BLACK GOLD

 

In 1859 Drake field – the first oil field in the history was discovered in Pensylvannia, USA. Due to the invention of internal combustion engines, operating on hydrocarbons, the demand is dashing and industrial explorations of oil extraction start in Europe and in Caspian region of Russian Empire. British Empire is also forced to carry out a strategic research in relation with the high needs of its navy. Middle East, North Africa, Burma and Indonesia start to be explored.

By the end of 19th century large «integrated companies» appear, uniting all functions in themselvesfrom exploration to transportation of oil and trade in oil products.

 

The oil prices are determined every day, nearly every hour. Figures, established according to the rates of actual sales are published in specialised magazines, following which one can observe the direct influence of oscillations in the price of one barrel of reference blends of crude oil (which depend on the big number of concrete bargains hourly concludedin particular in Middle East) on the international currency rates and the condition of global economy for the current moment. The energy conservation law continues to influence the actual living standard of a mass worker.

In the following text we shall try to examine the significance, which our region Central Asia obtains in the context of energy crises of the last 30 years; the end of antagonism between market and planning systems, of liberal and bureaucratic capitalisms ńorrespondingly; breaking into the spaces, previously unavailable for the market, that have significant energy resourcesnatural, as well as human, workforce; and, especially, the S11 terrorist attacks on USA that served as an excuse for the consequent agressive, enforced assertion of political and economic interests of  the US ruling circles in the whole world and according to the opinions of some proletarian analysts (Jon Flanders, George Caffentzis) carried out directly for penetration into Central Asia.

 

If one gets acquainted with tables and diagrams, it becomes clear that the biggest demand for oil exists in the regions of North America, Western Europe, Far East and Oceania, while it is produced mainly in Middle East, where the oil reserves are measured in hundreds of billions of barrelsin the first place in such countries as Saudi Arabia, Iran, UAE, Iraq, Kuwait. In the world consumption of oil products per head there is a vast gap between USA and Canada and other industrial countries, as well as between the latter and the rest of the world.

As we shall see the process of profit extraction from oil production is quite capacious, requiring a lot of time, big capital investments and a precise calculation of all factors, including force majeur circumstances, such as wars, revolutions, social tension.

By convention, the entire process can be divided into three stagesthe upstream phase, including exploration/evaluation/development/production; the downstream phase, which includes transportation/refinery/distribution; and trade and marketing.

Certainly, the first stage is the most labour intensive. In order to discover a new field (not speaking about the region) all factors that are able to influence profits/losses of such an enterprise must be taken into consideration. If Capital does not have a certainty in the maximum payback of investments and profitability of production, the field will not be developed. Actually, there are rich fields in the world that are not and will not be developed because of unprofitability of, say, their geographic location, being far from the market, or from a possible, profitable pipeline route. In the first turn, the composition of oil-bearing bed (its geometry, quality, dynamics), its type and balance reserves are studied. The exploration can be seismic, gravimetric electromagneticthe last one is especially often used in CIS. Then the logging is donethe measurement of physical quality of the rock by means of geophysical sensors lowered along the stem of an exploratory well, a logging diagram is drawn, which will become the basis for the evaluation of the explored reservoir. When the exploration data are studied there is always a high risk of failureas a rule, only one out of 7 wells fits for operations.

In its financial expression the upstream phase looks as follows (in capital costs): the collection of seismic data costs 500-1000 USD per kilometer; loggingfrom 5 to 50 USD for one inspected meter; drillingfrom half million to one million USD per kilometer; testing/lowering of equipmentfrom 0.1 to 0.5 million USD; operationsfrom 0.5 to 2 thousand USD per day.

The evaluation of all exploration works is carried out as a rule by a group of experts-geophysicists in the central body of an oil company. An engineering decision is passed and only then the drilling of wells, the lowering of equipment and the extraction of oil & gas start. At this stage huge investments of capital are madehundreds of millions of dollars.

In general it could be said that the upstream stage of the biggest of known oil & gas fields of Central Asia, particularly Kazakhstan, was carried out in the period of 1966-1975. Already in 1975 Kazakhstani Caspian fields together with Western Siberia were producing 35% of the total output of USSR.

 

The oil industry dynamics is well reflected by the downstream phase.

As we have already mentioned the cost and safety of oil products transportation from fields to the market is the most important economic factor when the fields to be developed are defined. At the dawn of the industry the transportation was carried out by railway, river ferries and trucks, but the increasing production output and distance between fields and markets became a reason for the development of new modes of transportation. The oil transportation by sea was always cheaper than by land. The first person to carry it out was the not unknown Emmanuel Nobelthe Swedish businessman actively participated in business organisations of Russia and he was the first one, who transported oil by Caspian Seafrom Baku to Astrakhan in the beginning of the 20th century. In 30-50-s the construction of onshore oil pipelines started and in the 70-sthat of underwater pipelines.

