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[casi] Iraq- the bottom line, O_I_L





29 Nov 2003 23:22 GMT DJ
Experts See Long-Term Risks To Iraq's Oil Reservoirs -NYT


Copyright  2003, Dow Jones Newswires


NEW YORK (Dow Jones)--As the Bush administration spends hundreds of millions
of dollars to repair the pipes and pumps above ground that carry Iraq's oil,
it hasn't addressed serious problems with Iraq's underground oil reservoirs,
which U.S. and Iraqi experts say could severely limit the amount of oil
those fields produce, the New York Times reported Saturday.

The report, posted on the Times' Web site, said experts familiar with the
Iraqi oil industry warned that years of poor management have damaged the
fields, and some say that the current drive to rapidly return the fields to
prewar capacity runs the risk of reducing their productivity in the long
run.

In northern Iraq, the large, aging Kirkuk field suffers from too much water
seeping into its oil deposits, the experts say, and similar problems are
evident in the sprawling oil fields in southern Iraq, the Times reported.

"We are losing a lot of oil," Issam al-Chalabi, Iraq's former oil minister,
was quoted as saying. He said it "is the consensus of all the petroleum
engineers" involved in the Iraqi industry that maximizing oil production may
be detrimental to the reservoirs, the Times reported.

A 2000 U.N. report on the Kirkuk field said "the possibility of irreversible
damage to the reservoir of this supergiant field is now imminent," the Times
reported.

U.S. officials acknowledge the underground problems, but figuring out how to
address them is a quandary, the report said. The Bush administration and the
Iraqis are banking on oil revenues to help pay for Iraq's reconstruction,
and U.S. officials say that aggressively managing the reservoirs is crucial
to keeping oil and revenue flowing. But so far, U.S. officials have steered
clear of delving below ground, partly, they say, out of fear of adding to
suspicion in the Arab world that the U.S. invaded Iraq to control its oil,
according to the report.

The above-ground versus below-ground debate also raises the question of
whether the U.S.-led reconstruction effort is intended just to repair damage
from the war or to improve conditions beyond what they were before the U.S.
invasion, the report said.

When Wayne Kelley, a Texas oil engineer, and other experts asked about
attending to Iraq's oil reservoirs during a government conference for
contractors in July, Army Corps of Engineers officials said their mission
was restoring war-damaged facilities, not "redeveloping the oil fields,"
according to a transcript of the meeting, the Times reported.

(END) Dow Jones Newswires



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