Bob Tippee
Iraq could be selling oil already if not for politics.
Storage at the terminal at Ceyhan, Turkey, which receives crude by pipeline from Kirkuk and nearby fields in northern Iraq, supplemented by oil from southern fields, holds an estimated 9 million bbl of oil.
But the last tanker to load Iraqi oil there departed Mar. 20. Buyers won't lift oil of uncertain title.
As of this writing, on Apr. 23, nobody knows who owns Iraqi oil.
Meanwhile, hungry Iraqis depend for food and other basic supplies on foreigners they dislike who don't want to be in their country.
Crude oil has begun to flow at diminished rates from southern fields. The 100,000 b/cd Daura refinery outside Baghdad has restarted at less than half of capacity. The 140,000 b/cd Basra refinery is waiting on parts.
Iraq's high-potential but dilapidated oil industry thus chugs and wheezes its way back onstream, war-damaged in many places and generally deprived of replacement equipment and modern technology. Fuel begins to flow locally.
But nothing is being sold outside Iraq, which therefore receives none of the revenue it desperately needs. And the reason is that nobody knows who owns the oil.
So it will go in Iraq for a while.
Until an Iraqi regime has things under reasonable control in Baghdad and seems likely to endure, little will happen.
With help from outside, Iraqis can restore production to perhaps 2.5 million b/d and fix transport systems enough to export most of it.
The resulting cash flow might fund basic humanitarian needs, oil-field maintenance, and modest reconstruction.
But to do more—including to raise production capacity from vast reserves already discovered—will require investment from abroad.
The decision to do more or not depends on Iraqis. Sooner or later, a majority of them will discover that life improves as a function of development and decide to get busy.
To attract the needed capital, however, they'll need a stable regime in Baghdad—an entity nowhere yet in sight—to answer questions as fundamental as the one now holding back exports and foreclosing revenue streams: Who owns the oil?
(Online Apr. 25, 2003; author's e-mail: [email protected])