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.