Bush urges congress to end federal ban on offshore drilling; Iraqi government in no-bid contract negotiations with foreign oil companies; Militants mount their first attack on an offshore facility in Nigeria
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    • The Bush administration urged Congress to end a federal ban on offshore oil drilling and open a portion of the Arctic National Wildlife Refuge (ANWR) for oil exploration, in a bid to increase domestic oil production, lower gasoline prices and strengthen national security. The move came in for severe criticism from environmentalists as well as the Democrats on grounds that the oil recovered would be too small to make any significant dent in oil supplies. The administration’s move, which represented a reversal of President Bush’s longstanding position, was however supported by a growing number of Republicans, including the Republican nominee for the presidential elections in November 2008, Sen. John McCain1. It however remains to be seen if the move can be implemented. Reports pointed out that there was a chronic shortage of ships used for deep-water offshore drilling that would impede any rapid turnaround in oil exploration and supply from offshore oil fields2.

    Another development is set to dramatically increase the total global oil output in time to come. Reports noted that Exxon Mobil, Shell, Total, BP and Chevron, along with a number of smaller oil companies, were in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields. While the move was sure to reignite debates regarding American motives to go to war in Iraq, a spokesperson from the Iraqi Oil Ministry stated that the no-bid contracts was a stop-gap measure to bring modern technology into the oil fields till such time that the oil law pending in Parliament was approved. He further added that companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and that they had the needed technology3.

    Meanwhile Nigeria witnessed a disturbing development during the week as rebels attacked an enormous offshore drilling platform of Shell Oil Company which led to a shut down in production in the Bonga field off Nigeria’s coast in the volatile Niger Delta region. Militants from the Movement for the Emancipation of the Niger Delta claimed responsibility for the attack, which was the first time that the rebels had succeeded in attacking an off-shore facility. Reports noted that the attack was bound to impact international oil prices as the Bonga field produces about 225,000 barrels of crude a day. Also, Nigeria’s plans to rely on offshore production to increase its oil output would also be hurt4.

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