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Wednesday, 07 January, 2009, 19:40 GMT | more >>

Oil theft costs Iraq '$15m per day'



By Upstream staff 

Smuggling and theft in Iraq may be choking off up to $15 million in potential oil revenues to the war-torn Opec nation each day, the US Government Accountability Office (GAO) said today.

Congress' investigative arm found up to 300,000 barrels per day of oil output may be disappearing as Iraq's oil sector strains against worn-out equipment, sabotage attacks and years of neglect under deposed dictator Saddam Hussein to pump out 2 million barrels daily.

The Bush administration had hoped that Iraq's vast oil reserves of 115 billion barrels, the third-largest on the globe, would be the main revenue source to help rebuild the country.

But between 10% and 30% of Iraq's refined fuel production "is diverted to the black market or is smuggled out of Iraq and sold for a profit", according to State Department findings cited by the GAO.

Oil is the mainstay of Iraq's economy, accounting for 70% of its gross domestic product and providing 95% of government revenues.

A Reuters report said Iraq's oil losses could be higher than the GAO's $15 million estimate as the report is based on oil prices of $50 a barrel, well below current levels above $60.

There is a discrepancy of 100,000 bpd to 300,000 bpd between Iraq's daily crude oil production figures cited by the State Department and the Energy Information Administration, the US Energy Department's energy forecasting arm, Reuters quoted the GAO as saying.

In comparison, the US' largest oilfield, Prudhoe Bay, in Alaska, pumps about 400,000 bpd.

The EIA said a lack of storage capacity at the giant Kirkuk field in northern Iraq could account for some of the difference, because oil that cannot be stored or shipped is reinjected into the ground.

"It is possible that corruption, theft, and sabotage may also be factors in the discrepancy," the GAO said.

The findings match a December 2006 report by the bipartisan Iraq Study Group, which said that as much as 500,000 bpd of oil is being stolen, Reuters said. Both groups said Iraq needs to build a system to meter the oil in order to keep better tabs on it.

Iraq's parliament could pass a draft oil law by the end of the month which is vital to securing the billions of dollars needed to boost Iraq's oil output and rebuild its economy.

Tuesday, 15 May, 2007, 21:01 GMT  | last updated: Tuesday, 15 May, 2007, 22:04 GMT

On guard: but oil smuggling and theft cost Iraq $15 million a day in potential revenues, a US report said
 

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