The oil war treadmill?

posted by Dustin








Russian jets today targeted the 3 year-old Baku-Tbilisi-Ceyhan pipeline that takes oil form the Caspian to the Mediterranean. Reports are that they missed.

This "energy corridor" is a critical piece for securing future profits for multinational oil companies, since this oil is eventually directed toward the very rapidly evolving markets in China and India. There have already been announcements to link it the Trans-Israel Eilat-Ashkelon pipeline, connecting Ceyhan to Israeli ports, bypassing Syria and Lebanon.

It is going to very important to keep an eye on what is happening and wade deep through the media noise over the coming weeks.

Enough with the speculators, already. It's our own fault.

posted by Ben

What are the big drivers of oil prices? As Paul Krugman lays it out here, it's not the speculators. Sure they may be contributing, but the big drivers are the obvious ones: reduced supply, increased demand. Increased demand from rapidly developing countries in Asia are a big part of it, but lets not forget that US demand is increasing, albeit at a slower rate than when gas prices were in the $2 range. If you want to see how big an impact conservation in the US would have take a look at this chart (source: CIA World Factbook, 14 June, 2007 via Nationmaster)
Even so, the rapid rise in oil prices, is at a rate greater than would be justified by the simple supply/demand fundamentals. A big chunk of the increase in price can be directly attributed to the bungling and malfeasance of the Bush administration on the international stage. They did this in several ways that effectively reduced available oil reserves. First, they essentially took Iraqi oil off the market. Next they rattled sabers toward Tehran. The constant threat of war or increased sanctions made even Russian investors leery of risking capital in improving Iranian oil fields. Iran's oil extraction industry is decades out of date due to international isolation. The same effect is felt in a number of other countries, primarily in the Middle East, where US bellicosity has increased the political risk price. For a great analysis of the role of political risk in asset pricing see this paper (pdf): Weiner, Robert J. and Click, Reid W., "Political Risk and Real-Asset Values: M&A Evidence" (January 2007). By getting so deeply in trouble in Iraq and screwing up totally in Afghanistan and Pakistan, the Saudis (who may or may not have the petroleum reserves that they claim) know that we need them more than they need us. That makes it hard to ask them to pump more oil and increase supply, thus reducing their profit per barrel of oil.

Another big influence on oil prices is the decline in value of the US dollar. Oil is traded in dollars. If the dollar goes down, the price of oil goes up. The Chinese are loving pointing this out (after we have given them so much grief about not floating their currency). The weak dollar, too, can be attributed to Bush administration policy. Had the US had a good regulatory regime in place, we might have avoided the mortgage-backed securities mess that triggered the current recession (yes, I called it). If we had not followed free-trade theology to its logical extreme, we might still have some jobs in the US that involve making things--perhaps even for export. If we had a culture of saving supported by the tax code (currently you are rewarded for speculating in the market, but punished for saving at the bank), we might have a lower current accounts deficit. But mostly, if we didn't have to borrow so much money to pay for the war in Iraq, the dollar would be worth a lot more. Ironically, what we knew all along is finally being confirmed (just before the Bush junta loses power-- see Dustin's post from June 22).

Living on the Ice Shelf

Published on Thursday, June 26, 2008 by TomDispatch.com

Living on the Ice Shelf, Humanity's Meltdown

by Mike Davis

1. Farewell to the Holocene

Our world, our old world that we have inhabited for the last 12,000 years, has ended, even if no newspaper in North America or Europe has yet printed its scientific obituary.

This February, while cranes were hoisting cladding to the 141st floor of the Burj Dubai tower (which will soon be twice the height of the Empire State Building), the Stratigraphy Commission of the Geological Society of London was adding the newest and highest story to the geological column.

The London Society is the world's oldest association of Earth scientists, founded in 1807, and its Commission acts as a college of cardinals in the adjudication of the geological time-scale. Stratigraphers slice up Earth's history as preserved in sedimentary strata into hierarchies of eons, eras, periods, and epochs marked by the "golden spikes" of mass extinctions, speciation events, and abrupt changes in atmospheric chemistry.

In geology, as in biology or history, periodization is a complex, controversial art and the most bitter feud in nineteenth-century British science — still known as the "Great Devonian Controversy" — was fought over competing interpretations of homely Welsh Graywackes and English Old Red Sandstone. More recently, geologists have feuded over how to stratigraphically demarcate ice age oscillations over the last 2.8 million years. Some have never accepted that the most recent inter-glacial warm interval — the Holocene — should be distinguished as an "epoch" in its own right just because it encompasses the history of civilization.

