[PEN-L:30156] Re: RE: ex-URPE member makes good

[Ben Day <day@xxxxxxxxxxxxxx>]

At 11:41 AM 9/10/2002 -0700, Devine, James wrote:
> > A friendly Iraq - home to the world's second-largest oil reserves -
> would provide an alternative to Saudi Arabia for basing US troops. Its
> oil reserves would make Saudi Arabia, the world's largest oil exporter,
> less important in setting prices, he said. In general, others contend, a
> US-allied Iraq could work to diminish the influence of OPEC, long
> dominated by Saudi Arabia, over oil supplies and prices.
>
> >''We would be much more in a position of strength vis-a-vis the
> Saudis,'' Clawson said.<
>
> I understand that Iraq has lots of oil reserves (at least they do now,
> before a likely destructive war, in which many may catch fire
> "accidentally"), but isn't Iraq a high-cost producer, especially compared
> to Saudi Arabia? So isn't it SA which has a greater ability to set the
> price? If so, doesn't that undermine Clawson's analysis? I can see Iraq as
> a military base for controlling Saudi Arabia (except that it would involve
> constantly putting down insurgencies), but it's hard to imagine it as a
> major player in the world oil market. Or am I wrong?

I dunno about costs (although I'm sure the embargo has an impact on
production costs), but Iraq's reserves are still less than half those of
Saudi Arabia's, and not significantly larger than reserves in Iran, Kuwait,
United Arab Emirates or Venezuala
(http://www.eia.doe.gov/emeu/iea/table81.html). Iraq would have a very long
way to go to gain significant ground in oil politics (although, compared to
current OPEC quotas, Iraq will definitely gain ground - see p. 22,
http://www.csis.org/mideast/reports/energyii81298.pdf and compare w/the
reserves table), and in particular to challenge SA, whose reserves are
large enough to expand much faster than Iraq.

-----Ben