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Iraq holds more than 112 billion barrels of oil - the world's second largest proven reserves. Iraq also contains 110 trillion cubic feet of natural gas, and is a focal point for regional security issues.
Note: The information contained in this report is the best available as of October 2002 and can change. Also, please click here for a complete chronology of events pertaining to Iraq from 1980 through mid-October 2002.
On May 14, 2002, the U.N. Security Council approved an overhaul of the "Oil-for-Food" program for Iraq that makes use of an extensive list of "dual-use" goods (goods that could have a military as well as civilian use). Under the modification, Iraq is able to use its oil revenues, which go into a U.N. escrow account out of which suppliers exporting products to Baghdad are paid, in order to purchase items not on the list. The resolution renews the U.N. program until November 25, 2002.
Over the past few years, Iraq has been attempting to improve relations with various Arab (and non-Arab) countries. In March 2002, for instance, at an Arab summit meeting in Beirut, Iraq pledged"non-interference" in Kuwait's internal affairs and recognition of Kuwait's borders. Iraqi Foreign Minister Naji Sabri stated, "We are for the prosperity and independence of the state of Kuwait and also for the normalization of ties, diplomatic, economic, political." In January 2001, Iraq signed free-trade deals with Egypt and Syria, and in August 2001, Syria's Prime Minister visited Baghdad. In April 2001, Iraqi Vice President Taha Hussein Ramadan met Russian President Vladimir Putin, the highest-level Iraqi-Russian contact in several years.
In June 2001, however, in an apparent blow to Iraqi-Saudi relations, Saudi Arabia announced that it had seized ownership of the 1.6-million-barrel-per-day IPSA pipeline that had carried Iraqi crude oil to the Saudi Red Sea port of Yanbu (Mu'jiz) prior to Iraq's invasion of Kuwait. The seizure included pumping stations, storage tanks, and the maritime terminal. Saudi Arabia claimed that the pipeline was confiscated as a result of aggressive Iraqi actions. Iraq insisted that it still owned the pipeline, and in May 2002, stated that the line was "ready for export."
Since the end of the Gulf War in 1991, the United States and the United Kingdom have maintained "no-fly zones" over Iraq, and also have carried out occasional bombing of various targets, primarily in reaction to perceived threats to allied aircraft. U.N. weapons inspectors left Iraq in December 1998, and the United States responded at the time with a several-day bombing campaign of Iraq, called "Operation Desert Fox." On October 16, President Bush signed a resolution by the U.S. Congress authorizing him to use force against Iraq if necessary.
It is important
to note that Iraq generally has not had access to the latest, state-of-the-art
oil industry technology (i.e., 3D seismic), sufficient spare parts, and
investment in general throughout most of the 1990s, but has instead reportedly
been utilizing questionable engineering techniques (i.e., overpumping,
water injection/"flooding") and old technology to maintain production.
There is also some evidence that Iraq may have damaged its oil reservoirs
through use of such techniques and through lack of sufficient investment
over a lengthy period of time. Iraq's Oil Minister, Amir Rashid, indicated
in early 2002 that only 24 of 73 Iraqi oil fields were producing. Recently,
oil consulting firm Saybolt International pointed out the risk of a 5%-15%
annual decline in production capacity at (possibly ) damaged Iraqi oil
Iraqi oil reserves
vary widely in quality, with API gravities in the 24o to 42o
range. Iraq's main export crudes come from the country's two largest active
fields: Rumaila and Kirkuk. The southern Rumaila field produces three
streams: Basra Regular (normally 34o API, 2.1% sulfur, but
apparently deteriorating); Basra Medium (30o API, 2.6% sulfur);
and Basra Heavy (22o-24o API, 3.4% sulfur). The
northern Kirkuk field, first discovered in 1927, normally produces 37o
API, 2% sulfur crude, although the API gravity reportedly has fallen in
recent years. An additional export crude, known as "Fao Blend," is heavier
and more sour, with a 27o API and 2.9% sulfur. Iraq's proven
oil reserves are not distributed evenly throughout the country. In fact,
prior to Iraq's invasion of Kuwait in 1990, about two-thirds of Iraq's
production was coming out of the southern fields of Rumaila, Zubair, and
Nahr Umr. Other potentially huge fields such as Majnoon and West Qurna
(see below for more details) are also located in the southern part of
the country. Notably, southern Iraq is populated overwhelmingly by Shi'ite
Muslims, who make up the majority of Iraq's population but have little
power -- Saddam Hussein is a Sunni Muslim from the central Iraqi town
of Tikrit -- and who rebelled against Saddam Hussein following the 1991
Gulf War. Although much of Iraq's southern oil infrastructure -- fields,
refineries, storage facilities, transportation infrastructure -- was damaged
during the Gulf war, the oil potential of this region alone is huge.