The crude oil is transported to the location of refineries, where it is processed and divided into separate products (petrol, gasoil, naphtha, bitumen). Refineries usually consist of an operating aggregate, reservoirs for crude oil, intermediate and complete material storages (an extremely important characteristic of oil, as a commodity is an impossibility of storing it for a long time without high costs), oil and oil products reanimation systems, auxiliary services. A big number of refining technologies (depending on the oil blend) includes cracking, reforming, isomerisation, alkylation, cleaning, hydro-treatment. Each of these technological processes has its own cost. Currently, in the developed countries the petrochemical industry exists, allowing with a lesser damage for environment to process the oil waste into plastic, rubber, detergents, fabrics etc.

The majority of refineries is located close to the markets of consumptionbig cities, large industrial facilities, and also, due to the big volumes of offshore transportations in the portssuch as Rotterdam, New Jersey, Marseilles, Genoa, Yokohama. However, lately, due to fiscal and economic reasons, it becomes more and more profitable to construct such plants on the so called «neutral territoties», situated along the routes of oil transportationfor instance on Sardegna, Sicily or Singapore.

On the last stagedistributionthe biggest importance is attained by a distribution network between refinery, storehouses, mediating agents and sellers. This networkis the most valuable asset of the large oil companies, requiring big capital investments and established for long periods.

 

In the beginning we already mentioned that the so called integrated companies played the supreme role in the industry. The first largest integrated company was Rockefeller’s «Standard Oil». The American millionaires clan controlled by that time the nodal transportation routesrailways and the river navigation in North-Eastern States. Rockefellers bought all exploration works and then by means of a special prices policy established control over downstream operations. In relation with a growing monopoly of such companies, their control over prices, destruction of competition, in USA in 1911 the anti-trust legislation was passed, which entailed the «Standard Oil» division into regional branches – «Exxon» in New York, «Mobil» in California, «Chevron» in Ohio and so on.

In Europe the Anglo-Dutch «Shell» became such company, which had started from the transportation of oil from Indonesia in Europe by Rhine. This company discovered that the hydrocarbons production in the producing countries, located more or less close to the market is the most favourable from the technical and commercial points of view.  Development of Middle East, South Asia and South America takes on a vast scale. The simultaneous beginning of mass production of cars, by means of fordist scientific organisation of  labour irrevocably alter the correlation of energy and labour.

 

After the First World War the world market found itself in a situation, in which a few large international companies controlled all production (except for the production in the rapidly industrialising at that time USSR), tanker fleet transporting oil to refineries and commercial distributing network. These companies entered the history under the name of «Seven Sisters» – «ESSO», «Mobil», «Chevron», «Gulf», «Texaco» from USA, British national company «British Petroleum» and «Shell». They controlled the world oil trade, 50% of oil refining enterprises and 70% of sales. These companies possessed their own banks, insurance companies, scientific research resources. They also possessed powerful political levers of pressure on local States, as well as on governments of the largest industrial countries. It is exactly these oil companies that established the legal system of relations between the oil producing companies and State authorities, foundations of which are still often used. Briefly, its essence is the followingthe total volume of locally produced oil by definition belongs to the land owner, which, nevertheless, transfers from 70 to 90 % to the oil producing company as the payment for production, besides, the owner in theory can control the methods of extraction and tax the final revenue of the company (around 16%). Afterwards, in order to provide legal provision of oil for the domestic markets the national oil & gas companies started to be established in the image of «British Petroleum» in France «CFP» (Compagnie Française des Pétroles) was established, in fascist Italy – «Agip», the analogous companies were created in Nazi Germany and Stalinist USSR. They were followed by the producing countriesMexico, in the 50-s Iran, Venezuela, Egypt, Indonesia, Iraq. ARAMCO in Saudi Arabia was created only in the 80-s. National oil & gas company «Kazakhoil» later reintegrated in NOC «KazMunaiGaz» became the inheritors of Soviet «Gazprom» in Kazakhstan.

 

In the beginning of the 60-s an organisation of petroleum exporting countries producing more than 70% of the world exported oil – Saudi Arabia, Iraq, UAE, Kuwait, Iran, Indonesia, Venezuela, Nigeria, Gabon - was established. This group has achieved a possibility of imposing on the buyers the so called «Officially announced price» for crude oil, which was defined by means of confidential negotiations between OPEC members.

A little while later the first energy crisis took place. There are various opinions about the reasons that triggered the crisis, but it’s clear that it can’t be explained by official versions like political antagonism of interests between Islamic countries and Israel/USŔ. True, after the Yom Kippur war a quadruple increase of oil prices by OPEC countries followed. However, such a massive «accumulation of capital by OPEC» according to Mario Montano, «is also the capital accumulation by Seven Sisters». Further, he continues:

«This identity if interests between USA and OPEC countries has a long history. In 1950 the State Department, in association with Treasury, allocated a significant loan to the oil companies for the payment of foreign taxes. This loan for the payment of taxes put a premium on the oil companies interests in multinational operations and at the same time increased the share of governments of petroleum producing countries.

