Who Owns The Oil?

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  • Rotterdam​ city centre sits a few miles inland from the North Sea, its skyscrapers and office buildings lining the New Meuse River, a tributary of the Rhine.
  • The depots are owned by companies with acronyms for names, cloaking their part ownership by global oil giants: Aramco, Vitol and Kuwait Petroleum International (also known as Q8).
  • In the US, however, Rich’s clandestine deal with Iran to provide oil for Israel was encouraged before the revolution but censured after it, leading to Giuliani’s attack on him.
  • Vitol has major storage facilities in Rotterdam, Singapore, the Caribbean and Fujairah in the UAE.
  • At a time of oversupply in the oil market, production isn’t nearly as profitable as it once was, so the big companies rely on the magic of financial derivatives to rake in the cash through their trading arms.

The depots are owned by companies with acronyms for names, cloaking their part ownership by global oil giants: Aramco, Vitol and Kuwait Petroleum International a reported by London Review.

Diplomacy

Rotterdam​ city centre sits a few miles inland from the North Sea, its skyscrapers and office buildings lining the New Meuse River, a tributary of the Rhine.

Rotterdam is the largest port in Europe, the tenth biggest in the world.

But it was the transition from coal to oil after the Second World War that decisively shaped the port city, as crude was imported on a massive scale and refineries built to process it.

Aramco provided the US government with intelligence, helped with diplomacy and – literally – fuelled its war machines.

The oil majors didn’t have it all their own way.

In 1951 Mohammad Mossadegh nationalised the Anglo-Iranian Oil Company, and in response, the companies known as the Seven Sisters – BP, Chevron, Exxon, Gulf, Mobil, Royal Dutch Shell and Texaco – boycotted Iranian oil.

Decolonisation & Nationalism

Decolonisation brought the nationalisation of oil and the establishment of state-owned oil companies, which, to varying degrees, worked with the oil majors.

The global spot market in oil was (re)born.

Humans and their labour, flora and fauna, livestock and crops.

Commodities from the colonies and the trade-in slaves were the lifeblood of early European capitalism.

As the historian William Cronon wrote in Nature’s Metropolis (1991), ‘one could buy, sell and settle up price differences without ever worrying about whether anything really existed to back up contracts.’

Across the empires, the protection of land and sea routes, the provision of information about rules of trade and tariff, as well as the availability and transferability of credit, helped merchants develop relationships with local agents.

Commodity trading firms

In the first half of the 20th century, one French merchant, Antonin Besse, set up shop in Aden and became an agent for Shell Oil with a finger in every pie, buying and selling coffee, livestock, skin, oil, timber and frankincense across the Indian Ocean and along the coast of East Africa.

King of the Red Sea coasts and their commerce … he was distressed at this time because he could not help making money during the war; it piled itself up, malgré Moi.’

Besse and his British and Indian counterparts defended the empire in Aden as fervently as it protected them, their interests and networks often overlapping.

In lieu of cash payment, Taylor had arranged to receive a shipment of crude at the Egyptian terminus of a pipeline from the Libyan oilfields.

There are similar familial connections in the modern era: many commodity trading firms emerged from Philipp Brothers, which started as a scrap and ore dealer and became a global metals merchant in the 1960s.

Philipp Brothers begat Marc Rich + Co, and Marc Rich + Co begat Glencore, and Trafigura, and so on.

Trading with rival

Marc Rich was put on the FBI’s most-wanted list in 1983, when a young US attorney for New York’s Southern District, Rudy Giuliani, charged him with 51 crimes including tax evasion, racketeering, conspiracy and ‘trading with the enemy.

The last charge was the final chapter in a long story.

It was Rich, still then with Philipp Brothers, who ensured the supply of oil to the pipeline, dispatching tankers to lift oil in Abadan, sail around the Arabian peninsula, and unload secretly in Eilat.

From the late 1950s until the 1970s, Israel imported 90 per cent of its oil from Iran.

In the US, however, Rich’s clandestine deal with Iran to provide oil for Israel was encouraged before the revolution but censured after it, leading to Giuliani’s attack on him.

Rich’s mistake had been not to secure a sanctions waiver; Taylor did not make the same mistake thirty years later.

Neo-Colonialism

When​ ghana’s first president, Kwame Nkrumah, published Neo-Colonialism: The Last Stage of Imperialism in 1965, it was already clear that the newly independent states were going to have to fight to be allowed to be economically self-sufficient. ‘

The motive spring of colonialism, however, still controls the sovereignty.

The new markets for primary commodities were engineered by those carpetbaggers, the merchants and traders who took advantage of the desperation of newly decolonised and impoverished states which were rich in commodities.

Rich cultivated relationships with the conservative government in Jamaica, offering much-needed oil in return for shipments of bauxite and even advancing cash to repay Jamaica’s IMF loan.

With Jamaica on the verge of economic collapse, its politicians were grateful for this daylight robbery.

Enormous power

Rich’s company and the other major commodities traders – Cargill, Glencore, Louis Dreyfus, Mercuria, Phillip Brothers, Trafigura, Vitol and Xstrata – didn’t just benefit from decolonisation.

And they’re now going to sell it to an American multinational?’

Trading with the enemy wasn’t only an issue in the courts of New York’s Southern District.

Banks loved commodity traders and lavished them with credit lines.

The US’s ability to extract fines and impose compliance on banks is a remarkable feat, made possible by the fact that commodity prices are denominated in dollars and by the enormous power the US wields over global financial infrastructures.

Commodity traders

Commodities traders rely on compliant financial and legal regimes.

But they also need easy access to a vast infrastructure of shipping and market facilities.

When the Seven Sisters lost control of global oil in the 1970s, Rotterdam became the clearinghouse for the oil market, and its position as Europe’s most important re-export hub for hydrocarbons was sealed.

By the turn of the millennium, Rotterdam hosted seven refineries and the main or regional offices of Vitol, Vanol, Transol, Bulk Oil, Transworld Oil and Mabanaft.

Glencore owns 150 mines, smelters and factories around the world.

Knesset committee

These days, an intermediary role of the sort Marc Rich once took, transporting the oil of one state to the pipelines of another, may not be necessary.

The oil that flows through the Eilat-Ashkelon pipeline is now supplied by a company called Med-Red Land Bridge.

Med-Red is a consortium between two Israeli hydrocarbon infrastructure firms and Petromal, a strange little oil services firm based in Abu Dhabi, whose ownership – once one peels back its shell companies – can be traced to two princes from the country’s ruling family.

Meanwhile, Israel has unilaterally taken over the pipeline and is refusing to pay the $1.1 billion (plus interest) it owes Iran.

The pipeline itself is a state secret, and a Knesset committee has ruled that anyone leaking information about it may be subject to a prison term of fifteen years.

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Source: London Review 

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