asia.reuters.com Wed March 19, 2003 09:13 AM ET By Tom Ashby

LONDON (Reuters) - World oil prices steadied on Wednesday after a four-day rout that knocked 18 percent off the cost of a barrel, as dealers braced for an imminent U.S. invasion of Iraq.

International benchmark Brent crude oil rebounded by 48 cents, or 1.8 percent, to $27.73 a barrel by early afternoon in London, having fallen eight percent on Tuesday.

U.S. crude futures climbed 24 cents to $31.91, following Tuesday's nine-percent drop which took prices to their lowest level in nine weeks.

"The market seems to have achieved some stability after the sharp sell-off," said Christopher Bellew, a broker at Prudential-Bache International.

"Prices are unlikely to move far from these levels until war starts."

Brent has tumbled $7, or 18 percent, in the last four trading days as uncertainty over an attack lifted and dealers bet on an easy U.S. victory. They also expect only a brief disruption to Middle East exports, which make up 40 percent of global oil trade.

Kuwaiti sources said U.S.-led troops had already moved into the demilitarized zone that straddles the border with Iraq.

The U.S. deadline for Iraqi President Saddam Hussein to quit Baghdad or face war stands at 0115 GMT on Thursday, but Saddam has already rejected the ultimatum.

All international U.N. staff, including weapons inspectors, have been evacuated from Iraq.

FEAR PREMIUM

Dealers said the four days of falls had removed some of the "fear premium" in oil prices. Saudi Oil Minister Ali al-Naimi said in an interview published on Wednesday it could be as large as $10.

"The fall indicates the market is looking beyond war. People are not expecting Saddam to have a scorched-earth policy," said Han-Pin Hsi at Deutsche Bank in Hong Kong.

Fears of a strike on Iraq and wider disruptions to Gulf supplies drove U.S. crude close to $40 last month, approaching the $41.15 record set in the buildup to the 1991 Gulf War.

During that war, prices dropped from over $30 to $20 when U.S.-led forces launched an offensive to expel Iraq from Kuwait, once it became clear Iraq would not harm oilfields in Saudi Arabia, the world's top exporter.

"If there is an early U.S. victory, I don't expect any major price increases, and it could fall further," Prudential-Bache's Bellew said.

Upside risks remain, however, if Iraq should torch its own oilfields, or if the conflict is drawn out.

"If the threat to blow up oilfields is carried out, we would see a savage spike. We would see sharp price rises probably out to two years forward," said Sydney-based independent oil analyst Simon Games-Thomas.

An invasion will almost certainly close Iraqi crude output of 2.5 million barrels per day (bpd) and its southern neighbor, Kuwait may also be forced to shut some fields near its border.

Oil giant Royal Dutch/Shell said on Wednesday it had closed an oilfield in Iran, close to the Iraqi border, because of its proximity to the potential conflict zone.

The offshore Soroosh field pumps 60,000 bpd, and is the first field outside Iraq to have closed because of war fears.

IRAQ EXPORTS SLOW

Iraqi oil exports, ranked seventh largest in the world, have already slowed dramatically this week because most Western companies are unwilling to take the risk on uncertain supplies.

The United Nations said Baghdad was still permitted to export through a pipeline to the Turkish Mediterranean. One ship is expected to load there on Friday, traders said.

The OPEC oil cartel has promised to fill any supply gap caused by war, but many members have already increased supplies to their full extent. Analysts believe any prolonged outage of Iraqi supply, with some impact on Kuwait, would test the group's spare capacity to the limit.

A cold northern winter and prolonged supply hitch from Venezuela have already drained commercial stockpiles to historic lows in the world's top oil consumer, the United States.

Official figures due for release later on Wednesday are expected to show a slight build in stocks of crude, which are at lows not seen since the mid-1970s.

The United States has made preparations to release oil from its strategic reserves to prevent any supply interruption. But the signal to open the taps on these emergency stocks will come only when the government decides a shortage has developed.