Iraqi oil reserves vary widely in quality, with API gravities in the 24o to 42o range. Iraq's main export crudes come from the country's two largest active fields: Rumaila and Kirkuk. The southern Rumaila field produces three streams: Basra Regular (normally 34o API, 2.1% sulfur, but apparently deteriorating); Basra Medium (30o API, 2.6% sulfur); and Basra Heavy (22o-24o API, 3.4% sulfur). The northern Kirkuk field, first discovered in 1927, normally produces 37o API, 2% sulfur crude, although the API gravity reportedly has fallen in recent years. An additional export crude, known as "Fao Blend," is heavier and more sour, with a 27o API and 2.9% sulfur.
Iraq's proven oil reserves are not distributed evenly throughout the country. In fact, prior to Iraq's invasion of Kuwait in 1990, about two-thirds of Iraq's production was coming out of the southern fields of Rumaila, Zubair, and Nahr Umr. Other potentially huge fields such as Majnoon and West Qurna (see below for more details) are also located in the southern part of the country. Notably, southern Iraq is populated overwhelmingly by Shi'ite Muslims, who make up the majority of Iraq's population but have little power -- Saddam Hussein is a Sunni Muslim from the central Iraqi town of Tikrit -- and who rebelled against Saddam Hussein following the 1991 Gulf War. Although much of Iraq's southern oil infrastructure -- fields, refineries, storage facilities, transportation infrastructure -- was damaged during the Gulf war, the oil potential of this region alone is huge.
In September 1999, more than 50 foreign companies attended an oil and natural gas technology exhibition in Baghdad, the first such gathering in 10 years. Most of the firms were from Canada, France, Italy, and the United Kingdom. No U.S. firms attended, although a high-level Iraqi oil official has stated that Iraq is ready to deal with U.S. oil companies. To help attract foreign investment to the country's energy sector, Iraq's oil ministry has introduced amendments to existing development and production contracts (DPCs). Among other things, the duration of DPCs has been reduced from 23 to 12 years. In addition, Iraq has added a clause referring to "an explicit commitment to achieve target production within a set period."
Oil industry experts generally assess Iraq's sustainable production capacity at no higher than 2.8-3.0 million bbl/d, with net export potential of around 2.3-2.5 million bbl/d (including smuggled oil). In July 2002, Iraqi Oil Minister Amer Rashid said that Iraq's current sustainable capacity was 3.2-3.3 million bbl/d, and that the country hoped to increase that to 3.5 million bbl/d -- even without help from foreign oil companies.-- by the end of 2003 (Iraq last produced 3.5 million bbl/d in July 1990. According to the Middle East Economic Survey, Iraq also aims to limit crude oil exports under the U.N. "Oil-for-Food" program to around 2.2 million bbl/d, with the remaining 800,000-900,000 bbl/d going for domestic consumption, exports to neighboring Jordan (at preferential rates), and smuggling (to Syria, Turkey, etc.).
Among other challenges in maintaining, let alone increasing, oil production capacity, is Iraq's battle with "water cut" (damaging intrusion of water into oil reservoirs) especially in the south. Saybolt International has reported that Iraq has been able to increase its oil production through use of short-term techniques not generally considered acceptable in the oil industry (i.e., "water flooding," injection of refined oil products into crude reservoirs). A U.N. report in June 2001 said that Iraqi oil production capacity would fall sharply unless technical and infrastructure problems were addressed. The report estimated, for instance, that production in the Kirkuk region could fall by 50% over 12 months, to 500,000 bbl/d, and that output at South Rumaila also could be reduced sharply unless immediate actions were taken. Iraq hopes to counter this by a large-scale program to drill new wells (417 are planned, most of which are to be carried out by Russian, Chinese, Iraqi, and Romanian companies).
