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Chilcot: The Oil Vultures

7th July 2016

A section from the Chilcot Report:

Post-Saddam Hussein oil contracts

850. During October and November 2002, UK oil companies expressed concern to the Government about securing future oil contracts in Iraq.

851. Sir David Manning raised the issue with Dr Rice in early December.

852. An oil industry representative called on Mr Chaplin on 2 October, warning that “by sticking to the rules over Iraq and not going for post-sanctions contracts”, major UK oil companies would lose out. He was concerned that some other countries would sell their support for US policy for a guarantee that existing deals with the Iraqi regime would be honoured. Mr Chaplin explained that the FCO was “seized of the issue” and “determined to get a fair slice of the action for UK companies”.

853. On 25 October, Mr Brenton reported a conversation with Vice President Cheney’s office, in which he had been told that Mr Cheney was about to discuss Iraqi oil contracts with Mr Yevgeny Primakov, the former Russian Prime Minister. Mr Brenton was advised that Mr Primakov would be told the “bids of those countries which co-operated with the US over Iraq would be looked at more sympathetically than those which did not”.

854. UK companies’ concerns persisted. Representatives of BP, Shell and British Gas discussed the issue with Baroness Symons on 31 October. Baroness Symons reported to Mr Straw that she had said:
“… we could not make any definitive undertakings, given our determination that any action in relation to Iraq is prompted by our concerns over WMD, and not a desire for commercial gains.
“However, I undertook to draw this issue to your attention as a matter of urgency. They were genuinely convinced that deals were being struck and that British interests are being left to one side.”

855. BP raised its concerns with Mr Brenton in Washington the same day.

856. On 6 November, the FCO hosted a presentation on Iraqi energy given by a team from BP. The presentation spelt out Iraq’s importance to oil companies: it had the second largest proven oil reserves in the world and “unique ‘yet to find’ potential”, but the oil industry was “a mess” and had to run fast to stand still.

857. The record of the seminar was sent to Mr Powell and Sir David Manning as evidence of why Iraq was so important to BP.

858. Mr Powell sent it to Mr Blair, who asked: “but what do we do about it?”

859. BP called on Mr Brenton in Washington again on 11 November. Sir Christopher Meyer told Sir David Manning that UK oil companies had been told by the Embassy that “US motivation as regards Iraq parallels our own: this is a matter of national security, not oil … Nevertheless, the rumours persist.”

860. Sir Christopher continued:
“We have seen a report from our team at CENTCOM which suggests that the Pentagon has already awarded a contract to Kellogg, Brown and Root, a subsidiary of Haliburton, to restore the Iraqi oil industry to production levels of 3m bpd [barrels per day]. (Haliburton is of course, the company of which Cheney was previously chairman). We have so far been unable to obtain collateral for this from the Administration, and it might well in any case amount to no more than prudent contingency planning to stabilise Iraqi oil facilities if Saddam attempts to damage them in a conflict.

“Either way, there is clearly an issue here which we need to tackle. Raising it in an effective way with the Administration is a delicate matter. My view remains that the only realistic way in to this is via a PM intervention with Bush … The points to make would be:

• Once Saddam has been disarmed … Iraq’s oil industry will be central to…economic recovery.
• We, as you, have energy majors who have skills and resources to help…
• To give the lie to suggestions that this campaign is all about oil, it is vitally important that, once sanctions are lifted, there is seen to be a level playing field for all companies to work in Iraq.”

861. Sir Christopher advised that this was the least the UK should do. He had been advised by Mr James A Baker III, the former US Secretary of State, to put down a marker with the Administration fast.

862. Sir David Manning raised oil and gas contracts with Dr Rice in Washington on 9 December. He hoped UK energy companies “would be treated fairly and not overlooked if Saddam left the scene”. Dr Rice commented that it would be particularly unjust if companies that had observed sanctions since 1991, a category which included UK companies, were not among the beneficiaries of post-Saddam Hussein Iraq.

863. UK and US policies on Iraqi oil and efforts to secure contracts for UK companies hoping to do business in Iraq are described in Section 6.5.

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