The Hunt for Oil

by emptywheel

Does it surprise you that the first company to sign an oil deal with Iraqi Kurds is Hunt Oil, a company with very close ties to Bush and our country's intelligence infrastructure?

Texas' Hunt Oil Co. and Kurdistan's regional government said Saturday they've signed a production-sharing contract for petroleum exploration in northern Iraq, the first such deal since the Kurds passed their own oil and gas law in August.A Hunt subsidiary, Hunt Oil Co. of the Kurdistan Region, will begin geological survey and seismic work by the end of 2007 and hopes to drill an exploration well in 2008, the parties said in a news release.

Nope. It doesn't surprise me, either. But I am interested in what it portends for long-term plans in Iraq.

First, some background. The Hunt family that owns Hunt Oil (it's privately held, so we don't get to scrutinize financial statements) is one of the big money Texas donors behind the Bush family political empire. Ray Hunt, the current chair of the company, is also on the board of Halliburton and the King Ranch, meaning he probably knows to duck when he goes quail hunting with Dick Cheney. Hunt is also on the board of trustees for Shrub's new presidential library, which has just announced its plans for a wacky democracy institute that will give cover for more imperialism around the world. Oh, and Hunt is also on PFIAB, which means he gets to review a huge amount of intelligence information and then refuse to reveal its classification and declassification activities--not to mention weigh in on whether or not the President's illegal intelligence activities are illegal or not.

It's also worth noting that one of Hunt Oil Company's planes has been spotted taking off and landing at a CIA training facility.

In short, Hunt Oil Company is as wired in as oil companies get--which is saying something.

Now do you see why I find it interesting that Hunt Oil Company is the first company into Kurdistan's oil fields?

What I don't know is how to interpret the deal. Perhaps it means nothing more than that Ray Hunt, having reviewed BushCo's plans and the real underlying intelligence personally, is sufficiently comfortable that Kurdistan will exist as a viable entity, with the oil laws in Iraq remaining as they are, with sufficient security, to conduct oil exploration over the long term (and this is oil exploration, so we are talking a long term indeed). Or perhaps Hunt has signed this deal as a favor to Bush, to push other, publicly held oil companies (which might--out of concern for shareholder value--hesitate before signing such a deal) to invest in Iraqi oil. The NYT article suggests both may be factors in this deal.

Despite Iraq's vast oil reserves, major international companies have sat on the sidelines, not only for security reasons but because of the absence of legislation governing the industry and offering protection for investments.

A draft oil law for all of Iraq has been bogged down for months, in part because of disputes over who will control the proceeds.

In August, however, the Kurdish self-governing region in northern Iraq enacted its own law governing foreign oil investments. The move angered the central government in Baghdad, but the Kurds are determined to push ahead with oil exploration.

Most interestingly, this deal suggests those close to Bush believe the US will retain its ties with Kurdistan, as a distinct entity, for some time. There is a growing body of evidence to suggest that recent developments in Iraq reflect a slow, but irreversible, split into three countries. If that happens, Turkey, Iran, and Syria are sure to be mightily involved in attempts to destabilize Kurdistan. But never fear, because Hunt Oil will be there, looking for oil. Among other things, I'm sure.

If I had to guess, I'd suggest this is pretty solid evidence that BushCo has grown comfortable with the idea of Iraq splitting apart.

Comments

[phred]

Wait a sec, so Congressional staffers with clearances, judicial staffers with clearances, and DoJ employees in the OLC are denied access to all manner of information related to the executive, but Bush can hand pick an "outside" council of big donors for them to review whatever Bush wants them to, and nobody knows what that may or may not be??? How on earth can such a system be legal and how did it get set up? I clicked the link you have to PFIAB, which didn't really get into how this little junta came into being... Do you have any links with more info? Thanks EW. And remember, the Iraq War is NOT about oil. Uh huh, right.

[bmaz]

Aw jeez, I may need an air sickness bag. Per my standard Sunday morning teevee schedule (except for Sundays like today when there is a Grand Prix live from Europe, Italian GP today, when I get an extra early start, i.e. 4;:30am here) the first important "Sunday Morning Talking Heads Show" I watch is "The Sports Reporters" on ESPN. Far superior, in both intellectual content and depth, than the bobblehead political shows on the networks. Unfortunately, it only lasts thirty minutes, so I usually switch over to NBC and catch the last half of Meet the Press for the panel discussion. If I negligently fail to hit one numerical button push on the ole remote, I end up on cspan2 and "Book TV".

