IRAQ OIL TROUBLE, 2

Billions in Oil Missing in Iraq, U.S. Study Says
James Glanz, May 12, 2007 (NY Times)

WHO
Department of Energy’s Energy Information Adminsitration (EIA), United States Government Accountability Office (GAO)

WHAT
A draft of the GAO’s report detailing missing Iraqi oil, assumed the result of theft, smuggling and official corruption. Alternative explanations are Saddam-era falsification of Iraqi production or engineering mistakes regarding water infiltration of oil in southern Iraq.

WHEN
To be released.

WHERE
Drafted for the US, about Iraq.

WHY
- The report is based on EIA statistics.
- Iraq produces 2 million barrels/day. The stated US goal is to bring production up to 3 million barrels/day. The volume of missing oil is estimated to be 100,000 to 300,000 barrels per day, valued at $5 to $15 million ($50/barrel).
- Smuggling of gasoline and kerosene by Sunni insurgents is widely suspected. Shi’a militia in the south are suspected of smuggling crude oil to independent refineries in China, the Caribbean and small European countries. A suspected Syrian pipeline could carry the suspected lost volume to Jordan and Turkey.
- Modern metering equipment is being installed through Shell Oil.
- The US has spent $5.1 billion (of $7.4 billion set aside), and Iraq $3.8 billion, on rebuilding the oil and electricity infrastructure, which is falling further and further behind its performance goals. Average 2006 output of Iraq’s national electricity grid: 4,300 megawatts (about the same as before the 2003 invasion) but fell to 3,800 megawatts by February 2007(only 5.1 hours/day in Baghdad, 8.6 hours/day nationally). The goal: 6,000 megawatts.
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QUOTES
- Philip K. Verleger Jr., economist/oil expert: “That’s a staggering amount of oil to lose every month…But given everything else that’s been written about Iraq, it’s not a surprise.”
- Erik Kreil, EIA: “Either they’re producing less, or they’re producing what they say and the difference is completely unaccounted for in any of the places we think it should go…Either it’s overly optimistic, or it’s unaccounted for.”
- John Pike, director of GlobalSecurity.org, regarding the possibility of bureaucratic inaccuracy: “It would be surprising if it was not the case…How could the oil sector be the exception?”