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Friday 11 July 2008 (08 Rajab 1429)

 
Of nations’ pride and access to resources
Syed Rashid Husain | Arab News
 

Access to national, natural resources is a divisive issue in real, real sense. It evokes raw emotions. And the emotions turn explosive, take a deeply political tone, when the national energy resources are in focus.

In an era, when to those who matter in this unipolar world of ours, the concentration and not the availability of the energy resources is the real issue; the question of access to these national, natural and indeed finite resources assumes explosive dimensions.

And how could it be different? Skepticism rules the world of energy and with real reasons. Some five decades back, in 1953 to be exact when President Mosaddeq of Iran decided to nationalize the Iranian energy assets, he was definitely within his own right to do so, no one could deny. Yet that was not acceptable to the powers that be. It is an open secret now that the grand son of President Roosevelt, Kermit Roosevelt orchestrated the August 19, 1953 coup against Mosaddeq. Indeed the powers that be, could not have afforded a state, crucially important from energy point of view, to exercise independence in real sense.

It’s the same today too. One doesn’t need to look that far into history to reach a conclusion. Most, including Washington insider Alan Greenspan, now admit the assault on Baghdad in March 2003 was all about oil. And even in recent months when pressure was being exerted on Baghdad to get on with the oil draft, rather in a hurry, most if not all in the region viewed it as another attempt at controlling the Iraq energy riches. And in the process, rightly or wrongly, the international oil companies (IOCs), are increasingly being perceived here by many as means for fulfilling the imperial designs. A section in the region now even views the energy riches of the region more of a curse rather than blessing, for getting too much of the unwarranted attention.

Indeed access to energy riches of the region is an issue running deep into the psyche of the region. And with the tightening of crude markets, access is once again under the spotlight. In the current circumstances, the issue is being painted by many as ‘the culprit’ for the market upheavals. Greater access to Saudi Arabian energy riches have been an avowed goal of successive Washington administration. It has long been a dream of oil majors too.

And in October 1998, when the then Crown Prince and the current King Abdullah, invited the chief executives of at least seven major oil companies for a meeting, while in Washington, they lobbied hard for access upstream here too. Many then thought that the then Crown Prince has finally opened up to the idea. The euphoria though proved short-lived and ever since the oil majors have been striving even harder for that.

The push continues to this day. At the just concluded World Petroleum Congress, Tony Hayward, the chief executive of BP, reiterated that fundamental issues such as a lack of investment and the rising intransigence of state-owned oil companies (in not allowing access to the IOCs) were behind the current oil price spike, warning that “the problems are above ground, not below it”.

Mr Hayward’s views were echoed by his compatriots too. The likes of BP, Shell, and ExxonMobil are now getting more and more vocal in pointing to the increasing difficulty they have in accessing new reserves, owing to the hardening stance of state-owned oil companies, that remain unconvinced that they need the help of private groups to extract the resource from beneath the surface. With the tightening market, the issue is assuming extremely explosive proportion.

And thus when Mark Finley, the general manager of Global Energy Markets for BP, even if reluctantly, conceded at the International Energy Forum Secretariat in Riyadh earlier this week that Saudi Aramco had the capacity and the technical capability to meet the challenges of the industry, and IOCs do not offer much added advantage in this case, for a change it was a welcome one.

To some extent, he was overriding his boss’s statement.

The entire argument that the denial of access was the culprit for the current woes of the market thus seemed standing on rather shaky grounds — in real sense.

Though indeed, if the reasons for the push for access are something else than what is being stated, then it’s a different debate altogether.

Lets’ be clear and to the point. The issue of access to resources is definitely important, one cannot argue, yet this is not applicable in all the scenarios. Saudi Aramco is bringing on stream the 1.2 million bpd Al-Khurais on stream next year, entirely on its own. And in this case, the IOCs — often termed as oil majors — don’t have much added advantage to offer.

On the other hand, one also needs to concede that though Saudi Aramco may not be in need of any help from the oil majors, in exploring the resources, yet some other state oil companies may definitely be in need.

And it is here that oil executives need to make the distinction. Rather than painting all the national oil companies with black, they need to be more specific. This may help them win at least the argument, making it more convincing, if not the access still.

One needs to underline at this stage that the issue of national pride is involved in this entire debate. And after all the oil majors do not have a clean history to boast off and they are today paying a price for the perceptions they enjoy and the past faults of their own — let’s admit and move ahead into future.

 



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