Meanwhile, the oil prices are kept stable. On the availability and cheapness of «cheap oil» the capital constructs its control over the working class in its countries and on the international level in the post-war period. In the USA the whole phase of capitalist initiative, based on automobile industry, international highway network, urban planning etc. was based on «cheap oil». In Europe the post-war economic development, subsidized by US government created a market for oil, which was quickly mastered by Seven Sisters, increasing their share five times between 1955 and 1970. By the sixties, oil controlled the economic development everywhere. By 1971 it became an «oil weapon».

The growth of prices as per Teheran Agreement, imposed jointly by OPEC members and US State Department, delivered a first blow to the working class of Europe and Japan. In 1973 Yom Kippur war marked a new multinational offensive of Capital on the working class under the US leadership. It entailed strenghthening of this advancement in Western Europe, escalation of attack against working class in USA and the hunger in the Third World countries». (Mario Montano, “ZEROWORK” #1, 1975 ă.)

Mario Montano exposes a concept of the energy crisis, as a strategy of capital, which had to provoke the following consequences: «1) energy crisis reduces the general employment; 2) it increases the unemployment threat, in general, as well as in separate sectors (e.g., in the automobile sector); 3) it allows capital to accumulate massively through the growth of prices in those areas (energy and food industry), in which, the biggest capitalists, i.e. multinational companies, based in USA, prevail». (ibid)

The fact that the first energy crisis was preceded by mighty class upheavals in the whole world, such as black riots in Los Angeles, May revolution in France, hot autumn in Italy, spring offensive in Japan, is as obvious as the fact that capital was not going to linger on in OPEC, gradually returning to the Western market. In particular, petrodollars were invested in large quantities into automation of factories of the so called Newly industrialised countries with a cheap workforce (almost Kazakhstani variant).

Let us turn to a more official sourcea respectable American political magazine Foreign Policy No. 25, as of 1976-77; an article by V. H. Oppenheim, entitled «Why Oil Prices Go Up: The Past: We Pushed Them» start from the following phrase: «Since 1971, the United States has encouraged Middle East oil-producing states to raise the price of oil and keep it up». Further Oppenheim traces the history – in 1970 the OPEC countries for the first time announce that they would seek a world wide price increase. The oil companies respond with a collective initiative for negotiations. An intervention of US government is capable of stopping this initiative of OPEC, but the US State Department prefers to stay aside without acting. Why does it happen? Oppenheim quotes the annual report of the White House Council on International Economic Policy as of 1973, according to which «USA must receive a profit from the increased oil prices and OPEC surplus invested fundsmost likely the biggest part of these funds will be obtained by USA». It all happened on the eve of Arab-Israel conflict and the imposition of embargo on oil.

In the same issue there is T.Moran’s article, dedicated to the same subject. However, in this article the analysis is concentrated more on the internal situation in the OPEC countries and the quadrupling of oil prices is explained by these countries wish, in particular that of Iran, Iraq and Saudi Arabia leaders of oil production in OPEC, to prevent social upheavals in their own countries, to finance social peace by means of food subsidies, housing and municipal services provision within a wider industrialisation program. Nevertheless, as we shall see, neither social concessions to the broad masses, nor repressions of SAVAK, the Shah guards, managed to prevent the social explosion that had been maturing in Iran.

 

After five years since the first oil crisis the Iranian revolution ‘78 marked the beginning of the second one. In many respects the oil prices increase provoked expectations of the living standards improvement, demands of salary growth in the OPEC countries themselves. Some bourgeois commentators saw the reasons of events in Iran in the increasing contradictions between the Shah absolute monarchy and the growing middle classes (James Ŕ.Bill, «Iran and the crisis of ‘78», Foreign Affairs, as of winter 1978/79). In this respect we consider «Melancholic Troglodytes»’ views to be a lot closer to the essence of the subject: «the incapacity of the Shah regime to enter the real phase of Capital’s domination over the proletariat (i.ĺ. the incapacity to extract the relative surplus value) has become the main reson for its collapse. Khomeinism was «a transition to the terrorist control over the production of the absolute surplus value by the State, which meant the destruction of proletarian political organisations». Indeed, despite the fact that the oil workers in the thick of events on the eve of insurrection acted independently of Fundamentalists and against themthey went on strikes not on the days, chosen by the opposition clergy for the protest demos (K.Knabb, «Joy of Revolution», 1997), the latter could suppress them, taking hold of the State power. Khomeini victory has become a resolutely counterrevolutionary event.

«Melancholic Troglodytes» draw a number of parallels between the regime of ayatollah and European dictatorships of the middle of the last centuryas well as in Francoist Spain the Church established itself over the whole of cultural life (on Spanish beaches men and women had to stay separately from each other and wear bathrobes!), as well as in Nazi Germany the chief’s charisma served as  a guarantee of «reactionary modernism», radical reforming of the «corrupted» Shah regime and exactly as in Mussolini’s Italy the borderline between private and social areas of life was erased.

