Saturday, December 16, 2006

Analysis: $700 million a month lost in oil smuggling

WASHINGTON, Dec. 14 (UPI) -- Iraq faces increasing security problems and a growing petroleum smuggling racket that is draining chances of rebuilding after nearly four years of war.

Meanwhile Iraq's electricity and oil infrastructure -- which also depend on each other -- need at least $80 billion to fix, U.S. and Iraqi officials said last week in Washington at the New-Fields 6th Rebuilding Iraq Conference & Expo.

With nearly its entire federal budget dependent on oil revenues, the $700 million a month the Oil Ministry estimates is lost to oil and petroleum products smuggling is a major loss.

"From all reports it is significant," Lyle Hendrick, president of Investigative Research Group Inc., a business intelligence and security consultant, told United Press International at the conference.

"It's a major bleeder and not only for the economy but also the potential for success in the future," he said. "Until the Oil Ministry and oil companies get a firm handle on protection of these assets, it's going to continue to be a major problem."

An estimated 100,000 barrels of oil is smuggled from Iraq each day, according to Saad Rahim, manager of PFC Energy's Country Strategies Group.

"It's certainly an impact being felt throughout Iraq," Rahim told UPI, as gasoline shortages, long lines at filling stations and a heavy gas subsidy have fueled a crude black market.

Lacking management, auditing and metering mechanisms in Iraq's oil industry, petroleum products such as gasoline are also being taken from the country in unknown quantities.

"You don't have the personnel or capacity to track these sorts of details," Rahim said.

Read the rest at UPI