Iraqi oil awaits peace

June 2, 2003
Removal of 13-year-old sanctions by the United Nations Security Council on May 22 represents an important step for beleaguered Iraq. But it's only one advance among many...

Removal of 13-year-old sanctions by the United Nations Security Council on May 22 represents an important step for beleaguered Iraq. But it's only one advance among many yet to be made toward social and economic order.

The UN's decision probably allows 9 million bbl of crude stored at Ceyhan, Turkey, to begin flowing into tankers. What's more important, it clarifies interim governing powers of the US, UK, and other partners in the war to depose former Iraqi President Saddam Hussein. It also provides for a role in the provisional authority by a UN special representative, a move that will help restore international comity.

But a major hurdle remains. Although US President George W. Bush officially declared the end of combat operations on May 1, fighting in Iraq hasn't ceased. Expectations about sustained oil supply from Iraq must be tempered by an appreciation for the deadly hazards that linger.

Attacks continue

Draining storage isn't the same as continuously producing oil for export. Iraq is a long way from sustaining production of 1.5 million b/d, as recently predicted for mid-June by Thamir Ghadhban, the new Iraqi oil administrator. Iraqi oil reservoirs can flow at that aggregate rate and more, of course. But production equipment and pipelines are in wretched condition. And fixing them isn't easy with bullets still flying.

Combat operations may be over, but warfare is not. Coalition soldiers continue to come under attack and to be killed. Looting and vandalism are chronic. In some places, surface equipment, including gas-oil separators and pipelines, has sustained more damage since combat officially ceased than before. Most of the equipment was decrepit and leaking even before looters and vandals struck.

The UN's lifting of sanctions will accommodate delivery of desperately needed equipment and supplies. But it can't ease lingering dangers in the oil fields and along pipeline routes. Workers in Iraq don't move about without military guards.

The damage is so widespread and attacks so frequent that many US officials now see the problem as guerrilla retaliation by Saddam loyalists coordinated by a desperation plan of the ousted leader. Deputy Defense Sec. Paul Wolfowitz recently told Congress that "several tens of thousands" of Iraqi fighters remain armed, organized, and threatening.

Impatient lawmakers from both US political parties are complaining about the messiness. Their frustration is understandable, but their expectations are unrealistic. Warnings have long been ample that managing peace would be more difficult in post-Saddam Iraq than fighting the war. What needs to be understood is that peace didn't begin when that giant statue of Saddam famously toppled. Until it does, oil flow from Iraq will have limits.

Before the war, Iraq's crucial export pipeline to Ceyhan operated at half its design capacity because of corrosion and damage to pump stations. The reversible Strategic Pipeline between the northern and southern producing areas also leaks and can't sustain design pressure. Pump stations along both systems need to be repaired or rebuilt.

Before the recent hostilities a 700,000 b/d pipeline to Syria was smuggling as much as 400,000 b/d out of Iraq but is old and rusty and now closed. The export pipeline in perhaps best repair is the 1.6 million b/d pipeline through Saudi Arabia, closed since the Iraqi attack on Kuwait in 1990. Iraqi refineries, too, are in poor shape despite the reported ingenuity with which their poorly supplied and cash-starved operators have kept them running.

Iraq's two main offshore terminals in the Persian Gulf survived the recent war but need maintenance. The Mina al-Bakr terminal handled less than design capacity of 1.6 million b/d of southern-area production before the war. The nearby Khor al-Amaya terminal, destroyed in earlier wars, was resuming operation after reconstruction.

Priority aim

Craving revenue, the interim authority might hope to squeeze 1.5 million b/d through this creaky infrastructure—perhaps more on occasion. But maintaining that throughput will be difficult against the already well-advanced forces of corrosion and imposed neglect and the new threats of sabotage and guerrilla attacks.

Iraq can't export oil at rates the country needs without wholesale rehabilitation of surface facilities, no matter what its lavishly endowed reservoirs can do. The work can't happen until the war really ends. That must remain the world's priority aim for Iraq.