During 2001, Iraq averaged official (i.e., U.N. monitored) net oil exports of around 2 million bbl/d, although this number fluctuated greatly through the year, and fell sharply during 2002 (to only 1.5 million bbl/d during the first 7 months of the year, and even further during August and September) (see graph). The reduced volume of Iraqi exports in 2002 appears to have been a result of at least two main factors: 1) Iraq's unilateral one-month embargo of oil exports in April 2002 ostensibly in support of the Palestinians; and 2) pressure by the United States and other countries to clamp down on Iraq's practice of charging an illegal "surcharge" on their U.N. -authorized oil exports (see below for more on this subject). As a result, Iraq's exports dropped sharply in the second and third quarters of 2002 before increasing sharply in recent weeks (to over 2 million bbl/d in the week ending September 20, for instance).
Besides the 90,000 bbl/d or so going to Jordan legally (i.e., with tacit U.N. permission, and under a protocol between Iraq and Jordan), and the 460,000 bbl/d or so consumed domestically, the rest (not counting illegally smuggled oil and oil products) was exported either through the Iraq-Turkey pipeline or the Persian Gulf port of Mina al-Bakr. Although U.N. Resolution 986 mandates that at least half of the "Oil-for-Food" exports must transit through Turkey, it appears that in recent months more Iraqi oil (close to three-quarters) has been exported via Mina al-Bakr rather than via Ceyhan, in part due to a shift in oil exports away from Europe and the United States and towards Asia due in part to the U.N. 's "retroactive pricing" plan (see below for more details). In general, Mina al-Bakr is used for Iraqi oil exports to Asia, while Ceyhan is used for Europe.
An estimated 30% of Iraqi oil is sold initially to Russian firms (i.e., Emerkom, Kalymneftegas, Machinoimport, Rosnefteimpex, Sidanco, Slavneft, Soyuzneftegaz, Tatneft, and Zarubzhneft). The remaining 70% of Iraq's oil is first purchased by companies from many countries, including Cyprus, Sudan, Pakistan, China, Vietnam, Egypt, Italy, Ukraine, and others. Iraqi oil is normally then resold to a variety of oil companies and middlemen before being purchased by end users. During 2001, for instance, nearly 80% of Basra Light liftings, and over 30% of Kirkuk oil, went to the United States, with large importers including ExxonMobil, Chevron, Citgo, BP, Marathon, Coastal, Valero, Koch, and Premcor. During the first seven months of 2002, the United States imported an average of 566,000 bbl/d from Iraq.
to U.N.-sanctioned oil exports to Jordan, which are currently carried
by truck (plans for a 150,000-bbl/d, $250-$350 million, 120-mile pipeline
to Jordan's Zarqa oil refinery were approved by Jordan's cabinet in December
2001, and Jordan reportedly has received more than 30 offers from firms
interested in building the line -- with possible completion in late 2004),
there have been persistent reports that Iraq has smuggled 200,000-400,000
bbl/d of crude oil and products via a number of routes. These include:
1) to Turkey (as high as 100,000-150,000 bbl/d, mainly of fuel oil) by
truck through the Habur border point (reportedly, this smuggling was stopped
from September 18, 2001 through January 7, 2002); 2) to Jordan (possibly
10,000-30,000 bbl/d above domestic needs) by truck; 3) to Syria (150,000-200,000
bbl/d or more; see below for details), mainly via the Kirkuk-Banias pipeline,
with smaller volumes possibly moving via a railway line from Mosul to
Aleppo; 4) to Iran along the Gulf coast and via Qais Island; and 5) to
Dubai with the use of small tankers sailing from Umm Qasr. Press reports
have estimated that these illegal shipments may be providing Iraq with
as much as $600 million-$2 billion per year in illegal revenues, while
a U.S. General Accounting Office study released in May 2002 estimated
that Iraq had earned $6.6 billion from oil smuggling and illegal surcharges
from 1997 through 2001.