As a result, contemporary stratigraphers have set extraordinarily rigorous standards for the beatification of any new geological divisions. Although the idea of the "Anthropocene" — an Earth epoch defined by the emergence of urban-industrial society as a geological force — has been long debated, stratigraphers have refused to acknowledge compelling evidence for its advent.

At least for the London Society, that position has now been revised.

To the question "Are we now living in the Anthropocene?" the 21 members of the Commission unanimously answer "yes." They adduce robust evidence that the Holocene epoch — the interglacial span of unusually stable climate that has allowed the rapid evolution of agriculture and urban civilization — has ended and that the Earth has entered "a stratigraphic interval without close parallel in the last several million years." In addition to the buildup of greenhouse gases, the stratigraphers cite human landscape transformation which "now exceeds [annual] natural sediment production by an order of magnitude," the ominous acidification of the oceans, and the relentless destruction of biota.

This new age, they explain, is defined both by the heating trend (whose closest analogue may be the catastrophe known as the Paleocene Eocene Thermal Maximum, 56 million years ago) and by the radical instability expected of future environments. In somber prose, they warn that "the combination of extinctions, global species migrations and the widespread replacement of natural vegetation with agricultural monocultures is producing a distinctive contemporary biostratigraphic signal. These effects are permanent, as future evolution will take place from surviving (and frequently anthropogenically relocated) stocks." Evolution itself, in other words, has been forced into a new trajectory.

2. Spontaneous Decarbonization?

The Commission's coronation of the Anthropocene coincides with growing scientific controversy over the 4th Assessment Report issued last year by the Intergovernmental Panel on Climate Change (IPCC). The IPCC is mandated to establish scientific baselines for international efforts to mitigate global warming, but some of the most prominent researchers in the field are now challenging its reference scenarios as overly optimistic, even pie-in-the-sky thinking.

The current scenarios were adopted by the IPCC in 2000 to model future global emissions based on different "storylines" about population growth as well as technological and economic development. Some of the Panel's major scenarios are well known to policymakers and greenhouse activists, but few outside the research community have actually read or understood the fine print, particularly the IPCC's confidence that greater energy efficiency will be an "automatic" byproduct of future economic development. Indeed all the scenarios, even the "business as usual" variants, assume that at least 60% of future carbon reduction will occur independently of greenhouse mitigation measures.

The Panel, in effect, has bet the ranch, or rather the planet, on unplanned, market-driven progress toward a post-carbon world economy, a transition that implicitly requires wealth generated from higher energy prices ultimately finding its way to new technologies and renewable energy. (The International Energy Agency recently estimated that it would cost $45 trillion to halve greenhouse gas emissions by 2050.) Kyoto-type accords and carbon markets are designed — almost as an analogue to Keynesian "pump-priming" — to bridge the shortfall between spontaneous decarbonization and the emissions targets required by each scenario. Serendipitously, this reduces the costs of mitigating global warming to levels that align with what seems, at least theoretically, to be politically possible, as expounded in the British Stern Review on the Economics of Climate Change of 2006 and other such reports.

Critics argue, however, that this represents a heroic leap of faith that radically understates the economic costs, technological hurdles, and social changes required to tame the growth of greenhouse gases. European carbon emissions, for example, are still rising (dramatically in some sectors) despite the European Union's much praised adoption of a cap-and-trade system in 2005. Likewise there has been little evidence in recent years of the automatic progress in energy efficiency that is the sine qua non of the IPCC scenarios. Although The Economist characteristically begs to differ, most energy researchers believe that, since 2000, energy intensity has actually risen; that is, global carbon dioxide emissions have kept pace with, or even grown marginally faster than, energy use.

Coal production, especially, is undergoing a dramatic renaissance, as the nineteenth century has returned to haunt the twenty-first century. Hundreds of thousands of miners are now working under conditions that would have appalled Charles Dickens, extracting the dirty mineral that allows China to open two new coal-fueled power stations every week. Meanwhile, the total consumption of fossil fuels is predicted to increase at least 55% over the next generation, with international oil exports doubling in volume.

