Foreign companies stay away from Iraq
29-04-08
Iraq has failed to attract foreign companies due to violence and around
70 % of the oil pipeline network remained idle due to sabotage and lack of
repairs last year, the Oil Ministry said.
Inspector General Abdul-Karim Elaibi, in an annual report, blamed frequent
sabotage and lack of maintenance for a reduction to around 35 % of the
carrying capacity of the 7,500 km pipeline network. The report also said the
country was also facing a decline in the output of refineries.
Since 2003, US Congress has approved $ 46 bn to rebuild Iraq's devastated
infrastructure, including oil production plants and pipelines. The
expectation after the US invasion had been it would take up to 18 months for
Iraq to assume responsibility for reconstruction efforts, using its oil
revenues.
But the Iraqi government has failed to lure international companies or even
local companies to improve the ailing industry despite repeatedly launching
tenders, sometimes more than 10 times for one project, Elaibi said.
No one "showed interest due to the security situation," the inspector said
in his 152-page report.
"The difficult security situation has affected the oil workers and their
performance," and had negative effects on production levels and development
plans, Elaibi said. In the latest act of sabotage, a bomb struck a pipeline
carrying oil to refineries in southern Iraq, wounding eight oil guards and
disrupting the flow of crude. Oil pipelines have frequently been targeted by
insurgents or saboteurs trying to pilfer oil in the war-torn country.
Concern about the situation led Grand Ayatollah Mohammed Hussein Fadlallah,
an Iraqi-born Shiite Muslim cleric in Lebanon, to issue a religious edict,
or fatwa, banning attacks on public utilities in Iraq -- mainly the oil
industry -- on March 31. Sunni insurgents are also blamed for sabotage,
especially in the north of the country.
Iraq sits on the world's third-largest oil reserves, totalling more than 115
bn barrels. But the industry lacks modern equipment and training after
decades of UN sanctions, war and Saddam Hussein's ruinous rule. The country
has announced plans to increase its oil output to 3 mm bpd by the end of
2008 by bringing in foreign companies, and is targeting production of 4.5 mm
bpd by end of 2013.
Meanwhile, Elaibi's report cited corruption and bureaucracy among other
barriers before developing the country's oil industry. The report said
workers and employees at some oil installations were in "collaboration" with
militiamen to commit "organized theft operations either by tankers or
jerrycans in daylight."
Earlier this month, the Iraqi government announced plans to crack down on
militiamen controlling gasoline stations and oil distribution in a new move
to curb the resources of armed groups. It is widely believed gasoline
stations and distribution centres, especially in eastern Baghdad and some
Iraqi southern provinces, are covertly controlled by Shiite militiamen
dominated by radical cleric Muqtada al-Sadr's Mahdi Army. They in turn make
large sums of money by selling smuggled gasoline and kerosene on the black
market.
Source: www.rigzone.com / Dow Jones Newswires
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