Foreign Correspondence

[Amaunet]

The Shanghai Cooperation Organization

I read a Bloomberg article this morning that really caught my attention. The article is headlined with, “India Oil Chief Says Attack on Iran Would Be Stupid.” Now that’s a pretty simple statement to understand, but let’s look a little deeper. In the text of the article the following countries were mentioned: India, Iran, USA, Afghanistan, Iraq, Pakistan, Russia, Venezuela, and Sudan. Four of the countries listed are members, or soon-to-be members of the Shanghai Cooperation Organization. The core countries of the group include China, Russia, Brazil and India, with Iran and Venezuela as probable new entrants. One thing I found surprising about the Bloomberg column is that the writer NEVER mentioned once about the existence of the international trade group known of as the Shanghai Cooperation Organization. It appears to me that Bloomberg intended to downplay the significance of this very powerful trade alliance. They are working feverishly behind the scenes to secure sources of supply (with each other) for energy and other key commodity items to meet the growing demands.

Subir Raha, the government-appointed head of India’s largest oil company, Oil & Natural Gas, said it would be stupid to attack Iran as it would risk imposing record oil prices on the global economy. Raha partially blamed the current high oil prices on the U.S. invasion of Afghanistan and Iraq, and said, “You launch one more attack and you can’t even guess where the speculation will go.”

The U.S. Administration must be quite concerned over the developments since they sent David Mulford, the U.S. Ambassador to India, to speak with India’s Oil Minister on March 10th to express concern about India’s plan to import gas from Iran through a pipeline. Less than a week later on March 16th, Secretary of State Condoleeza Rice was in New Delhi and said that the U.S. has “concerns” about India’s plan to buy gas from Iran. (Remember that Iran has also struck a deal with China to supply liquefied natural gas.) China is in the process of building a special fleet of ships designed for the sole purpose of shipping LNG from Iran to China. If another big chunk of Iran’s LNG production goes to India, how much will be left to ship into the USA?

The Indian response seems to be realistic in my mind. “I see no reason why India's priorities should be subservient to U.S. priorities,” said Raha, who has worked for state-run oil companies for the past 35 years. “The U.S. is chasing oil and gas as badly as China or India or anybody else.” The article went on to say that Oil & Natural Gas (India’s national oil company since 1959) will buy 20% of Iran’s Yadavaran oil field and may take a stake in the Juffair field. Oil & Natural gas also has contracts with Venezuela, Sudan and Russia for drilling new fields and India is also in talks to acquire assets of Yukos Oil Company from Russia. To play it fair, India is also in talks with Exxon Mobil to discuss deep-water drilling off India’s coast.

The big picture has India and China doing deals with Russia, Iran and Venezuela…not to mention Europe buying roughly 80% of their oil from Russia. These are clearly energy deals centered on the member countries of the Shanghai Cooperation Organization. You won’t hear much about the SHO in the mainstream media, but when the countries mentioned get into the headlines, remember the close trade alliances they have with each other that do not involve the USA. It’s no wonder Iran and other countries are working to establish an oil trading exchange that will be denominated in euros rather than U.S. dollars…we’ll see if they can pull it off or if the U.S. will insist that all oil be traded in dollars…it’s becoming quite the battle royal!!

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