On occasions when this happens, Book TV is like Forrest Gump's freaking box of chocolates. You never know what you will get. Usually I am just annoyed that I have to look up from my standard Sunday morning giant plate of eggs with cheese, sausage and biscuits with lots of real butter, that are in a race with Bush to see which will kill me first, in order to find the remote and get the right channel. Occasionally there is something interesting. Last time this occurred, I looked up and it was Marcy Wheeler discussing Anatomy of Deceit at a Drinking Liberally gathering that looked like there were a bunch of fun people drinking quite liberally. Today when I made the mistake, I stumble into Jack Goldsmith puffing up with pride over his new book. What a totally full of himself little fat fuck that guy is. It was hard to tell what impresses Goldsmith more about himself; that he was at the hub of the Bush Administration saving the world from terrorism, or that he is now saving the world from Bush. Legend in his own mind doesn't even begin to describe this guy; Mary is absolutely right on the money with her disgust for him.

[&y]

Are there any companies willing to offer political risk insurance (or any insurance, for that matter) in Iraq? Or is this one of those totally awesome deals where we taxpayers get to take the hit if Hunt's scheme fails?

[Sally]

Ha. If Kurdistan's neighbors make a move to destabilize the country (and Hunt's oil prospects), guess whose military will be rushed in?

By the way, this non-expert has the impression Kurdistan has its act together more than most in that region. Is that just not saying much and/or am I wrong?

[emptywheel]

phred

This article is a good place to start.

[DHinMI]

I'm not sure this is a signal to what the Bush administration is planning on doing. James Baker's standard position has always been that any country that exists should not be divided; he was adamantly opposed to the breakup of the USSR, and he committed crimes of diplomacy and statecraft in opposing the break up of Yugoslavia, as if we were going to keep that from happening. Bush obviously still has sway over him, as seen by this. I don't think there's anyone around Bush who has a clear and coherent idea of where Iraq is headed, so the idea that this is a move that the upper echelons of BushCo are calculating isn't one I find convincing.

However, I do think that a smart guy who's more of a realist than a utopian--and the neocons are utopians, or at least zealous idealogues--could look at the intelligence that Hunt has seen, and could have spent time actually listening to the Kurds when they say they don't want to be part of Iraq and watching what they do, like when they outlaw the display of the Iraqi flag in Kurdistan or pass their own oil laws, and conclude that they aren't going back in to Iraq, and it's worth the investment to assume that the Turks and Iranians aren't going to force them back in to Iraq. If you look at it that way--and I do, and I've thought for a long time that the Kurds are gone and aren't going to stay in Iraq--then it makes great sense for Hunt to sign that deal.

[phred]

Thanks EW. So I take it then that the President can appoint whomever he chooses, with no constraints whatsoever? I am stunned that Eisenhower was so short sighted as to not be aware of the kind of abuse that could occur. Thanks again, great post as usual :)

[ab initio]

Excellent insight!!

With the DC & Texas elites - follow the money. It will always lead you in the right direction.

The USofA is a direct subsidiary of BIG oil, telecom, pharma, finance.

[bmaz]

I think DHin MI is right here. The Turks have been fearful of an independent Kurdistan, and certain that it would happen sooner or later anyway, for a long time. Depending on how much money the Hunts sink in, it is undoubtedly a shrewd investment.

[Dismayed]

I'm with you EW. I've long thought that the three state solution was probably the only reasonable salvage position we have at this point.

It seems to me that the situation on the ground is more or less organically headed that way. Our arming the Sunnis may simply be a means of keeping the shia from prolonging a war of succession by the shia.

In the beginning a one state solution, probably was the goal for Bushco - feeling that one puppet state is easier to control. Learning that's not so three state may be the accepted plan B.

If we do go three state, anybody want to bet who ends up with all the oil. The sunni, of course. They'll be more dependent on us, where the shia will have big bro iran and bigger bro russia to look after them.

Wow, just dawned on me that this is looking more and more like vietnam all the time.

Anyway, seems pretty obvioust to me that a three state solution may be the cost of peace, but I'm sure oil interest will keep that peace short lived, if it arrives at all. At the very least it gives us a conventional war to deal with, and a side to back, and that is something Bushco knows will be easier to sell.

