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[casi] Re: Iraq Reports Record Oil Exports

Hey, what is really going on?   Last week, "Iraq Reports Record Oil
Exports".  Now:

Fueling Anger in Iraq
Sabotage Exacerbates Petroleum Shortages
By Rajiv Chandrasekaran

Washington Post Foreign Service
Tuesday, December 9, 2003; Page A01

BAGHDAD, Dec. 8 -- The line of cars waiting to fill up at the Hurreya gas
station on Monday snaked down the right lane of a busy thoroughfare, around
a traffic circle, across a double-decker bridge spanning the Tigris River
and along a potholed side street leading to one of Iraq's three oil

At the end, almost two miles from the station, was Mohammed Adnan, a taxi
driver who could not comprehend why he would have to wait seven hours to
fuel his mud-spattered Chevrolet Beretta. "This is Iraq," he noted wryly.
"Don't we live on a lake of oil?"

Despite its vast underground oil reserves -- estimated to be the world's
second-largest -- Iraq is a country starved of petroleum products. Not only
is gasoline in short supply, but so too are diesel, kerosene and propane.

Over the past few weeks, lines for gasoline and other petroleum products
have grown to lengths unimaginable even by the standards of the U.S. energy
crisis in the 1970s. Some are miles long, forcing drivers to wait all day
for a turn at the pump. Many Iraqis have taken to spending the night in
their cars. Others have resorted to buying gas on the black market for 20
times the pump price.

The difficulty in obtaining a commodity that Iraqis had long taken for
granted has fueled a new wave of anger and frustration with the U.S.
occupation, particularly among moderate, middle-class city dwellers who find
themselves unable to drive to work, drop their children off at school or go
shopping in this car-dependent city. The popular discontent appears to match
the fury that enveloped Baghdad when electricity service dropped to just a
few hours a day over the summer.

U.S. officials here contend the gas shortage has numerous causes; they cite
the import of 250,000 new cars since the end of the war and slumps in
production during Ramadan, the Islamic holy month of fasting. Compounding
the problem, they said, are Iraq's antiquated refineries, which have not
been able to resume prewar output levels because supplies of two crucial
inputs -- crude oil and electricity -- are regularly disrupted.

"There's no one thing that's to blame," said an official with the U.S.-led
occupation authority who is responsible for oil issues. "It's a combination
of a lot of little things."

But officials with Iraq's Oil Ministry offered a different view. The new
cars have not increased overall demand for gasoline, largely because fewer
people are working and traveling these days. The problem, they maintain, is

Repeated sabotage of pipelines has disrupted the flow of crude oil into
refineries and the removal of byproducts. Truckers bringing in fuel to
alleviate the shortage from neighboring countries have been attacked on the
highways, leading a contingent of Turkish drivers to go on strike last week.
And the lack of adequate law enforcement has allowed black marketeers to
exacerbate the situation by hoarding fuel.

"If we had security, we would have fuel," said Dathar Khashab, the director
of the Daura refinery in southern Baghdad.

For Iraqis, the impact of the anti-American insurgency has perhaps been felt
most broadly in the gasoline shortage. Although more than 100 Iraqis have
been killed in car bombings and more than a score assassinated by insurgents
for cooperating with occupation forces, the pipeline explosions and the
attacks on truckers have disrupted the lives of Iraqis like nothing else.

"Life is worse now than it was during the war," said Mazen Bayar, a retired
foreman who works part time as a taxi driver. "I spend all day in the line.
There's no time to work."

Standing atop a bridge where his car was stuck in line, Bayar looked out at
the Daura refinery as an orange flame shot out of a smokestack. "We have
always had enough oil," he said. "Now we have a shortage? Something
suspicious is going on."

But Bayar and a score of other drivers in line on Monday afternoon did not
make a connection between the shortages and the insurgency, blamed largely
on loyalists of the former president, Saddam Hussein. Instead, they cast the
blame at everyone -- and anyone -- else.

