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A Wasted Resource. Special Report on Oil
Exploitation in Iraq
13.9.2007
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September
13, 2007
Chaos, violence, graft and smuggling are wrecking
Iraq’s oil business, with the revenue it generates
vanishing into the pockets of extremists and corrupt
officials, a new IWPR special report reveals.
Even where the news is good, such as in Kurdistan
where relative peace has allowed oil companies to
record new finds, officials are squabbling over who
controls the new wealth.
Officials in Basra, the southern city near Iraq’s
richest oil fields, admitted to IWPR reporters in
the city that oil worth five million US dollars went
missing just last April. They call it waste. But
locals call it smuggling and say Shia militias and
political parties are complicit.
“Under Saddam, the oil ministry generally had a good
reputation. It was seen as staffed by competent
technocrats who got on with the job,” wrote IWPR
editor Christoph Reuter in a comment piece for the
special report.
“That is not the case any longer. As with other
ministries, an experienced staff has often been
replaced by less qualified, political appointees.”
An oil-smuggling infrastructure already existed in
Saddam’s time. During the Nineties, when United
Nations sanctions were imposed on Iraq, illegal oil
shipments were the easiest way to earn cash and
smuggling was officially condoned. The people in
charge may have changed, but the system remains.
"We use the same methods that we used during
Saddam," said one veteran smuggler. "Instead of
Ba’athists and generals, it is now Shia militias and
their cronies who are doing the business."
Each stage of the export process is controlled by
militias and political figures - from extracting the
oil from the refineries or terminals, to bringing it
safely past the border guards and navy vessels.
"You need someone to protect you," said a captain,
who specialises in smuggling. "You need influence;
otherwise you will be killed immediately."
The local smugglers’ main fear, he said, is being
stopped by British naval patrols, because they
cannot be bribed, while the Iranian coastguards and
the Iraqi navy are involved in the business.
When chased by Iraqi coast guards, the smugglers run
into Iranian waters, where Iraqi police cannot
follow.
On April 26 this year, two policemen were killed and
seven others were arrested when they came under fire
from Iranian coastguards while trying to apprehend
suspected oil smugglers at sea.
In Kurdistan, report IWPR correspondents, the
picture is stable but far from perfect. Geologists
say oil is gushing out the ground wherever they dig
and the relative peaceful environment means
production has soared.
But that has irked oil officials in the central
government in Baghdad, however, and the autonomous
region’s windfall is far from secure. It is
threatened by uncertainty surrounding a new national
law on Iraq’s oil reserves; and by pressure from
rival ethnic groups whose territories are not so
blessed with natural resources.
And they have to get the oil to market, which is
easier said than done, according to IWPR reporters
in Kirkuk. In the villages west of the northern
city, which the Kurds want to claim as their own,
tribesmen bomb the pipelines and steal the oil.
"The insurgents usually come at night and plant a
bomb to detonate the export pipeline," said Qais al-Mifraji,
a 34-year-old farmer in the village of al-Safra, 63
kilometres west of Kirkuk. "But if they want to
steal, they just break it and fill their tankers. No
one can stop them."
The riddled pipes partially explain why four years
after the US invasion, Iraq has not been able to
match its pre-war crude production level of 2.5
million barrels a day. In 2006, production averaged
2.1 million barrels per day, mostly from oil fields
near Basra.
Kirkuk now produces just 180,000 barrels a day. It
could produce at least 400,000 more a day which, at
current market prices, would net Iraq seven billion
dollars in revenue per year.
Over the second half of last year, one stretch of
pipeline connecting Kirkuk with the Turkish
Mediterranean port of Ceyhan - the main outlet for
Iraq's northern oil exports - pumped oil for only 43
days. The rest of the time, the pipeline lay idle,
leaking crude through dozens of holes drilled along
its 320-km run through the Iraqi desert.
Officials are coming up with new measures to protect
the pipelines but, because the people hired to
protect them are often from the same groups that
sabotage the pipes, and tribal bonds are often
stronger than national loyalty, the illegal drilling
is expected to continue.
Sheikh Ziyad Hasan, who formerly served as a
contractor protecting the pipelines, confirms that
people from the area sabotage the pipelines and
profit from the oil. Many locals, he said, lack the
motivation to prevent thefts.
"They believe that this oil serves the Americans and
the new government, and that it does not benefit the
people,” he said.
iwpr net
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