Any decision would probably be taken in tandem with the International Energy Agency, the West's energy watchdog, which monitors government oil stocks in 26 industrialized nations.

These stocks, added to reserves held by industry, could cover those countries' total import needs for 114 days.

Keiichiro Okabe, head of the Petroleum Association of Japan, said he did not expect the agency to order a release if the war ends quickly.

www.barbadosadvocate.com Web Posted - Wed Mar 19 2003 By David Hinkson

DEPUTY Prime Minister and Minister of Foreign Affairs and Foreign Trade Billie Miller said that Barbados cannot support the premise on which United States President George W. Bush is proposing to invade Iraq, and is wondering which country in the world would be next to face a preemptive strike from the US armed forces.

Speaking during debate on the 2003-04 Estimates in Parliament, Miller said the conditions for preemptive strikes had not been clearly thought out and that the US, which was supposed to represent the leadership of the free world, “had shown no little disrespect for the UN in recent years” even though it expected other nations to follow the rules of that organisation and other international agencies.

She said the pending action indicated that the processes the United Nations had put in place for the peaceful resolution of disputes had been overtaken by new principles and concepts promoting regime changes and preemptive strikes.

The Deputy Prime Minister said it was a serious cause for concern, and in pointing out current trouble spots in the world such as Palestine, Venezuela and Haiti, wondered whether the day would come when a more developed nation would suggest to Barbados who its Prime Minister or Government ought to be.

She noted that CARICOM Heads of Government at their recent meeting in Trinidad had reached a consensus on the matter which stated that diplomacy and dialogue were the best way for the two countries to resolve the conflict, and were “deeply troubled” by the human tragedy of war and its adverse effects on global economic stability.

The Deputy Prime Minister said Barbados will have to divert slender and hard-fought for resources to prepare ourselves for the damage that a war will cause, including building up food supplies, looking at our food security, and upgrading the security at our air and sea ports as well as at our overseas missions, particularly those in the United States, the United Kingdom, Venezuela, Brussels and Geneva, “where the alert is shining on orange now and may move to red within hours”.

She said Government also had to be concerned about the security of our foreign service officers in those countries, and that the Ministry of Tourism was also trying to determine what contingency plans could be put in place to promote our tourism programme in case the war breaks out.

news.bbc.co.uk Monday, 29 January, 2001, 11:09 GMT By Katty Kay

A majority of President Bush's new cabinet are millionaires and several are multimillionaires.

According to information from financial disclosure reports, released by the Office of Government Ethics, most cabinet appointees have amassed their fortunes in stock options.

Now a Washington-based think tank is questioning whether some of the cabinet members could face a possible conflict of interest.

It is not unusual for American politicians to be rich. For the last two decades more than half of all cabinet members have been millionaires.

Strong ties

But the number of millionaires in this new cabinet highlights the influence of money in American politics.

"You don¹t come to Washington and give up your life and business unless you have a lot of money," said Charles Lewis, executive director of the Center for Public Integrity.

What makes the new Bush administration different from previous wealthy cabinets is that so many of the officials have links to the same industry - oil.

The president, vice-president, commerce secretary and national security adviser all have strong ties to the oil industry.

Vice-President Dick Cheney amassed some £50m-$60m while he was chief executive of Haliburton oil company.

Commerce Secretary Donald Evans held stock valued between $5m and $25m in Tom Brown Inc, the oil and gas exploration company he headed.

Opening exploration

National Security Adviser Condoleeza Rice was a director of Chevron.

The concentration of energy connections is so pronounced that some critics are calling the Bush government the "oil and gas administration".

Condoleezza Rice: Was a director of Exxon

There are also questions about how energy policy decisions may be affected by the private financial interests of so many senior cabinet members.

The Bush administration has already made it clear that it would be interested in opening up oil exploration in Alaska.

It is a move opposed by environmental groups but favoured by energy companies. With oil prices rising in recent months this issue has taken on new urgency.

Political apathy

And this is not just the era of wealthy cabinet members.

Don Evans: Held stock in oil exploration company

One third of this senate are millionaires and 10 of the major presidential candidates also had financial fortunes in the millions.

