New Iraq-Iran alliance in boosting oil output to challenge reigning Saudi Arabia will be game changer

Iraq and Iran plot oil revolution in challenge to Saudi Arabia
Iraq's goal of pumping 9m barrels a day of crude could be a game changer for oil prices and British companies

By Andrew Critchlow
The Telegraph
Jan 28, 2014

Iraq sets its sights on the top spot of Middle East oil producers

Iraq is poised to flood the oil market by tripling its capacity to pump crude by 2020 and is collaborating with Iran on strategy in a move that will challenge Saudi Arabia's grip on the Organisation of Petroleum Exporting Countries.

"We feel the world needs to be assured of fuel for economic growth," Hussain al-Shahristani, Deputy Prime Minister for Energy in Iraq told oil industry delegates attending a Chatham House Middle East energy conference.

Al Shahristani said on Tuesday that Iraq plans to boost its capacity to produce oil to 9m barrels a day (bpd) by the end of the decade as Baghdad rushes to bolster its economy, which is still shattered by war and internal conflict. Iraq was producing 3m bpd in December, according to the International Energy Agency.

Iraq's intention to challenge Saudi Arabia's status as the "swing producer" in the OPEC cartel could see a dramatic fall in oil prices if Baghdad decides to break the group's quotas and sell more of its crude on the open market.

"It's very difficult to predict actual world (oil) demand by 2020 because the world economy is unpredictable," said Mr al-Shahristani.

British oil giants BP and Royal Dutch Shell are also poised to benefit from Iraq's ambitious production plans. Both companies are already managing two huge oil fields in southern Iraq which are vital if Baghdad is to achieve its goal.

However, even if Iraq is able to achieve its target of boost production capacity it is unlikely to be able to put in place sufficient pipeline and port infrastructure to export the additional crude.
Iraq's main export terminal for loading oil tankers at Al Faw near Basra will require billions of pounds worth of improvements in addition to the refurbishment of its pipeline network.

Iraq's ambitious plan could see it clash increasingly with the regime in Saudi Arabia, which has used its influence in OPEC over the last decade to keep oil prices above $100 a barrel. Saudi itself is now under pressure to boost output to maintain market share. The kingdom pumped 9.8m bpd in December up by about 100,000 barrels from the previous month.

Experts say that attention within OPEC, which pumps 30% of the world's crude, could increasingly focus on compliance with more of the group's members tempted to pump more barrels to protect their share of the market as the cartel grapples with the rise of US shale oil production.

OPEC agreed in early December to renew for six months its 30M bpd output cap for the first half of the year to keep prices above $100. However, quotas have in the past proved difficult for OPEC as a group to enforce without any binding penalties for over-producing. Since its restoration to OPEC following the 2003 Gulf War, Iraq has been excluded from the group's quota system to allow its economy to recover but pressure is mounting for it to comply this year.

The International Monetary Fund this week warned that Iraq's weak economy remains vulnerable to fluctuations in oil markets. Crude oil exports account for 93% of government revenues. The IMF estimated that Baghdad required an average oil price of $106.1 per barrel in 2013 to balance its budget, up from $95 in 2011 because of higher spending.

Despite Mr al-Shahristani's hopes for boosting Iraq's energy sector there are severe concerns over security amid fears the country may again be slipping toward a civil war between Sunni and Shia Muslim factions.

In a further challenge to Saudi Arabia, which is mostly closed to international oil companies, Mr al-Shahristani revealed that Baghdad is working with Iran to help it attract investment ahead of the possible lifting of sanctions. Oil companies are understood to be queuing up to win Iranian oil deals.

"Iran has been in touch with us," said Mr al-Shahristani. "They want to share our contracts model and experience."

Combined, Iran and Iraq hold greater reserves of oil than Saudi Arabia and the potential with the help of international investment to match its capacity to produce oil, which currently stands at around 12.5m b/d of crude.

