Baghdad (Platts)--17May2007

The Iraqi oil ministry has rejected a US government report which
estimates that Iraq could be losing up to 30% of its refined products output
as a result of smuggling and corruption.

     "The report of the [US Government Accountability Office] is incorrect and
holds many fallacies," oil ministry spokesman Assim Jihad was quoted by the
government-run newspaper Al-Sabah as saying Thursday.

     "All Iraq's southern exporting ports are observed by US forces and no
tanker may pass without a contract signed by the ministry," Jihad said, adding
that all exports are through the southern ports and that there is no pipeline
to the Shatt al-Arab waterway that smugglers could use.

     The report, which is available on the GAO's website, also said that
Iraq's official crude production is overstated by between 100,000 b/d and
300,000 b/d.

     The Iraqi government and the US State Department are trying hard to
achieve tangible progress in the country by raising production levels, which
have remained well below the 3 million b/d target.