Undoubtedly, it was a big blow for the USA that relied on the Shah and on Saudi king, as the two biggest ally forces in the region. The ayatollah regime suspended production and deliveries of oil to the world markets. It brought panic among the consumer countries and international companies that started to buy and store oil feverishly. If in 1971 the USA imported 25% of oil from abroad, in 1979 they buy from abroad already 50%. Due to these large purchases by consumer countries, the oil prices come out of control, get destabilised, growing by several times from one bargain to another.

This whole process demonstrated the total dependence of consumer countries on OPEC, their readiness to pay any price, no matter how high it increases. As a result, the oil industry came into crisis again. USSR invasion to Afghanistan added oil to fire. (Walter J.Levy, Foreign Affairs, 58 (5), 1980). Now the Carter government was forced to announce its readiness for war in the case of «a threat to US vital interests», i.ĺ. further military expansion of USSR on Middle East. It is exactly in this antagonism of interests between the two superpowers of that time that the mojahed movement takes its roots from.

 

The crises entail a search of the replacement of oil by alternative energy sources. In particular, the discovery of big oil and natural gas reserves in the Northern Sea brought to construction of big sea gas pipelines in the 70-s.

Also, by the beginning of the 80-s the necessity to use instead of the OPEC «Officially announced prices» another system for the establishment of actual prices on crude oil, open and accountable, was revealed clearly. In this new system the rules of such financial institutions as Wall Street, Chicago agricultural market, were used. Oil is estimated according to its quality against the reference blends and transportation costs. The monopoly of Saudi crude leaves place to the reference blends British Brent (the most wide-known blend, extracted on the North Sea) and American WTI (West Texan Intermediate).

The long term contracts, putting a buyer in dependence on a seller are replaced by the so-called «trap» contracts, according to which the price is defined through the calculation of a concrete interest from each product, which one refinery can produce from one barrel of the crude oil (for instance 30% of petrol, 50% of fuel) and summing up the corresponding prices for this product at the internal petroleum refining market.

By that time, an overproduction occurs in the OPEC countries they extract about one billion barrels above the ceiling established by themselves. Especially it is related with Saudi Arabia, extracting from 5 to 6 million barrels per day, which clearly exceeds the demand. Moreover, Saudi Arabia even goes for a barter, exchanging 34 million barrels for 10 planes «Boeing-747».

All the abovementioned novelties plus the initiative of the largest for that moment producers - UK, Norway and Saudi Arabia provoke the third oil shock. It is a competely reverse process with an exchange of the rolesOPEC has to gather a meeting, where the protective measures are discussed.

At the same time in USA due to the fall of oil prices the interest rates decrease, the inflation risk reduces and the growing monetary mass is pumped by the Federal Reserve System (FRS, the system of a dozen or so largest banksa sort of Central Bank of USA) into the national economy.

However, according to an American autonomous Marxist George Caffentzis the decrease of a nominal oil price has been provoked by the necessity to lower the USD rate. The decision on lowering the rate, in his view, was related with an intensified struggle of black South African population against apartheid, that led to a moratorium on the debts payments and introducing the state of emergency on the part of South African government. Reagan administration went for the dollar decrease to soften the conditions of the debt payment by South Africa. The author also connects the bombings of Tripoli and Benghaz in 1981 with the change in oil pricesaccording to his version Lybia was thus physically punished for opposition to the US interests in stabilisation of oil prices, because as well as before the first oil crisis Lybia was interested in the prices increase. At the same time a brgain was concluded with Iran in exchange for arms. («Rambo on the Barbary shore», Midnight Notes)

In general, all these factors seem to have played an essential role, although the authors of Midnight Notes (as well as their predecessors ZEROWORK) tend to overemphasise the conscious role of capital and separate capitalists in the strategic management of crises. For example, this author is contradicted by an influential English ultraleft magazine «Aufheben», which provides its own interpretation of events: «[according to Caffentzis] These twin manoeuvres of 1985-86 - the dollar and oil devaluations - exhibit how the international market is consciously structured by capital.

This whole analysis is riddled with errors which are symptomatic of Midnight Notes' theoretical inadequacies. Firstly the US dollar was not devalued unilaterally at a stroke. The devaluation of the dollar that followed the Plaza Accord took nearly two years and required concerted intervention of the central banks of the major industrial powers armed with reserve funds that were only a fraction of the huge flows of capital surging around the international money markets. Secondly the devaluation does not necessarily halve the debt, particularly if the debt is denominated in US dollars and the exporter, e.g. Mexico, is trading mainly with the US. It is true that resistance to debt forced rescheduling under the Baker plan and simultaneously limited the US government's strategy of using interest rates to indefinitely defend an overvalued dollar, forcing them towards international co-operation to devalue the dollar in 1985. But we can not simply explain fluctuations in the US dollar in terms of oil pricing as Midnight Notes are prone to do. Halving the dollar does not mean that oil prices have to be halved to prevent the US' import bill doubling since oil is denominated in dollars. Consequently the twin manoeuvres of 1985-86 do not show how the international market is structured by capital, on the contrary they show how attempts to consciously regulate international markets are highly circumscribed!»

