Iraq's oil production falls short of goals

Despite years of rebuilding, petroleum production continues to fall short of targets, due to insurgency vandalism, poor field management, and corruption.

from the May 7, 2007 edition

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WASHINGTON - Here's a bit of good news about Iraq and oil: The Al Basrah Oil Terminal finally can work at full speed. This giant H-shaped tanker loading platform, located in the Persian Gulf off Iraq's southeastern coast, is one of the country's most important pieces of economic infrastructure. Thanks to US-funded reconstruction, all four of its berths now are in operation for the first time in many years.

Now the bad news: There's not much else good about Iraqi oil to report. Despite years of rebuilding, petroleum production continues to fall short of targets, due to insurgency vandalism, poor field management, and corruption. Proposed Iraqi legislation on oil revenue distribution – a measure deemed crucial by the White House – remains the subject of bitter sectarian debate.

Four years after the fall of Saddam Hussein, the story of Iraqi petroleum remains one of great promises unfulfilled. Iraqi oil did not pay for the first round of postwar national reconstruction, as Bush administration officials had predicted. Nor has the industry come close to matching its decades-old pumping record of 3.7 billion barrels a day – a level at which Iraq might become a vital source of oil for thirsty world markets.

"I think they are years away from being a reliable 4-million-barrel-a-day producer," says Frank Verrastro, director and senior fellow in the energy program of the Center for Strategic and International Studies (CSIS).

In many ways the Al Basrah Oil Terminal mirrors the promise and problems of Iraq's oil sector as a whole.

Built in 1974, Al Basrah has suffered from war damage and neglect for decades. After the ouster of Mr. Hussein in 2003, US inspectors found the facility capable of only limited operations, due to the dilapidated condition of crude oil loading arms and missing and damaged auxiliary equipment. Rebuilding began in early 2004.

This spring, the US Special Inspector General (SIGIR) for Iraq dispatched a team to assess the oil terminal's rebuilding. They judged it a qualified success.

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