Wolverine
21 Jun 2004, 08:13 AM
Oil revenues in Iraq short of projections
Pipeline bombings cut production
By PETER URBAN purban@ctpost.com
WASHINGTON
Nearly 15 months ago, Deputy Defense Secretary Paul Wolfowitz assured a House panel that Iraq could pay for its own reconstruction through oil revenues that would pour into its coffers relatively soon.
"There's a lot of money to pay for this that doesn't have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people," Wolfowitz told the House Appropriations Committee. "The oil revenues of that country could bring between $50 [billion] and $100 billion over the course of the next two or three years."
Iraq's oil revenues, however, have thus far fallen short of Wolfowitz's projections, due largely to mounting insurgent attacks that have crippled exports.
Most recently, two explosions at oil pipelines in southern Iraq shut down the country's major oil export terminal, leaving the nation unable to export oil and facing an estimated loss of $1 billion in revenues.
Full crude oil exports are expected by the end of next week, as crews work to repair the pipelines.
The attacks will likely continue as Iraq's new interim government prepares to assume formal control of the country June 30, according to Middle East and oil industry experts.
"What we have seen this month is a sign of things to come," said Jamal Qureshi, an oil analyst for PFC Energy.
Qureshi said last week's attack completely shut down exports that had been averaging as much as 1.7 million barrels a day.
Robert Ebel, energy program director at the Center for Strategic and International Studies, said that insurgents are "very much aware of the vulnerability of the oil sector" and know they can inflict serious damage.
"There is no way a pipeline can be protected along its entire route," he said.
In the past decade, Iraq produced roughly 2.6 million barrels a day at its peak in 2000, according to the BP 2004 Statistical Review of World Energy. The nation has an estimated 115 billion barrels of proven oil reserves.
In May 2003, the U.N. Security Council unanimously adopted a resolution lifting sanctions against Iraq and establishing the Iraqi Development Fund, which would receive all the revenues from sales of Iraqi oil, to meet the humanitarian needs of the Iraqi people.
Ebel said Iraq has probably raised about $7 billion through oil sales since Saddam Hussein's regime was toppled
less than some Bush administration officials had anticipated before the war began. However, Ebel expects that Iraq will eventually stabilize and oil production will grow.
"I would characterize it as promises postponed," Ebel said.
Aside from oil production, questions are being raised about how the money already raised is being spent.
Iraq Revenue Watch claims that that the Coalition Provisional Authority has launched a last-minute spending spree that committed nearly $2 billion in oil revenues to poorly planned projects.
Among the expenditures approved by CPA's Program Review Board are $180 million to settle Iraqi property claims, $500 million for Iraqi security forces, and $460 million for oil sector reconstruction.
"There are massive commitments being made, some for cash give-away programs where there are no mechanisms in place to hold them accountable," said Sventlana Tsalik, director of the Revenue Watch Program, which is funded by billionaire George Soros, a staunch opponent of President Bush.
Without proper accountability, Tsalik said some of the programs being funded could be rife for abuse.
"They've committed $180 million to compensate land claims but we have no idea who will be eligible, how the money will be dispensed or who will make the decisions," she said. "That creates an open door for corruption."
Tsalik also questioned why $500 million of Iraqi oil revenues are being committed to security forces when the U.S. Congress has earmarked $3.2 billion for Iraqi security. And, she questioned why $460 million for oil sector reconstruction was committed, when less than half of the reconstruction projects already under way have not been completed.
"Why not leave this for the interim Iraqi government to decide?" Tsalik asked.
John Paul, executive director of the Global Policy Forum, said there are serious questions that need to be answered about the Iraqi Development Fund.
"The U.S. has failed to do any monitoring or accounting of the money, so it is a scandal waiting to happen," Paul said. "There supposedly is continuing oversight but it has been very, very negligent."
http://www.connpost.com/Stories/0,1413,96~3750~2224421,00.html
Pipeline bombings cut production
By PETER URBAN purban@ctpost.com
WASHINGTON
Nearly 15 months ago, Deputy Defense Secretary Paul Wolfowitz assured a House panel that Iraq could pay for its own reconstruction through oil revenues that would pour into its coffers relatively soon.
"There's a lot of money to pay for this that doesn't have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people," Wolfowitz told the House Appropriations Committee. "The oil revenues of that country could bring between $50 [billion] and $100 billion over the course of the next two or three years."
Iraq's oil revenues, however, have thus far fallen short of Wolfowitz's projections, due largely to mounting insurgent attacks that have crippled exports.
Most recently, two explosions at oil pipelines in southern Iraq shut down the country's major oil export terminal, leaving the nation unable to export oil and facing an estimated loss of $1 billion in revenues.
Full crude oil exports are expected by the end of next week, as crews work to repair the pipelines.
The attacks will likely continue as Iraq's new interim government prepares to assume formal control of the country June 30, according to Middle East and oil industry experts.
"What we have seen this month is a sign of things to come," said Jamal Qureshi, an oil analyst for PFC Energy.
Qureshi said last week's attack completely shut down exports that had been averaging as much as 1.7 million barrels a day.
Robert Ebel, energy program director at the Center for Strategic and International Studies, said that insurgents are "very much aware of the vulnerability of the oil sector" and know they can inflict serious damage.
"There is no way a pipeline can be protected along its entire route," he said.
In the past decade, Iraq produced roughly 2.6 million barrels a day at its peak in 2000, according to the BP 2004 Statistical Review of World Energy. The nation has an estimated 115 billion barrels of proven oil reserves.
In May 2003, the U.N. Security Council unanimously adopted a resolution lifting sanctions against Iraq and establishing the Iraqi Development Fund, which would receive all the revenues from sales of Iraqi oil, to meet the humanitarian needs of the Iraqi people.
Ebel said Iraq has probably raised about $7 billion through oil sales since Saddam Hussein's regime was toppled
less than some Bush administration officials had anticipated before the war began. However, Ebel expects that Iraq will eventually stabilize and oil production will grow.
"I would characterize it as promises postponed," Ebel said.
Aside from oil production, questions are being raised about how the money already raised is being spent.
Iraq Revenue Watch claims that that the Coalition Provisional Authority has launched a last-minute spending spree that committed nearly $2 billion in oil revenues to poorly planned projects.
Among the expenditures approved by CPA's Program Review Board are $180 million to settle Iraqi property claims, $500 million for Iraqi security forces, and $460 million for oil sector reconstruction.
"There are massive commitments being made, some for cash give-away programs where there are no mechanisms in place to hold them accountable," said Sventlana Tsalik, director of the Revenue Watch Program, which is funded by billionaire George Soros, a staunch opponent of President Bush.
Without proper accountability, Tsalik said some of the programs being funded could be rife for abuse.
"They've committed $180 million to compensate land claims but we have no idea who will be eligible, how the money will be dispensed or who will make the decisions," she said. "That creates an open door for corruption."
Tsalik also questioned why $500 million of Iraqi oil revenues are being committed to security forces when the U.S. Congress has earmarked $3.2 billion for Iraqi security. And, she questioned why $460 million for oil sector reconstruction was committed, when less than half of the reconstruction projects already under way have not been completed.
"Why not leave this for the interim Iraqi government to decide?" Tsalik asked.
John Paul, executive director of the Global Policy Forum, said there are serious questions that need to be answered about the Iraqi Development Fund.
"The U.S. has failed to do any monitoring or accounting of the money, so it is a scandal waiting to happen," Paul said. "There supposedly is continuing oversight but it has been very, very negligent."
http://www.connpost.com/Stories/0,1413,96~3750~2224421,00.html