"Maybe it's the black marketeers," Adnan said. "They're taking all our

Bayar was more certain. "It's the refineries," he said. "They're not
producing enough gasoline."

The driver of the next car in line scoffed at both explanations. "It's the
Americans, for sure," said Hassan Jawad Mehdi. "They are taking our oil back
to America."

Other drivers were convinced plenty of gasoline remained in distribution
centers guarded by U.S. troops. "The Americans are keeping it from us until
the security improves," one driver said. "If they wanted to give it to us,
they could."

When American oil experts descended on Iraq after Hussein's government was
toppled in April, they never foresaw the task of getting gasoline to Iraqis
to be so complicated. The country's three refineries -- one in the northern
town of Baiji, one in the southern port city of Basra and one in Baghdad --
produced enough gasoline, diesel, kerosene and propane to meet the national
demand. Even under U.N. economic sanctions, Hussein's government kept the
refineries running.

Gasoline was sold then -- as now -- for a steal: about 5 cents a gallon.

Although the Basra refinery and oil-pumping infrastructure in the south were
extensively looted after the war, teams from the U.S. Army Corps of
Engineers and contractor Kellogg Brown & Root Inc., a subsidiary of
Halliburton Co., performed emergency repairs.

By midsummer, more than 1 million barrels of crude oil were being pumped
each day from the northern and southern fields. The three refineries were
ramping up production and it appeared they would soon return to prewar
production levels.

Then the insurgents found a new target: the web of pipelines that extend
through a swath of the country long known for its loyalty to Hussein.
Guerrillas began blowing up the lines that connect the Baiji and Daura
refineries with the northern fields.

At the Daura refinery, a chart in Khashab's office that plots crude oil
inputs has the peaks and valleys of an electrocardiogram. On some days, the
plant, with a 110,000 barrel-per-day capacity, has processed less than
10,000 barrels. "This is no way to run a refinery," he said.

Iraq's daily domestic demand for gasoline is about 4 million gallons, but
its refineries are producing only about 2 million, Oil Ministry officials

To make up for the shortfall, the occupation authority and the Oil Ministry
signed contracts to import oil from neighboring countries. "It was like
bringing coals to Newcastle," one official with the occupation authority
said. "But we had no choice."

Between 2 million and 3 million gallons of oil products are imported into
Iraq every day, the American official involved in oil issues said. Much of
it has been brought in by Halliburton, the Houston-based company once run by
Vice President Cheney, which has been paid as much as $2.65 per gallon by
the U.S. government, a deal that has prompted criticism among some members
of Congress but has been defended by the occupation authority as fair
because of security-related expenses.

Even so, escalating attacks on tanker trucks have disrupted that effort.
Fuel imports from Turkey halted last week after drivers went on strike,
largely over fears they would be attacked, Turkish trucking company owners
said. The Turkish drivers also have refused to drive beyond the northern
city of Mosul, forcing the Oil Ministry and the occupation authority to
arrange another convoy of trucks to haul the fuel south to Baghdad.

The drivers' refusal to travel south of Mosul has forced the Baiji refinery
to scale back production because the trucks are needed to remove the heavy
fuel oil that is a byproduct of the refining process. The refinery is
operating at only about 50 percent of its 280,000-barrel-per-day capacity
because storage tanks at the plant are filled with more than 30 million
gallons of fuel oil, said the director, Riyad Ghassab.

Fuel oil used to be removed from Baiji by a pipeline, but that line is now
being used to transport crude to the refinery because the normal crude line
was severed by saboteurs, U.S. and Iraqi officials said.

"We have the oil," Ghassab said, "but we cannot move it around in our
pipelines and on our roads."

U.S. officials said military units have started to provide additional
security for truck convoys. The Oil Ministry also is deploying several
thousand new security officers to guard pipelines. And in Baghdad, U.S.
soldiers and Iraqi police officers are taking a tougher posture with
black-market vendors and the gas station owners who sell to them, arresting
them en masse and threatening some with 10-year jail sentences.

Such actions are not without risk. In Mosul, insurgents shot and killed a
U.S. soldier guarding a gas station on Monday.