In April 2000, the U.S. Navy stopped a Russian tanker, the Akademik Pustovoit, which it suspected might be smuggling Iraqi oil. The United Nations later determined that around 20% of the vessel's gasoil cargo (which Shell said it owned) was of Iraqi origin. In April 2001, an Iraqi-owned vessel -- the Zainab -- sunk off the Dubai coast, leaking over 1,000 tons of smuggled diesel oil and polluting Gulf waters and UAE beaches. At least two other ships smuggling Iraqi oil sunk during 2001 -- one off the Kuwaiti coast in October, and one in November. During 2001, Iraqi oil smuggling through Iranian waters reportedly was reduced significantly (possibly 50%), as Iran increased its efforts at stopping suspect vessels. In October 2001, the United Nations discovered that two oil shipments on the "Essex" had been "topped off" after U.N. inspectors had signed off, adding some 500,000 barrels of crude oil to the ship. The Essex was chartered by trader Trafigura, run by former employees of Marc Rich.
In late October 2001, the U.N. Sanctions Committee began imposing a so-called "retroactive pricing" mechanism (proposed by the UK and supported by the United States) to alter the way in which Iraqi oil prices are set. The United States and the UK were concerned that Iraq was using oil price fluctuations to impose a de facto surcharge on oil purchasers, and that this money was going directly to the Iraqi government outside of U.N. control. This was also part of a continuing effort by the United States, the UK, and others to stop Iraq from forcing buyers to pay a $0.30-$0.60 per barrel surcharge, paid directly to the Iraqi government. Under "retroactive pricing," Iraqi oil exports to the United States and Europe (but not Asia) are priced based on oil market developments through the end of the period covered by a particular oildelivery contract. Thus, "official selling prices" for Iraqi crudes (Kirkuk and Basrah Light) are not known until after the oil has been loaded and sold. At this point, prices are set at a level high enough to assure that lifters have no room to pay Iraq the illegal surcharge and still make a profit. By many accounts, this effort appears to have been at least partly successful in reducing illegal surcharges, and may also have had the side effect of reducing overall Iraqi oil exports as 2002 has gone on. Iraqi oil (Kirkuk and Basra Blend) bound for the United States is priced off West Texas Intermediate, while for Europe, Iraqi oil is priced off of dated Brent.
On October 31, 2000, the U.N. Sanctions Committee approved an Iraqi request to be paid in Euros, rather than U.S. dollars, for oil exported under the "oil for food" program. On November 16, Iraq's State Oil Marketing Organization (SOMO) demanded that companies lifting cargoes of Iraqi crude oil begin paying a fifty cent per barrel surcharge directly to the Iraqi government (in violation of U.N. sanctions) starting on December 1, 2000.
Development, War, and Current Status
The Kirkuk field, with over 10 billion barrels in remaining proven oil reserves, forms the basis for northern Iraqi oil production. Bai Hassan, Jambur, Khabbaz, Saddam, and Ain Zalah-Butmah-Safaia are the other currently-producing oil fields in northern Iraq. An estimated 60% of Northern Oil Company's (NOC) facilities in northern and central Iraq were damaged during the Gulf War. In 2001, output from all northern fields (Kirkuk, Bai Hassan, Jambar, Khabbaz, Saddam, Safiya, and 'Ain Zalah/Butnah)was around 1 million bbl/d. In December 2001, the Turkish Petroleum International Corporation won a U.N.-approved contract to drill for oil in northern Iraq, specifically at the Khurmala field near Kirkuk. Two Russian companies -- Tatneft and Zarubezhneft -- have won U.N. -approved upstream contracts at the Bai Hassan, Kirkuk, and Saddam fields. Tatneft is to drill 78 new wells in Iraq, marking the largest foreign company oil involvement in Iraq since 1990. In early December 1999, Russian energy company Zarubezhneft said that it was drilling multiple wells at Kirkuk, and that this did not violate U.N. sanctions (Russian officials have denied that any work was being done). Zarubezhneft hopes to boost Kirkuk production capacity from its current 900,000 bbl/d to around 1.1 million bbl/d.
Iraq's southern fields -- mainly North and South Rumaila, plus al-Zubair, the Missan fields, West Qurna, Luhais, and Bin Umar --produced around 1.5 million bbl/d in 2001. Zarubezhneft also has a contract to drill approximately 100 wells in the North Rumaila field. In January 2002, Tunisia signed a deal with Iraq to develop an oilfield near the southern province of Najaf.
