Return to Transcripts main page

CNN Live Saturday

Interview With James Placke

Aired April 19, 2003 - 15:17   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDREA KOPPEL, CNN ANCHOR: Let's talk a little more about the future of Iraq's oil reserves. Joining us here in Washington, James Placke. He is a senior associate at Cambridge Energy Research Associates, an industry research group.
Well, Jim, we heard there in Rula's report, sort of laying out what the situation is. And before the war, we heard an awful lot about the fact that this was the world's second largest oil reserves. Fortunately, most of them were not torched. Lay out for us if you will, all the moving pieces to the Iraqi oil situation.

JAMES PLACKE, OIL INDUSTRY ANALYST: Well I think the point has been made and quite correctly, that it's important to get Iraqi oil back into production as soon as possible in order to be able to generate at least some of the revenue that's going to be so urgently required for recovery. And the industry itself can only generate part of that; that it would be a major contribution.

KOPPEL: What do we know about the state of Iraq's oil economy today?

PLACKE: It's been in decline for the last 20 years; that is the industry has. And it's because of a series of political missteps and disasters; the Iran/Iraq War, the Iraqi occupation of Kuwait in 1990, the U.N. sanctions for the last decade, and more that have followed. It's the, the consequences for the industry have been quite severe. They in fact have lost about a million barrels a day of capacity as compared to where they were 20 years ago.

KOPPEL: So where are they today, and where to you think they'll be let's say five years or so from now?

PLACKE: Well today we would estimate Iraq's capacity, once it gets back into production, which could be only a matter of weeks; at something on the order of two and a half to 2.6 million barrels a day. The next stage would be to rebuild the industry; rehabilitate it if you will, to get their production back up to the historic peak of three and a half; so adding about a million barrels a day. That would take we estimate, two to three years and require $5 to $7 billion of investment.

KOPPEL: OK. I'm going to ask your help here in doing some calculations for us. If they are currently pumping about 2.6 million barrels a day, how much revenue does that mean at the end of the year?

PLACKE: Well of course it depends upon prices, which do vary, but something on the order of $13 to $15 billion.

KOPPEL: The Bush administration as you know, before the war began, had spoken quite a bit about the fact that, don't worry about the cost of reconstruction because the Iraqi oil industry will be able to defray a lot of the cost. Do you think that that was a realistic prediction?

PLACKE: Well given the size of Iraq's oil revenue as compared to both the needs of its oil industry first of all, and then the rest of the economy, which are really overwhelming, I think it can make an important contribution, but it's only one piece.

KOPPEL: Of course we're talking here as if the U.S. or another entity is able to sell the oil. But right now, because U.N. sanctions are still in place, they can't. And the problem is that the French and the Russians are blocking the move to lift the sanctions, saying you got to show us that there's no more weapons of mass destruction in the country. How do you recommend, how do you think the U.S. could potentially navigate this impasse?

PLACKE: Well it's interesting that there've been so many role reversals on this set of issues. U.S. once advocating that it's continuation of sanctions and others opposing it, and now it's kind of reversed. President Bush this week, called for the lifting of Iraqi sanctions promptly, and I think that will be, it is because the President has declared it, American policy and I think the United States will make, try to make that effective at the United Nations. It's going to be very difficult I think, for any other of the permanent members of the Security Council to be seen to be opposing restarting Iraq's oil production and exports, when the need for revenue is so obviously great.

KOPPEL: James Placke, I only wish we had more time. I thank you sir for coming in on your Saturday. Mr. Placke is a senior associate at Cambridge Energy Research Associates here in Washington.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired April 19, 2003 - 15:17   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDREA KOPPEL, CNN ANCHOR: Let's talk a little more about the future of Iraq's oil reserves. Joining us here in Washington, James Placke. He is a senior associate at Cambridge Energy Research Associates, an industry research group.
Well, Jim, we heard there in Rula's report, sort of laying out what the situation is. And before the war, we heard an awful lot about the fact that this was the world's second largest oil reserves. Fortunately, most of them were not torched. Lay out for us if you will, all the moving pieces to the Iraqi oil situation.

JAMES PLACKE, OIL INDUSTRY ANALYST: Well I think the point has been made and quite correctly, that it's important to get Iraqi oil back into production as soon as possible in order to be able to generate at least some of the revenue that's going to be so urgently required for recovery. And the industry itself can only generate part of that; that it would be a major contribution.

KOPPEL: What do we know about the state of Iraq's oil economy today?

PLACKE: It's been in decline for the last 20 years; that is the industry has. And it's because of a series of political missteps and disasters; the Iran/Iraq War, the Iraqi occupation of Kuwait in 1990, the U.N. sanctions for the last decade, and more that have followed. It's the, the consequences for the industry have been quite severe. They in fact have lost about a million barrels a day of capacity as compared to where they were 20 years ago.

KOPPEL: So where are they today, and where to you think they'll be let's say five years or so from now?

PLACKE: Well today we would estimate Iraq's capacity, once it gets back into production, which could be only a matter of weeks; at something on the order of two and a half to 2.6 million barrels a day. The next stage would be to rebuild the industry; rehabilitate it if you will, to get their production back up to the historic peak of three and a half; so adding about a million barrels a day. That would take we estimate, two to three years and require $5 to $7 billion of investment.

KOPPEL: OK. I'm going to ask your help here in doing some calculations for us. If they are currently pumping about 2.6 million barrels a day, how much revenue does that mean at the end of the year?

PLACKE: Well of course it depends upon prices, which do vary, but something on the order of $13 to $15 billion.

KOPPEL: The Bush administration as you know, before the war began, had spoken quite a bit about the fact that, don't worry about the cost of reconstruction because the Iraqi oil industry will be able to defray a lot of the cost. Do you think that that was a realistic prediction?

PLACKE: Well given the size of Iraq's oil revenue as compared to both the needs of its oil industry first of all, and then the rest of the economy, which are really overwhelming, I think it can make an important contribution, but it's only one piece.

KOPPEL: Of course we're talking here as if the U.S. or another entity is able to sell the oil. But right now, because U.N. sanctions are still in place, they can't. And the problem is that the French and the Russians are blocking the move to lift the sanctions, saying you got to show us that there's no more weapons of mass destruction in the country. How do you recommend, how do you think the U.S. could potentially navigate this impasse?

PLACKE: Well it's interesting that there've been so many role reversals on this set of issues. U.S. once advocating that it's continuation of sanctions and others opposing it, and now it's kind of reversed. President Bush this week, called for the lifting of Iraqi sanctions promptly, and I think that will be, it is because the President has declared it, American policy and I think the United States will make, try to make that effective at the United Nations. It's going to be very difficult I think, for any other of the permanent members of the Security Council to be seen to be opposing restarting Iraq's oil production and exports, when the need for revenue is so obviously great.

KOPPEL: James Placke, I only wish we had more time. I thank you sir for coming in on your Saturday. Mr. Placke is a senior associate at Cambridge Energy Research Associates here in Washington.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com