WASHINGTON — Defying optimistic Bush administration projections, Iraq’s hobbled oil industry might be unable to beat the production capacity of Saddam Hussein’s era until sometime next year — if then, according to industry analysts.
Iraq’s oilfields and pipelines have been targeted since last year’s U. S. invasion by bombings and sabotage that have restricted production, slowed exports and hindered reconstruction despite hundreds of millions of dollars set aside for the purpose, analysts say.
Meanwhile, Iraq is in the strange position for a nation with the world’s second-biggest oil reserves of having to import gasoline from its neighbor, Kuwait, because it lacks the refining capacity to meet domestic demand.
The continuing weakness of the oil industry seldom is highlighted, but it is a byproduct of the same insurgency that exacts a daily death toll among U.S. service personnel and Iraqis —
security workers as well as civilians — who are seen as cooperating with the U.S.-led coalition.
Iraqi officials have reported 250 guerrilla attacks on pipelines and other oil facilities since the invasion, costing the country billions of dollars in lost exports and causing dozens of deaths and injuries. Although attacks have subsided in recent weeks, late last week saboteurs bombed two pipelines transporting crude oil to a refinery in Baghdad, the capital.
As a result, Iraq has been unable either to profit from or contribute to easing the tight worldwide oil market that has pushed prices above $50 a barrel, and it will continue to need American aid to rebuild its economy and ease a high unemployment rate.
Before and during the 2003 invasion, Pentagon officials cited Iraq’s underground oil wealth to justify their claims that postwar Iraq would not be a drain on U.S. tax dollars.
U.S. Defense Secretary Donald Rumsfeld’s deputy, Paul Wolfowitz, told Congress a week after the March 2003 invasion, “We are dealing with a country that can really finance its own reconstruction and relatively soon.”
And toward the end of major combat, Vice President Dick Cheney told newspaper editors that “hopefully” Iraq would be producing 2.5 million to 3 million barrels a day by the end of 2003. Iraqi exiles suggested this figure could double by 2010.
The postwar insurgency forced Washington, D.C., to scale back its projections. In February, then-Director of Central Intelligence George J. Tenet said Iraq was “on track” to produce close to 3 million barrels of oil daily by the end of this year. Now U.S. officials say this goal won’t be met until sometime next year.
Iraq produces about 2.3 million barrels a day, according to the U.S. Energy Information Administration, which put the country’s pre-war capacity at 2.8 million to 3 million barrels a day.
The U.S. Army, which is financing two major repair contracts totaling more than $800 million, insists that Iraq is now matching the production levels Saddam’s regime reached in the period just before the war.
Precise measurements are hard to come by, however. “The lack of sufficient metering means that production estimates from Iraq are not true measures of production, but educated guesses,” the EIA says.
Just hitting Iraq’s pre-war production is hardly a sign of a robust energy industry, analysts point out, given the destruction and decline from two major wars and 12 years of sanctions.
Reporting to the United Nations in 2000, the Dutch company Saybolt International found Iraq’s industry to be in “lamentable” shape. A combination of spare-parts shortages, overproduction from existing wells, absence of new technology and water encroachment caused a steady decline in production capacity, according to congressional testimony last year by Robert E. Ebel, energy program chairman at the Center for Strategic and International Studies.
Now, “everything — exports, domestic markets consumption and production — depends on security,” said Leila Benali, a Middle East analyst for Cambridge Energy Research Associates. She doubts that Tenet’s goal of 3 million barrels a day can be met even next year.
Smuggling, in addition to violence, might be limiting Iraq’s output, said Mike Amitay, director of the Washington Kurdish Institute, a nonprofit research and aid organization. Local officials and bandits are tapping into oil pipelines, he said, exercising a form of “fuel patronage” that is winked at by Iraqi authorities.