Another major Iraqi oil field is the 11-billion barrel East Baghdad field, which came online in April 1989. This centrally-located field currently produces 50,000 bbl/d of heavy, 23o API oil as well as 30 million cubic feet per day (Mmcf/d) of associated natural gas.
In March 2000, U.N. Security Council agreed to double the spending cap for oil sector spare parts and equipment (under Resolution 1175 of June 20, 1998), allowing Iraq to spend up to $600 million every 6 months repairing oil facilities. U.N. Secretary General Kofi Annan had warned of a possible "major breakdown" in Iraq's oil industry if spare parts and equipment were not forthcoming. In August 2000, a senior Iraqi oil official stated that delays by the United Nations in approving contracts to upgrade Iraq's oil sector were threatening production levels. The United States has said that the $300 million should be used only for short-term improvements to the Iraqi oil industry, and not to make long-term repairs. Iraq's oil sector distribution plan for the "Oil-for-Food" program's 12th phase reportedly includes $350 million for upstream contracts, including development work on the Hamrin, Suba, and West Qurna fields.
As of early January 2002, the head of the U.N. Iraq Program, Benon Sevan, expressed "grave concern" at the volume of "holds" put on contracts for oilfield equipment, and stated that the entire program was threatened with paralysis. According to Sevan, these holds amounted to nearly 2,000 contracts worth about $5 billion, about 80% of which reportedly were "held" by the United States. Overall, Iraq has imported about $1.2 billion worth of equipment to upgrade oil facilities over the past three years under the "Oil-for-Food" program. Sevan also said that retroactive pricing was resulting in lower Iraqi oil exports, and therefore revenues, under the "Oil-for-Food" program.
Sanctions Development Plans
In recent weeks and months, Iraq reportedly has signed a flurry of deals with companies from Italy (Eni), Spain (Repsol YPF), Russia (Tatneft), France (TotalFinaElf), China, India, Turkey, and others. According to a report in The Economist, Iraq has signed over 30 deals with various oil companies, offering generous rates of return ("on the order of 20%") as part of its "Development and Production Contract" (DPC) model. Iraq introduced the DPC in 2000 to replace the previous "Production Sharing Contract" (PSC) arrangement.
Russia, which is owed several billions of dollars by Iraq for past arms deliveries, has a strong interest in Iraqi oil development, including a $3.5-billion, 23-year deal to rehabilitate Iraqi oilfields, particularly the 11-15 billion barrel West Qurna field (located west of Basra near the Rumaila field). Since the agreement was signed in March 1997, Russia's Lukoil (the operator, with a 68% share, heading a Russian consortium plus an Iraqi company to be selected by the Iraqi government) has prepared a plan to install equipment with capacity to produce 100,000 bbl/d from West Qurna's Mishrif formation. Meanwhile, in August 2000, Iraqi engineers reportedly completed work on two degassing stations at West Qurna, with two more planned, potentially raising production at the field (one of the world's largest) significantly, from around 140,000 bbl/d currently. West Qurna is believed to have potential production capacity of up to 1 million bbl/d. In October 1999, Russian officials reportedly said that Iraq had accepted a Russian request to delay work on West Qurna given the continuation of U.N. sanctions. This followed an Iraqi warning that Lukoil could lose its contract (and possibly be replaced by another Russian company) at West Qurna if it did not begin work immediately (Lukoil has been restrained from doing so by U.N. sanctions). As of October 2002, however, Lukoil had not begun work on West Qurna. In October 2002, Lukoil's Chief Executive (Vagit Alekperov) said his belief that the West Qurna contract would "be upheld no matter what happens" in Iraq, and that he had received "guarantees" on this matter from Russian President Vladimir Putin.
In October 2000, the Iraqi Oil Ministry expressed frustration with the slow pace of progress by Russian and Chinese firms, and in January 2001, Shell announced that it had held talks with the Iraqi Oil Ministry regarding "potential opportunities" at the 1-billion-barrel Ratawi oilfield. In March 2001, the Deputy Oil Minister announced that Iraq might terminate contracts with the Chinese and Russian companies.
