Pipeline Attacks Put Iraq Oil Exports in Doubt
Thu Jun 26,11:48 AM ET Add World - Reuters to My Yahoo!
By Hassan Hafidh and Peg Mackey
BAGHDAD (Reuters) - Iraq (news - web sites) was hit by a new oil pipeline explosion on Thursday, underlining concerns that a breakdown in security is undermining Baghdad's efforts to restore crude exports.
Reuters Photo
News of the blast, the sixth in two weeks, came as Iraq's de facto oil minister Thamir Ghadhban told a news conference that sabotage could undermine the drive for oil exports needed to fund Iraq's post-war reconstruction.
"Surely these are serious incidents and they will affect our performance, there is no doubt about that," he said.
Ghadhban said Iraq still hoped to boost production from current rates of 900,000 bpd, less than a third of pre-war capacity, to two million bpd by the end of the year.
"We have our eyes on those targets if not more, but security and stability are not in our hands," he said.
Before the war Iraq was able to pump three million bpd, a target that some industry experts now think is a long way off.
"The intensity of the attacks against Iraqi oil infrastructure and the failure so far of coalition forces to begin to get a grip on the situation suggests that this will be a long running story," said JP Morgan oil analyst Paul Horsnell.
"We would now even question whether Iraqi output can regain the pre-war production level in a sustainable fashion during what now looks likely to be lengthy period of occupation."
Ghadhban said the recent spate of pipeline attacks had not hit oilfield production directly but was hampering supplies to Iraq's refineries.
The latest explosion damaged a line carrying crude to Iraq's biggest refinery at Baiji, 260 kilometers north of Baghdad.
"I expect the incident was another act of sabotage," Adal al-Kazaz, director-general of Iraq's North Oil Company, told Reuters.
Thursday's damage followed a blast on a crude pipeline on Tuesday near Barwanah. That pipeline carries oil to the al- Daura refinery, which supplies Baghdad.
Iraqi officials fear the loss of supplies to refineries could disrupt power generation and cause further civil unrest.
Beyond the domestic impact, Iraq is pinning its entire economic revival on exports from its oilfields, home to the world's second biggest reserves.
Even if the attacks are kept at bay, Iraqi officials said technical glitches could still prevent oil from reaching world markets.
"The Iraq-Turkey pipeline was not only damaged by sabotage, its telecontrol system is still down," a senior Iraqi oil official told Reuters on Thursday.
"It is critical to get it up and running before Kirkuk exports can resume."
Iraq's oil marketing chief Mohammed al-Jibouri said on Wednesday Baghdad was aiming to export 400,000 bpd of Kirkuk oil and 600,000 bpd of Basrah Light crude by mid-July.
Baghdad last Sunday shipped its first oil since the war with a cargo from crude stored at the Turkish Mediterranean port of Ceyhan.
The big question now is whether it can meet its mid-July plan to restart exports from the oilfields.
Lack of security means oil workers are having trouble getting to work and fear for their lives once they get there.
"The system is collapsing...If we reach a sustainable rate of 1.5 million in two months we have achieved a lot," said an oil ministry official.
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