Petrel Resources - moderated discussion/research part II

tonystringy - 22 Oct'05 - 14:07 - 20272 of 20275

tonystringy

I think you may be correct in questioning the PSA business. Here is my view:

I think the idea that PSA awaits a new and permanent government is a red herring. It is used by the media, some Iraq 'government' officials and the big multinationals for the simple reason the latter aren't able to operate in Iraq due to the security issue. In other words, does anyone really think that had it not been but for the security situation, the big multinationals would not have been operating in Iraq by now regardless of the present, past or future government situation? Following from this, would the big cos accept to be involved on a cash basis only? Of course not.

Therefore if it wasn't for the security issue alone the multinationals would have been involved by now and have had PSA awarded to them, regardless of the state of the Iraqi government. Whatever government is in place it doesn't alter the fact that Iraq is in urgent needs of the technologies and the finances to rebuild their country and quickly, if only to show their people the merit of the political changes/war and more importantly to weaken the insurgency. The insurgency has actually intensified because of lack of progress in the lives of the Iraqi people, which in turn is due to the slow progress in the rebuilding of the oil industry on which the whole of the Iraqi society rely on for their welfare.

Therefore it is in the best and selfish interest of Iraq government, regardless of its official nature, to start rebuilding the oil industry as quickly as possible; and they can only do this through the award of PSA: beggars cannot be choosers.

So why aren't PSA being awarded? Because the US want the big share of the oil deals to go to its multinationals - that is obviously one of the main reason of the war. And given the security situation, the US multinationals cannot operate because they will be targeted by the insurgency, hence their lack of involvement so far as documented by the press stating their CEOs concerns about the security situation.

Basically the US doesn't want to see PSA going to other companies whilst its multinationals lose out because they are prevented from operating in Iraq by the insurgency. Further, given the insurgency, awarding PSA to basically the big boys, who are seen to be associated with the occupation, would confirm the suspicion that the war was about oil. This would intensify the insurgency further which would weaken the US hold of Iraq further and make it much worse for the big boys to even dream of getting into Iraq.

What we have here is, in effect, a stand off between the US and the insurgency (cowboys’ dual). Whilst the former wouldn’t let go of the PSA unless most of it goes to US cos, the insurgency is saying no to US cos benefiting from the war. In between we have the Iraq government helpless, hence the criticism levelled at it by oil expert both Iraqis and outsiders on specifically the point about the slow progress in rebuilding the oil industry with some experts putting the blame on the lack of PSA contracts so far.

So where does leave us with PSA at the moment? In actual fact PSA are being discussed, within the context of at least the study deals IMO is currently offering. PSA cannot be offered on existing oil wells producing the same amount of oil as before, simply because there is no new oil exploration and therefore no risk undertaken by the contractors.

Therefore, with regard to S&L, there is no PSA to be had on the current contract as it stands because it is to service the oil well and bring it up to operational level as it stood prior to its damage during the Iran/Iraq war. However, the extended contract of S&L which Pet said it is seeking can, and most likely will, be awarded on PSA basis. This extension would be to extract newly discovered oil from "DRILLING AT DEPTH IN THE FUTURE.", as made clear in DH statement recently:

"Mr Horgan said that while the contract, which envisages daily production of 200,000 barrels of oil and 100 million cubic feet of gas, is to drill for oil proved to exist at shallow levels, THE COMPANY HOPES TO EXTEND THE CONTRACT TO INCLUDE DRILLING AT DEPTH IN THE FUTURE."


So where does this leave us with a possible PSA for the extension of the current S&L contract VS the US (or the Iraq government, if one wishes) blocking award of PSA. I don't wish to get into the politics but suffice to say that the US is not and will not be in full control of Iraq and has no choice but to give in little. The US cannot afford to be seen to clash with its puppet government in Iraq, whose interest (and incidentally that of the US) is to satisfy the Iraq people with rebuilding the oil industry quickly for the welfare of Iraqis, if only to drain the support away from the insurgency. The US has already done so if you consider the contracts the IMO has awarded so far, including those to Pet, albeit small ones.

In fact the US may deliberately let the IMO award small scale oil deals on PSA basis, not only to prepare the ground for its multinationals but also to be seen not interfering with Iraq oil. OTHERWISE, HOW LONG FOR CAN THE US HOLD THE GUN AGAINST IRAQ GOVERNMENT'S HEAD, WHO ON THE OTHER SIDE HAS THE GUN OF THE INSURGENCY HELD AGAINST IT, WHILE THE IRAQIS ARE SCREAMING FOR JOBS ETC....?

After all the US repeatedly denies the war was for oil. Well they have to be seen to live up to that claim, at least a little bit. The "little bit" could be little PSA deals such as the extension to Pet's S&L, and hopefully several others.