In October 2001, a joint Russian-Belarus oil company, Slavneft, signed a $52 million service contract with Iraq on the 2-billion-barrel, Suba-Luhais field in southern Iraq, and expecting to sign a service contract to begin drilling later this year. Full development of Suba-Luhais could result in production of 100,000 bbl/d at a cost of $300 million over three years. As of March 2002, Slavneft reportedly was awaiting approval from the United Nations to drill 25 wells as Luhais.
The Saddam field contains 3 billion barrels of oil and 5 trillion cubic feet (Tcf) of associated gas. Iraq is seeking foreign assistance for a second-phase Saddam development, which would raise oil production capacity to 50,000 bbl/d, as well as 300 Mmcf/d of gas. In early April 2001, Russia's Tatneft and Zarubezhneft reportedly received U.N. approval to drill 45 wells in the Saddam field, plus Kirkuk and Bai Hassan, as part of an effort to reduce water incursion into the fields. As of October 2002, however, work on these fields had yet to begin.
The largest of Iraq's oilfields slated for post-sanctions development is Majnoon, with reserves of 12-20 billion barrels of 28o-35o API oil, and located 30 miles north of Basra on the Iranian border. French company TotalFinaElf reportedly has signed a deal with Iraq on development rights for Majnoon. Majnoon was reportedly brought onstream (under a "national effort" program begun in 1999) in May 2002 at 50,000 bbl/d, with output possibly reaching 100,000 bbl/d by the end of 2002 (according to Oil Minister Rashid). Future development on Majnoon ultimately could lead to production of up to 600,000 bbl/d at an estimated (according to Deutsche Bank) cost of $4 billion. In July 2001, angered by France's perceived support for the U.S. "smart sanctions" plan, Iraq announced that it would no longer give French companies priority in awarding oil contracts, and would reconsider existing contracts as well. Iraq also announced that it was inclined to favor Russia, which has been supporting Iraq at the U.N. Security Council, on awarding rights to Majnoon and another large southern oil field, Nahr Umar.
TotalFinaElf apparently has all but agreed with Iraq on development of the Nahr Umar field. Initial output from Nahr Umar is expected to be around 440,000 bbl/d of 42o API crude, but may reach 500,000 bbl/d with more extensive development. The 2.5-4.6 billion-barrel Halfaya project is the final large field development in southern Iraq. Several companies (BHP, CNPC, Agip) reportedly have shown interest in the field, which ultimately could yield 200,000-300,000 bbl/d in output at a possible cost of $2 billion.
Smaller fields with under 2 billion barrels in reserves also are receiving interest from foreign oil companies. These fields include Nasiriya (Eni, Repsol), Tuba (ONGC, Sonatrach, Pertamina), Ratawi (Shell, Petronas, CanOxy), Gharaf (Japex, TPAO), Amara (PetroVietnam), Noor (Syria), and more. Italy's Eni and Spain's Repsol appear to be strong possibilities to develop Nassiriya.
In addition to the 25 new field projects, Iraq plans to offer foreign oil companies service contracts to apply technology to eight already-producing fields. Meanwhile, Iraq has authorized "risk contracts" to promote exploration in the nine remote Western Desert blocs. Iraq has identified at least 110 prospects from previous seismic work in this region near the Jordanian and Saudi borders. In late 2000, India's ONGC was awarded Block 8 in the Western Desert region, and in April 2002, Indonesia's Pertamina signed an exploration contract for Block 3. Other companies reportedly interested in the Western Desert region include: Repsol, Lundin, Sonatrach, MOL, Petronas, Ranger, and TPAO.
In total, Deutsche Bank estimates that international oil companies in Iraq may have signed deals on new or old fields amounting to nearly 50 billion barrels of reserves, 4 million bbl/d of potential production, and investment potential of more than $20 billion. Development of southern fields may be complicated by infrastructure damage, the presence of land mines (from the Iran-Iraq war), and marshy conditions. Major companies with deals in Iraq include TotalFinaElf (with estimated reserves of 12.5-27 billion barrels, according to the Wall Street Journal), several Russian companies (Lukoil, Zarubezneft, Mashinoimport, with combined reserves of 7.5-15 billion barrels), China's National Petroleum Company (CNPC -- 2 billion barrels or so); and Eni (under 2 billion barrels).
