Sunday, September 09, 2007

Texas and Kurdistan oil each other up

Despite the fact that US and other oil companies have been operating in Kurdistan for quite some time already, the passage of a Kurdish version of an oil law was sure to further spur activity. And so it is. Within a month of the KRG passing their oil law, Texans are now able to officially move in.
Texas' Hunt Oil Co. and Kurdistan's regional government said Saturday they've signed a production-sharing contract for petroleum exploration in northern Iraq, the first such deal since the Kurds passed their own oil and gas law in August.

A Hunt subsidiary, Hunt Oil Co. of the Kurdistan Region, will begin geological survey and seismic work by the end of 2007 and hopes to drill an exploration well in 2008, the parties said in a news release. Terms of the deal were not disclosed.
...
Revenue will be shared by the KRG throughout Iraq, consistent with the Iraq constitution and the Kurds' new petroleum law, issued by the Kurdistan National Assembly early last month.

Despite Iraq's vast oil reserves, major international companies have sat on the sidelines, not only for security reasons but because of the absence of legislation governing the industry and offering protection for investments.

A draft oil law for all of Iraq has been bogged down for months, in part because of disputes over who will control the proceeds.

In August, however, the Kurdish self-governing region in northern Iraq enacted its own law governing foreign oil investments. The move angered the central government in Baghdad, but the Kurds are determined to push ahead with oil exploration.
I love the conceit Ashti Hawrami, the regional government's minister of natural resources, espouses that the oil law has produced a "a supportive and transparent business environment," while simultaneously preventing the disclosure of contract terms. And don't expect this to change. The terms of these PSAs will likely never be revealed and the direction and share of oil revenues in Iraq will likely have to be pieced together from a variety of sources, if it can be done at all.

Now, it is indeed a curious sight: all these Texas oil companies moving in on Kurdish oil fields, even while being admonished by the State Department. Ballsy, really. Even Exxon doesn't seem to be doing this but perhaps this only because their profile is bit larger than some of the small lights in the oil and gas industry.

As I pointed out earlier, if they're from Texas and oil companies, they probably have some relationship to either Dick Cheney and/or George Bush. Well, Hunt Oil certainly has that. From Hunt Oil's own website, we can learn that Hunt Oil's CEO is a one Ray Hunt.
[I]n October 2001 and again in January 2006, Mr. Hunt was appointed by President George W. Bush to the President’s Foreign Intelligence Advisory Board in Washington, D.C.
Furthermore, Ray Hunt serves on the National Petroleum Council which advises the Secretary of Energy. As interesting is Hunt Oil's Senior Vice President and Director, Tom Muerer, who serves on the board of The Middle East Institute, a "think tank" whose major funders are Chevron, ConocoPhillips, ExxonMobil, Raytheon, Saudi Aramco, Shell. In a not unrelated note, both Hunt and Muerer are or have been trustees for the Southern Methodist University, where, despite the protests of actual Methodist ministers, the George W. Bush presidential library is likely to be housed.

How convenient it is that Hunt Oil, with a CEO on the president's Foreign Intelligence Advisory Board, winds up with, as far as I can tell, the first officially sanctioned oil contract in Iraq.

I love it when a plan comes together.

2 Comments:

Anonymous andrew weaver said...

Ray Hunt is a longtime financial backer of the Bush family. He raised money for the elder Bush and served as the finance chairman of the Republican National Committee for George W. Bush in 2000 (Bryce, 2005). According to the Center for Responsive Politics, Hunt and his spouse have donated more than $460,000 to Republican state campaigns, while his company and its employees contributed more than $1 million to Republican causes between 1995 and 2002 (Grimaldi, 2002). He gave $100,000 toward the 2001 Bush inaugural festivities and one of his corporations, Hunt Consolidated, gave another $250,000 toward the Bush 2005 presidential inaugural gala (Public Citizen's Congress Watch, 2007). In addition, Hunt donated a whopping $35 million toward the Bush library/think tank to secure additional property for the project (Schutze, 2006).

One month after 9/11, Bush honored his friend Ray Hunt with a seat on the President's Foreign Intelligence Advisory Board (PFIAB), and he was re-appointed in January 2006 (Bryce, 2005). According to the White House, this board operates to offer the president "objective, expert advice" on the conduct of foreign intelligence (Wolffe and Bailey, 2005b). Hunt, with international business interests, has access through PFIAB to intelligence that is unavailable to most members of Congress. This group is privy to the most current and sensitive information gathered by the Central Intelligence Agency, the National Security Agency, the military intelligence organizations, and several others sources (Bryce, 2005). PFIAB operates in complete secrecy. According to Salon magazine, members of this oversight board "are not subject to the Freedom of Information Act and unlike other public servants who work for the president, there is no public disclosure of the PFIAB members' financial interests" (Bryce, 2005).

