DISADVANTAGE/OIL

LINK: ALLOWING IRAQ'S OIL SUPPLY ONTO THE MARKET WILL BRING OIL PRICES DOWN

IRAQ COULD QUICKLY INCREASE ITS OIL PRODUCTION

Mideast Mirror, January 5, 2000 HEADLINE: Iraq playing into U.S. hands by rejecting latest UN resolution //ACS-LN-1-23-2000

According to the government's declared plans, production capacity could rise to 3.2 million barrels daily by the end of 2000, and it is certainly true that Iraq's technical prowess in restoring such production levels has amazed the oil world.

IRAQ HAS HUGE RESERVES CAPABLE OF DESTABILIZING THE WORLD OIL SYSTEM

Mideast Mirror, January 5, 2000 HEADLINE: Iraq playing into U.S. hands by rejecting latest UN resolution //ACS-LN-1-23-2000

One recent study estimated that new finds could lead to a doubling of Iraq's existing proven reserves, enabling it to sustain production at eight, 10 or even 12 million barrels daily. The current state of affairs ideally suits Washington's strategy for controlling the region, and it has come about largely thanks to the behavior and mistakes of the Iraqi regime.

IRAQ HAS HUGE OIL RESERVES

Mideast Mirror, January 5, 2000 HEADLINE: Iraq playing into U.S. hands by rejecting latest UN resolution //ACS-LN-1-23-2000

CAPACITY: Following the nationalization of the Iraq Petroleum Company (IPC) in 1972, the Baathist government took huge strides in oil exploration, leading to the discovery of many giant fields. Thus proven reserves increased from about 22 billion barrels before nationalization to some 120 billion now.

INCREASED IRAQI OIL THREATENS PRICES AND USA OIL VENTURES IN AREAS LIKE THE CASPIAN

Mideast Mirror, January 5, 2000 HEADLINE: Iraq playing into U.S. hands by rejecting latest UN resolution //ACS-LN-1-23-2000

The U.S. also sees the prospect of increasing quantities of low-cost Iraqi oil reaching the market as a real threat to oil prices. That, in turn, poses a threat to American oil investments both in the U.S. and overseas, especially its extensive investments in the high-cost areas of the Caspian Sea, West Africa and the Gulf of Mexico.

IRAQ IS THE SWING PRODUCER IN THE WORLD OIL MARKET

Friedman, December 21, 1999 (Thomas L., The Gazette (Montreal), p B3)

Because of rising oil demand from Asia, and the OPEC cartel's limiting of its production, the oil market has been very tight for the past six months. In this tight market, Saddam Hussein's Iraq became the enormously powerful swing producer the only country willing and able to suddenly turn on or off its oil tap. When Saddam was pumping his 2 million barrels a day, prices stayed steady or fell. But if he suddenly stopped, oil prices could skyrocket. On Nov. 23 Saddam suddenly stopped, sending prices soaring. He said he was doing this in protest against continuing UN sanctions. Don't believe it. Here's my guess at what Saddam and his oil minister were really saying to each other.

IRAQ CAN EITHER SEVERELY LIMIT OR INCREASE THE OIL SUPPLY, IRAQ IS KEY

Milwaukee Journal Sentinel, December 9,1999 Oil Prices are rising, Section- Business Page 1)

Curtailed production, and the resulting squeeze has boosted prices. Global oil supplies have fallen since Iraq suspended oil exports and Iran FOR petroleum products just as winter begins in some of the biggest oil-importing nations, the International Energy Agency reported Wednesday. Global demand for oil grew 1.3% in the third quarter compared with a year ago, while demand in the United States increased in November by 6%.

IRAQI OIL INVESTMENT WILL INCREASE PRODUCTION SIGNIFICANTLY

EIU Country Report, I" Quarter 2000, "Iraq"//hxm

0bservers are now waiting to see what impact UN Security Council Resolution 1284 has on Iraqs off sector. The resolution calls for the formation of a "group of experts" to look at the options for increasing Iraqi oil production. The committee-which has yet to be formed-is to report within 100 days of the passage of the resolution on means to increase Iraqi oil production, including the involvement of foreign oil companies. The Iraqi government will be hoping that Saybolt Is involved in this group, as its analysis of Iraq's production problems leaves no doubt that foreign investment will be necessary to promote good oilfield husbandry. The government is eager to have foreign oil firms operating in the country, both to boost oil production and to gain additional political leverage over governments whose oil firms are operating in the state.