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<h1>Air Strikes In Iraq Largely About Oil</h1>
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<div class="cat-date-line"><span class="cat-date-line2"><a
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title="View all posts in Educate!" rel="category tag">Educate!</a></span>
<span class="cat-date-line3"> <a
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<span class="cat-date-line4">By John B. Judis, <a
href="http://www.newrepublic.com/article/119035/us-attack-islamic-militants-all-about-iraqs-oil"
target="_blank">www.newrepublic.com</a><br>
August 14th, 2014</span><br>
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<p>Note: Two articles below make the point that the US air strikes
are primarily about protecting the US friendly undeclared Kurdish
Oil State.</p>
<big><big>
</big></big>
<h2><big><big>The U.S. Airstrikes in Northern Iraq Are All About Oil</big></big></h2>
<big><big>
</big></big>
<p><big><big>By <a
href="http://www.newrepublic.com/authors/john-b-judis"
rel="author">John B. Judis</a></big></big></p>
<big><big>
</big></big>
<p><big><big>Last night, President Barack Obama <a
href="http://www.whitehouse.gov/the-press-office/2014/08/07/statement-president">announced</a>
that he was authorizing American airtstrikes in Iraq. He <a
href="http://www.whitehouse.gov/the-press-office/2014/08/07/statement-president">described</a>
his intervention as a “humanitarian effort to help save
thousands of Iraqi civilians who are trapped on a mountain”
and as an effort “to protect our American personnel.” One word
that he didn’t mention is “oil,” but it lies near the center
of American motives for intervention.</big></big></p>
<big><big>
</big></big>
<p><big><big>The United States is conducting airdrops to aid the
Yazidis who have fled the advance of Islamic State militants,
but it is conducting airstrikes around Erbil, which is to the
east. There are American consular personnel in Erbil, but they
could be evacuated if necessary. What Obama left unsaid was
that Erbil, a city of 1.5 million, is the capital of the
Kurdish regional government and the <a
href="http://www.cwckiog.com/">administrative center</a> of
its oil industry, which accounts for about a quarter of Iraq’s
oil. The Kurds claim that if they were to become an
independent state, they would have the ninth-largest oil
reserves in the world. And oil wells are near Erbil.</big></big></p>
<big><big>
</big></big>
<p><big><big>If the Islamic State were to take over Erbil, they
would endanger Iraq’s oil production and, by extension, global
access to oil. Prices would surge at a time when Europe, which
buys oil from Iraq, has still not escaped the global
recession. Oil prices have already risen in response to the
Islamic State’s threat to Erbil, and on Thursday, American oil
companies Chevron and Exxon Mobile began <a
href="http://online.wsj.com/articles/oil-companies-evacuate-staff-from-iraqi-kurdistan-1407512928">evacuating</a>
their personnel from Kurdistan. But oil traders are predicting
that American intervention could halt the rise. “In essence we
find U.S. air strikes more bearish than bullish for oil as the
act finally draws a line for IS and reinforces both the
stability in south Iraq and in Kurdistan,” Oliver Jakob, a
Swiss oil analyst, <a
href="http://uk.reuters.com/article/2014/08/08/markets-oil-idUKL4N0QE1CI20140808">told</a>
<em>Reuters</em>.</big></big></p>
<big><big>
</big></big>
<p><big><big>In portraying American intervention in Iraq as a purely
humanitarian effort, Obama is following the script he read
from in Libya, when he justified American intervention as an
effort to prevent a massacre in Benghazi. In a March 28, 2011
<a
href="http://www.whitehouse.gov/the-press-office/2011/03/28/remarks-president-address-nation-libya">address</a>
to the nation, Obama painted the American intervention as a
response to “brutal repression and a looming humanitarian
crisis.” Oil was not mentioned, even though Libya was the
world’s sixteenth-largest oil producer in 2009 and a major
supplier to Europe. But oil was most likely involved, as
became clear when, after preventing a massacre in Benghazi,
the United States and its coalition partners stuck around to
topple the regime of Muammar Qaddafi. If the Obama
administration wanted to prevent the world’s peoples from
brutal dictators and repressive regimes or from takeovers by
terrorist groups, there are other countries besides Libya and
Iraq where it could intervene. What distinguishes these two
countries is that they are major oil producers.</big></big></p>
<big><big>
</big></big>
<p><big><big>The United States should worry about the global oil
supply. It is important for global economic and political
stability. And having a significant chunk of it fall into the
hands of a group like the Islamic State should certainly be a
concern. But if Obama is worried about the world’s oil supply,
then he should say so forthrightly and not leave himself in a
position where he will be unable to justify or explain further
intervention after the airdrops to the Yazidis are completed.
And the administration should also have a plan for making sure
that in sending out the Air Force, it will actually end a dire
threat to Iraq’s oil production and put Iraq back on its feet.
