“I cannot see that any other form of organisation would stand a better chance”
I’ve been thinking a lot during the last month about the fact that 50-some years ago, the United States overthrew the democratically-elected government in Iran because the country nationalized BP’s assets in the country. Take this FT interview with the Chairman of BP, Carl-Henric Svanberg, that Yves Smith linked to.
As Yves points out, Svanberg discusses its relationship with the United States (remember–the country that overthrew a government for BP) as mutually beneficial, or perhaps mutually dependent, and certainly equal.
He said: “The US is a big and important market for BP, and BP is also a big and important company for the US, with its contribution to drilling and oil and gas production. So the position goes both ways.
“This is not the first time something has gone wrong in this industry, but the industry has moved on. Of course our reputation will be tarnished, but let’s wait and see how we do with plugging the well and cleaning up the spill.”
Yves points out that BP “was far from the only major oil company that does deep water drilling.” And that’s undoubtedly true. But it’s worth recalling a few details I pointed out in this post. BP has a significant share–perhaps a third–of the deepwater drilling in the Gulf and is involved in several of the most ambitious projects in terms of depth and complexity. BP also does significantly more deepwater drilling than its competitors (see slide 30)–more than Exxon and Mobil combined; Shell is a distant second to BP. Not that that should make the US subservient to BP; ultimately Shell or Exxon or Andarko (which has a stake in the Macondo well) should be able to come in and take over this well. But BP is the company that is most pushing the limits of deepwater drilling at the moment, and because of that has the ability to best exploit the oil reserves in the deepwater Gulf.
So to the extent that the US feels a strategic need to develop some US sources of oil–and frankly, to the extent that the US feels a need to develop a non-nationalized source of oil anywhere in the world–the Gulf is going to be a part of that. Apparently, 4 US locations are in the top 20 sources of non-nationalized sources of oil.
For example, once reserves that are entirely owned by governments are removed from the analysis, of the 104 remaining fiscal regimes ranked by Wood Mackenzie that allow some participation by international oil companies and that have remaining oil and gas reserves, the deep water U.S. Gulf of Mexico ranked 18th highest in terms of remaining oil and gas reserves. Three other U.S. regions were ranked in the top 18 in terms of reserves. These were the U.S. Rocky Mountains (8th), Alaska (14th), and U.S. Gulf Coast (15th), but these regions are not uniquely covered by the federal fiscal regimes, as state and private resource owners may also exist.
Of course, the reason we need to retain sources of oil not owned by national governments is to prevent countries like Venezuela and Iran from attaining too much power to use their oil as a weapon. (And to ensure that if, say, Israel decided to launch a war against Iran, there would be sufficient supply in our control for us to join in the belligerence.)
So while BP is not irreplaceable, the drilling it does in the Gulf does play a key role in the US strategy for maintaining its global hegemony. That doesn’t mean that’s the way it should be. But that’s the way it is.