Several experts are persuaded that Hunt's position at PFIAB could easily benefit both Hunt Oil's worldwide energy interests and Halliburton, which has been awarded billions of dollars worth of no-bid, cost-plus contracts in Iraq by the U.S. government (Bryce, 2005; Wolffe and Bailey, 2005). Hunt has been on Halliburton's board of directors since 1998, when Dick Cheney was running the company and serving as an SMU trustee (1997- 2000). Interestingly, soon after Hunt joined the Halliburton board, he was placed on its compensation committee, where he helped determine Cheney's pay package (Bryce, 2005). In fact, in 1998 Hunt's committee decided that Cheney deserved a $3.78 million bonus (Bryce, 2005), and in 2000 he got $33.7 million award when he joined the Bush campaign (Bryce, 2000).

Halliburton has outdone even Enron in using offshore tax shelters to avoid paying taxes. By 2005, Halliburton had 58 offshore subsidiaries in Caribbean tax havens (Turnipseed, 2005). In 1998, the year Hunt joined Cheney at Halliburton, the company paid $302 million in taxes. In 1999, with the use of offshore tax havens, Halliburton paid no taxes and even received $85 million in refunds from the IRS (Turnipseed, 2005). Halliburton also utilized its offshore companies to contract services and sell banned equipment to Iran, Iraq, and Libya -- something that would have violated federal law if Halliburton had not used offshore subsidiaries (Turnipseed, 2005). New York City Controller William Thompson said that profits made by Halliburton from states that sponsor terrorism, such as Iran and Libya, is nothing short of "blood money" (Halliburtonwatch, 2007).

Despite using tax havens and earning millions in profits from rogue states like Iran, Halliburton experienced financial distress. In late 2001, according to Fortune magazine, after a series of financial debacles and billions in asbestos-related liability claims, Halliburton stock plummeted to $8.50 a share, and Wall Street worried about the corporation's survival (Elkind, 2005). Halliburton's fortunes changed dramatically with the onset of the "war of choice" in Iraq. Before the war, Halliburton was 19th on the U.S. Army's list of utilized contractors; by 2003 it was number one. The company has been awarded at least $11 billion in government contracts since Bush took office (Mayer, 2004).

And Ray Hunt has become an even richer billionaire. In March of 2003 Halliburton stock was valued at $20.50 per share and by March of 2007 it was worth $64.12 per share (Rich, 2007). According to the Forbes list of the World's Richest People in 2003, at the beginning of the Iraq war Ray Hunt was worth $2.3 billion (Forbes, 2003) and by 2007 his fortune had grown to $3.5 billion (Dallas Business Journal, 2007). Both Hunt and Halliburton have been winners in the Iraq war. To provide perspective, the $1.2 billion increase in riches in four years by Hunt is greater than SMU's total endowment garnered since 1911 (SMU, 2006).

In 2005 audits by the Pentagon, the Government Accountability Office, and other agencies found that $1.8 billion of the $11 billion in contracts to Halliburton (16.4 percent) to be either "unjustified" or "undocumented" charges to the government (Elkind, 2005). In addition, the auditors reported widespread problems with record keeping and a refusal to provide required information, as well as misleading the auditors about its efforts to seek competitive prices. According to Fortune magazine, Halliburton's "war profiteering" also involved outrageous price-gouging for fuel and services to the troops, such as charging $100 to wash a 15-pound bag of clothes and serving out-of-date food to the troops (Elkind, 2005).

As long-ago as September of 2004, the U.S. military called for "the immediate termination of Halliburton's most lucrative contract with Army because of poor performance" (Halliburtonwatch, 2005). Secretary of Defense Donald Rumsfeld and President Bush ignored the request. When Fortune magazine tried to speak to Hunt about the company's questionable practices, its phone calls were not returned (Elkind, 2005). None of these jaw-dropping scandals kept Halliburton from obtaining a new federal contract to build a maximum-security prison at Guantanamo Bay, Cuba (Ivanovich, 2005; Buncombe, 2006).

In a separate business dealing, Hunt Oil has a major role in the development of the Camisea Natural Gas Project in an unspoiled rain forest in Peru. This project has encountered fierce opposition because of concerns that the pipeline will destroy the rainforest and the lives of the indigenous peoples in the region (Grimaldi, 2002). Amazon Watch, an environmental and human rights group, calls the Camisea Gas Project "the most damaging project in the Amazon Basin" (Amazon Watch, 2007). The (London) Independent newspaper reported that the project "will enrich some of [President Bush's] closest corporate campaign contributors" but that it "risks the destruction of one of the world's remaining pristine stretches of rain forest and threatens the lives of indigenous peoples" (Halliburtonwatch, 2004). Does Hunt's position on PFIAB and the government intelligence to which he is privy give him a business advantage in dealing with this and numerous other projects? There is no way to be certain. What is clear, as journalist Robert Bryce has observed, is that "Hunt's business operations are so vast that every bit of foreign intelligence he sees at PFIAB could potentially be of value to him and his associates" (Bryce, 2005).

http://www.mediatransparency.org/story.php?storyID=196

6:42 AM  
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3:03 AM  

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