More Than Wells Are Stuck In The Sand Over Iraqi Oil

Now America finds itself currently in control of Iraqi oil infrastructure, and what an infrastructure it is. There are 22 total oil fields in Iraq, 9 of them major ones, with the two most important being the northern Kirkuk field with 1000 wells and the southern Rumaila field with 500 wells. The other twenty fields contain a total of around 300 wells between them. The Rumaila field extends all the way to the Kuwait border and in fact, so-called “slant drilling” by Kuwait to tap Iraqi reservoirs was the alleged event which triggered the Iraqi invasion of Kuwait and Gulf War I.

So far, most effort to get Iraqi oil production restarted after the current war has centered on the Rumaila field and has been the responsibility of the U.S. Army Corps of Engineers. Brig. Gen. Robert Crear, Commander of the Corps’ Southwestern Division, leads Task Force RIO (Restore Iraqi Oil) and far from being classified, their efforts and accomplishments have been regularly reported by weekly RIO Updates. The accomplishments of the RIO Task Force are impressive. Oil began flowing from Rumaila in late April within weeks after the Americans took control.

So, where’s this oil going? The U.S.-military-supervised State Oil Marketing Organization (SOMO) of Iraq agreed in mid-July to sell six million barrels to ChevronTexaco, Petrobras of Brazil, and Switzerland’s Vitol. In late July two supertankers, the Seattlebello and the Front Lord, docked at Iraq’s Mina Al-Bakr terminal and started taking on two million barrels of oil apiece. Routine supertanker shipments are now underway taking oil out of Iraq. An October 29 RIO press release about replacing $2 billion in non-competitive support contracts with Kellogg Brown and Root by competitive ones noted, “Exceeding their project goals, the Iraqi Ministry of Oil and TF RIO, working together, have brought crude production up to over 2 million barrels per day.” At $25 per barrel, that means current Iraqi oil production levels are generating $50 million of oil per day, or $1.5 billion per month, or $18 billion per year.

Meanwhile, even as Iraq exports unrefined crude oil in a corrupt, pirate-filled environment, it is importing gasoline and fuel oil. As of Oct. 19, Halliburton had imported more than 61 million gallons of gasoline for civilian use as part of operation Iraqi Freedom, and had been paid nearly $163 million under its non-competitive Army Corps contract. As reported by the British news agency Reuters, the Pentagon’s Defense Energy Support Center is able to import military fuel from Kuwait to Iraq for $1.08 to $1.19 per gallon, compared with the $2.65 per gallon that Kellogg Brown & Root, a subsidiary of the oil services firm Halliburton once run by Vice President Dick Cheney, charges the U.S. government for fuel destined for use by everyday Iraqis under a no-bid U.S. Army contract. Democratic lawmakers Rep. Henry Waxman of California and Rep. John Dingell of Michigan wrote to the Army Corps of Engineers Wednesday urging it to take over the job of importing gasoline. “This action could save American taxpayers hundreds of millions of dollars,” they wrote.

In other news last week, the U.S. Congress agreed to go along with President Bush’s demand that $20.3 billion in Iraqi aid be a grant instead of a repayable loan even as Commerce (!?!) Secretary Don Evans optimistically discussed the possibility of tripling current Iraqi oil output to 6 million barrels per day over the next four years. That would be $55 billion or so per year in oil income, or over $20,000 per Iraqi citizen per year for each and every one of Iraq’s 25 million or so citizens, young and old. [NOTE ADDED AFTER PUBLICATION: THIS CLAIM IS INCORRECT. SEE UPDATE.] In contrast, currently in the United States there are 35 million Americans at or below the Federal poverty level of $10,000 per year income for an individual or $18,000 per year income for a family of four.

Gee…seems kinda funny, don’t you think, that it’s the U.S. Commerce Secretary and not Iraq’s State Oil Marketing Organization (SOMO) talking about potential Iraqi oil production levels in 2007?