The United Nations Development Program, which has made its own study of sustainable energy goals, warns that it will require "a 50 percent cut in greenhouse gas emissions worldwide by 2050 against 1990 levels" to keep humanity outside the red zone of runaway warming (usually defined as a greater than two degrees centigrade increase this century). Yet the International Energy Agency predicts that, in all likelihood, such emissions will actually increase in this period by nearly 100% — enough greenhouse gas to propel us past several critical tipping points.

Even while higher energy prices are pushing SUVs towards extinction and attracting more venture capital to renewable energy, they are also opening the Pandora's box of the crudest of crude oil production from Canadian tar sands and Venezuelan heavy oil. As one British scientist has warned, the very last thing we should wish for (under the false slogan of "energy independence") is new frontiers in hydrocarbon production that advance "humankind's ability to accelerate global warming" and slow the urgent transition to "non-carbon or closed-carbon energy cycles."

3. Fin-du-Monde Boom

What confidence should we place in the capacity of markets to reallocate investment from old to new energy or, say, from arms expenditures to sustainable agriculture? We are propagandized incessantly (especially on public television) about how giant companies like Chevron, Pfizer Inc., and Archer Daniels Midland are hard at work saving the planet by plowing profits back into the kinds of research and exploration that will ensure low-carbon fuels, new vaccines, and more drought-resistant crops.

As the current ethanol-from-corn boom, which has diverted 100 million tons of grain from human diets mainly to American car engines, so appallingly demonstrates, "biofuel" may be a euphemism for subsidies to the rich and starvation for the poor. Likewise "clean coal," despite a vigorous endorsement from Senator Barack Obama (who also champions ethanol), is, at present, simply a huge deception: a $40 million advertising and lobbying campaign for a hypothetical technology that BusinessWeek has characterized as "being decades away from commercial viability."

Moreover there are disturbing signs that energy companies and utilities are reneging on their public commitments to the development of carbon-capture and alternative energy technologies. The Bush administration's "marquee demonstration project," FutureGen, was scrapped this year after the coal industry refused to pay its share of the public-private "partnership"; similarly, most U.S. private-sector carbon-sequestration initiatives have recently been cancelled. In the United Kingdom, meanwhile, Shell has just pulled out of the world's largest wind-energy project, the London Array. Despite heroic levels of advertising, energy corporations, like pharmaceutical companies, prefer to overgraze the commons, while letting taxes, not profits, pay for whatever urgent, long-overdue research is actually undertaken.

On the other hand, the spoils from high energy prices continue to gush into real estate, skyscrapers, and financial assets. Whether or not we are actually at the summit of Hubbert's Peak — that peak oil moment — whether or not the oil-price bubble finally bursts, what we are probably witnessing is the largest transfer of wealth in modern history.

An eminent Wall Street oracle, McKinsey Global Institute, predicts that if crude oil prices remain above $100 per barrel — they are, at the moment, approaching $140 a barrel — the six countries of the Gulf Cooperation Council alone will "reap a cumulative windfall of almost $9 trillion by 2020." As in the 1970s, Saudi Arabia and its Gulf neighbors, whose total gross domestic product has almost doubled in just three years, are awash in liquidity: $2.4 trillion in banks and investment funds according to a recent estimate by The Economist. Regardless of price trends, the International Energy Agency predicts, "more and more oil will come from fewer and fewer countries, primarily the Middle East members of OPEC [The Organization of the Petroleum Exporting Countries]."

Dubai, which has little oil income of its own, has become the regional financial hub for this vast pool of wealth, with ambitions to eventually compete with Wall Street and the City of London. During the first oil shock in the 1970s, much of OPEC's surplus was recycled through military purchases in the United States and Europe, or parked in foreign banks to become the "subprime" loans that eventually devastated Latin America. In the wake of the attacks of 9/11, the Gulf states became far more cautious about entrusting their wealth to countries, like the United States, governed by religious fanatics. This time around, they are using "sovereign wealth funds" to achieve a more active ownership in foreign financial institutions, while investing fabulous amounts of oil revenue to transform Arabia's sands into hyperbolic cities, shopping paradises, and private islands for British rock stars and Russian gangsters.

Two years ago, when oil prices were less than half of the current level, The Financial Times estimated that planned new construction in Saudi Arabia and the emirates already exceeded $1 trillion dollars. Today, it may be closer to $1.5 trillion, considerably more than the total value of world trade in agricultural products. Most of the Gulf city-states are building hallucinatory skylines — and, among them, Dubai is the unquestionable superstar. In a little more than a decade, it has erected 500 skyscrapers, and currently leases one-quarter of all the high-rise cranes in the world.

