I: Homecoming, 36 Years Later
In case you haven't heard, the Iraq Petroleum Company is back in brisk business.
The Oil Ministry in Iraq is in the final stages of negotiations that would award no-bid contracts exclusively to the four oil companies that were evicted in the aftermath of the nationalisation projects of Saddam's time. BP, Exxon-Mobil, Royal Dutch Shell and Total were all pioneer members of the IPC - then known as the Turkish Petroleum Company, TPC - in 1925. This succession of agreements would result in the return of these companies back into Iraq, with the aim of resuscitating the oil refineries that constituted the foundations of most of the fragile assumptions that planners of the Iraqi invasion rested their hopes upon. And as the price of oil continues to inch upwards unabated, debates are becoming ever more populated with oil-centric perspectives: will Iraqi oil finally begin to pay for the War on Terror itself; is this simply the beginning of an era of exploitation by the major oil companies to suck the remaining oil deposits dry while sustaining the world's energy consumption; is this what Halliburton failed to get away with, and now the money and contracts are simply landing into different hands of the same motive?
It is easy to be disillusioned at this turn of events - indeed, news articles and commentaries have been churned out as if waiting in the shadows for their five minutes of provocative fame, now unleashed and perfectly poised to capture the groundswell of disgruntlement sweeping through the public. Having watched George Clooney's Syriana only a few days ago, one can safely say that the argument of exploitative, profit-hungry oil companies colluding with power-hungry leaders, having gained the expressed support of higher-ups in the government through assassination ploys and foreign policy manoeuvring, has proven very effective and convincing such that most people would take it at face value and begin finger-pointing almost right away.
Before I begin, let me warn those who expect this to be another run-of-the-mill, convoluted, spittle-spewing tirade of hatred aiming at the discreditation and wholesale denigration of oil companies and their despicable motives of exploiting Third World countries dry: I do not see the need to pander to stereotypical ideas, and certainly I do not see the need to further add oil to the raging fire, for that would only strengthen the myths I seek to debunk.
First off, what struck me about the article in the Tribune was that the reportage was being framed almost exclusively to assuage the escalating fears of the general public - who have been increasingly feeling the pinch as oil prices head skywards - and the industries who depend on oil to run their operations. Thus, the main focus drilled home the important concern that was presumptively on everyone's minds: production, and the rate of expansion:
Certain principles and code of values are what societies live by, and the most successful of civilisations emerge victorious if they manage to forge the best compromise of old and new principles to live by. Societies make decisions as to whether to cling on to tradition-honoured principles that their ancestors held, whether to abandon them as those codes of conduct have become counterproductive to adopt in light of changing circumstances, and whether to adopt new principles that allow humans to objectively conduct retrospective criticism of their past behaviour and make changes in how they live in order to increase the chances of success of survival by perhaps a few generations, if history is merciful.
The realists of Ayn Rand's novel seek to convince society that principles are simply too rigid to equip individuals with the necessary tools for survival in an age of declining production and affluence, that the time has come to renounce the very codes of conduct that created the wealth being enjoyed in the present. These malicious panic-mongerers seek to denounce profit as the main culprit of the world's problems of poverty, because private companies have taken all the money and hoarded it for themselves. They propose a vicious, purely perverse mechanism by which entrepreneurs, pioneers and inventors shall be penalised and punished for their attempts at maximising profit; instead, they will reward people on a basis of need. The principle of hard work, of relying on one's intellect and will to earn one's own living, is abolished for the sake of equality of ever-lowering standards of the physical, followed by the moral and spiritual.
You must be wondering what I'm getting at. Let me explain: firstly, there is one principle that has proven absolutely essential to humankind's survival and continued existence on this earth: sustainability of resources. Yet this principle is still being deprioritised in general reportage: production alone will not get us anywhere other than to buy us time. The way I see it, the $140 price of one oil barrel is indicative of a scenario that we would inevitably reach in a few years' time even if there wasn't any form of OPEC-induced limit on supply today. The limits placed on supply only served to illustrate what would surely happen in one or two decades from now, when technologies hit the wall and no more oil can be extracted from the ground, when deposits worldwide are sucked dry. We should be focusing on how to ease transition to alternative energy sources, weaning our dependence on oil. And yet people are worrying about production and whether it can match accelerating demand from many Third World countries, whose people are aspiring to First World living standards and environmental impact per capita.
