Peak Oil, Missing Oil Meters and an Inactive Pipeline:
The Real Reason for the Invasion of Iraq?

Introduction

In this article I will present research that supports a rather startling hypothesis: that the USA invaded Iraq primarily to enable the secret diversion of a portion of Iraq’s oil production to Saudi Arabia. This was done in order to disguise the fact that Saudi Arabia’s oil output has peaked, and may be in permanent decline.  The evidence for this conclusion is circumstantial, but it does knit up many of the loose threads in the mystery of the American administration’s motivation for invasion.

To lay the groundwork we need to set out a couple of assumptions.

The primary assumption is that the world’s oil production has been on a plateau for the last two years, and in fact we may be teetering on the brink of the production decline predicted by the Peak Oil theory. Such a decline could be dangerous to the world economy, both directly through the loss of economic capacity and indirectly (and perhaps more importantly) through the loss of investor confidence in the global economic structure.

The second assumption is that the oil production of Saudi Arabia is key to maintaining the global oil supply.  Saudi Arabia supplies over 10% of the world’s crude oil, with over half of that coming from one enormous field named Ghawar.  There is a large and well-informed body of opinion that believes that if Saudi oil production goes into decline the world will follow because there is not the spare capacity anywhere else to make up for such a decline.  Saudi Arabia is notoriously tight-lipped about the state of their oil fields, and in fact oil production information is considered to be a state secret. The only trustworthy information the world really has about Saudi Arabia’s oil are their aggregated production figures.

The conclusion that can be drawn from these two assumptions is that if Saudi Arabia’s production began to decline and the world found out about it, there would be a significant risk of a world-wide economic panic that would destabilize markets and throw nations like the USA into a recession or depression that would be worse than the actual damage done by the loss of the oil.  We can assume that the prevention or postponement of such a crisis would be an extremely high priority for the administrations of both the USA and Saudi Arabia.

The Evidence

Cheney’s Energy Task Force Meetings

These meetings have long been a bone of contention with the Bush administration.  They have gone to extraordinary lengths to keep the subject of the meetings absolutely secret.  These efforts are documented by such sources as http://www.projectcensored.org/publications/2005/8.html and http://www.bushsecrecy.org/page.cfm?PagesID=27&ParentID=1&CategoryID=1

We do know the following:

• The task force was created in the second week of the Bush administration to develop national energy policies.  They met early in 2001 (well before September 11) to draft policy and develop plans.
• Task force meetings were attended by executives of Exxon-Mobil Corp., Conoco, Royal Dutch Shell Oil Corp., and the American subsidiary of British Petroleum.
• Among the meager product that has been made public are maps of Iraqi and Saudi Arabian oil fields and pipelines.  On both these maps there is a pipeline called IPSA (the Iraq Petroleum Saudi Arabia pipeline) that is marked “closed”.  The maps are available at http://www.judicialwatch.org/IraqOilMap.pdf and http://www.judicialwatch.org/SAOilMap.pdf

The Iraqi Oil Ministry

It is well known that the Iraqi Oil Ministry was the only major government installation guarded by American troops following the fall of Baghdad.  Indeed it was guarded extremely well: according to an April, 2003 news story at http://www.smh.com.au/articles/2003/04/16/1050172643895.html:

Since US forces rolled into central Baghdad a week ago, one of the sole public buildings untouched by looters has been Iraq's massive oil ministry, which is under round-the-clock surveillance by troops.

The imposing building in the Al-Mustarisiya quarter is guarded by around 50 US tanks which block every entrance, while sharpshooters are positioned on the roof and in the windows.

The curious onlooker is clearly unwelcome. Any motorist who drifts within a few metres of the main entrance is told to leave immediately.

Baghdad residents have complained that US troops should do more to protect against the looters, most of them Shi'ite Muslims repressed by Saddam Hussein's Sunni-dominated regime who live in the vast slum known as Saddam City on the northern outskirts.

But while museums, banks, hotels and libraries have been ransacked, the oil ministry remains secure.

The ostensible reason for this extraordinary focus was to protect Iraq’s primary asset.  Indeed an American captain is quoted in the article as saying, "Anyone who says we're protecting this ministry to steal Iraqi oil doesn't know what's really going on in this country."