This super-charged Gulf boom, which celebrity architect Rem Koolhaas claims is "reconfiguring the world," has led Dubai developers to proclaim the advent of a "supreme lifestyle" represented by seven-star hotels, private islands, and J-class yachts. Not surprisingly, then, the United Arab Emirates and its neighbors have the biggest per capita ecological footprints on the planet. Meanwhile, the rightful owners of Arab oil wealth, the masses crammed into the angry tenements of Baghdad, Cairo, Amman, and Khartoum, have little more to show for it than a trickle-down of oil-field jobs and Saudi-subsidized madrassas. While guests enjoy the $5,000 per night rooms in Burj Al-Arab, Dubai's celebrated sail-shaped hotel, working-class Cairenes riot in the streets over the unaffordable price of bread.

4. Can Markets Enfranchise the Poor?

Emissions optimists, of course, will smile at all the gloom-and-doom and evoke the coming miracle of carbon trading. What they discount is the real possibility that a sprawling carbon-offset market may emerge, just as predicted, yet produce only minimal improvement in the global carbon balance sheet, as long as there is no mechanism for enforcing real net reductions in fossil fuel use.

In popular discussions of emissions-rights trading systems, it is common to mistake the smokestacks for the trees. For example, the wealthy oil enclave of Abu Dhabi (like Dubai, a partner in the United Arab Emirates) brags that it has planted more than 130 million trees — each of which does its duty in absorbing carbon dioxide from the atmosphere. However, this artificial forest in the desert also consumes huge quantities of irrigation water produced, or recycled, from expensive desalination plants. The trees may allow Sheik Khalifa bin Zayed to wear a halo at international meetings, but the rude fact is that they are an energy-intensive beauty strip, like most of so-called green capitalism.

And, while we're at it, let's just ask: What if the buying and selling of carbon credits and pollution offsets fails to turn down the thermostat? What exactly will motivate governments and global industries then to join hands in a crusade to reduce emissions through regulation and taxation?

Kyoto-type climate diplomacy assumes that all the major actors, once they have accepted the science in the IPCC reports, will recognize an overriding common interest in gaining control over the runaway greenhouse effect. But global warming is not War of the Worlds, where invading Martians are dedicated to annihilating all of humanity without distinction. Climate change, instead, will initially produce dramatically unequal impacts across regions and social classes. It will reinforce, not diminish, geopolitical inequality and conflict.

As the United Nations Development Program emphasized in its report last year, global warming is above all a threat to the poor and the unborn, the "two constituencies with little or no political voice." Coordinated global action on their behalf thus presupposes either their revolutionary empowerment (a scenario not considered by the IPCC) or the transmutation of the self-interest of rich countries and classes into an enlightened "solidarity" without precedent in history. From a rational-actor perspective, the latter outcome only seems realistic if it can be shown that privileged groups possess no preferential "exit" option, that internationalist public opinion drives policymaking in key countries, and that greenhouse gas mitigation could be achieved without major sacrifices in upscale Northern Hemispheric standards of living — none of which seems highly likely.

And what if growing environmental and social turbulence, instead of galvanizing heroic innovation and international cooperation, simply drive elite publics into even more frenzied attempts to wall themselves off from the rest of humanity? Global mitigation, in this unexplored but not improbable scenario, would be tacitly abandoned (as, to some extent, it already has been) in favor of accelerated investment in selective adaptation for Earth's first-class passengers. We're talking here of the prospect of creating green and gated oases of permanent affluence on an otherwise stricken planet.

Of course, there will still be treaties, carbon credits, famine relief, humanitarian acrobatics, and perhaps the full-scale conversion of some European cities and small countries to alternative energy. But the shift to low, or zero, emission lifestyles would be almost unimaginably expensive. (In Britain, it currently costs $200,000 more to build a zero-carbon, "level 6″ eco-home than a standard unit of the same area.) And this will certainly become even more unimaginable after perhaps 2030, when the convergent impacts of climate change, peak oil, peak water, and an additional 1.5 billion people on the planet may begin to seriously throttle growth.

5. The North's Ecological Debt

The real question is this: Will rich counties ever mobilize the political will and economic resources to actually achieve IPCC targets or, for that matter, to help poorer countries adapt to the inevitable, already "committed" quotient of warming now working its way toward us through the slow circulation of the world ocean?

