Report: Iraq's oil industry not attracting foreign companies
Inspector General Abdul-Karim Elaibi, in an annual report, blamed frequent sabotage and a lack of maintenance for a reduction to around 35 percent of the capacity of the 4,600-mile pipeline network.
Since 2003, the U.S. Congress has approved $46 billion to rebuild Iraq's devastated infrastructure, including oil production plants and pipelines. The expectation after the U.S. invasion had been that 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 contractors to improve the ailing industry, despite repeatedly seeking bids — 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 hurt production levels and development plans, Elaibi said.
But on Tuesday, Chief Executive Paolo Scaroni of Italian oil and natural gas company Eni SpA, said that the company was planning to bid for a gas project in southern Iraq, Dow Jones Newswires reported.
The project will include revamping an existing liquefied natural gas plant that isn't currently working, Scaroni said at a news conference in Rome. He also confirmed the company's plans to bid for Iraqi oil contracts.
Iraq sits on the world's third-largest oil reserves, totaling more than 115 billion barrels. It wants to raise its oil output from 2.4 million barrel now to 3 million barrels a day by the end of 2008 by bringing in foreign companies, and is targeting production of 4.5 million barrels a day by the end of 2013.
But the industry lacks modern equipment and training after decades of U.N. sanctions, war and Saddam Hussein's ruinous rule.
Pipelines have frequently been targeted by insurgents or saboteurs trying to pilfer oil. In the latest act of sabotage, a bomb struck a pipeline carrying oil to refineries in southern Iraq on Friday, wounding eight oil guards and disrupting the flow of crude.
Concern about the frequent violence 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.
Elaibi's report also cited corruption among the barriers to developing Iraq's oil industry.
He said workers and employees at some oil installations were in "collaboration" with militiamen to commit "organized theft operations, either by tankers or jerrycans."
Shiite militiamen dominated by radical cleric Muqtada al-Sadr's Mahdi Army are widely believed to covertly control gas stations and distribution centers, especially in eastern Baghdad and some southern provinces. They make large sums of money by selling smuggled gas and kerosene on the black market.
Yeah that, and the Saudis and OPEC most likely have them under threat of blacklisting. The last thing they want is free market contracts working out in Iraq. I mean give me a break, the longer Iraq is off line, the more money they make, and the more control they have over the US economy, and the less of a threat of the rouge Shi'a regime gaining power and influence in the region.