On August 20, 1998, Iraq and Syria (which reopened their border in June 1997 -- after a 17-year closure -- for trade and official visits) signed a memorandum of understanding for the possible reopening of the 50-year-old, rusting Banias oil pipeline from Iraq's northern Kirkuk oil fields to Syria's Mediterranean port of Banias (and Tripoli, Lebanon). As of October 2002, the pipeline reportedly was being used (see above), and there also was talk of building a new, parallel pipeline as a replacement.
In order to optimize export capabilities (i.e., to allow oil shipments to the north or south) , Iraq constructed a reversible, 1.4-million bbl/d "Strategic Pipeline" in 1975. This pipeline consists of two parallel 700,000-bbl/d lines. The North-South system allows for export of northern Kirkuk crude from the Persian Gulf and for southern Rumaila crudes to be shipped through Turkey. During the Gulf War, the Strategic Pipeline was disabled after the K-3 pumping station at Haditha as well as four additional southern pumping stations were destroyed. In early 2001, Iraqi oil ministry officials claimed that the pipeline had been rehabilitated, providing Iraq with increased export flexibility. However, a U.N. assessment team which visited Iraq in March 2001 concluded that the country's downstream sector "had declined seriously in many respects" over the past 18 months, including increased leakage from pipelines, particularly the North-South "Strategic" line.
In the Persian Gulf, Iraq has three tanker terminals: at Mina al-Bakr, Khor al-Amaya, and Khor al-Zubair (which mainly handles dry goods and minimal oil volumes). Iraq also has additional dry goods ports at Basra and at Umm Qasr, which is being outfitted to accommodate crude tankers. Mina al-Bakr is Iraq's largest oil terminal, with four 400,000-bbl/d capacity berths capable of handling very large crude carriers (VLCCs). Gulf War damage to Mina al-Bakr appears to have been repaired in large part and the terminal currently can handle up to 1.2-1.3 million bbl/d. A full return to Mina al-Bakr's nameplate capacity apparently would require extensive infrastructure repairs. Mina al-Bakr also is constrained by a shortage ofstorage and oil processing facilities, most of which were destroyed in the Gulf War.
Iraq's Khor al-Amaya terminal washeavily damaged during the Iran-Iraq War (andcompletely destroyed during Operation Desert Storm in 1991) and has been out of commission since then. As of March 2001, reports indicated that Iraq had largely completed repairing two berths at Khor al-Amaya. According to the Iraqi Oil Ministry, the terminal, with export capacity of 500,000-700,000 bbl/d, would "soon be ready to receive oil tankers." Upon full completion of repairs, Iraq projects Khor al-Amaya's capacity will rise to 1.2 million bbl/d, and will help prevent delays at Mina al-Bakr while repairs are conducted there. In March 2002, Platt's Oilgram News reported that a Russian company was "awaiting the green light from the U.N.....to help restore Iraq's Mina al-Bakr and Khor al-Amaya crude loading platforms." Iraq will need U.N. Security Council approval to export from Khor al-Amaya, since it is not part of the approved export outlet of Mina al-Bakr.
Main sources of associated natural gas are the Kirkuk, Ain Zalah, Butma, and Bai Hassan oil fields in northern Iraq, as well as the North and South Rumaila and Zubair fields in the south. The Southern Area Gas Project was completed in 1985, but was not brought online until February 1990. It has nine gathering stations and a larger processing capacity of 1.5 billion cubic feet per day. Natural gas gathered from the North and South Rumaila and Zubair fields is carried via pipeline to a 575-Mmcf/d natural gas liquids (NGL) fractionation plant in Zubair and a 100-Mmcf/d processing plant in Basra. At Khor al-Zubair, a 17.5-million-cubic-foot LPG storage tank farm and loading terminals were added to the southern gas system in 1990.