To be more vivid: Will the electorates of the wealthy nations shed their current bigotry and walled borders to admit refugees from predicted epicenters of drought and desertification like the Maghreb, Mexico, Ethiopia, and Pakistan? Will Americans, the most miserly people when measured by per capita foreign aid, be willing to tax themselves to help relocate the millions likely to be flooded out of densely settled, mega-delta regions like Bangladesh?

Market-oriented optimists, once again, will point to carbon offset programs like the Clean Development Mechanism which, they claim, will allow green capital to flow to the Third World. Most of the Third World, however, probably prefers for the First World to acknowledge the environmental mess it has created and take responsibility for cleaning it up. They rightly rail against the notion that the greatest burden of adjustment to the Anthropocene epoch should fall on those who have contributed least to carbon emissions and drawn the slightest benefits from 200 years of industrialization.

In a sobering study recently published in the Proceedings of the [U.S.] National Academy of Science, a research team has attempted to calculate the environmental costs of economic globalization since 1961 as expressed in deforestation, climate change, over-fishing, ozone depletion, mangrove conversion, and agricultural expansion. After making adjustments for relative cost burdens, they found that the richest countries, by their activities, had generated 42% of environmental degradation across the world, while shouldering only 3% of the resulting costs.

The radicals of the South will rightly point to another debt as well. For 30 years, cities in the developing world have grown at breakneck speed without any equivalent public investment in infrastructure services, housing, or public health. In large part this has been the result of foreign debts contracted by dictators, payments enforced by the International Monetary Fund, and public sectors wrecked by the World Bank's "structural adjustment" agreements.

This planetary deficit of opportunity and social justice is captured in the fact that more than one billion people, according to UN-Habitat, currently live in slums and that their number is expected to double by 2030. An equal number, or more, forage in the so-called informal sector (a first-world euphemism for mass unemployment). Sheer demographic momentum, meanwhile, will increase the world's urban population by 3 billion people over the next 40 years (90% of them in poor cities), and no one — absolutely no one — has a clue how a planet of slums, with growing food and energy crises, will accommodate their biological survival, much less their inevitable aspirations to basic happiness and dignity.

If this seems unduly apocalyptic, consider that most climate models project impacts that will uncannily reinforce the present geography of inequality. One of the pioneer analysts of the economics of global warming, Petersen Institute fellow William R. Cline, recently published a country-by-country study of the likely effects of climate change on agriculture by the later decades of this century. Even in the most optimistic simulations, the agricultural systems of Pakistan (a 20% decrease from current farm output predicted) and Northwestern India (a 30% decrease) are likely to be devastated, along with much of the Middle East, the Maghreb, the Sahel belt, Southern Africa, the Caribbean, and Mexico. Twenty-nine developing countries will lose 20% or more of their current farm output to global warming, while agriculture in the already rich north is likely to receive, on average, an 8% boost.

In light of such studies, the current ruthless competition between energy and food markets, amplified by international speculation in commodities and agricultural land, is only a modest portent of the chaos that could soon grow exponentially from the convergence of resource depletion, intractable inequality, and climate change. The real danger is that human solidarity itself, like a West Antarctic ice shelf, will suddenly fracture and shatter into a thousand shards.

Mike Davis is the author of In Praise of Barbarians: Essays against Empire (Haymarket Books, 2008) and Buda's Wagon: A Brief History of the Car Bomb (Verso, 2007). He is currently working on a book about cities, poverty, and global change.

[Note for TomDispatch readers: Those of you who are environmentally minded and interested in pursuing such matters further might consider spending some time at the superb website of Grist Magazine and visiting, as well, an interesting and provocative new online magazine/website, Environment 360. Tom]

Copyright 2008 Mike Davis

Windfall profit tax on big oil should help pay for Iraq war costs

If you read the article below you will learn that what the big oil companies are doing is essentially decoupling the value of the dollar from the value of oil. Payments will not be in cash, but in oil. So it is even more apparent that strengthening the global power of big oil does not translate to better standards of living for Americans.

This appeared on the 11PM PST, Wed night edition. It was buried in the "World" section by the morning.


NEW YORK TIMES
June 19, 2008
Deals With Iraq Are Set to Bring Oil Giants Back
By ANDREW E. KRAMER

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies, speaking only on the condition that they not be identified, said they were helping Iraq rebuild its decrepit oil industry.