If wealth is a prerequisite of political office, it appears that poverty is often a hallmark of political apathy.

Charles Lewis of the Center for Public Integrity said: "There is a perception of wealthy folks running the government and those who are not wealthy not participating in government."

Of the 100 million Americans who do not vote, the overwhelming majority are lower middle class or poor.

www.crikey.com.au Stephen Mayne and Kate Jackson Keeping an eye on George Dubya's Oilies January 31, 2003

With war in the Middle East looming we look at the top ten oil producing nations and their proven reserves, and consider just who is influencing foreign policy in the Bush administration.

Biggest oil producing countries There has been much discussion of late about the motivation of a US led attack on Iraq. Many people have mentioned oil as a motivation, but who really knows which countries produce the most oil and which have the largest reserves? We have compiled a list of the top 10 crude oil producing countries and the countries top 10 crude oil reserves (and those just outside the top 10).

World crude oil production by country in 2001 (barrels daily)

1. Saudi Arabia - 8,768,000
2. USA - 7,717,000
3. Russian Federation - 7,056,000
4. Iran - 3,688,000
5. Mexico - 3,560,000
6. Venezuela - 3,418,000
7. Norway - 3,414,000
8. China - 3,308,000
9. United Kingdom - 2,503,000 10.Iraq - 2,414,000
10. United Arab Emirates - 2,422,000
11. Nigeria - 2,148,000
12. Kuwait - 2,142,000
13. Libya - 1,425,000
14. Indonesia - 1,410,000

World proven crude oil reserves by country in 2001 (thousand million barrels)

1. Saudi Arabia - 261.8
2. Iraq - 112.5
3. United Arab Emirates - 97.8
4. Kuwait - 96.5
5. Iran - 89.7
6. Venezuela - 77.7
7. Russian Federation - 48.6
8. USA - 30.4
9. Libya - 29.5 10.Mexico - 26.9
10. Nigeria - 24.0
11. China - 24.0
12. Qatar - 15.2
13. Norway - 9.4

Stats from BP's Stastical Review of World Energy

In the PDF file "table of proved reserves at end 2001" you'll see how Iraq's proven reserves have rocketed from 29.7 billion barrels in 1981 to 112.5 billion barrels in 2000 - second only to Saudi Arabia which has 261.7 billion barrels.

The key statistic here is that Iraq is the tenth biggest producer but has the second largest amount of proven reserves. Given that the Bush administration is full of oilies, it does suggest that oil is a big motivation in the move to oust Saddam.

In other words, Saddam is sitting on proven oil reserves worth an incredible US$3 trillion based on current oil prices (+US$30).

At the moment the French, Chinese and Russians are best positioned to exploit this. No wonder they are reluctant to back George W and let Exxon, Chevron, Texaco and the like in there.

The USA's proven oil reserves have fallen from 36.5 billion barrels to 30.1 billion over the past 20 years whilst NAFTA has dropped from 102 billion barrels to just 64.8 billion, presumably due to all that Yankee gas-guzzling as the economy has boomed.

The ratio of NAFTA reserves to annual USA oil consumption has never been lower. If the Yanks were only relying on NAFTA, their annual consumption of 7 billion barrels would suck the whole of North America dry in less than 10 years.

Yet Saddam is sitting on decades worth of US oil consumption. When you've got an administration full of oilies and these are the cold, hard facts, it is very hard to dismiss the widely held view that this war is all about oil.

Meanwhile, pitiful Australia only has 2.9 billion barrels in proven reserves and we've recently given East Timor a slice of this, although the treaty is still to be signed. The Yanks certainly won't be invading if Simon Crean or Bob Brown ever became Prime Minister.

What others are saying:

The topic of America's oil obsession is also gaining mainstream coverage in the media. Tony Walker observed in the Fin Review on 31 January that, "The US is a net importer of 52 per cent of its oil requirements. By contrast, Australia imports about 8 per cent of its oil requirements, most of that form Asia, with a small amount from the Middle East.

