Iraq’s Reconstruction Will Make Saudi Oil Superfluous

The American-European accord on Iraq and Iran’s nuclear program also cover key understandings on Iraq’s oil resources.

According to DEBKA-Net-Weekly’s sources in Washington, all parties to the deal are agreed that if the Europeans holds up their end, the United States will open the door to wider EU involvement in the Iraqi oil industry.

Once an interim government is established in Baghdad, tenders backed by funding from the UN and World Bank will be issued for the reconstruction and modernization of Iraq’s oil fields. Our sources report exclusively that working papers and draft contracts are drawn up already for an ambitious investment program worth more than $45 billion.

The Bush administration has agreed to the award of development contracts to Britain, Germany and Italy as soon as responsibility for Iraqi oil is transferred to an interim Baghdad government. France and Russia are out of it until such time as they endorse the political and diplomatic agenda outlined in a separate article in this issue.

And there will be plenty of black gold to go around. According to expert assessments, Iraqi oil production will reach three million barrels a day by the end of the year, generating sales approaching an annual $5.5 billion. Washington hopes that reconstruction of Iraq’s pipelines will raise production to five million barrels a day by 2006. Modernization of Iraq’s oilfields and increased exports from Libya and Russia should keep the industrial world swimming in a sea of petroleum in the coming years – even if Saudi Arabia’s royal family is toppled and the kingdom’s oil industry is paralyzed.

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