The Mystery of the Oil Meters

On March 22, 2007, CorpWatch published an article entitled “Mystery of the Missing Meters: Accounting for Iraq's Oil Revenue” (http://www.corpwatch.org/article.php?id=14427). In it they make the following claims:

• At the oil terminals of Al Basra (ABOT) and Khawr al Amaya (KAAOT), “smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT - has not worked since the March 2003 U.S. invasion of Iraq.”
• Officials blame the four-year delay in repairing the relatively simple system on "security problems." Others point to the failed efforts of the two U.S. companies hired to repair the southern oil fields, fix the two terminals, and the meters: Halliburton of Houston, Texas, and Parsons of Pasadena, California.
• Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. "Iraq is the victim of the biggest robbery of its oil production in modern history," blazed a March 2006 headline in Azzaman, Iraq's most widely read newspaper. A May 2006 study of oil production and export figures by Platt's Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for.
• The kinds of meters they were supposed to repair or replace at ABOT are commonly found at hundreds of similar sites around the world. Because they are custom-built, shipped, then assembled and calibrated on site, the process can take up to a year. But the probelm has persisted for four years.
• After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields.
• "I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq," Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station.

The Pipeline

Now we’ll look at that pipeline on those Energy Task force maps.

The Iraq Petroleum Saudi Arabia (IPSA) pipeline was built during the Iran-Iraq war to circumvent attacks by Iran on Iraqi tankers in the Gulf. It has a capacity of 1.7 million barrels per day and runs from Iraq's southern oil fields to the Saudi port of Yanbu, north of Jeddah.   It later served both Iraq and Saudi Arabia, but has been closed by the Saudis since Iraq’s invasion of Kuwait.  The Saudis claim ownership of the pipeline, though Iraq disagrees.

The pipeline was reported ready to resume operation in September, 2003 (http://www.ameinfo.com/28059.html ). One month later in October however, we heard this (from http://www.gasandoil.com/goc/news/ntm34663.htm ):

20-10-03 The 1.7 mm bpd crude pipeline which runs from Iraq across Saudi Arabia to the Red Sea is in no condition to be utilised for Iraqi exports. When asked about reports that Iraq was in discussions with Riyadh to re-open the line, a Saudi Aramco official said that the Iraqis "don't know what they are talking about. The pipeline is not in a state to be utilised."

So is it usable or isn’t it?  I can’t find anything except this denial to indicate that it’s unserviceable, though a State Department presentation (http://www.state.gov/documents/organization/60011.pdf ) indicates that it’s closed with no plans to re-open.  I can find no evidence of insurgent attacks against it, so there is at least some possibility that it is running.

Saudi Arabia’s Oil Production History

Saudi Arabia’s oil production has been deliberately increased and decreased over the years in like with their role as the world’s “swing producer” – a country with enough capacity to open the taps to keep prices from rising too high and the political discipline to restrict production if prices fell.  In the period from 2001 to the end of 2003, this “price band” was set by OPEC at $22 to $28 per barrel.  At the beginning of 2004 oil prices moved above this band, and have never returned to it.  This seems to indicate that OPEC members, and particularly Saudi Arabia, don’t have the excess capacity that would be required to bring the prices back within the traditional band.  The suspension of the price band in 2005 seems to be in recognition of this new market reality.

This graph of Saudi oil production is very interesting. It clearly shows the fluctuations in supply during 2002 and 2003, presumably attributable to their role as a swing producer.  At the beginning of 2004, however, something very curious happens.  There is a very rapid rise in production of 1.3 million barrels per day over the course of two months.  This production level is maintained with only one small dip (which may indicate the temporary influence of production from the new Haradh III oil field) until the beginning of 2006.  At that point a decline sets in that has not yet been arrested, resulting in a fall of 8% over the last year.  This decline has been validated by four independent sets of data, as described here: http://www.theoildrum.com/node/2331

Pulling it All Together

Existing Hypotheses

I have never been entirely satisfied with the unofficial explanations for the Iraq war.  I do accept (as does this article) the idea that the war was somehow “about oil,” yet none of the existing explanations for why that should be so are terribly convincing.  The United States could have achieved significant influence over the disposition of Iraqi oil through standard diplomatic and commercial means, without the expenditure of so many lives and so much money.

One hypothesis advanced by Canadian journalist, Linda McQuaig, in her book “It’s the Crude, Dude” argues that the US invaded to acquire the “carrot and stick” of oil ownership and sales rights in order to be better able to reward friends and punish its enemies, thereby shaping regional and global power structures.  To me this seems a costly, indirect and ineffective mechanism, especially if the global oil supply is unconstrained and nations can buy from whomever they wish.

Then there is the hypothesis that invasion was staged to permit western oil companies (particularly those with close ties to the Bush administration) to take control of the fields and reap windfall profits.  This speculation also comes up short in my opinion. Those oil companies were already doing very well. An invasion and occupation are very risky ventures, and are intrinsically unlikely to provide the stable environment required for a simple transfer of commercial control (neo-con dreams of flowers, candy and regime change notwithstanding).  The costs seem entirely out of proportion to the potential rewards.

