oil company – government meetings, 2002-3
First Release, 27 April 2011
These five documents are minutes of meetings about Iraq between the UK government and oil companies BP and Shell, ion the six months before the war. They were reported in the Independent on 19 April 2011.
The documents do not demonstrate that oil was the reason for the war. But they do show that during the preparations for war, oil was a central concern for the UK government, disproving its claims that it was not interested in Iraq’s oil.
The documents also provide a remarkable insight into the interaction between oil companies and government, at the highest levels. We see that the government needed no persuasion that it should help the companies – the civil servants clearly saw themselves as on the same side as the oilmen. The companies could barely contain their excitement about Iraq – “the big oil prospect”, as BP put it in one meeting (DOCUMENT 3) – and the tone is quite unlike that usually seen in minutes of government meetings. The companies and government officials alike had no doubt that a war would take place, months before the parliamentary vote and while the government struggling (unsuccessfully) to persuade the UN Security Council to pass resolution authorising the war.
From the company perspective, the main purpose of the meetings was to ensure that they got their share (as they saw it) of Iraqi oilfields after the war. They were especially worried that the US government would naturally favour US companies, and might offer other fields to French, Russian or Chinese companies in exchange for their governments’ support in the UN Security Council. Tony Blair had already pledged British participation in the war, and so the British companies feared that with no bargaining power they’d be left out.
Trade Minister Baroness Symons – a staunch Blairite and active member of the British American Project, which had aimed since the 1980s to align the Labour Party’s foreign policy with that of the USA – was present in two of the meetings. She said [DOCUMENT 2] that “It would be difficult to justify British companies losing out in Iraq in that way if the UK had itself been a conspicuous supporter of the US government throughout the crisis”. In other words, if British forces fight in a war then British companies should get a share of the spoils. This view is clearly unethical, but is also arguably illegal, under the Fourth Hague Convention.
BP and Shell both claimed that no such meetings took place. These minutes show such claims to be untrue. When invited to explain the discrepancy, both companies declined to comment. For her part, Symons said to Parliament in April 2003 that Iraq’s oil was “the patrimony of the people of Iraq, which should be used for their benefit, and for their benefit alone” – this was not what she said in private to the oil companies.
For more commentary on these documents, including the companies’ objectives and their history of deals with the Saddam regime, please see Chapter Four of Fuel on the Fire. For more on the UK and US governments’ strategic oil objectives, please see Chapter Three.
DOCUMENT 1 – Meeting of Edward Chaplin (Middle East Director, Foreign & Commonwealth Office (FCO)) with Tony Wildig (Senior Vice President for New Business in Middle East, Shell), 2 October 2002.
Chaplin: “Shell and BP could not afford not to have a stake in it for the sake of their long-term future… We were determined to get a fair slice of the action for UK companies in a post-Saddam Iraq.”
DOCUMENT 2 – Meeting of Baroness Liz Symons (Trade Minister) with representatives of BP (Richard Paniguian, Tony Renton), Shell (John Withrington, Gavin Graham) and BG (Bethell), 31 October 2002.
BP: Iraq “would provide an immense strategic advantage to any company which emerged in a commanding position”
Symons: “Anything of this nature would be highly sensitive and kept very close”.
DOCUMENT 3 – Meeting of Michael Arthur (Head of Economic Policy, FCO) with Richard Paniguian (Group Vice President for Russia, the Caspian, Middle East and Africa), 6 November 2002.
“Iraq is the big oil prospect. BP are desperate to get in there.”
BP: “Vitally important – more important than anything we’ve seen for a long time.”
DOCUMENT 4 – Meeting of Baroness Symons with Richard Paniguian and Tony Renton (Commercial Director Middle East, BP), 4 December 2002
Discussion of US planning efforts for Iraqi oil. “It was clear that Ahmad Chalabi, the leader of the INC [Iraq National Congress] had a key role in selecting who was involved in these groups”.
“BP believed that the US authorities need to start giving some serious consideration to a number of issues on the future of Iraq’s oil industry including Iraq’s role in OPEC, the role of both existing and future Oil Ministry and State Owned Oil Company.”
Note that BP wanted more involvement of Iraqi expertise – presumably for greater stability for any investment.
DOCUMENT 5 – Meeting of John Browne (Chief Executive, BP) with Michael Jay (Permanent Undersecretary, FCO), 18 March 2003
This meeting took place less than 48 hours before bombs started falling on Baghdad, at the highest level: the head of BP with the most senior civil servant in the FCO. Of Jay’s five predecessors in that role, four had become directors of oil and gas companies on retirement from government service (two at Shell and one each at BP and BG).