For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity.

While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world’s oil patch becomes off limits. Governments in countries like Bolivia and Venezuela are nationalizing their oil industries or seeking a larger share of the record profits for their national budgets. Russia and Kazakhstan have forced the major companies to renegotiate contracts.

The Iraqi government’s stated goal in inviting back the major companies is to increase oil production by half a million barrels per day by attracting modern technology and expertise to oil fields now desperately short of both. The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.

For the American government, increasing output in Iraq, as elsewhere, serves the foreign policy goal of increasing oil production globally to alleviate the exceptionally tight supply that is a cause of soaring prices.

The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.

It said the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and because these companies had the needed technology.

A Shell spokeswoman hinted at the kind of work the companies might be engaged in. “We can confirm that we have submitted a conceptual proposal to the Iraqi authorities to minimize current and future gas flaring in the south through gas gathering and utilization,” said the spokeswoman, Marnie Funk. “The contents of the proposal are confidential.”

While small, the deals hold great promise for the companies.

“The bigger prize everybody is waiting for is development of the giant new fields,” Leila Benali, an authority on Middle East oil at Cambridge Energy Research Associates, said in a telephone interview from the firm’s Paris office. The current contracts, she said, are a “foothold” in Iraq for companies striving for these longer-term deals.

Any Western oil official who comes to Iraq would require heavy security, exposing the companies to all the same logistical nightmares that have hampered previous attempts, often undertaken at huge cost, to rebuild Iraq’s oil infrastructure.

And work in the deserts and swamps that contain much of Iraq’s oil reserves would be virtually impossible unless carried out solely by Iraqi subcontractors, who would likely be threatened by insurgents for cooperating with Western companies.

Yet at today’s oil prices, there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.

David Fyfe, a Middle East analyst at the International Energy Agency, a Paris-based group that monitors oil production for the developed countries, said he believed that Iraq’s output could increase to about 3 million barrels a day from its current 2.5 million, though it would probably take longer than the six months the Oil Ministry estimated.

Mr. Fyfe’s organization estimated that repair work on existing fields could bring Iraq’s output up to roughly four million barrels per day within several years. After new fields are tapped, Iraq is expected to reach a plateau of about six million barrels per day, Mr. Fyfe said, which could suppress current world oil prices.

The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.

A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts.

The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.

The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

“These are not actually service contracts,” Ms. Benali said. “They were designed to circumvent the legislative stalemate” and bring Western companies with experience managing large projects into Iraq before the passage of the oil law.

A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms.

Assem Jihad, the Oil Ministry spokesman, said the ministry chose companies it was comfortable working with under the charitable memorandum of understanding agreements, and for their technical prowess. “Because of that, they got the priority,” he said.

In all cases but one, the same company that had provided free advice to the ministry for work on a specific field was offered the technical support contract for that field, one of the companies’ officials said.

The exception is the West Qurna field in southern Iraq, outside Basra. There, the Russian company Lukoil, which claims a Hussein-era contract for the field, had been providing free training to Iraqi engineers, but a consortium of Chevron and Total, a French company, was offered the contract. A spokesman for Lukoil declined to comment.

Charles Ries, the chief economic official in the American Embassy in Baghdad, described the no-bid contracts as a bridging mechanism to bring modern technology into the fields before the oil law was passed, and as an extension of the earlier work without charge.

To be sure, these are not the first foreign oil contracts in Iraq, and all have proved contentious.

The Kurdistan regional government, which in many respects functions as an independent entity in northern Iraq, has concluded a number of deals. Hunt Oil Company of Dallas, for example, signed a production-sharing agreement with the regional government last fall, though its legality is questioned by the central Iraqi government. The technical support agreements, however, are the first commercial work by the major oil companies in Iraq.

The impact, experts say, could be remarkable increases in Iraqi oil output.

While the current contracts are unrelated to the companies’ previous work in Iraq, in a twist of corporate history for some of the world’s largest companies, all four oil majors that had lost their concessions in Iraq are now back.

But a spokesman for Exxon said the company’s approach to Iraq was no different from its work elsewhere.

“Consistent with our longstanding, global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate,” the spokesman, Len D’Eramo, said in an e-mailed statement.

But the company is clearly aware of the history. In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”

James Glanz and Jad Mouawad contributed reporting from New York.