© Copyright of Telegraph Media Group Limited 2014

Paul Sheldon Foote: "US Steals World Natural Resources without Compromise"

Uploaded by WolkenZwemmer on Mar 8, 2012
Original report at: http://www.presstv.com/detail/230657.html
Press TV


http://youtu.be/eQ7FL6v25Ow

News on Iran Front: Feb 29, 2012

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Iran’s underground nuclear sites not immune to U.S. bunker-busters, experts say

Watch RT`s CrossTalk: Iranoia

Uploaded by RussiaToday on Feb 22, 2012
http://youtu.be/t-jDXu8N0BU

The international community has numerously voiced its support for nuclear proliferation, especially when dealing with a regional power like Iran. However, some countries go further than that. Prominent scholars and officials voice the possibility of war with Iran, and in some cases even promote it. Is this a rational approach? How justified would this war be if there is still no evidence that Iran has nuclear weapons in its arsenal? And who is being more rational, Western powers or Iran, when it comes to their geopolitical interests? CrossTalking with Patrick Clawson, Gawdat Bahgat and Gilbert Doctorow.

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Sanctions...what sanctions? Ukraine to invest $800mln in Iranian oil sector; India continues to buy Iranian oil

Ukraine to invest USD800mln in developing three Iranian oil fields
Press TV
Mon Feb 20, 2012 6:51PM GMT


-Updated Feb 23, 2012:
India charters new tanker to ship more Iranian crude
Tajikistan ready to buy Iranian crude oil: Tajik envoy

Iran has signed a contract with a consortium consisting of Iranian and Ukrainian companies for the development of Kouhmond, Boushkan and Kouhkaki oil fields.

Naft Gas Prom Pars consortium will invest about USD 800 million in
developing three Iranian oil fields., photo credit: PressTV

The contract, valued at about USD 800 million, was signed on Monday between the Petroleum Engineering and Development Company, an affiliate of the National Iranian Oil Company (NIOC), and Inter Naft Gas Prom Pars Co., which is a consortium of Iranian and Ukrainian entities.

NIOC managing director, Ahmad Qalebani, told reporters that the consortium would invest about USD 800 million in the development of the three Iranian oil fields.

Kouhmond heavy oil field is located 80 km to the east of Bushehr port in southern Iran. Though eight wells have been already drilled in the field, only two wells are meant for heavy oil production. The field's in-place heavy crude reserves have been estimated at about one billion barrels.

Kouhkaki oil field is located northeast of Kouhmond about 15 km south of the city of Khormoj where only one well was drilled in 1973. The field contains light crude with estimated in-place reserves of about 780 million barrels.

Boushkan oil field is located 100 km north of Bushehr and 30 km from Dalan gas field. The field’s in-place reserves have been estimated at about 340 million barrels with a single well drilled in 1963.

The fields will be developed in two phases to produce 11,000 barrels per day (bpd) of crude oil after the completion of the first phase, which will hit 22,000 bpd when the second phase is finished.

A total of 18 heavy and extra heavy oilfields have so far been discovered in Iran, including Ferdowsi oil field in the Persian Gulf, which is one of the country's biggest heavy oil fields with proven reserves of more than 31 billion barrels.

Iran's total in-place oil reserves have been estimated at more than 560 billion barrels with about 140 billion barrels of extractable oil. Moreover, heavy and extra heavy varieties of crude oil account for roughly 70-100 billion barrels of the total reserves.

Iran holds the world's third largest proven oil reserves and the second-largest natural gas reserves.

SS/AZ/HGH

Additional Info:
US Gen. Dempsey: Iran rational actor, not after nukes
India importing Iran oil, slap in face for US: Ex-US Official
‘EU banned Iran oil to satisfy Israel’
Iran cutting oil to EU in line with international law: MP
South Korea exempted from non-oil trade ban on Iran

Current U.S.-Iran Tensions: Is there more than meets the eye...again? Reminiscent of Iraq and Libya...