Where is the talk of sustainability and consumption rates? The general assumption everyone is banking on is that while Iraq's oilfields are potentially capable of matching world demand, there will always be some oilfield elsewhere in the world that we can tap into in the future, when supply starts to stem again. Endure through the period of rising prices and eventually, we will be able to maintain our rate of consumption to sustain our lifestyle. That is, while most people do realise that once the oilfields are exhausted, they do not bother themselves with the difficult questions of what would happen to Iraq once their natural resources run low. Consumers will adopt the typical behaviour of shifting their attention - and purchasing power - to those new oilfields that can be exploited. After all, they are paying the money, so why would they care about how the oil is being extracted, and whether it is sustainable?
That mindset is the scourge that will contribute to the accelerated depletion of the world's remaining oil deposits. Lest it be forgotten, oil is considered a non-renewable resource: it takes thousands and millions of years for oil to be formed under the earth. We should review our rate of consumption and adopt new principles of living sustainably in order to ensure that future generations - our generation of sons, daughters, nephews and nieces - will not be crushed under the burden of having to suffer for the environmental degradation our generation wrought in our time.
Abandon the principle of treating consumption as the only measure of status, affluence and well-being: it is the most tangible, magnificent manner and testament of our capability, our intellect, our power to create; yet what good would it be if we could only hope to possess it for a lifetime, only to be painfully reminded of our past glory when we are starving and struggling? We can enhance our well-being by helping to preserve sustainable practices that will contribute to the ability of future generations to successfully cope with the costs of transition and adaptation. Creating ever-larger cars and complexes isn't going to be of much help except perhaps boost your own sense of ego when environmental degradation coupled with climate change impacts living standards in adverse ways. Our criteria for standard of living must shift to accommodate factors such as air and water quality, degree of sustainable development of local resources, degree of capability in mitigating the costs of emittances of greenhouse gases and other pollutants. In short, how well we can minimise the effects of harmful trends of consumption afflicted by our predecessors while moving forward in technological advancement and innovation. My best guess is that human progress will be measured by this yardstick in the decades to come.
One particular fact that many people seem to have conveniently ignored while accusing oil companies, amongst many offenders in big business, is that these private companies are responsible for their shareholders. One must be aghast at the need to remind people that private companies exist for the sake of profit, for otherwise what else could be the motive that drives men to innovate, to work hard? People talk as if these companies were obligated to respond solely to the needs of society. The starting point of negotiations with oil companies lies in the need to recognise that the company is responsible to its shareholders first and foremost, and then persuade them to adopt more socially responsible practices by promising to reward their reforms with profit. It does not help the existing debate by railing against big business, demonising every corporate outfit and profit-making entity as selfish, greedy and inhumane. Responsibility to society has to be cultivated. Even governments have to be taught that.
Should we be worried about corporate social responsibility in the case of the big four, soon to find themselves back in Iraqi oilfields? Have they been cultivating socially responsible practices to ensure that resources are being exploited sustainably? Have they been rewarded by the public for doing so, and has the public been discerning enough to actually care about such matters other than their right to consume?
Public interest in environmental issues has exponentially increased in recent years, and shareholders have noted the positive effects of adopting environmentally-friendly policies in the form of greater frequency of success in negotiating projects with foreign governments, less domestic protests and the willingness of consumers to identify socially responsible companies and patronise their products over their competitors. It is now profitable to be environmentally-friendly, which is why it is no surprise that BP, Total and Exxon-Mobil have placed so much emphasis on sustainable development, subjecting themselves to regulatory checks by independent bodies and reputation management by public opinion surveyors such as Ipsos MORI (Shell and BP are registered members). In this aspect, instead of the scenario whereby each oil company seeks to earn its green credentials by selecting regulatory bodies to observe and scrutinise its operations, the fact that two largest oil firms chose to challenge the other head-on by picking the same regulator proves that there is credibility in the claims made by these companies. Hopefully, this trend of challenging each other by offering to subject itself to scrutiny and transparency will continue to spread throughout the industry.
More in part II.
It is easy to be disillusioned at this turn of events - indeed, news articles and commentaries have been churned out as if waiting in the shadows for their five minutes of provocative fame, now unleashed and perfectly poised to capture the groundswell of disgruntlement sweeping through the public. Having watched George Clooney's Syriana only a few days ago, one can safely say that the argument of exploitative, profit-hungry oil companies colluding with power-hungry leaders, having gained the expressed support of higher-ups in the government through assassination ploys and foreign policy manoeuvring, has proven very effective and convincing such that most people would take it at face value and begin finger-pointing almost right away.