No great arguments there for Australia's legions to march across the desert sands of Iraq, although Australian officials in Canberra are understood to have had preliminary talks with their American counterparts in Washington about the possibility of BHP and Woodside sharing in some of the post-war action in Iraq.

The gas guzzling US consumes more than 25 per cent of oil produced worldwide. And where does the US get its oil imports? In 2000, nearly 55 per cent of US gross oil imports came from four countries: 15 per cent from Canada, 14 per cent from Saudi Arabia and Venezuela and 12 per cent from Mexico. Iraq supplied 5 per cent to 6 per cent.

But - and this is a huge "but" - according to the US Energy departments own projections, the US and its major trading partners are set to become much more dependent on Gulf oil over the nest two decades."

Meanwhile the eleven members of the Organisation of Petroleum Exporting Countries (OPEC) are still collectively suppling about 40 per cent of the world's oil output, and possess more than three-quarters of the world's total proven crude oil reserves. At the end of 1999, OPEC had proven reserves of 811,526 million barrels of crude oil, representing 77.8 per cent of the world total of 1,042,536 million barrels.

The member countries are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. There are a few countries with which the US has deliberately cultivated relationships, such as Kuwait and Saudi Arabia. Not countries you would expect the US to be friends with if oil were not in the equation.

Bush's oil industry connections

It is well known that George W. followed his father into the Texas oil business years before following him into the White House. But the links between his administration and the oil industry do not stop there.

Vice President Dick Cheney previously served as chairman and chief executive of Halliburton Co., the world's largest oilfield services company, which has operations in Azerbaijan. Cheney and Commerce Secretary Donald Evans both ran energy-related companies, earning millions of dollars.

National security adviser Condoleezza Rice, was on Chevron's board of directors from 1991 until January of this year, and has a company oil tanker named after her.

Christine Todd Whitman, the administrator of the Environmental Protection Agency, owns interests in oil wells in Texas and Colorado valued at between $55,000 and $175,000. She has promised to divest of them to meet ethics guidelines.

Defence Secretary Donald Rumsfeld has between $3.25 million and $15.5 million worth of investments in energy-related companies. He is divesting himself of many financial holdings but has not provided details.

The law firm of former Secretary of State James Baker, a Bush family adviser, represented several oil companies with interests in Azerbaijan, among them Exxon-Mobil Corp.

Brent Scowcroft, a Rice adviser who was national security adviser in the administration of Bush's father, has industry connections that include sitting on the boards of Pennzoil-Quaker State Co. and Enron Global Power & Pipelines, a unit of Enron Corp.

Deputy Secretary of State Richard Armitage is a former co-chairman of the U.S.-Azerbaijan Chamber of Commerce.

With such strong oil connections in the administration it is very hard to imagine how access to Middle East oil reserves could not be a large factor in Bush's decision to go to war. Not to mention the fact that many of these large energy companies donated money to the Republican Party. After all, it wasn't long ago that former head of Enron, Kenneth Lay and the President were best friends.

www.crikey.com.au

The Crikey Crew

......................unfair to everybody".

Hugo Kelly hugo@melbpc.org.au Crikey's eccentric media, politics, business and sports commentator haphazardly applies his sublime writing skills to all sorts of things. Hugo was first elected Venezualan President in a 1998 landslide victory, ousting the regime of Carlos Andres Perez, Hugo Kelly's path to power has followed a traditional South American route: from military strongman to populist political dictator. This admirer of Fidel Castro's Cuba and avowed anti-globalist was pushed from office on 12 April - as a result of his attempts to take control of the world's fourth-biggest oil industry. But just two days later, after his supporters - mainly Venezuela's poor - took the streets, he was back in the presidential palace. Now, his country his in the grip of a dramatic general strike with oil production paralysed and Hugo might soon might himself out of job and writing for Crikey again.

Dan McNutt dan@crikey.com.au Dan McNutt is Crikey's Sydney (Sin City) correspondent. Dan is like Stephen Mayne in many ways ........................