http://www.atimes.com/atimes/Middle_East/HA21Ak01.html
Best Regards
Chris Cook
Jan 21, 2006
SPEAKING
FREELY
What the
By
Chris Cook
Speaking Freely is an
It
is said that there is the reason they give; and then there is the real reason.
Nowhere is this more true, perhaps, than in
My experience with
This letter was
written on the basis of my experience as a
former
director of the International Petroleum Exchange and in the aftermath
of allegations I made in relation to market manipulation on the IPE the previous
year, which were dismissed by a commissioner appointed by the exchange. I still
regret that I used the description "systematic" rather than "systemic" of this
alleged manipulation, but that is another story.
In this letter I
pointed out that the structure of global oil markets massively favors
intermediary traders and particularly investment banks, and that both consumers
and producers such as
It is therefore with wry amusement that I have seen
a myth being widely propagated on the Internet that the genesis of this
"
As anyone
familiar with the Organization of Petroleum Exporting Countries will know, the
denomination of oil sales in currencies other than the dollar is not a new
subject, and as anyone familiar with economics will tell you, the denomination
of oil sales is merely a transactional issue: what matters is in what assets
(or, in the case of the United States, liabilities ) these proceeds are then
invested.
After a couple of years of apparent inaction, my colleague and
I were invited to put together a consortium to tender for a project to create
such an exchange and, after a presentation at the central bank in Tehran in May
2004, we were successful, as reported in The Guardian at the time. We
subsequently learned that the delay had been due to initial opposition from the
Saudis and this opposition was withdrawn after the attacks of September 11,
2001, and the subsequent US-led invasion of
A
major feasibility study was carried out in the summer of 2004 - for which we
still have not been paid by the Iranian Oil Ministry - and after this, the
process became bogged down in turf battles between the Oil Ministry and the
Ministry for the Economy.
We met president Mohammad Khatami in December
2004 to resolve this problem and then spent considerable time with his close
advisers, from whom we received powerful backing. Progress was made, to the
extent that an exchange entity was incorporated and premises purchased on
In the second quarter of 2005 the real opposition from
within the Oil Ministry - from factions opposed to shedding any light on the
sales regime - was becoming apparent. However, as the battle was about to be
joined, Khatami's period in office came to an end and the presidential election
in August intervened.
Neither we, nor anyone we knew, expected the
result of the election, still less the events after it. Three times over a
period of three months an oil minister was nominated by the new president,
Mahmud Ahmadinejad, from among his trusted colleagues and three times they were
turned down by the majlis (Iranian parliament), until finally an experienced
insider was appointed in early December. Only now are further levels of
appointments being made by the new minister.
Ahmadinejad is on record as
saying that he favors transparency in the Iranian oil market. As anyone familiar
with the City of
However, we remain hopeful that the
strategy we recommended, which is based upon (a) gradual and organic
introduction of pricing built upon the neutral function of transaction
registration and (b) a simple (and Islamically sound) partnership-based
"clearing union" synthesis of bilateral trading and a multilateral guarantee,
will in due course be taken forward.
One of the most interesting aspects
of the process was that during our brief spell of contacts with decision-makers,
some insight into current Iranian policy was possible - in particular, the
nuclear question. In our conversations we were left in no doubt that it suits
both the
In fact the issue is
a proxy for
Now that
pro-Iranian Shi'ite elements are taking a primary role in the emerging
government in
The realpolitik is of course that those in power in the
Chris Cook is a former director of the International
Petroleum Exchange. He is now a strategic market consultant, entrepreneur and
commentator. Reprinted with permission from www.energybulletin.net.
(Copyright 2006 Chris Cook.)
Speaking Freely is an