not without sacrificing what America used to be forever. I am not going to stand for that. I hope you won't either.

I will stand for America coming up with renewable energy technology, something that would create the sort of high-paying jobs we're currently losing, and would put the US in a legitimate position of world leadership.

Will you?

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pessimist :: 4:45 PM :: Comments (20) :: TrackBack (0) :: Digg It!