Here we go again, are we that naive to think that yet again the current tensions with Iran is really about 'nukes'? Come on, it all about the precious black gold we call OIL, its always about oil. In 2000, Saddam Hussein of Iraq wanted to turn away from trading oil in U.S. dollars to euros instead. Of course that wouldn`t be allowed to befall the powerful dollar and he was subsequently attacked and removed in 2003. In 2011, Col Muammar Ghadafi of Libya envisioned to create a new Gold dinar currency, a currency that would be backed by gold, inevitably rivaling the dollar and euro and allow Ghadafi to re-price oil. It would have had serious consequences for the world financial system - i.e. the world elite, even though it would have empowered the people of Africa for once in their lives and not be dictated by the global powers into debt slaves and destitute. 

An oil field near Pol-e-Dokhtar, Iran; credit: RT News

Petrodollar pumping US policy on Iran, backfire looms
by: Michael T. Winter
RT News
published: 01 February, 2012, 20:18

As tensions between the US and Iran heat up, author Michael T. Winter believes the main reason behind America’s harsh stance is Tehran’s move to seek an alternative to the dollar as an oil currency.

Economic sanctions, spearheaded by the US and, less willingly, the EU could have a disastrous effect on both of their respective economies. If Iran cannot sell their oil to Europe, there are plenty of customers waiting in the wings, and if they come bearing not petrodollars, but gold and sovereign currencies, then all the better for Iran. These sanctions, if enforced, will in effect place a serious dent in the power of the petrodollar.

...At the heart of the issue is not Iran’s dubious attempt to build nuclear weapons, or even oil, but how that oil is paid for. In 1973, Richard Nixon promised King Faisal of Saudi Arabia that the US would protect Saudi Arabian oilfields from any and all interested parties seeking to forcefully wrest them from the House of Saud. It’s important to remember that in 1973, Saudi Arabia didn’t have a fraction of the military and ground forces it possesses today (almost exclusively US manufactured weapons) and the USSR was very much a threat.

In return Saudi Arabia, and by extension OPEC, agreed to sell their oil in US dollars only. As if that weren’t sweet enough, as part of the deal, they were required to invest their profits in US treasuries, bonds and bills. The real zinger is that all countries purchasing oil from OPEC had to do so in US dollars, or ‘petrodollars’.

...2001, enter Saddam Hussein. He floated a plan to sell oil for European currencies in lieu of petrodollars. Shortly after Iraq was ‘suddenly’ found to be seeking and stockpiling weapons of mass destruction – allegations spearheaded by the US. The world knows what happened, suffice it to say that Saddam is dead and Iraq is ‘back on track’, selling its oil for petrodollars once again.

...Gaddafi made a fatal error when he decided to move away from the petrodollar in favor of other currencies. This simply was not tolerated by the US. Having already played the WMD card in Iraq, something new was pulled from the US ‘regime change’ grab bag. Within a year, ‘internal’ elements rose up in rebellion against Gaddafi and now he is dead. Long live the petrodollar.

Dominique Strauss-Kahn, former head of the International Monetary Fund (IMF), suggested last year that the Euro would be a more suitable oil reserve currency than the US Dollar. Within three months of that statement, allegations of rape ruined his career, derailing his bid for the French Presidency in the process. Soon thereafter, all charges were dropped, but of course, le dommage était fait – the damage was done. Christine Lagarde, DSK’s replacement as head of the IMF sees no reason to change the current arrangement, naturellement.

The Iran situation is a little trickier. The US has sought to dismantle Iran’s regime ever since the 1979 Iranian Revolution, so this round of hostilities, while not new, reflects a new level of intensity. Why, after thirty years of hostility, has the US ratcheted up its rhetoric? As Obama stated in his recent State of the Union address, when it comes to Iran and the insistence they dismantle their nuclear program, “no options are off the table”. By stating ‘no options’ this would include nuclear deployment as a deterrent.