As we see, if Midnight Notes tend to make a certain overemphasis on a conscious, individualised strategy of Capital, Aufheben rather underestimates the influence of oscillations in the oil prices on the USD rate with all proper consequences in a definite economic situation at each given moment. In our turn, possessing a certain experience of work in oil industry, including work with Western macroeconomists and oil technicians, we, in many aspects are inclined to consider that the Midnight Notes research is moving in the right direction. The possibilities of manipulating oil prices to influence the world situation, especially with reference to class antagonisms are not to be underestimated.

On the level of facts, it cannot be refused that this whole process benefitted the developed countries economy. On the contrary, the OPEC countries suffered from it and got stuck in debts. For instance, Nigeria had to accept the Structural adjustment program of IMF, the foreign debts of Jordan made 8 billion USD, those of Iraq – 80 billion USD.

Unlike them, Kuwait, which had invested 100 billion USD into two reserve funds abroad during the 70-s, continued to receive a bigger profit from these investments than from oil production.

Thus, by the beginning of the 90-s an antagonism developed between the poor Arabic countries (Egypt, Iraq, Jordan, Yemen) and the rich ones (UAE, Kuwait) as a result of which Iraq occupied Kuwait and the oil prices doubled again. (Ya.Sadowski) Iraqi policy was originally directed towards a reducing of the extraction and an increase of prices. According to some critics the interests of USA and Saddam Hussein coincided here. Certain facts testify that.

In 1990 the congressmen Allen Greenspan and Stephen Neal lobbied a «zero inflation» plan (reducing inflation to zero) for the next five years, using the following arguments: «1) [zero inflation would] reduce interest rates and maintain them at their lowest possible levels; 2) promote the highest possible sustainable level of unemployment; 3) produce the maximum sustainable rate of economic growth; 4) increase the national savings rate as well as increase investment, thereby boosting productivity and raising the standard of living; 5) Stabilize the economy by allowing long term contracts between employers and workers to be more predictable as well as credit contracts between debtors and lenders». (Michael Meeropole) It is only one of the symptoms that the economic situation in the United States starts to require a dollar rise emphatically.

One of the best American experts in Middle East met in January of the same year an Iraqi Minister in New York. Washington Centre for Strategic and International Studies made a proposition that Iraq increased the oil price to 25 USD per barrel and that the same country put pressure on its OPEC partners. The records of conversations with American diplomats, with A.Glaspie in particular, proposing the same price of 25 USD per barrel prove that. (Helga Graham, London Observer as of 21 Oct. 1990). The situation in Iraq is compicated by the Shiites and Kurds uprisings on the North and South of the country. However, USA for that moment obviously were not interested in the support of Iraqi lower classes in their struggle against the regime. It is known that they preferred to bomb the deserters columns, returning from Kuwait, which could become the main force in an insurrection against the Hussein regime, at the same time leaving the elite guards of the dictator untouched. (K.Knabb, Joy of Revolution).

Here again the polemics between «Aufheben» and Midnight Notes is continued. The latter in their analysis came to a conclusion that «Iraq and the US colluded in the invasion of Kuwait, via April Glaspie, as part of a co-ordinated strategy of increasing oil prices. Whilst the invasion of Kuwait was a consequence of the Ba'athists inability to impose austerity on their own working class, it is not the case that it was part of a co-ordinated global plan for militarizing the world's oil industry, as the disarray of the US government's response clearly illustrates…

However, the triumph of the Ba'athist state over the working class uprisings was by no means guaranteed. Also it is not the case that the Iraqi state sought saturation bombing, resulting in massive destruction of productive capital, and the risk of overthrow, because it thought it might possibly improve its ability to impose austerity. Excepting the decimated oil industries of Iraq and Kuwait, Midnight Notes fail to show that oil production is more militarized after the Gulf War than it was before. Even with civil war raging in Yemen oil prices are only $16 a barrel, the level they were prior to the Gulf War. This is hardly the mass increase in oil prices that Midnight Notes expected as the result of collective capital militarizing oil production through the Gulf War. With oil prices predicted to settle down to $13-14 a barrel for the forseeable future we can conclude that either capital does not have a high oil price strategy at all, or that it has been incapable of imposing one. It is clear that oil prices are not operating as the motor for a new phase of accumulation to pull the world out of recession». (Aufheben No.5, 1996)