In Libya, the U.S. and its partners succeeded in getting rid
of Muammar Qaddafi, but not in resolving the country’s
humanitarian crisis or in keeping its oil flowing. Oil
production has plummeted as Libya has been plunged into
anarchy after Qaddafi’s fall. The challenge in Erbil and Iraq
is even more daunting.</big></big></p>
<big><big>
</big></big>
<p><big><big> </big></big></p>
<big><big>
</big></big>
<h2 class="headline entry-title"><big><big>Oil a key motive for U.S.
air strikes in Iraq</big></big></h2>
<big><big>
</big></big>
<div id="text-pages"><big><big>
</big></big>
<div class="page" style="display: block;"><big><big>
</big></big>
<p><big><big>This week’s U.S. air strikes in northern Iraq are
being accompanied with an undertow of “it’s all about
oil” talk.</big></big></p>
<big><big>
</big></big>
<p><big><big>Take for example, Columbia School of Journalism
Dean Steve Coll’s observation in the New Yorker, that
“Obama’s defense of Erbil (capital of the semiautonomous
Kurdish region) is effectively the defense of an
undeclared Kurdish oil state.”</big></big></p>
<big><big>
</big></big>
<p><big><big>It’s no secret that Iraqi Kurdistan has an
abundance of oil reserves, nor that U.S. oil companies,
like San Ramon’s Chevron Corp., are busy exploring there.
Chevron has three “production sharing contracts” with the
Kurdish government, covering a combined 444,000 acres,
north of Irbil, where it’s in the early testing and
drilling stage. And it likes what it sees.</big></big></p>
<big><big>
</big></big>
<p><big><big>“We are very encouraged with the initial results in
the Kurdistan region of Iraq,” the company said in its
earnings call two weeks ago. “Exploratory drilling and
logging has indicated multiple pay zones in a large
structure … the formations have demonstrated the ability
to deliver high liquid flow rates.”</big></big></p>
<big><big>
</big></big>
<p><big><big>Days after the earnings call, the extremist Islamic
State, which had been swallowing swathes of Iraqi
territory to the south, were suddenly close to the gates
of Irbil. Chevron and other energy multinationals, which
had been well out of harm’s way, began
evacuating personnel.</big></big></p>
<big><big>
</big></big>
<p><big><big>Asked for an update, a Chevron spokesman said
Monday, “We continue monitoring the situation. We remain
in regular contact with the Kurdistan Regional Government
and are dedicated to supporting the (Kurdistan Region of
Iraq) in developing its natural resources.”</big></big></p>
<big><big>
</big></big>
<p><big><big>“Could it affect operations? Civil wars always do,”
said Amy Myers Jaffe, a global energy policy expert at UC
Davis. “But the level of danger appears reduced, now the
U.S. is engaged, hopefully.”</big></big></p>
<big><big>
</big></big>
<p><big><big>Oil traders agree. “In essence we find U.S. air
strikes more bearish than bullish for oil (prices) as the
act finally draws a line for IS (Islamic State) and
reinforces both the stability in south Iraq and in
Kurdistan,” Oliver Jakob, a Swiss oil analyst,
told Reuters.</big></big></p>
<big><big>
</big></big>
<p><big><big>So, sure – setting aside for the moment that
without U.S. intervention, the Yazidi minority group would
be worse than they already are – much of this is about
oil. Iraq, north and south, has enormous quantities of it.
And – sorry – the world will depend on oil to help fill
its energy needs far into the future.</big></big></p>
<big><big>
</big></big>
<p><big><big>Ironically, for Chevron, it would not be the end of
the world if Kurdistan was forced offline. “It could be a
very profitable place, but it’s small for Chevron,” said
Jaffe, referring to the company’s much larger oil holdings
in Venezuela and the Saudi Arabia-Kuwait neutral zone, and
natural gas in Australia.</big></big></p>
<big><big>
</big></big>
<p><big><big>A potentially bigger worry for both Chevron and the
Kurds, she said, could be if Iraq did stabilize and unite,
with Kurdistan under its umbrella. “It could be a problem
for Kurds who saw the rest of Iraq as a failed state, and
have had freedom of movement for its oil.”</big></big></p>
<big><big>
</big></big>
<p><big><big>For Chevron, she added, a new arrangement in Iraq
could entail the renegotiation of contracts it has with
the Kurds, which by the way, Baghdad refused to recognize.
“A federal government might want to revisit its export
policy,” she said.</big></big></p>
<big><big>
</big></big>
<p><big><big>Jaffe thinks that’s less likely, and notes that
Kurdistan’s oil pipeline via Turkey continues to pump out
oil – 120,000 barrels per day.</big></big></p>
<big><big>
</big></big>
<p class="dtlcomment"><big><big>Andrew S. Ross is a San
Francisco Chronicle columnist. E-mail: <a
href="mailto:bottomline@sfchronicle.com">bottomline@sfchronicle.com</a>
Blog: <a href="http://blog.sfgate.com/bottomline">http://blog.sfgate.com/bottomline</a>
Twitter: <a href="http://twitter.com/andrewsross">@andrewsross</a></big></big></p>
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