Monthly Archives: June 2011

Oil Theft That Pays and Stays

by Robert Anderson 

Where’s the outrage on seizing the $70 billion Libyan Sovereign Wealth Fund and redirecting it to Libyan rebels & elsewhere? Where’d the US and NATO get this authority? Its not right, and its déjà vu all over again on Chapter 2 of the Great 21st Century Oil War. Chapter 1 was Iraq. And don’t give me the malarkey that Qaddafi was a corrupt despot so it justifies such action. He was no more so than the rest of the Mideast including ‘our allies’ in places like Saudi Arabia. And if we are going to make corruption allegations we’d best not look in a mirror. Recently we’ve learned that $6.6 billion of a $12 billion fly-in-cargo-planeloads-of-money into Iraq is missing and probably stolen. Its incorrect to blame this on the Iraqis. The US was in charge of the provisional government there when the probable theft occurred. I’m betting it ended up going to a combination of Iraqis and U.S. war profiteers. Eisenhower was right about his military industrial warnings. Big planeloads of money in an insufficient checks & balances set-up couldn’t possibly turn out favorably. And here we are doing the same scandalous thieving in Libya a few years later. Same game. Different oilfields. Pick an eccentric dictator with extensive oil wealth, fire up the propaganda machine and take him down while shaking them down. “Hey. We can’t account for all this oil wealth. Its war!”

 And here’s a bigger graft outrage from our great oil war chapter 1 that wasn’t widely reported. It wasn’t just $6.6 billion in oil wealth stolen. There was probably an even bigger theft of oil! Here’s an article posted on my peak oil message board in 2007. I’ve posted there as DeRonin. This message board has been going strong since 1999! I’m glad we setup one section of Important Archieved Threads:

How Much Iraqi Crude Oil is Being Stolen?

“Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. “Iraq is the victim of the biggest robbery of its oil production in modern history,” blazed a March 2006 headline in Azzaman, Iraq’s most widely read newspaper. A May 2006 study of oil production and export figures by Platt’s Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for…With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals….After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields.”

Got that? We took over Iraqi oil operations and intentionally didn’t fix the meters for 4 years at Basra through which all the Iraqi oil flowed at the time. There was no metering of the oil at the production point, the pipeline or the export port for 4 years! This was obviously intentional.

I learned this trick when I was entrenched in the Russian oil business when I worked for the Hermes Group in the mid-1990s. Under the communist system, the vehicles, buildings and oil were all government owned. No one got billed so no oil got metered. And when they shifted to a market system there wasn’t any rush to shift to metering. No records. No quantifying who’s getting what from who. Its an oil theft bonanza!

Wait a sec! This is hard to believe. What is the source of this article? You’ve never heard of CorpWatch? OK. How about an best selling author and former CIA agent writing in Time Magazine, backing it all up?

Who Is Stealing Iraq’s Oil?

By Robert Baer

“The Government Accountability Office is about to release a report that estimates 100,000 to 300,000 barrels of oil goes missing every month. According to the New York Times, the GAO will not offer a conclusion about what specifically is happening to the missing oil, other than it is probably lost to corruption, smuggling or just bad accounting.

Iraqis oil traders, on the other hand, tell me they think they know exactly where the stolen oil is going — the militias appropriate it to arm and feed the rank and file. The same traders also tell me there’s a lot more pilfered oil than the GAO acknowledges, and that the practice started as soon as Saddam fell.”

The lines to the north were out of service so it almost all came through Basra from '04-'08.

So nearly 10 years after we moved in and destroyed Saddam Hussein and much of Iraq, have you noticed the reports of ongoing water and power shortages there in spite of +$100 oil prices and the resultant oil revenue windfall? Now you know why. The post Saddam regime is just too corrupt. Oh that’s us? Oh well. Or actually its OIL WELL! On to Libya! Because oil theft that pays is oil theft that stays!

Why Is Libya in the Crosshairs of the West?

Here’s an important non-Western perspective
on why we launched another military boondoggle in the Mideast.
Its one more chapter of the ‘Great 21st Century Oil War’.

Have you noticed Iraq weapons of mass destruction was a bogus issue, and we only intervene on the Arab Spring oil exporter-Libya. Oil & a Sovereign Wealth Fund!!

As is typical, its not as simple as just controlling Libyan oil. Here’s an abreviated recap of the myriad of reasons:

~ Qaddafi was the main supporter of pricing oil -especially within OPEC- in a new gold dinar instead of dollars.

~ Huge water aquifers under the Sahara in Libya.

~ The Libyan economy was never integrated into the BIS and the Western banking system so it couldn’t be manipulated by the West. Notice we set up a Central Banking structure for the rebels very soon after fighting commenced.

~ Libyan oil is high quality sweet and onshore – so cheap to produce.

~ Qaddafi was negotiating for higher oil royalty cuts and delaying new projects for Western oil company concessions.

~ Libya had a $70 billion Sovereign Wealth Fund. Its already been seized and some of it redirected to the rebels and who knows where else.

~ Qaddafi had opted out of USAC, one of the 9 global Pentagon commands, to control Africa and the Mediterranean Basin, including the strategic energy transit routes and choke points, crucial for the world economy.

Its all the result of faulty economic theory that subordinates energy to economics when it should have been the other way around. U.S. oil production peaked in 1970. Or- to phrase this another way- we drained over half our valuable +100 million year hydrocarbon legacy into sub-$3/ barrel economics. The Brits did it in the North Sea into sub $15 oil economics. So now that we’ve figured out oil ISN’T expendable and easily replacable, its a futile scramble for what’s left. The U.S and the U.K. are the main 2 perpetrators of the ‘Great 21st Century Oil War’ in which we concoct false humanitarian reasons to try and extend our flagging  petroleum imperialism. Its a faulty strategy that’s not working- and can’t work- due to huge oil purchase wealth transfers to our adversaries and the prohibitive costs of this exorbitant militaritarization. To coin the author Paul Kennedy’s phrase, its ‘imperial overstretch’ with an oily twist.

Welcome to the new world of post peak fundamentals. Take heed. It won’t  be any fun being on the oil depleted side of this strategic equation.