Iraqi Oil Exports Are Cut Nearly in Half
Iraq's oil exports were cut nearly in half as workers struggled Monday to repair a key pipeline shut down after looters sabotaged the line, officials with the South Oil Company and traders said.
"Exports out of Basra are at about 40,000 barrels per hour" or about 960,000 barrels per day a London-based trader with a European oil company said, speaking on condition of anonymity. He cited reports from Iraqi's State Oil Marketing Organization from 9 a.m. Monday.
The 42-inch-diameter line, the smaller of the two key export arteries from the south, was knocked out of service Saturday after it was breached by looters looking to steal crude oil for sale on the black market, said an SOC official, also speaking on condition of anonymity.
The shutdown effectively halved Iraq's 1.8 million barrels per day in exports from the south, which accounts for about 90 percent of Iraq's total oil exports. Oil exports are the country's main source of financing for postwar reconstruction efforts.
SOC officials say it could take up to four days to repair the line costing the government tens of millions of dollars as they will likely replace the broken section. The earliest the line is likely to be back up is Wednesday.
The breach was north of the town of Faw, near the site where saboteurs last month attacked both of the southern export lines as part of their continuing campaign targeting Iraq's already creaky oil infrastructure. Those attacks halted exports for about a week.
Decades of neglect under the previous regime of Saddam Hussein, coupled with the impact of the war last year, have left the oil sector in shambles and thwarted efforts to boost exports well beyond the prewar levels of about 2 million barrels a day.
Iraq's new interim prime minister, Iyad Allawi, has said that recent attacks on the southern lines, along with the frequent strikes on a third line that links the northern oil fields of Kirkuk with the Turkish port of Ceyhan, have cost the country about $1 billion.
Officials have made securing the pipelines and the other oil infrastructure a priority. But with about 4,350 miles of pipelines crisscrossing the country, they concede there are many places for saboteurs to strike.
Traders and analysts have said the continued attacks on the pipelines raise fears on the market about Iraq's ability to be a steady and reliable supplier of crude at a time when global demand continues to rise and excess supply capacity is limited. Crude oil futures have remained high
On Sunday, saboteurs blasted a portion of a strategic crude oil pipeline that runs from the country's northern oil fields to the south. Fire crews and police from at least three nearby cities worked into the night to extinguish the blaze near Musayyib, about 50 miles southwest of Baghdad.
Oil officials say the line is largely out of use and the attack would have no impact on exports. Other domestic lines that feed a major Baghdad refinery have also been struck.