Eric Watkins
Senior Correspondent
LOS ANGELES, Mar. 7 -- Sabotage, mismanagement, and administrative corruption are the main problems preventing Iraq from stepping up its oil production, according to a senior Iraqi official.
Muhammad al-Abudi, director-general of drilling for the Iraqi Oil Ministry, said the country's oil crisis is very real but not insoluble. His remarks came in an interview with al-Bayyinah, a weekly newspaper of the Hizballah Movement in Iraq, an offspring of the Shiite Supreme Council for Islamic Revolution in Iraq.
Asked how long it would take to make visible improvements in Iraq's oil industry and general economy, Al-Abudi gave a downbeat assessment. "I think it will take a very long time, which can be divided into phases," he said. "We hope the next 5 years will witness noticeable developments."
Al-Abudi said the immediate crisis derives from several factors. "Among them is the security factor, i.e. the destruction of the buildings, tanks, and pipelines. As for the buildings, they are not equipped to produce sufficient quantities because of administrative corruption and also because of the management."
The solution to the problem, he said, "lies basically in the treatment of the security situation, which is the government's and the occupation forces' duty. The Ministry of Oil has formed a general directorate to protect the oil buildings. But I think that is not right. We are the Ministry of Oil, not the Ministry of Defense."
Corruption
Al-Abudi also suggested that corruption is preventing progress regarding security. "There is a lot of money being given to certain people," he said. "But until now no remarkable development has taken place in the security situation."
Following the security problem, he said, "we have to treat administrative corruption, which is roaming wildly without any control, leaving behind its back people's rights and values."
He said administrative corruption has yet to be dealt with because "none of the responsible agencies undertook any measures toward that end." Al-Abudi did not identify which agencies have responsibility for oversight of the Oil Ministry.
"The robberies and thefts that are taking place on a daily basis and on all levels, which affect the Iraqi economy, are committed by low-level government employees and also by high officials in leadership positions in the Iraqi state," he said.
Al-Abudi acknowledged technical problems in the country's refining industry, saying "that important sector has been exposed to partial damage," and "the technical and administrative sides delayed the process of production." He said refineries should be privatized.
Drilling companies under the Oil Ministry "work according to whims," he said. "Their work is not based on any practical basis, as is known and practiced by world producing companies."
Al-Abudi noted a decrease in production in the south and said the reason is faulty production management rather than depletion. He said administrative problems have shut engineers out of drilling and production decisions.
"Administrative corruption takes on so many forms, starting with disrespecting time and ending with favoritism and dishonesty," he said. "The interim government stood totally helpless against administrative corruption. Real talents were pushed to the shadows."
Al-Abudi said Iraq's oil development is not merely a matter of finances but is connected to a general rise in development and to building the infrastructure of other service institutions, which in turn serve the oil industry.
"If the infrastructure is not appropriate, it will be very hard to develop the oil and gas sectors," he told the paper. "We need streets, buildings, ports, pipelines, and transportation laws, i.e., all the facilities that will help foreign and local investors."
He stressed that "foreign investments are an important aspect, which need a formulation of laws, which will facilitate investments and protect foreign investors." But so far, he said, "through my work at the Ministry of Oil, I can say that there is no department that specializes in dealing with Iraqi or foreign investors."
Although the government has received many inquiries about joint ventures in Iraq, he said, "All those private foreign, Arab, and Iraqi companies failed in achieving their aim. The reason behind that is the management, which moves around in closed circles on the pretext that there are no laws that allow for this."
He also blamed what he called "resistance coming from several directions, from committees formed especially to hinder developments in that respect. Maybe there are political dimensions, which aim to hinder the development of Iraq as a whole."
Production prospects
Al-Abudi agreed with earlier statements by ministry officials that Iraq could boost its production to 6 million b/d but said a more-deliberate increase to 3.5 million b/d is preferable.
"If we want to produce 6 million b/d now and in the nearest time possible, then we have to facilitate matters for foreign and Iraqi investments," he said. "Those investors in turn help develop the oil sector in quick, deliberate steps, especially the world oil companies."
Meanwhile, he agreed that higher oil production rates would help the country, provided that "the return be in honest hands. One American company informed me that they were going to buy crude oil, signing a contract for $26/bbl. At the time the price was $54/bbl."
Up to now, he said, Iraq's oil and natural gas reserves have not been properly exploited.
"If we take, for example, the exploitation of the wells, we find that there are more than 300 wells west of al-Qirna. They have been left behind for more than 20 years for various technical reasons, such as our incapability to export that oil or the size of our ports...etc. These are all unacceptable reasons."
He also said that "the inappropriate exploitation of the oil wells on the Kuwaiti and Iranian borders is the reason behind the loss of millions of dollars daily."
Al-Abudi hinted at further corruption in connection with "what happened on the borders of the Kingdom of Saudi Arabia, Syria, and Jordan and northern Iraq in the [Kurdish] Sulaymania governorate, granting contracts to foreign companies without the government's or the ministry's consent and approval."
He expressed regret for a lack of "any fixed or deliberate strategies or economic planning, aiming at a deliberate production supporting the Iraqi economy."
Natural gas, he said, "is not exploited at all, but rather is wasted on a daily basis. Its use and exploitation are minimal. As for pumping and selling it to Kuwait, it was a real disgrace selling it for such low prices, as if they were giving us alms, although we need that gas for local consumption and for electricity."
He explained that "we now live in the age of gas, as the demand for it is constantly growing. But in Iraq, we burn gas or do not exploit it properly. We don't even have an institution that is responsible for gas affairs. We spend millions of dollars to import petroleum derivatives for electricity purposes, for example, although with all these sums we could build pipeline networks to transport gas and to develop it."