Iraq's only non-associated natural gas production is from the al-Anfal field (200 Mmcf/d of output) in northern Iraq. Al-Anfal production is piped to the Jambur gas processing station near the Kirkuk field, which is 20 miles away. Al-Anfal's gas resources are estimated at 4.5 Tcf, of which 1.8 Tcf is proven. In December 2001, Russia's Gazprom reportedly was negotiating possible development of al-Anfal. In November 2001, a large non-associated natural gas field reportedly was discovered in the Akas region of western Iraq, near the border with Syria, and containing an estimated 2.1 Tcf of natural gas reserves. It is not clear whether or not the field is associated or non-associated.
In August 2001, Iraqi oil minister Rashid announced that Iraq had reached an agreement with Turkey to build a $2.5 billion gas pipeline to Turkey, and possibly on to Europe. Iraq aims to increase its natural gas exports to Europe, and Turkey could be a key transit center. Iraq also would like to export natural gas to Syria, Lebanon, and Jordan.
According to a report by U.N. Secretary General Kofi Annan, Iraq's power deficit stood at 1,800 MW as of August 2000, with blackouts a common occurrence. Iraq reportedly has signed contracts for renovating two generation units at the Harithah power plant, and another to rebuild the Yusufiyah plant, which stopped operating in 1990. Iraq's Electricity Authority reportedly also has signed several other contracts with Chinese, Swiss, French, and Russian companies, to build 3,000 MW of additional power generating capacity. These contracts require U.N. approval, and Iraq has claimed that the United States and Britain are blocking $1.5 billion worth of electrical equipment it has requested. In December 2000, it was reported that a Chinese company had completed work on the Abdullah power plant north of Baghdad. In October 2001, it was reported that Russia's Mosenergomontazh was working to modernize Iraq's Southern Heat and Power Plant in Najibia, Basra province. The project aims to add 200 MW of generating capacity to Iraq's grid. In August 2002, the Najaf governate in southern Iraq announced that two new power plants, with a combined capacity of 20 MW, had come online.
Sources for this report include: Agence France Presse; Associated Press; BBC Summary of World Broadcasts; Business Week; Chicago Tribune; CIA World Factbook 2002; Deutsche Bank; Dow Jones; DRI/WEFA; The Economist; Economist Intelligence Unit; Energy Compass; Financial Times; Gulf News; Hart's Africa Oil and Gas; Interfax News Agency; Janet Matthews Information Services (Quest Economic Database); Los Angeles Times; Middle East Economic Survey; New York Times; Oil & Gas Journal; Oil Daily; Petroleum Economist; Petroleum Intelligence Weekly; Platt's Oilgram News; Reuters News Wire; Russian Oil and Gas Report; U.N. Office of the Iraq Programme; U.S. Energy Information Administration; U.S. Department of State; Wall Street Journal Europe; Washington Post; Weekly Petroleum Argus; World Markets Energy.
Head of Government: Saddam Hussein al-Takriti
Deputy Prime Minister: Tariq 'Aziz
Independence: October 3, 1932
Population (7/01E): 23.3 million
Location/Size: Middle East/168,709 square miles, slightly more than twice the size of Idaho.
Major Cities: Baghdad (capital), Basra, Mosul, Karbala, Kirkuk
Languages: Arabic, Kurdish
Ethnic Groups: Arab 75-80%, Kurdish 15-20%, Turkmen, Assyrian, or other 5%
Religions: 97% Muslim (Shi'a 60-65%, Sunni 32-37%), Christian or other (3%)
Defense (2001E): Army (375,000); Air Force (30,000); Navy (2,000). Iraq is believed to have 2,200 main battle tanks and over 300 combat aircraft (of which as few as 100 may be serviceable); Paramilitary Forces (42,000-44,000, including Security Troops, Border Guards, and "Saddam's Fedayeen")
* The total energy
consumption statistic includes petroleum, dry natural gas, coal, net hydro,
nuclear, geothermal, solar, wind, wood and waste electric power. The renewable
energy consumption statistic is based on International Energy Agency (IEA)
data and includes hydropower, solar, wind, tide, geothermal, solid biomass
and animal products, biomass gas and liquids, industrial and municipal
wastes. Sectoral shares of energy consumption and carbon emissions are
also based on IEA data.
Links to other
U.S. government sites:
Office of the Iraq Program U.N. Security Council
Resolutions Relating to Iraq
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File last modified: October 18, 2002