Monday, January 02, 2006

Too bad for them Ali Rodriguez already has a job 

No sooner than I post on Iraq's energy problems thinking they are about as bad as they can get they screw me up by getting even worse:

Iraq's oil exports hit their lowest level since the war, according to figures released on Monday, heightening a sense of crisis as fuel supplies grow scarce and political leaders struggle to form a government.

Iraq exported 1.1 million barrels per day (bpd) of oil in December, a senior official said -- less than any month since exports resumed in mid-2003 after the U.S. invasion and about half the level seen during sanctions under Saddam Hussein.

Sabotage is damaging plants and blocking investment, keeping exports at a fraction of targets officials say should be met if Iraq's vast reserves are to provide its people with the prosperity that might draw the sting of civil conflict.

The oil official was speaking after Oil Minister Ibrahim Bahr al-Uloum announced his resignation in opposition to fuel price rises imposed last month as part of an aid deal with the International Monetary Fund that demands big cuts in subsidies.


If the new government is to revitalize the economy, economists say, it must harness Iraq's vast proven oil preserves -- the third largest in the world.

But successive governments have struggled to do so since the fall of Saddam, and the latest export figures suggest things are getting worse.

December's 1.1 million bpd was down from 1.2 million the previous month, said Shamkhi Faraj, Director General of Economics and Oil Marketing, who oversees Iraq's oil exports.

That compares with a post-war peak of around 1.8 million bpd in early 2005 and is well below exports under Saddam, when Iraq regularly exported 1.8-2.5 million bpd.

With oil production dropping I'm sure they are getting desperate to find someone who can turn the situation around. Ali Rodriguez, who as the then president of PDVSA, got the sabotaged Venezuelan production back up from zero to over 3 million barrels a day in a matter of months would seem the ideal candidate. But he already has a job as the Venezuelan Foriegn Minister and given his life long anti-imperialist stance I seriously doubt any amount of money could persuade him to aid the U.S. imperial adventure in Iraq.

On another note, I briefly mentioned this in a post a few days ago but it is really stunning to see Iraq getting jerked around by the IMF. The U.S. is in a hugely important war their that they very much risk losing. You would think they would want to do absolutely everything they could to avoid having your average Iraqi get any more pissed off than they already are. Yet they allow the IMF to ram draconian gas price increases down the Iraqi's throats. You really have to wonder what gives. After all, the U.S. could easliy pay the few billion dollars that is being saved by those increases out of its own treasury. So why are they allowing something like this to be done by the IMF which puts in jeapordy their whole project? I don't know. Figuring out how these neo-cons minds work is not something that comes easily to me. But I suspect that the IMF is such a key organization when it comes to imposing their economic will on countries all around the world that they don't want to risk doing anything to undermine its authority even if it makes the situation in Iraq worse.


A poster referenced this link which provides additional and highly interesting information on this topic. It starts out with some of the information that we already knew:

Two-and-a-half years after the US invasion of Iraq, the country's oil industry is still in disarray. An official of the Oil Ministry in Baghdad told ISN Security Watch, on condition of anonymity: “We do not know the exact quantity of oil we are exporting, we do not exactly know the prices we are selling it for, and we do not know where the oil revenue is going to.”

According to Baghdad press reports, export revenues are still not sufficient to cover the Iraqi state budget. The government is forced to take loans from international banks to cover its running expenses.

Although the US invested around US$1.3 billion in the rehabilitation of oil plants damaged by lack of maintenance during 13 years of UN sanctions, the daily output of approximately 1.3 million barrels remains far below Iraq’s pre-war production level of 2.5 million barrels.

The production goal for December 2004 of 3 million barrels per day, set by the US and the Iraqi government, cannot be reached in the near future, according to experts within the Iraqi Oil Ministry who talked to ISN Security Watch.

The Iraqi government looks set to lose US$8 billion a year in potential oil revenue, due to the poor current state of the oil industry.

But then its gets into some analysis of why the Iraqi oil industry is doing so poorly:

One of the reasons for the decline of the industry is a lack of progress in the reconstruction effort, due to serious managerial deficiencies.

For instance Halliburton subsidiary Kellogg Brown & Root (KBR) was awarded a US$225 million contract, without a tender, to rehabilitate the Qarmat Ali Water Plant in southern Iraq, according to a report in the Los Angeles Times.

The plant is used to pump water into the ground in order to build pressure that brings the oil to the surface.

However, the contract did not include the repair of the pipelines carrying the water to the oilfields. When the water was pumped into the ground, the old pipes burst, spilling large amounts of water into the desert. In addition, farmers often tap the water pipes in order to irrigate their fields.

That KBR was chosen due to political connections rather than competance probably comes as no surprise to anyone. But the next scapegoat turns out to be quite ammusing:

US officials apportion some of the blame for the delay in rehabilitating the oil industry to their own Army Corps of Engineers. During the first months after the war, the Corps was given responsibility for the first phase of repairs to oil pumps and pipelines.

Members of the Corps lacked experience in handling the complicated, outdated technology that was imported by Iraq from the former Soviet Union. A member of the Corps later told a Congress hearing: "The Corps of Engineers had absolutely no abilities as far as oil production is concerned."

So the Corps of Engineers isn't too good when it comes to repairing oil fields? Who'd have thought? Especially given the superlative job they did in making sure the New Orleans levees held up just fine. Seriously though, they clearly aren't too good at flood control and now it turns out they don't know anything about oil. One has to start to wonder what exactly they ARE good at.

Then there is just good old fashioned theft:

Analysts say that the third reason for the decline in Iraqi oil production is widespread corruption within the Iraqi Oil Ministry. In March of this year, the ministry sacked 450 employees for the illegal sale of oil and oil products.

In the same month, the Oil Ministry’s Director General for Drilling Mohammed al-Abudi said that “administrative corruption” was taking many forms. “The robberies and thefts are taking place on a daily basis on all levels […] committed by low-level government employees and by high officials in leadership positions of the Iraqi state,” he added

Instances of fraud include the manipulation of measuring instruments at the end of pipelines and the provision of inaccurate data on tanker oil loads. The supervision of tanker loads, which is usually done through the checking of insurance papers, has ceased in many cases.

Oil industry experts say that corruption has not ended with the sacking of the 450 ministry employees.

Often, tribal chiefs and criminal gangs tap the pipelines, depriving the government of significant oil revenue. Trucks carrying gasoline to gas stations are robbed by gangsters, while gunmen frequently attack gasoline stations, even in town centers.

The oil acquired in this way is sold on the black market or transported to neighboring countries like Iran.

Responding to questions from ISN Security Watch, Oil Ministry officials in Baghdad predicted that reconstruction efforts and the fight against corruption will not produce significant results in coming years. Rather, they expect a continuous stagnation, and even a further downturn in production.

What's interesting is that some of the theft involves oil tanker shipments. That would seem to indicate that some people outside of Iraq must be involved in the theft. Hmmm. Do you think some major oil companies or even, heaven forbid, people in the U.S. government could be involved? Wouldn't it be nice to have an answer to that someday.

But all this does show why the U.S. government and some of its lackeys in Iraq are determined to fight on. They want to be able to steal as much as possible before all is lost.


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