Tuesday, February 21, 2006

The death spiral of Iraqi oil production 

As I have pointed out on numerous occassions one of the main reasons for the U.S. invasion of Iraq was to get control of its oil, ramp up production, break OPEC, and get oil prices to tank. Unfortunately, things haven't quite worked out as Bush and Co. planned. Iraqi oil production has seldom exceeded what it was before the U.S. invasion and for the last two years it has been steadly dropping, now at an accelerated rate. A lot of the decline results from insurgent attacks, corruption, administrative incompetance, and, according to the Wall Street Journal, another rather interesting reason. Here is the article from todays Wall Street Journal:

Fresh Woes Hinder Iraqi Oil Output

Iraqi oil production has fallen sharply in recent months amid a series of buereaucratic and political tussles in Baghdad, raising questions about the country's ability to keep its petroleum industry from spiraling further into disrepair.

For more than two years, insurgents targetting pipelines and oil workers have stymied the recovery of Iraq's oil industry. Slow funding from Washington, poor project planning and widespread smuggling and corruption also have hindered the effort.

Iraqi oil officials are now complaining about new problems,including political infighting at the oil ministry and escalating conflicts between officials in Baghdad and those in Iraq's main oil-producing regions. Essential equipment has been held up as Iraqi and U.S. officials butt heads over whether it can safely brought into the country.

Oil production was shut down during the U.S. invasion in March 2003. By early 2004 Iraq recovered to briefly approach pre-invasion production levels, some 2.5 million barrels a day. As the insurgency heated up, those gains faded. Still, Iraq managed to pump an average of 1.8 million to two million barrels a day through much of 2004 and 2005, meeting more than 2% of global demand.

But late last year, output started trailing off. In the last three months of 2005, Iraq produced 1.66 million barrels a day, down from 1.96 million a day in the previous quarter, according to the International Energy Agency, the Paris energy watchdog. In January, production sank to 1.5 million barrels a day.


Moreover, output at individual wells tend to drop over time, requiring engineers to constantly drill new wells or stimulate older ones. A senior Iraqi oil official said the ministry has been trying to persuade American officials to allow the import of perforation charges into Iraq. The devices are explosives used to puncture the walls of a well and allow oil to flow to the surface, but U.S. trade rules have curtailed shipments to several countries because of fears they could be used as weapons.

As if its not bad enough that Iraqi production is in steady decline and they apparently haven't been able to hire Ali Rodriguez away from Venezuela to get it re-started, but they can't even import the things they need to ramp up production for fear they will be used to make the I.E.D.s that keep blowing up G.I.s!!!!! I guess you just can't trust those darn Iraqis.


This page is powered by Blogger. Isn't yours?