Hold on to your hats, new lines in the sand, coming right up.

[Mimikatz]

How could the Sunnis end up with all the oil when most of it is in the south (Shi'a) or north (Kurdistan)? They are fighting over Mosul, their ownly hope for holding on to some.

To me it indicates that Hunt at least foresees that Iran will have hegemony over the southern oil fields, or they will be badly damaged in the coming war between the US and Iran, so he's locking up what is likely to be all that's really left.

[Dismayed]

I don't have a good grasp on where exactly the oil is located. I thought a good portion of it was in arguable areas, while yes concentrated in the south.

Perhaps Bushco is pushing the Sunni to accept less oil in exchange for their lives, and there is a back door deal with the shia?

Lord knows the mechanations, but it does seem that a three state solution is coming and that does seem like the most natural solution.

[AZ Matt]

Between Bush landing in the Anbar Resort & Military Base and this information concerning the Hunt Co., I would say the maps are ready showing where the dividing lines are between the Kurds, the Sunnie and Shias.

[sailmaker]

Here is a map of the oil. http://www.eia.doe.gov/emeu/security/esar/esar_bigpic.htm

Super impose a map of the new, permanent bases and one gets the idea of why we are there. Notice there aren't bases in al-Anbar, or Karballa provences. http://www.fcnl.org/iraq/bases.htm

As to why Hunt would make such a gamble as making a deal with the Kurds - gambling runs in the family. The Hunt brothers ran up the silver market in the 1970s in response to inflation http://www.wallstraits.com/main/viewarticle.php?id=1298. I kind of think Eisenhower was wrong about them:

Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.
Letter to Edgar Newton Eisenhower, his brother (1954-11-08)

Not stupid - dangerous in my opinion.

[phred]

Clearly, Eisenhower underestimated the malevolence of the splinter group and their ability to buy the talent they needed to impose their will on the rest of us.

[sailmaker]

Here is the map T.E. Lawrence (of Arabia) presented the British parlement in 1918.

http://www.npr.org/templates/story/story.php?storyId=4967572

Enlarge it, and I think one might be surprised: looks like a good way to divide the place up, if it has to be divided.

[Jodi]

We need oil.

What's the fuss?

[bmaz]

Sailmaker - You are right about Lawrence's map. There is actually much of T.E.Lawrence's work that was eerily prescient about Bush's Iraq exploits. In fact, most of the mistakes and idiotic thoughts of Bush and the neocons were covered in one way or another in the Seven Pillars of Wisdom; especially the winning nature of insurgency like battle in this area of the world. Shame that Bush can't/doesn't read; he could have gained much from the Seven Pillars. There is an absolutely fantastic French movie from the 60s (one of the all time great war movies in my estimation) by the name of "The Battle of Algiers" that also clearly exhibits about every lesson on the region that Bush and the neocons STILL have not learned. For anybody that has not seen this movie, I highly recommend it.

[DHinMI]

Although, Lawrence was very loose with the truth and exaggerated what was happening in the Middle East to assist his political and personal goals, and David Lloyd-George was often more than willing to accept without question Lawrence's assessments, because they supported what he wanted. There's probably 20 or more examples of Lawrence's exaggerations, lies and fables laid out in David Fromkin's A Peace to End all Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East.

[masaccio]

Kurdistan, at least, may make sense as a geopolitical entity. Maybe if it happens slowly and safely, the Turks and the Iranians can push their Kurds into the new nation. That would require protections for the Turkmen minority who are a sizable minority who live in a band across the southern side of Kurdish territory. Here's a map. The area they inhabit includes important oil areas around Kirkuk, and smaller fields near Mosul. The Turks feel kinship towards the Turkmen, and will not want to see them harmed.

[bmaz]

DHinMI - You are quite correct about exaggerations by Lawrence; some of which are clearcut, sopme not so much and the result of propaganda by detractors and some created by Lowell Thomas (Of whom Lawrence himself was a fierce critic). There has long been a heated debate on this by historians. Wherever one comes out on the ultimate veracity of Lawrence spectrum, there really is quite a bit useful in the Seven Pillars to today's situation in Iraq and how it came to be.

