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#16 - JRL 7140
April 10, 2003
Thirst for Oil, OPEC and Russia's Fate
After the war in Iraq new associations and alliances, new local markets will emerge. US's aviation will get new targets as well

After the 9/11 terrorist attacks many people understood that the world would never be the same as it had been before. Now when American tanks are driving about Baghdad with impunity and shoot down hotels where journalists live, it is beyond any doubt that the world has radically changed one and for all. And since the world has changed, it means that the others will have to change as well, no matter how disagreeable the necessity is.

Experts have forecasted several times already that as soon as the USA captures Iraqi oil, the world oil market in its present-day condition will cease to exist. It is a widespread opinion that after the Gulf War II the Organization of Petroleum Exporting Countries (OPEC) may collapse. Recently this outcome was predicted by Russian vice-premier Viktor Khristenko. Yesterday, this pessimistic scenario was voiced by an anonymous high-ranking official from the oil cartel administration in Vienna, right where the OPEC headquarters is located. In the words of the official, if "privatization" is held by American companies in the Iraqi oil industry after the war, then OPEC breaking-up will be inevitable.

And this statement is not a surprise. The USA is the world's largest oil consumer. As soon as it becomes independent of the world oil market (and America will practically obtain this independence after it gains control over Iraqi oil), the market will break down to lonely and helpless exporters and importers of hydrocarbon stuff.

The anonymous official from OPEC reminds the whole of the world that Iraq, that is being crushed by the US/UK forces today, is not only the world's largest black gold reservoir. Iraq was one of the initiators of OPEC creation. The oil cartel was set up on a conference in Baghdad in September 1960. However, it is clear that the tragic symbolism of the present-day situation is not at all a final verdict on this international organization.

OPEC Secretary General Alvaro Silva Calderon met journalists yesterday, he neither confirmed nor denied the possibility of OPEC breaking-up. In his words, the organization has already survived several critical situations like this.

In fact, experts predicted even during the Storm Desert and later, during the eight-year Iran-Iraq war that OPEC might collapse. However, all rumors about demise of the oil exaggerated. Alvaro Silva Calderon says that this time the situation may be like that as well. The matter of the fact is that breakdown of the cartel won't decide and help anything. There will be oil exporters and importers. The same problems will still remain. All of them will need a stable predictable oil and oil products market. Otherwise it will be impossible to plan economic development of any country in the world. Consequently, other international organizations, alliances of oil importers and exporters will arise instead of OPEC. This is the only way toward coordination of mutual interests. This is regardless of the fact if the USA buys oil on the international marker or not.

At present, Russia is also thinking about changes in the world oil flows. And this is not because of the Iraqi war, but rather because of the failure to realize large-scale oil supplies to the USA in exchange for investments in the Russian mining industries. As Russia's mass media inform, the Russian government considers Asiatic countries such as China, Japan, etc. as its highly probable clients and investors. Certainly, countries of the European Union will be interested in additional supplies of Russian oil in case if they give up Iraq oil. So, it is too early to give up the Russian oil and gas industry for lost during the redistribution of the oil market done by the USA, as well as it's too early to say OPEC will vanish forever. Somehow or other, new alliances would still appear. Barbaric actions of the US/UK occupation troops in the interfluve of Tigris and Euphrates just catalyze the process.

As the press-service of the Russian Energy Minister reported yesterday, Iran had already suggested to expand cooperation in the energy sphere. Negotiations on the subject were held yesterday between RF Energy Minister Igor Yusufov and chairman of Iran's largest economic structure, Mostazafan Iran foundation, Mohammad Foruzande. As Russia's news agency RIA Novosti informs, the parties discussed participation of Russian companies and enterprises in industrial projects on the territory of Iran.

At present, Russian companies are already operating in Iran. The Russian concern Silovye Mashiny (Power Machines) helps conclude construction of a nuclear power plant started by Germans in the Iranian city of Busher. Equipment supplied to the country in the Soviet era is being modernized. However, the Iranian leadership seems to be dissatisfied with the level of cooperation the countries have reached by now.

As the press-service of the Russian ministry informs, Mohammad Foruzande suggested the Russian government the possibility to consider Russia's participation in construction and modernization of thermoelectric power stations, construction of new electric power stations of combined cycle using gas. It is also supposed that Russian companies may participate in drilling operations in oil and gas fields, including Iran's largest gas field, South Pars. Iran would also like to organize delivery of Russian oil to the northern regions of the country.

According to an official report, a special workgroup will start consideration of these issues in the nearest time. No doubt that Russia will be grateful to start modernization and construction of oil and gas objects in Iran. The same way as it willingly joined tempting projects in Hussein's Iraq. As they say, neither Iran nor Russia have other ways out. The USA has an alternative in this situation; it is not in vain that America names its next targets Syria, that strongly protested against the war in Iraq, and Shi'ite Iran, that expelled loyal to US oil companies shah Reza Pahlavi during the 1979 Islamic revolution.

Dmitry Slobodyanyuk
Translated by Maria Gousseva

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