Oil imports, sabotage cost Iraq US$7 billion

Oil imports, sabotage cost Iraq US$7 billion

Agence France-Presse/Baghdad

Attacks on Iraq's oil infrastructure and its import of oil
products due to insufficient refining capacity has cost the
country seven billion dollars since March 2003, Oil Minister
Thamer Ghadban said on Thursday.

The country spent US$200 million per month for imports, which
translates to $2.4 billion a year, Ghadban said.

Insecurity and frequent attacks on pipelines and other oil
infrastructure have hampered efforts to develop the country's
rich-resource further and bring in much-needed hard currency, the
minister explained.

"Sabotage affects our production capacity, which averages 2.8
million barrels per day (bpd), of which 2.1 million bpd is from
southern fields and about 700,000 bpd from the north," he told
reporters.

"We also seek to bring our exports up to 1.8 million bpd, a
level which we have reached in the past but slipped below due to
security problems."

He said Iraq aims to produce three million bpd next year
provided the security situation permits.

Ghadban also spoke about building new refineries in the north
around Mosul, as well as in the center and south to tackle
chronic fuel shortages.

He said a sharp rise in the number of vehicles brought into
Iraq after the fall of Saddam Hussein's regime, a number which he
put at 700,000, has put the country's daily fuel needs at 20
milllion liters (5.2 million gallons) per day.

"The current capacity of refineries is only 14 million liters
(3.7 million gallons) per day in the best of scenarios and this
could fall to nine million (2.4 million gallons) due to power
cuts and sabotage."

The fuel shortage is made worse by rampant smuggling of Iraqi
fuel to neighboring countries where it fetches multiples of the
local price.

Iraq sits on the world's second-largest oil reserves. With oil
prices at record highs, the country is eager to ramp up its
production and increase exports to bring in much-needed funds to
rebuild its war-battered economy.

But these efforts have been hampered by the lack of security,
sabotage and the slow pace of investment in the sector. Some
experts have estimated that $50 billion is needed over 10 years
to rebuild infrastructure.

The bulk of Iraqi oil exports are shipped through southern
terminals. Efforts to increase exports through the northern oil
pipeline linking the fields of Kirkuk to the Turkish
Mediterranean port of Ceyhan have been held back by constant
sabotage.

Part of this pipeline and another to the Baiji refinery in the
north were attacked with bombs on Tuesday.