BP had a team ready. But in the longer-term development of Iraq’s oilfields “They would not wish to be involved unless they were clear that administrative and other structures were in place to ensure that their involvement would be acceptable to whatever government followed military action”. This political conservatism by the major oil companies would shape the evolution of Iraqi oil policy during the early years of the occupation. Note however that Browne did not apparently make the more common point that such deals would have to be legal.
british government strategy papers on iraqi oil, 2003-4
Second Release – 27 April 2011
These three documents set out the British government’s objectives for Iraqi oil, and its strategies for how to achieve them. They were reported in the Independent on 20 April 2011.
The documents stand in stark contrast to public claims by the government that it had no interest in Iraq’s oil. For example, Tony Blair said in February 2003 that “The oil conspiracy theory is honestly one of the most absurd when you analyse it.” Three months later, a Foreign & Commonwealth Office (FCO) strategy paper (DOCUMENT 6) would declare, “The future shape of the Iraqi oil industry will affect oil markets, and the functioning of OPEC, in both of which we have a vital interest.” That paper was written less than two weeks after President Bush declared “mission accomplished” on the deck of the USS Abraham Lincoln.
The nature of British and American interests in Iraqi and Middle Eastern oil is explored in Chapter 3 of Fuel on the Fire. It is not as simple as to ‘take the oil’ (as Donald Trump has been saying over the last few weeks as a launchpad for his presidential campaign). And nor is it just about getting contracts for their own companies, although that was a secondary aim, as discussed in the pre-war Whitehall meetings. The most important strategic interest lay in expanding global energy supplies, through foreign investment, in some of the world’s largest oil reserves – in particular Iraq. This meshed neatly with the secondary aim of securing contracts for their companies. Note that the strategy documents released here tend to refer to “British and global energy supplies”. British energy security is to be obtained by there being ample global supplies – it is not about the specific flow, as if physical Iraqi oil goes to China rather than Europe, another source (say, in Africa) can be re-rerouted from China to Europe in its place.
Chapters 9 and 11 of Fuel on the Fire look at how Britain and the USA sought to achieve their oil objectives during the early years of the occupation (before the formation of a permanent government in 2006). Those chapters contextualise and interpret these three British strategy documents; they also reflect on the favoured euphemism of “advice” (which implies that Iraqi leaders were independently able to take or leave the advice).
DOCUMENT 6 – Iraqi oil and British interests, FCO paper, 12 May 2003
As its title suggests, this document is quite blunt about British interests, not bothering to dress up its proposals as being in Iraqi interests. And it notes the interplay between British energy security and commercial interests.
DOCUMENT 7 – Management change in the Iraqi oil sector, 27 May 2003
Two weeks later, this document was prepared for an interdepartment meeting of the government’s Oil Sector Liaison Group, comprising officials from the FCO, the Treasury, the Department of Trade & Industry and the Department for International Development.
Unlike the previous document, this expresses its aims as being in the interests of Iraqis – yet of the seven items in the objectives list on page 4, five are quite plainly British rather than Iraqi concerns. Even the other two (the 4th and 5th) are only what outsiders imagine Iraqi concerns to be, rather inaccurately.
Note especially the aim for Iraq to be a role model for the other major oil countries in the region, and the call for it to remain within OPEC but as an advocate of lower oil prices.
DOCUMENT 8 – UK Energy Strategy for Iraq, September 2004
This too was an interdepartmental paper, and is quite clear about how Britain would influence the evolving Iraqi oil policy. Note especially the recognition that Iraqis won’t like the plans.
Fourth release, 31 July 2011
During the second half of 2009, Iraq held two auctions of its largest oilfields, awarding them to multinational companies such as BP, Shell and ExxonMobil to operate under 20-year contracts. Between them the oilfields account for over 60% of Iraq’s reserves. The contracts were service contracts rather than the companies’ preferred production sharing agreements, which had been proposed for Iraq but rejected as giving too much away.
Media reports of the auction focused on the headline remuneration fees. These sounded so low – between $1.15 and $5.50 per barrel – that many commentators questioned the profitability of the deals. But as always in oil contracts, the devil is in the detail. And whereas the auctions were billed by the Iraqi government as among the world’s most transparent contracting processes, the first contract, for the super-giant Rumaila field near Basra, was privately renegotiated between the Iraqi government and the winning BP/CNPC consortium for more than three months after the auction.The result was that the terms changed significantly from the published model contract on which the auction was based, to make it much more attractive to BP and CNPC, at the expense of the Iraqi people.
