Oil Wars

Today the New York Times reported on the massive looting of the Iraqi oil industry. According to a U.S. government report anywhere between 2 and 5 billion dollars worth of Iraqi oil is unaccounted for.

Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.

Using an average of $50 a barrel, the report said the discrepancy was valued at $5 million to $15 million daily.

The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.

This is on top of billions of dollars worth of refined products that go missing each year:

Iraqi and American officials have previously said that smuggling of refined products like gasoline and kerosene is probably costing Iraq billions of dollars a year in lost revenues. The smuggling of those products is particularly feared because officials believe that a large fraction of the proceeds go to insurgent groups.

Now, given that oil production numbers can be disputed some times I decided to go to the source and see what the Iraq State Oil Company had to say about this. Thing is, I couldn’t even find any web site for them. Actually, the Iraqi oil company is split by geographic region such that there is a “Northern Oil Company” and a “Southern Oil Company”. But I couldn’t find them either.

Next I tried looking up the Iraq Oil Ministry. Couldn’t find it either. I guess I should think of an award to give any reader who manages to find any official Iraqi oil industry site.

Of course, Venezuelans who want to learn about the status of their oil industry have no such problem. They can find comprehensive financial statements here. Their State oil company, PDVSA, has a very comprehensive and informative web site here. And they file audited financial statements filed with the U.S. Securities & Exchange Commission which are found here. Because Venezuela's oil industry is so transparent Venezuelans can get all sorts of data on how much oil their country has, how much it produces, how much it refines, who it sells it to, how much income it gets from those sales, how much it invests and on and on. Iraqis who want to know what is going on with their oil industry can only look on in envy.

There is one more interesting twist to this:

Mr. Ebel said the lack of modern metering equipment, or measuring devices, at Iraq’s wellheads made it especially difficult to track smuggling there. The State Department official agreed that there were no meters at the wellheads, but said that Iraq’s Oil Ministry had signed a contract with Shell Oil to study the possibility of putting in the meters.

The official added that an American-financed project to install meters on Iraq’s main oil platform in the Persian Gulf was scheduled to be completed this month.

So they don’t have meters on the well heads to measure how much oil is being produced! Almost makes it seem that the old PDVSA managers that Chavez fired might be running the Iraqi industry. When the old PDVSA managers came to power in the early 1990s they took two measure to make it impossible for the government to track what they they were doing – they had Venezuelan tax authority auditors thrown out of PDVSA headquarters and they had the oil flow meters removed from the well heads.

Fortunately for Venezuelans those managers were fired, those decisions to reverse transparency reversed, and the Venezuelan government once again has full control over its oil industry. Iraqis can only wonder when they will be so lucky. Apparently having the United States invade and take over your oil industry isn’t all its cracked up to be.
|