Amer Hassan, the manager of the Hurreya station here, said American soldiers
need to be even more aggressive. "They should show the black-market sellers
no mercy," he said. "They are thieves."

As he surveyed his station and puffed on a cigarette -- smoking is not
prohibited at Iraqi gas stations -- Hassan expressed amazement at rows of
eager drivers waiting to fill up their cars.

"Of all things," he said, "we never thought we'd be without gasoline in


----- Original Message -----
From: "ppg" <>
To: <>
Sent: Friday, December 05, 2003 5:06 PM
Subject: Iraq Reports Record Oil Exports

> What on earth?  Where did this come from suddenly? pg
> Iraq Reports Record Oil Exports
> Last Updated: 12/5/2003 8:41:13 AM
> Despite setbacks in rebuilding its shattered oil industry, Iraq boosted
> production to 2.1 million barrels a day last month and exported record
> volumes of crude from its terminal in the Gulf, Iraq's delegation to OPEC
> said Thursday.
> Iraq's output and exports have both grown at rates "exceeding earlier
> expectations," the Iraqi Oil Ministry said in a communique issued after a
> meeting of the Organization of Petroleum Exporting Countries at OPEC's
> Vienna headquarters.
> OPEC member Iraq hopes to maintain this momentum and increase its daily
> production to an average of 2.3 million barrels in December and 2.8
> barrels by next April. By comparison, Iraq pumped about 2.5 million
> a day on the eve of the U.S.-led invasion that toppled Saddam Hussein.
> Iraq shipped 1.5 million barrels a day from its Basrah Terminal last
> more than at any time since the terminal opened in the late 1980s, the
> communique said. Although Iraq exported some 2.1 million barrels a day
> before the war, that amount included crude from the country's northern oil
> fields, which are currently shut off from a strategic export pipeline to
> Turkey due to repeated sabotage.
> Iraq aims to increase its exports to 1.7 million barrels a day by the end
> this year and 2 million barrels a day by April. The Basrah Terminal -
> formerly as Mina el-Bakr - was captured early in the war in good
> However, it has a maximum export capacity of about 1.5 million barrels a
> day, and it was not immediately clear how the Iraqis expected to ship any
> additional crude beyond that.
> One option under consideration is an oil swap with neighboring Iran, in
> which Iraq would transfer some of its crude overland to Iran, which would
> then export the oil from an Iranian port. In exchange, Iraq would receive
> refined Iranian oil products of comparable value. Such an arrangement
> require construction of a small, 6-mile pipeline from southern Iraq to
> said George Beranek, an analyst with PFC Energy, a Washington consultancy.
> Another option would be for Iraq to rebuild and expand its second Gulf
> terminal, Khor al-Amaya, which was destroyed during the Gulf War of 1991
> has only been partially repaired. Mohammed Al-Waely, operations manager of
> Iraq's state-run South Oil Co., has described the facility as "a jungle of
> pipes and burnt buildings in miserable condition." Although Khor al-Amaya
> hasn't been used since Saddam's ouster, the ocean is often calmer there
> at the Basrah Terminal, making it easier for tankers to load oil.
> In a pinch, Iraq could also export oil by truck to neighboring countries,
> Beranek said.
> Iraq's Oil Ministry said it has forged good relations with Saudi Arabia,
> Qatar, Kuwait and Iran and hopes to interest them in the joint
> investment and training it needs to further develop its oil resources. In
> addition, it has made a priority of developing its oil fields and is
> discussing "common acceptable grounds" with international oil companies,
> communique said.
> The ministry said it plans to hold an oil conference in Baghdad in
> to help stimulate the interest of international firms.
> Iraq's Oil Ministry recently called off a similar conference planned for
> December due to concerns about the security of potential visitors.
> the communique claimed that the security situation in Iraq has improved
> "significantly" since then.
> Copyright 2003 Associated Press. All rights reserved. This material may
> be published, broadcast, rewritten, or redistributed.
> WUSA 9 News

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