Before I begin, let me warn those who expect this to be another run-of-the-mill, convoluted, spittle-spewing tirade of hatred aiming at the discreditation and wholesale denigration of oil companies and their despicable motives of exploiting Third World countries dry: I do not see the need to pander to stereotypical ideas, and certainly I do not see the need to further add oil to the raging fire, for that would only strengthen the myths I seek to debunk.
First off, what struck me about the article in the Tribune was that the reportage was being framed almost exclusively to assuage the escalating fears of the general public - who have been increasingly feeling the pinch as oil prices head skywards - and the industries who depend on oil to run their operations. Thus, the main focus drilled home the important concern that was presumptively on everyone's minds: production, and the rate of expansion:
It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.David Fyfe, a Middle East analyst at the International Energy Agency, a Paris-based group that monitors oil production for the developed countries, said he believed that Iraq's output could increase to about 3 million barrels a day from its current 2.5 million, though it would probably take longer than the six months the Oil Ministry estimated.
Fyfe's organization estimated that repair work on existing fields could bring Iraq's output up to roughly four million barrels per day within several years. After new fields are tapped, Iraq is expected to reach a plateau of about six million barrels per day, Fyfe said, which could suppress current world oil prices.
A realist would most likely chide me for focusing on anything else. Production, after all, is what will save us from rocketing oil prices. As demand inexorably and inevitably rises, what is needed is to follow basic economics and increase supply exponentially in order to suppress prices and render oil affordable again. Short-term concerns saturate the colloquial conversations in road-side cafes, in waiting queues at the supermarket, at the workplace and at home. After all, why bother about the future when in the long-run, we'll all be dead, anyway? That was the nonchalant response of the realists in Ayn Rand's Atlas Shrugged, embracing the strategy of self-preservation to the extreme degree, so desperately wanting to earn the privilege of being the last to starve. We must be "realistic" and focus on existing needs to be resolved, the consequences of our actions can be resolved in the future. Why talk about principles when they are clearly outmoded and will no longer serve humans in their quest for survival?
Certain principles and code of values are what societies live by, and the most successful of civilisations emerge victorious if they manage to forge the best compromise of old and new principles to live by. Societies make decisions as to whether to cling on to tradition-honoured principles that their ancestors held, whether to abandon them as those codes of conduct have become counterproductive to adopt in light of changing circumstances, and whether to adopt new principles that allow humans to objectively conduct retrospective criticism of their past behaviour and make changes in how they live in order to increase the chances of success of survival by perhaps a few generations, if history is merciful.
The realists of Ayn Rand's novel seek to convince society that principles are simply too rigid to equip individuals with the necessary tools for survival in an age of declining production and affluence, that the time has come to renounce the very codes of conduct that created the wealth being enjoyed in the present. These malicious panic-mongerers seek to denounce profit as the main culprit of the world's problems of poverty, because private companies have taken all the money and hoarded it for themselves. They propose a vicious, purely perverse mechanism by which entrepreneurs, pioneers and inventors shall be penalised and punished for their attempts at maximising profit; instead, they will reward people on a basis of need. The principle of hard work, of relying on one's intellect and will to earn one's own living, is abolished for the sake of equality of ever-lowering standards of the physical, followed by the moral and spiritual.
You must be wondering what I'm getting at. Let me explain: firstly, there is one principle that has proven absolutely essential to humankind's survival and continued existence on this earth: sustainability of resources. Yet this principle is still being deprioritised in general reportage: production alone will not get us anywhere other than to buy us time. The way I see it, the $140 price of one oil barrel is indicative of a scenario that we would inevitably reach in a few years' time even if there wasn't any form of OPEC-induced limit on supply today. The limits placed on supply only served to illustrate what would surely happen in one or two decades from now, when technologies hit the wall and no more oil can be extracted from the ground, when deposits worldwide are sucked dry. We should be focusing on how to ease transition to alternative energy sources, weaning our dependence on oil. And yet people are worrying about production and whether it can match accelerating demand from many Third World countries, whose people are aspiring to First World living standards and environmental impact per capita.
Where is the talk of sustainability and consumption rates? The general assumption everyone is banking on is that while Iraq's oilfields are potentially capable of matching world demand, there will always be some oilfield elsewhere in the world that we can tap into in the future, when supply starts to stem again. Endure through the period of rising prices and eventually, we will be able to maintain our rate of consumption to sustain our lifestyle. That is, while most people do realise that once the oilfields are exhausted, they do not bother themselves with the difficult questions of what would happen to Iraq once their natural resources run low. Consumers will adopt the typical behaviour of shifting their attention - and purchasing power - to those new oilfields that can be exploited. After all, they are paying the money, so why would they care about how the oil is being extracted, and whether it is sustainable?