The “Purloined Letter” Hypothesis

The speculation of this article is that the real background of the Iraq war goes something like this:

• The Bush administration is composed primarily of oilmen.  They are well aware of the Peak Oil theory.
• They are also aware of the risks that a decline in global oil production could pose to the world’s political and economic stability, especially if it is generally perceived to be the result of irreversible geological conditions (i.e. we start to realize that the world is running out of oil and there’s nothing we can do about it).
• The Bush administration and the Saudis are also well aware of the role Saudi Arabia plays as the linchpin of world oil production.
• The Bush administration and the Saudis are very good friends, and share intimate secrets like the actual state of Saudi oil production.
• In early 2001 the Saudis tell George and Dick that Ghawar has started to “water out”:  the oil they are pumping up contains more and more of the water that they are using to force oil into the wells.  This is a sure sign that the field is nearing the end of its useful life.
• This news triggers very loud alarm bells in Washington and Riyadh, because if Ghawar and overall Saudi production are about to decline this brings the risk of global instability that much closer.
• The two administrations decide they need to keep the imminence of Saudi oil decline out of the public consciousness for as long as possible.  To do this they need to accomplish two things: mask the decline of Saudi Arabia, and make it appear as though any decline in Middle East production is due to above-ground factors.
• Fortunately, they have a ready target in Iraq.  Saddam is vulnerable, he has lots of oil, and Iraqi oil production has been in chaos since Gulf War 1.  And he controls the input end of the IPSA pipeline.
• At Cheney’s Energy Task Force meetings the plan is developed and western oil companies are brought into the picture.  This ensures they will be onside and will not start asking awkward questions later about the provenance of Saudi oil.
• As a parallel effort, the Saudis agree to sponsor an attack on US soil to provide the Bush administration with the required “casus belli”.  The Saudis recruit 15 of their own citizens to form the core of the September 11 attack team.
• Once the attack has taken place the march to war begins.  It doesn’t matter how flimsy the excuses are, all that matters is that the progress of the plan cannot be derailed under any circumstances.  No penetration of the ruse, however small, will be permitted.  This determination results in the Wilson/Plame reprisal, the killing of Dr. David Kelly and possibly other killings like that of State Department WMD analyst John Kokal (http://www.fromthewilderness.com/free/ww3/112003_kokal.html ).  The real reason for the invasion must never be discovered.
• Iraq is duly invaded and Baghdad is captured.  The Oil Ministry is the only facility to be secured because it’s the only one that matters to the plan.
• The meters in the southern oil fields are immediately shut off and sabotaged so nobody can tell how much oil is missing.
• The un-metered oil is redirected into the perfectly functional IPSA pipeline and enters Saudi Arabia.
• There are now two possibilities for what happens to the purloined oil:

1. It arrives at the Saudi port of Yanbu where it is loaded onto tankers as legitimate Saudi oil, and shipped to international customers.  There is a problem with this scenario, because the oil coming in from Iraq has a slightly different chemical signature from Saudi oil.  This small difference would be noticed by customers, because the refineries need to know the characteristics of their feedstock very precisely.
2. A more reasonable solution is that this oil is piped to refineries in Saudi Arabia and is used to satisfy domestic demand.  The Saudi oil spared by this substitution is shipped out to customers, and no one is the wiser.  This is both safer and easier than the first suggestion, because the stolen oil never leaves Saudi Arabia, and its disposition falls under the obscuring veil of Saudi secrecy.  This also makes the case harder to prove, of course.
   

• The 1.7 million barrel per day volume of the IPSA pipeline and the timing of the rise seen in Saudi oil production in early 2004 fit the scenario perfectly.
• Any decline in overall Middle Eastern oil production can now be blamed on the civil war in Iraq, which has been either a blessing in disguise or a calculated part of the plan.  The attacks on oil installations have also made it easy to disguise the disappearance of a full tanker-load-equivalent of oil every day.
• It was all going well, except that the decline in Saudi oil production exceeded everyone’s expectations.  Even with the Iraqi subterfuge in place the decline of 800,000 barrels per day over the last year could not be masked.

Conclusion

There is as yet no smoking gun to support this hypothesis.  This remains a work of pure speculation, based on a suggestive convergence of events and incidents.  The one feature of this hypothesis that makes it attractive is the extent to which it can accommodate all the odd and otherwise inexplicable events of the last six years.  On the other hand, it can be accused of suffering from the common failing of conspiracy theories: it would take too many people to implement.  The argument against that is that these events have demonstrably occurred and the binding element of the hypothesis, the peaking of Saudi oil production, would not require that many people to be aware of it in order for it to provide sufficient motivation for such a devious scheme.