Even as they hailed the lifting of sanctions against Iraq, US officials in that country again have underscored the need to improve security in an effort to ramp up production of crude oil for domestic consumption and exports.
"Lifting (United Nations) sanctions is a vital step in helping the Iraqi people restore a normal life," said Ambassador L. Paul Bremer III, chief civilian administrator in Iraq, adding, "Crude oil sales will be a key source of reconstruction funds for Iraq."
Production challenges
But getting production up to the level needed will require efforts in a number of different areas, not the least of which are repairs to the basic infrastructure that has been neglected for the better part of 30 years under the regime of former Iraqi President Saddam Hussein.
Philip Carroll, the coalition's senior oil ministry advisor, detailed the challenges as "increasing security at its facilities, establishing geographically dispersed communications, repairing recent damage, and upgrading facilities impaired by the regime's long-neglected maintenance."
Thamir Ghadhban, chief executive of Iraq's interim oil industry management team, told reporters May 24, "There is extensive damage due to looting at several key installations and fields."
At one point, the oil ministry had hoped to restore production to 1.5 million b/d by early June. The target has been pushed back by several weeks, and Ghadhban said looting is one of the reasons.
While coalition officials say there are not enough soldiers to guard every well site, export terminal, refinery, natural gas plant, and pipeline route, they have nonetheless begun training of the country's oil police force.
About 450 Southern Oil Co. police have completed the training as of mid-May, and more classes were scheduled for later last month. Similar sessions are being held in Iraq's northern oil fields, where ethnic Kurds are being recruited to join the Northern Oil Co.'s security force.
Armed forces dissolved
In a more extensive effort to reduce the potential for continued conflict in Iraq, which has hampered efforts to increase the country's oil production, Bremer during mid-May dissolved the Iraqi Armed Forces, including the Ministry of Defense, the Ministry of Information, and other specified security institutions.
That announcement followed the De-Baathification order issued by Bremer on May 16, which requires the dismissal of members from civil service who were officials of the Baath Party, which formerly ruled the country.
More controversially, however, the US administration also has ordered all Iraqis to disarm by June 14, with the exception of the peshmerga, a Kurdish fighting force that helped the US during the war. Viewed as key allies in the war, the peshmerga would be permitted to keep their weapons in certain northern regions.
That decision, however, has piqued the ire of the largest Shiite party in Iraq. That party has refused to disarm its own 25,000-strong militia. Indeed, relations between the Supreme Council for the Islamic Revolution in Iraq (SCIRI) and US administrators in Baghdad were reported to be at breaking point May 24 after the group rejected moves to force its Badr Brigade to disarm.
Some American officials had regarded Abdul Aziz Al Hakim, SCIRI's representative in the interim government, as their best hope of forging a relationship with the Shiite community in Iraq. But delegates described furious exchanges between Gen. David McKiernan, the commander of land forces in Iraq, and SCIRI leaders at disarmament talks with all seven parties in the interim government.
That disagreement was reflected May 24 in the southern city of Karbala, where Al Hakim addressed a crowd of cheering Iraqis and called for an end to US "occupation." Earlier, Hamid Al Bayati, a spokesman for SCIRI, issued an ominous threat: "The longer Americans remain here, the more they are at risk from terrorist attack."
US leadership praised
Despite such areas of potential conflict, however, Carroll on May 23 expressed high regard for the US-appointed leadership of the oil ministry in the face of its pending challenges. "Iraq has excellent leadership in its new chief executive officer, Thamir Al-Ghadhban, and the team of professionals within the ministry and its subsidiary companies," Carroll said.
That team saw changes the following weekend as Iraq's State Oil Marketing Organization (SOMO) will have a new director for foreign oil sales, Mohammed Al-Jibury, who succeeds Ali Hassan.
Other elected officials include Mobdir Al-Khudhair and Kadim Razouki, who will jointly head the crude oil marketing department, while Hashim Al-Wardi will serve as director of marketing for refined products.
SOMO also announced that it plans to sell most of its oil to refiners through long-term contracts rather than to traders on a spot basis, in a bid to secure a steady source of income.
Meanwhile, Ghadhban May 24 said that exports of oil could resume in 3 weeks, and he forecast a doubling of crude production to around 1.5 million b/d from his current estimate of 700,000 b/d by the time exports resume.
He also announced that a contract with Russia's OAO Lukoil had been terminated, while another contract with a Chinese company to develop Al-Ahdab field had been frozen by "mutual agreement (see related story, p. 34)."
While taking aim at Russian and Chinese companies, Ghadhban said he is still in favor of opening up Iraq's oil industry to foreign investment: "We are going to open the door for foreign investment but in accordance with a formula that safeguards the interest of the Iraqi people."
When exports do resume, Iraq already has some 9.3 million bbl ready to move from storage in the Turkish port of Ceyhan, while it should be able to ship around 1.2 million b/d from the Persian Gulf export terminal at Mina al-Bakr.
"Once the signal is given to begin exporting, we can do it anytime," said Mohammed Al-Waely, operations manager of the state-run South Oil Co.