The answer of course is that Iran is now seeking to disengage itself from the petrodollar dynamic. In 2005, Iran sought to create an Iranian Oil Exchange, thus bypassing the US controlled petrodollar. Fear that western powers would freeze accounts in European and London banks put an end to that plan.

...Iran is breaking the back of the petrodollar. Others have tried, but Iran is succeeding. To understand how disastrous this is for the US, one must have a basic understanding of how critical a role the petrodollar plays in the economic health of the US.

...By creating the petrodollar paradigm, the US economy soared, as all countries of the world were required to amass US currency to purchase oil from OPEC nations. Sales of T-bills, securities and US bonds soared. US coffers fattened. With the US dollar as the world’s oil currency reserve, economic fortune favored the US. But with great reward comes great risk. While other countries exchanged their currency for the dollar, (forfeiting value in the process) the US simply printed more money to match their needs and purchase their oil – essentially for free. The best example is that while gasoline in the US cost $3.00 per gallon, in Europe that same gallon costs $6.00 or more.

Herein lies the danger. If Iran is successful in its bid to set up their own bourse, or oil exchange, then what need does the world have for all those US dollars? The answer is none at all. As Iran creating gold and sovereign currency partnerships with India, China, South Korea and Russia, the hegemony of the petrodollar will be destroyed.

The resulting sell-off of US dollars, T-bills, securities, bonds and assets will flood the already swollen world economy with even more useless dollars, ultimately devaluing it into a position where hyper-inflation becomes a risk.

So, while the US government sabre-rattles and prattles on and on about nuclear weapons and the threat Iran poses to the Middle East, the thin veneer of lies spouted by the elite controlled media is being stripped away, revealing the truth of their warmongering rhetoric.

...The US, by their foolish insistence on enforcing embargoes and sanctions against Iran, is hastening the end of the petrodollar and ushering in the age of US dollar hyper-inflation. A practical example: One loaf of bread in a healthy economy is $1.00. In an inflationary economy it’s $1.75. In a hyper-inflationary economy, $500.00.

Bullies may be large and dangerous, but rarely are they intelligent.

Damocles wisely vacated the throne of Dionysius before the sword fell upon his head, but the US is foolishly refusing to step down from their economic dais in spite of the catastrophic effect current policy direction will mean for US citizens and the world economy.

Michael T. Winter

The statements, views and opinions expressed in this article are solely those of the author and do not necessarily represent those of RT.

(click here to read the full article by Michael Winter)

Additional info:The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker
by William Clark
www.globalresearch.ca

Using gold to buy crude oil?...you betcha

Numismaticassets

It seems India has purchased Iranian oil from Iran using gold, circumventing unilateral U.S. and EU sanctions placed on the Iranian oil industry and financial institutions. (The sanctions placed on Iran ban any bank involved in oil trade with Iran from dealing with American and European financial institutions.) And now, China, another top purchaser of Iranian oil may follow suit in future oil transactions. India and China, the two major buyers of Iranian oil together account for 40% of all exports of oil from Iran while the EU accounts for 20% of Iranian oil.

India and China do not support and refuse to join the sanctions. Russia, already announced in a bilateral meeting they would implement bilateral trade using their domestic national  currencies instead of the dollar. Russia already uses their rouble for trade with China

Now this would severely hurt what the U.S. and EU sanctions and oil embargo are trying to do. Just this past Monday, the EU announced an oil embargo against Iran. Oil is priced in US dollars, and bypassing the greenback will pose challenges for both parties. This will certainly push the price of gold high, especially as large sums of gold are involved in such oil transactions, and that would hurt the value of the dollar especially at a time like this.

RT News (24 Jan 2012): India pays gold for Iranian Oil:

RT News: Priya Sridhar (24 Jan 2012)

Source: Sanctions dodge: India to pay gold for Iran oil, China may follow (RT News), 24 Jan 2012