- BP's chief executive delivered a serious setback to hopes
of rebuilding Iraq when he said that the oil company has no future there.
-
- John Browne, one of Tony Blair's favourite industrialists,
indicated he had given up on Iraq because the political and security situation
in the country had deteriorated so much.
-
- Yet only 18 months ago he was extremely enthusiastic
about prospects, lobbying in Washington and London to ensure American rivals
did not cut him out of the action.
-
- "We need a government, we need laws and we need
decisions. We have not got any of that yet. A whole range of steps need
to be taken," said the BP boss as he unveiled new record profits this
week.
-
- "It's not obvious to me you need foreign oil companies
to do that [redevelopment]." He added that private oil firms could
destabilise an already sensitive situation and perhaps it should be left
to local state-owned groups.
-
- The pessimistic view about the future in Iraq was expressed
hours after Lord Browne had met the prime minister at the launch of a new
climate change organisation.
-
- The downbeat message contrasts with the optimism expressed
in the autumn of 2002 when the BP chief was desperately worried that American
firms would monopolise Iraq once Saddam Hussein was overthrown.
-
- "We have let it be known that the thing we would
like to make sure, if Iraq changes regime, is that there should be a level
playing field," Lord Browne had said.
-
- Western oil firms originally hoped there would be a bonanza
as the country with the second biggest oil reserves in the world expanded
its production dramatically.
-
- But these aspirations have evaporated as the hopes of
peace following invasion by American and British forces have given way
to ferocious guerrilla attacks.
-
- Bruce Evers, oil analyst with Investec Securities, said
the future of Iraq depended on foreign oil companies such as BP rehabilitating
the country's only real export earner.
-
- "Iraq could not begin to get itself back on its
feet without the western oil companies. It needs their technology, expertise
and balance sheets [cash], apart from anything," he said.
-
- The Iraqi oil fields were dilapidated and the surface
equipment was so out of date it was a "miracle that anything functioned
at all".
-
- While Halliburton and other large energy services firms
had won major contracts to get the oil industry running at prewar levels,
it was the oil majors such as BP which drilled wells and produced oil,
he added.
-
- The threat to Mr Blair and US president George Bush on
Iraq was underlined last night by the International Energy Agency following
a meeting with the Organisation of Petroleum Exporting Countries to look
at future investment worldwide.
-
- Claude Mandil , executive director of the IEA, said:
"A pivotal area in shaping the flow of investment to oil developments
is the Middle East. Although the costs of developing the region's reserves
are lower than anywhere else in the world, financing this investment will
be determined partially by perceptions of security."
-
- He said privately owned international oil companies -
which would include BP - can mobilise "large cash resources"
which state firms could not always do because they were constrained by
other demands on the national budget.
-
- BP and some other large foreign oil firms have become
increasingly wary of the Middle East, preferring to invest in Russia if
not Angola or the Caspian.
-
- "Oil companies have become increasingly frustrated
by the attitude of many Middle East rulers such as Saudi Arabia, which
do not seem able to decide whether they want us to operate there or not,"
said one oil man, who asked not to be named.
-
- Energy experts from accountants Ernst & Young also
em phasised the importance of western cash for transforming the oil industry
- and national wealth - of Kazakhstan. Speaking at a joint UK-Former Soviet
Union seminar in Aberdeen yesterday, Gerard Young said that oil and gas
related investment in Kazakhstan could be worth $150bn (about £84bn)
by 2015.
-
- Kazakhstan had only been able to begin to realise the
value of its huge natural energy resources since foreign capital and expertise
became available following the collapse of the Soviet Union, he argued.
-
- But Iraq's redevelopment has been hampered by widespread
opposition to American and British troops - and also service companies
working in the country.
-
- Foreign workers have been targeted by militants and the
Guardian revealed on Tuesday how work on a number of infrastructure projects
had ground to a halt as contractors pulled out their employees.
-
- The irony of oil companies not investing in Iraq is that
they are flush with money because of high crude prices and many people
believed the US invaded the country only to secure future oil supplies.
-
- Guardian Unlimited © Guardian Newspapers Limited
2004
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- http://www.guardian.co.uk/print/0,3858,4912718-103550,00.html
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