- We have obtained the renegotiated Rumaila contract, and can reveal its contents for the first time. The major changes are explained in the report “From Glass Box to Smoke Filled Room – How BP secretly renegotiated its Iraqi oil contract, and how Iraqis will pay the price”, written by Fuel on the Fire author Greg Muttitt and published by PLATFORM.
NEW REPORT: From Glass Box to Smoke Filled Room.
Also in today’s release:
- Another document released today reveals the possible reason BP was so successful in changing the terms in its favour, by focusing on the detailed terms of the contract. In April 2009, Ministry of Oil officials travelled to the UK to explore how to meet their training needs. Just two months before the auction, foremost among the areas where they sought training were commercial and negotiating skills. And the training provider they went to? BP!
DOCUMENT 14: Letter from BP to Iraq Ministry of Oil, 28 April 2009.
- The contracts were opposed by many in Iraq, including oil experts, the management of the South Oil Company (which would have to work with BP on the Rumaila field), the oil trade union and the parliamentary oil and gas committee. When parliamentarians called in the Iraqi Oil Minister for questioning about the contract, Prime Minister Nouri al-Maliki wrote to the speaker of parliament to warn against the move. In the private and confidential letter, released today, he told the speaker that he would consider such questioning to be “in harmony” with recent major terrorist bombings in Baghdad.
DOCUMENT 15: Letter from Nouri al-Maliki to parliament, October 2009 (Arabic original)
DOCUMENT 16: Letter from Nouri al-Maliki to parliament, October 2009 (English translation)
Fifth release, July 17, 2012
(See also today’s press release)
Two documents are published today, revealing for the first time the role of the Energy Infrastructure Planning Group, whose purpose was to plan for the running of Iraq’s oil industry during the period of direct U.S. occupation and administration of Iraq (under the CPA of Paul Bremer, as it became).
EIPG was established in summer 2002 by Undersecretary of Defense for Policy Douglas Feith. It was led by Michael Mobbs, a political appointee in the Department of Defense. The other members were Michael Makovsy of the Department of Defense, Seneca Johnson of the Department of State, Clark Turner of the Department of Energy (Strategic Petroleum Reserve) and a CIA analyst.
The EIPG did the thinking behind the subject, and made recommendations to the Deputies and Principals Committees of the National Security Council (comprising the heads and second-in-commands of the government agencies relevant to national security).
They were obtained from the Department of Defense under the Freedom of Information Act. This is the first clear evidence, more than nine years on, that Bush administration officials were planning before the war to open the way to multinational oil companies, an assertion consistently denied by the government.
DOCUMENT 17: a briefing to the Deputies Committee on November 6, 2002. The main topic of the meeting is how to spend the proceeds from Iraqi oil.
See especially page 10, where weighing up whether to repair war-damaged Iraqi oil infrastructure, one of the cons is that it “could deter private sector involvement”. Although this route was rejected (see DOCUMENT 18), it could later be seen in the U.S. forces’ failure to stop looting of the infrastructure in April 2003 (they only protected the Oil Ministry building, which held the irreplaceable geological data – they did nothing to protect drill rigs, pump stations etc). The attitude was seen again when the Oil Ministry’s considerable human resources were cleared out in fall 2003, in favor of friends and family of the new oil minister.
Note also on the contents page (2) the EIPG planned to consider later that month “whether to use control of Iraqi oil to advance important U.S. foreign policy objectives”. DOD reports that it holds no record of such discussions. They are likely to involve not direct U.S. energy interests, but whether to tear up eg Russian and Chinese contracts in order to harm those countries.
(The briefing was stored by the DOD as landscape printed on portrait paper – hence the edges are cut off in the official archive too!).
DOCUMENT 18: a briefing to the Secretary of Defense Donald Rumsfeld on January 11, 2003, incorporating comments and decisions from earlier Deputies meetings.
Here the option of leaving war damage unrepaired so as to make room for Big Oil has been rejected, in favor of appointing Halliburton subsidiary KBR to carry out repairs (page 5).
Priorities are set of restoring crude oil production (which the USA needed) over electricity and fuel (which Iraqis needed – page 6).
Increasing Iraqi production to 5 million barrels per day (from 2.5m bpd) is favored as it “helps consumers” and “puts long-term downward pressure on the oil price”
Strikingly, “pubic diplomacy” (page 4) means the message that would be given to the public, including saying that “we will act… so as not to prejudice Iraq’s future decisions” – even though the opposite is proposed as substantive policy. In other words, the briefing recommends that the Bush administration mislead the public on how it would approach Iraqi oil.