In 1997-98 following the financial crisis in the Asian countries a new fall of oil prices occurs. In his recent work Caffentzis writes that it is exactly because of that that «the Saudi monarchy decided, for "strategic reasons," to globalize its economy and society beginning with the oil sector. The oil industry had been nationalized since 1975, which means that foreign investors were allowed to participate only in "downstream" operations like refining. But in September 1998 Crown Prince Abdullah met in Washington DC with senior executives from several oil companies… by mid 2000, the Saudi government began to cautiously respond to them, by ratifying a new foreign investment law. Under the new law, "tax holidays are abolished in favor of sweeping reductions in tax on profits payable by foreign entities, bringing them nearer to levels that apply to local companies. Wholly owned foreign businesses WILL HAVE THE RIGHT TO OWN LAND, sponsor their own employees and benefit from concessionary loans previously available only to Saudi companies" (Bahgat 2001)… This law constituted, in effect, a NAFTA-like agreement between the Saudi monarch and the US and European oil companies … In May of 2001 the first concrete step in this stepped up globalization process was concluded when Exxon/Mobil and Royal Dutch/Shell Group led eight other foreign companies (including Conoco and Enron from the US) took on a $25 billion natural gas development project in Saudi Arabia». According to the author after that: «Whatever hopes the Islamic opposition in the ruling classes of the Arabian Peninsula had ever harbored of getting their governments to send the American troops packing and turning their oil revenues into the economic engine of a resurgent Islam were facing a historic crisis in the summer of 2001»

Terrorist attacks of 11 September, 2001, became a definite historical landmark. Besides, they raised an issue of a connection between US military actions amd pipeline routes for oil and gas. For instance, as Jon Flanders observes, (the Italian translation of his pamphlet on war, oil and pipelines is available in the magazine “Giovane Talpa”), starting from 1998 the consortium headed by an American oil company «Unocal» held negotiations with Taleban on gas pipeline construction, which would connect vast gas fields of Turkmenistan with the Asian markets, through Afghanistan and Pakistan and Arabian Sea. This pipeline would be just the first birdaccording to Todor, Vice President of «Unocal» the Asian market is the most optimal for the Central Asian oil, in the first place due to geographic reasons. In the percentage ratio the CentGas consortium looked as follows: Unocal Corporation (ŃŘŔ), 46.5%; Delta Oil Company Limited (Saudi Arabia), 15%; government of Turkmenistan, 7%; Indonesia Petroleum, LTD. (INPEX) (Japan), 6.5%; ITOCHU Oil Exploration Co., Ltd. (CIECO) (Japan), 6.5%; Hyundai Engineering & Construction Co., Ltd. (South Korea), 5%; The Crescent Group (Pakistan), 3.5%. The blasts of American embassies in Western Africa put an end to these plans.

The identical American-Saudi projects existed in relation to the construction of a Trans-Afghan pipeline for the hydrocarbons transportation from Kazakhstan. We remember that as a result of the first visits of Saudi ruling circles representatives to Kazakhstan, not only the sponsorship arrived for the building up «most Northern Moslem capital» and for the reconstruction of a strategic motorway, but also an abrupt change in the statements of the then Prime Minister K.Tokayev regarding Talebanabout comprehension and a necessity to develop a dialogue with the Afghan ruling regime.

Other two promising directions for the possible pipeline routes for the Central Asian oilare Iranian and Turkish. The Bush administration inherited from the Clinton administration the policy of open pressure and lobbying the last direction, obviously, more expensive (according to some estimations – 2.5-3  billion USD), but also more politically correctwe are talking about Baku-Cheyhan project. In relation with this it is curious for what reasons exactly Iran was included into the «axis of evil», because not long before S11 an abrupt aggravation of relations between Iran and Azerbaijan took place, when on 23 July 2001 an Iranian military ship forced Azeri British contractors to stop operations at a disputable field moving them away, while in Baku an «anti-President plot» of the radical Islamic grouping «Hezbollah», based in Iran, was unveiled, all of this with the background of territorial claims of Iran to Azerbaijan and demands of the latter to give out a participant of an armed anti-government revolt of 1995.

Also, in 1997 an agreement between Kazakhstan and China was signed – on the transportation of oil from West Kazakhstan to Western China. Possibly, in reality this one is the most optimal project for Kazakhstan. Yet in June 2001 D.Akhmetov, Vice Prime Minister of RoK, stated that the project of a pipeline Atyrau-Zhanazhol-Kumkol-Alashankou «might become a reality in 2006-2010». The project is evaluated in $3-3.5 billion. The length of the pipeline is around 3 thousand km, its carrying capacity – not less than 20 million tons of oil per annum. It is known that the Southern neighbour has an old interest in the «temporarily uninhibited territories», it is a centuries old story. However, currently China is virtually surrounded by hostile forces and it seems like surprising mentioning by Bush of North Korea and the «Republic of Taiwan» are also nonrandom, but are an expression of the transparent challenge from USA to China in the pronounced struggle for prevalence in the region. It’s difficult to say what’s it pregnant with so far, but it’s clear that metropolises won’t limit themselves to mere diplomacy and very wise sayings in their political game. For example, a seat of tension for both countriesUSA and China, as well as for Russia, is Kyrgyzstan, where in Bishkek airport «Manas» American soldiers are quartered, while in the South of the Republic after the armed clashes with police of March 2002 the rural masses are still ready for the armed struggle against the government.