That mindset is the scourge that will contribute to the accelerated depletion of the world's remaining oil deposits. Lest it be forgotten, oil is considered a non-renewable resource: it takes thousands and millions of years for oil to be formed under the earth. We should review our rate of consumption and adopt new principles of living sustainably in order to ensure that future generations - our generation of sons, daughters, nephews and nieces - will not be crushed under the burden of having to suffer for the environmental degradation our generation wrought in our time.
Abandon the principle of treating consumption as the only measure of status, affluence and well-being: it is the most tangible, magnificent manner and testament of our capability, our intellect, our power to create; yet what good would it be if we could only hope to possess it for a lifetime, only to be painfully reminded of our past glory when we are starving and struggling? We can enhance our well-being by helping to preserve sustainable practices that will contribute to the ability of future generations to successfully cope with the costs of transition and adaptation. Creating ever-larger cars and complexes isn't going to be of much help except perhaps boost your own sense of ego when environmental degradation coupled with climate change impacts living standards in adverse ways. Our criteria for standard of living must shift to accommodate factors such as air and water quality, degree of sustainable development of local resources, degree of capability in mitigating the costs of emittances of greenhouse gases and other pollutants. In short, how well we can minimise the effects of harmful trends of consumption afflicted by our predecessors while moving forward in technological advancement and innovation. My best guess is that human progress will be measured by this yardstick in the decades to come.
One particular fact that many people seem to have conveniently ignored while accusing oil companies, amongst many offenders in big business, is that these private companies are responsible for their shareholders. One must be aghast at the need to remind people that private companies exist for the sake of profit, for otherwise what else could be the motive that drives men to innovate, to work hard? People talk as if these companies were obligated to respond solely to the needs of society. The starting point of negotiations with oil companies lies in the need to recognise that the company is responsible to its shareholders first and foremost, and then persuade them to adopt more socially responsible practices by promising to reward their reforms with profit. It does not help the existing debate by railing against big business, demonising every corporate outfit and profit-making entity as selfish, greedy and inhumane. Responsibility to society has to be cultivated. Even governments have to be taught that.
Should we be worried about corporate social responsibility in the case of the big four, soon to find themselves back in Iraqi oilfields? Have they been cultivating socially responsible practices to ensure that resources are being exploited sustainably? Have they been rewarded by the public for doing so, and has the public been discerning enough to actually care about such matters other than their right to consume?
The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts.
Having reviewed the environmental data charting the key indicators of each company's activities in terms of emissions, flaring, among others, all four companies seem to regard the issue of environmental impact very seriously. This is evinced by the general impression given by the company's presentation of its constant efforts to seek out alternative energy sources, address energy security in the future by improving on extraction methods, and attempting to minimise the impact on the landscape as it extracts the oil from ever-deeper basins underground. Shell uses the criteria of "External Perception of environmental performance" as a key indicator of how well it does in terms of social responsibility, noting that the gap between itself and the nearest competitor in terms of external publics' perceptions has only widened as of 2007. This is becoming increasingly common as companies now find it worth the time and investment to actually adopt environmentally-friendly practices. Innovating cleaner technologies and methods of extraction, processing and refining provides the incentive for companies to reap cost savings earlier than its competitors, thereby creating the impetus for these companies to jump on the bandwagon.
Public interest in environmental issues has exponentially increased in recent years, and shareholders have noted the positive effects of adopting environmentally-friendly policies in the form of greater frequency of success in negotiating projects with foreign governments, less domestic protests and the willingness of consumers to identify socially responsible companies and patronise their products over their competitors. It is now profitable to be environmentally-friendly, which is why it is no surprise that BP, Total and Exxon-Mobil have placed so much emphasis on sustainable development, subjecting themselves to regulatory checks by independent bodies and reputation management by public opinion surveyors such as Ipsos MORI (Shell and BP are registered members). In this aspect, instead of the scenario whereby each oil company seeks to earn its green credentials by selecting regulatory bodies to observe and scrutinise its operations, the fact that two largest oil firms chose to challenge the other head-on by picking the same regulator proves that there is credibility in the claims made by these companies. Hopefully, this trend of challenging each other by offering to subject itself to scrutiny and transparency will continue to spread throughout the industry.
More in part II.
Labels:
Environment,
Iraq
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