Business | Oil & Gas
Arab oil producers may not cheer Bush for long
Arab Gulf oil producers who have privately cheered the re-election of George W. Bush for another term might have to change their sentiments when the stronger US President revives pressures to privatise their vital oil and gas industry.
- By Dalal Abu Ghazaleh, Staff Reporter
- Published: 00:00 November 14, 2004
Arab Gulf oil producers who have privately cheered the re-election of George W. Bush for another term might have to change their sentiments when the stronger US President revives pressures to privatise their vital oil and gas industry, Arab oil officials and analysts said.
Bush's challenger, Senator John Kerry, created many enemies in the Middle East when he promised American voters that he would lessen US reliance on Arab oil, targeting in particular Saudi Arabia, the world's biggest oil producer and exporter.
Many analysts dismissed Kerry's rhetoric during the final days of the election as impractical and not feasible, saying that in a seller's market there was ample demand in a thirsty world to fill America's place for Arab oil.
"China has recently given the biggest example on this when it signed a $70 billion agreement for oil and gas from Iran," a Riyadh-based Arab oil analyst told Gulf News by telephone.
"Here you have a US President who had included Iran as part of his so-called 'axis of evil' and stopped any dealings with it, and the emergence of a powerful challenger like China quickly replaces it," he said.
But the officials and analysts appeared to be more worried by the potential course of action that would be taken by Bush, who is seen as a traditional lobbyist for big oil companies vying for much larger stakes in oil exploration and production activities in the Gulf.
"The future of oil during Bush's second term is linked to a large extent to America's political relationship with oil producers," said Abdul Samad Al Awadi, a London-based oil consultant for several major companies.
"The big question is how far the Gulf oil producers will comply with Bush's revived demands for privatising the oil sector," Al Awadi told Gulf News.
Al Awadi and other analysts described Kerry as an "oil ignorant politician", while they saw Bush, who hails from the oil producing state of Texas, as someone whose strategic positions have been oil-oriented.
The analysts noted GCC oil producers' initial warmth for the Bush administration extended mainly to petroleum considerations; as far as general sentiment was concerned, the man on the street had always been a staunch Kerry supporter.
"Gulf Arab governments look at oil as a strategic commodity that represents their lifeblood. They cannot leave it to foreigners for fear of being manipulated by them and put their economies at their risk," a Saudi oil official said.
Saudi Arabia has for years kept the vital energy sector away from multinational oil companies, and instead boosted the national oil company, Aramco, to become one of the world's biggest oil giants.
"Bush's administration frightens the oil community more than the Demo-crats because signs of Bush's policies in the region have started to emerge in Iraq, which is under US occupation," Al Awadi said.
He was referring to recent moves by the interim-Iraq government to open the oil sector for exploration and development by mostly American companies. "Iraq will become the prime mover of this policy," Al Awadi said.
Al Awadi, a former top Kuwaiti oil official who had represented his country at scores of Opec meetings, urged Arab oil producers to formulate a common strategy when its comes to energy issues.
Analysts said that the heated Bush-Kerry exchanges on oil policies have had little impact on oil prices which have broken several record highs in the past few months.
They cited several more reasons, such as the inability of the US occupation to restore Iraq's pre-war level of production, soaring world demand, particularly in China and India, political upheavals in oil producing countries like Nigeria and Venezuela and lack of refining capacity in the world, especially for heavy sour crudes.
Despite this, experts said tension in Iraq will continue to push oil prices highier in the immediate future because they rise during political tension, especially in a producing country.
"High oil prices might be good for the Arab producing countries in the short run, but they have a negative impact in the long run because they deplete their resources since producers will be pushed to increase production to ease the market," said Louis Hobeika, head of the economics section at the American University in Beirut.
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