Finally, the actually existing pipelines come through Russia. CJSC «Caspian Pipeline Consortium» was established in 1992 by the governments of RF, RoK and Sultanate of Oman for the construction of a 1580 km long pipeline, designed for the crude oil transportation from Tengiz and other nearby fields in Kazakhstan and Russia to the terminal on the Black Sea shore in the area around Novorossijsk. The pipeline route passes the territories of Kazakhstan, Kalmykia, Astrakhan province, Stavropol and Krasnodar territories.

In December 1996 an agreement on CPC restructuring was signed, as per which 50% of the Consortium authorised capital stock went to the international companies, that are among the top ten oil producing companies of the world. In CPC apart from Russia, Kazakhstan, Sultanate of Oman the following private oil companies entered: Chevron Caspian Pipeline Consortium Company (7.5%), LUKARCO (12.5%), Rosneft-Shell Caspian Ventures Limited (7.5%), Mobil Caspian Pipeline Consortium Company (7.5%), Agip International NV (2%), British Gas Overseas Holding Limited (2%), Kazakhstan Pipeline Ventures LLC (1.75%), Oryx Caspian Pipeline LLC (1.75%). The shares of the CPC founder governments are subdivided as follows: Russia - 24%, Sultanate of Oman - 7%, Kazakhstan - 19%. Currently, Karachaganak – one of the biggest oil & gas condensate fields in the world is being connected to CPC.

Certainly Putin’s policies in the region, at times presenting a real threat to the profits of American capital served as another reason for so urgent assertion and military penetration of USA into Central Asia.

As George Caffentzis writes: «There are two clear territories which the Bush administration has strategically used the death and destruction of September 11 to move on: a conceptual restructuring of the political horizon and a geo-political thrust into the former Central Asian republics of the U.S.S.R. which became nation states in 1991. These states, especially Kazakhstan, Uzbekistan and Turkenistan, have significant oil and gas reserves. "The proven and possible energy reserves in or adjacent to the Caspian region--including at least 115 billion barrels of oil--are in fact many times greater than those of the North Sea and should increase significantly with continuing exploration. Such plentiful resources could generate huge returns for US companies and their shareholders. American firms have already acquired 75 percent of Kazakhstan's mammoth Tengiz oil field, which is now valued at more than $10 billion." (Kalicki 2001: 121). These countries, along with the former and present Caucasian republics, form the southern border of Russia's "Near Abroad" which the US has been aiming to penetrate militarily for some time both for immediate economic purposes and for the ultimate goal of disintegrating Russia itself into a set of pliable statelets».

 

As we know, the exploration works were continued indeed and several more mammoth fields are waiting their turn in the first place Kashagan fieldthe largest newly discovered oil field in the world in the last thirty years. According to preliminary estimations its reserves make around 7 billion tons of oil. Let’s remember that one ton of Tengiz oil is more expensive than Brent by 7 dollars.

 

Changes in geopolitical situation as always brought oscillations in oil pricing policy. On 14 November 2001 the OPEC countries organised an extraordinary conference, at which a decision to reduce the quotas for production and export of crude oil by 1.5 million barrels a day was made. The OPEC countries demanded reduction of production from the independent oil producers, which the latter were not in a hurry to obey. Oil prices fell to 17 USD per barrel. Only when Russia did cut the oil export by 150 thousand barrels a day since the beginning of 2002, the prices were stabilised at London IPE (International Petroleum Exchange).

There are many various possibilities of situation developments. As it is known, Kazakhstan joined OPEC as an observer (together with Russia, Mexico, Norway, Angola, Oman), however, the multisided confrontations of interests in Central Asia  is far from ensuring the US hegemony in the country and in the region in general. Undoubtedly, class war has to play its part in the general picture and its intensity depends on the strength of destructive/creative tendencies in the wide strata of pauperised population more, than on external economic crises. In Russia during Summer-Autumn 2001 on the Black Sea shores a number of initiatives and radical groups was active, including mainly anarchists from «Autonomous Action» and eco-warriors from green organisations and directed against CPC and Russian-Turkish gas pipeline «Blue Stream». However, differing from other recent ecological actions they didn’t manage to attract any significant support from local population, or achieve any success in their beginnings, for instance in suspending works until the period of storms, handcuffing themselves to operating equipment or sitting on unique trees being cut along the gas pipeline route.  Approximately at the same time, on the other end of CPC project, Karachaganak workers group was active. It was a circle of workers from various enterprises, with a very loose structure, gathering weekly for discussions on broad theoretical issues (libertarian socialism, council communism, revolutionary syndicalism) and situation on their own jobs. After S11 events, more than one thousand workers from Arab-Italian consortium ŃŃŃ/Saipem held a meeting in the construction camp on the field, where the terrorist attacks were celebrated, burning US flag and raising Palestinian. The authorities deported several Palestinian workers, who provoked disorder according to their bosses, who gave them away to police. Karachaganak workers group concentrated on radical anti-war propaganda from class positions at the field. Eventually, it had to disperse due to the alarm that it caused in the local secret services and circulation of rumours about "an anarchist conspiration" in that small ghetto town. On the South of the country at the same time various extremist groups activated, distributing Pan-Islamist leaflets. A wave of persecutions and arrests by police and national security started in the country.