[phred]

sailmaker, thanks for the links to the maps. It certainly appears that the bases are linked with the oil fields, but I'm curious, given the number of bases in the north, why aren't there more bases in the southeast? From the oil map, it appears there are more (if smaller) super fields in the southeast than the north. Is this simply because of the division between US and British deployments, or is there more to it than that?

[Mary]

I've got a bit of a different take on the Hunt deal. To start with, if Cheney goes hunting with the King Ranch boys (or girls even) he needs to be the one to have read up on when to duck. *g*

Sailmaker imo has the biggest part of it right. Exxon ThinkTanker Rice and Bush/Cheney have sold a big hunk of song and dance on the oil and gas law. While they focus on the issue of revenue sharing - and that is the appealling issue - the bigger issue with the oil law is what it does on production agreements and development rights and control of the development awards and all of that is completely geared to be nothing more than a huge and long term giveaway to the big oil companies. Hunt is huge for a wholly owned, but they are nowhere near the size of the Texas Double Cross (Exxon).

And Hunt is also not the first to cut a deal for oil development with the Kurds - they are just the first US entity to do so.

http://www.globalpolicy.org/security/oil/2005/1201kurdishoil.htm

So here's how it works. Iraq has very mapped out reserves - there is almost no exploration risk involved, just drill a well and pump in several areas - to the south and by Kirkuk in particular. Now, countries like Iran and Saudi Arabia, with such plotted reservoirs, pretty much began taking control of development themselves, bc multinational production agreements were pretty egregious (we know the oil is there, we'll drill the pretty risk free well and recoup 100% of the well costs off the top and then we get a huge production payment off of everything else that ever comes out of the ground)

So the multinationals have fewer and fewer opportunities these days to impose that kind of production payment in their favor on any new Big Fields, because countries have wised up. Enter the Iraqi oil law, which pretty much reopens the issue of big production payments for the big guys. And while Hunt is a big and well connected player (there are actually all kinds of Hunt companies as the family has different interests and spin offs other than the main entity) the truth of the matter is that it was going to be the really big players to get the big pieces of that pie.

But a funny thing happened on the way to the oil law being passed. First off, the Kurds and Norway's DNO (also a company not likely to get a slice the way the oil law was being structured to be a giveaway to the big boys) went ahead and cut a deal for development the end of 2005. Oops.

In any event, I see the new Hunt deal as being a big gamble and also a big EffU to Rice and the megawatt players. I'm thinking this means that Hunt thinks the oil law at this juncture either won't get passed, or will be forced to grandfather in existing deals even if it were passed. So rather than sit back, wait for the law to be passed and cut out the smaller players, or wait while no law is passed but companies like DNO go forward with deals and eventually the big players come in and squeeze out the little guys for things that haven't been taken, or wait while an entity gets put in place that will work with Iran in the South and self-develop, etc. the Hunt family is once again gambling.

Exxon and others are more constrained bc of what they would have to put in their corporate reports and shareholder issues if they went in and started trying to cut deals with no oil law, plus they want the biggest deal they can get and don't want to do piecemeal carveouts with lower production payments. Big ships turn slowly. IMO, Hunt is betting that Exxon's girl Rice is a washout, Bush is an inept also ran, and they can outmaneuver the politicians and the multinationals.

If you go back through the OPEC history, you'll see how the independents (especially in Libya) were what really began to give OPEC its power, back when the Seven Sisters rode herd on things. Big oil has a long memory and they are not favorably disposed to the indys.

Right now there are a lot of different considerations, but my primary reaction to the news is that Hunt is willing to begin undercutting the big boys and cut their own deals with the Kurds is "good for them."

IMO, it's not something that will make Bush Cheney all that happy, as the Sisters can be real witches when their plans are thwarted by bumbling political incompetents.

All jmo and spec, fwiw.

[casual observer]

So the Kurdish profits will be distributed nationwide, at least as long as the nation exists (and there are any actual profits). Interesting.

It strikes me that this deal is definately in the Kurd's interest. And I wonder if this is why (among other reasons) the Kurds had retained Barbour's lobbying firm in washington.

All of these are side issues. The real problem, I believe, is that BMAZ will have increasing difficulties with his remote TV control, on account of all the butter (real) and sausage grease caked thereon. This is a real, growing threat all across america. And I don't know what to do about it.

[phred]

Mary, who are the Seven Sisters?