Nevertheless, recently we witnessed not only certain actions on the part of radical minorities, but also large wildcat strikes on the part of oil producing proletariat, although they had been bringing forward standard demands of salary increases and an improvement of labour conditions. For sure, in view of the promised «oil century» for Kazakhstan it’s possible to expect only stronger integration of the oil area workers into the new accumulation regime. Currently, it is exactly in oil industry that the average salary approaches the cost of living, while Western consortiums, especially operating on Caspian Sea and at Karachaganak, not in the last turn to support their image before the government provide more or less stable contracts (up to 2 years), bearable labour conditions, and currently they develop a whole package of social benefits, from housing loans to medical insurance, possibly even for the workers families. At the same time the subcontractors of the same consortiums (construction companies in the first place) often keep inhuman labour conditions, irregular working hours, minimum salaries, strong differentiation between local and imported workers and even non-payment of overtime, although the last factors usually lead to non-sanctioned strikes. Especially harmful for us, perhaps, is that artificial opposition of local and foreign workers. Indeed, Western companies too often profit from the lack of knowledge by our workers and specialists of the advanced Western technologieswhile at the same time it is obvious that foreign workers and specialists are below the level of Soviet school workers and specialists in work, skills and qualification. Nevertheless, as per concluded contracts, the companies profit much more if they bring, say, through Beirut, a wide variety of foreign workers (Filippino, Tamil, Palestinians, Sikhs, Persians), – and not because they spend their salaries at the home markets, but rather because their salaries are reimbursed to the companies from the State budget of the same Kazakhstan. Again, it’s not due to simple discrimination that a hard working local worker always has a salary much lower than an imported one (no matter how low paid he is  on Middle Eastern markets). In the first place it is due to the extreme cheapness of the local workforce market. Secondly, again the payment of high salary to a foreign worker is profitable for his employerit’s a vicious circle. Therefore instead of common struggle against the bosses there are only mass rumbles against each other. At the same time no one can guarantee that the ethnic Russian, Kazakh or Tatar workers, who today come together against a crowd of Filippinos won’t start mobilising against each other, as it already happened around the Republic in the first half of the 80-s. All the same the class interest, uniting them todayis common alcoholism, while for a vast number of younger ones, that is, since the «Taleban» corporation came to power in Afghan, it is heroin. At the fields as nowhere else the proletarian conditions of existence are reproduced, implying squalid housing, absence of communal utilities, ecology destructive for human organism (hydrogen sulphide, radiation since the Soviet nuclear tests), hierarchy imposed by western colonisers, under which their underage mistresses, employed by the well-known oil companies possess real authority over the field old timers. The green buck, circulated in huge amounts in the locations of hydrocarbons extraction only stresses the total spiritual bankruptcy and misery of everyday life of the population producing them. When a night disco in an oil town earns more per night, than a large enterprise, standing still in another once industrialised province, while in the dark street corners  around it women get disfigured and even killed for their liaisons with foreign bosses, a relative external well-being appears to be a mere chimera, while the stable salary transforms into the smoke of withdrawal syndrome.

Of course, in the country, where the actual average salary is much lower than the actual cost of living, the spontaneous protests «against work» or an appearance of a mass political movement with a clear anticapitalist program are hardly possible, but the unpredictability of the international situation itself with the further unification of world economy puts an internationalisation of conflict between Capital and human being on the agenda.

 

PS Stockholm Association for studies of the oil peak (ASPO) has published a forecast of a mass oil crisis, which can fall on the world energy resources market in 10 years, Russian Information Agency "RosBusinessConsulting" reports from Sweden. According to the calculation of the ASPO specialists, the crisis will provoke an increase in the demand for oil that will exceed the offer from oil producers. Moreover, ASPO believes that the oil reserves will end yet while the current generation is alive.

It is due to the fact that the industrial countries consume 4 times more oil, than there are newly discovered reserves. In 20 years the developed countries will consume by 20% more oil, than today. The developing countries consumption will increase by 50%. ASPO expresses an opinion that the politicians and the oil producing States exaggerate the figures concerning their reserves on purpose.

RIA "RosBusinessConsulting", www.kazaag.kz, as of 14.08.2002

 

 

Bibliography:

 

Harry Cleaver Texas University site

 

"Aufheben" No.3,5

 

"Zerowork" No.1-2

 

G.Caffentzis: "The work/Energy Crisis & Apocalypse", "Midnight Oil"

 

Commoner web-zine (www.commoner.org)

 

J.Flanders, "In Mezzo alla Furia"

 

K.Knabb, "Joy of Revolution"

 

"Melancholic Troglodytes"

 

Karl Marx, «Capital»

 

Index