an off the books slush fund that both the Americans and their Iraqi allies could use with impunity to cover expenditures they would rather keep secret

April 4, 2006 6:43 PM

How Much Oil Has Iraq Been Exporting Since We Invaded? And how much revenue should be recorded? --Iraq’s oil exports hit another post-invasion low in December and January, according to the Oil & Gas Journal. How do they know? Good question: according to Reuters, production and exports have gone unmetered since the Coalition Provisional Authority took over the country following the 2003 invasion; until new meters are installed (in 1-2 more years), everybody’s just guessing. Our Government's Energy Information Administration has all sorts of statistics--anyone wanna figure out how they're derived regarding Iraq?
posted by amberglow (22 comments total)

Nice title.

I was going to say, I'm sure they know how much money they've been reciving.
posted by delmoi at 6:53 PM on April 4, 2006

Reuters reported on 3/27 that : Iraq's oil exports are currently running at around 1.5 million barrels per day (bpd) and were at between 1.2 and 1.4 million in recent days, a senior U.S. naval engineer overseeing export facilities said on Monday. ... Daniel Speckhard, the senior U.S. diplomat in charge of economic reconstruction projects in Iraq, said overall national oil production was running at about 2.0 to 2.1 million bpd and that a target for raising production -- with current infrastructure -- of 2.8 million bpd remained in place. ...

But Speckhard recently said this as well: U.S.: Iraq on own to rebuild (USA TODAY, 3/23/06) ... Iraq's main revenue source — oil — is hampered by insurgent attacks on production facilities and pipelines, forcing the country to spend $6 billion a year on oil imports....
Iraq must increase oil exports from their current level of about 1.6 million barrels a day to 2 million barrels a day, Speckhard said. ...

Can anyone explain this? First of all, how do they know any of these amounts? And why is the target to be reached 2 million barrels a day on March 23rd, and then the target is 2.8 million 4 days later, with the original target said to already have been met? Second of all, why is Iraq importing $6 billion worth of oil a year, when there's supposedly 2 million barrels a day being produced right there (and still less electricity than before we invaded)? Where are the revenues from those 2 million barrels a day going, if that even is a real number? Why is $6 billion being imported? What's paying for Iraq reconstruction (we were told it would be the oil revenues), and where is that 6 billion coming from?
posted by amberglow at 7:03 PM on April 4, 2006

I have to say, from reading "Twilight in the Desert" and "Persian Puzzle", I've learned that the oil industry is stupifying complex. How are we to know that Iraq's prewar export numbers are even correct? The incentive to lie for political and economic gain are enormous. And the so-called underproduction of Iraq oil may not be a bad thing, it may allow more recovery in the future due to the repressuration of the gas cap.

I would not be surprised if the US came to Iraq and saw a neglected oil infrastructure. Had Iraq been overproducing oil (creating dangerously low levels of gas thereby limiting the total recoverable oil) the underproduction now may be necessary. Not to mention the need for salt water to repressurize the fields (were these line cuts? what condition are they in?). If there's one thing I am certain, the US and various corporatinos are doing all they can to get the oil back online.
posted by geoff. at 7:08 PM on April 4, 2006

I'm split, and I'd love your input Amber Glow. Was this part of the plan, or not. Exxon is now the top fortune 500. Sure, we're fucked, but the oil stocks are going great guns.

So, is this Iraq a sympton of incompetance, or a strike of genius for the Bush crew? I really have no idea.

Perhaps Bush is just the anti-Christ.
posted by gesamtkunstwerk at 7:21 PM on April 4, 2006

As for why they're importing while they're exporting, it seems concievable that they're having problems with their refineries in particular, and thus export crude while importing more usable stuff.
posted by gsteff at 7:43 PM on April 4, 2006

How are we to know that Iraq's prewar export numbers are even correct?

Well, wasn't Iraq in Opec and their oil output was metered and regulated by the UN too, no? I'd think pre-war figures were correct, or semi-correct. Without any metering and conflicting statements out of the people in charge now and since 03, and for the next 1-2 years, i don't know how anyone could even tell. I keep thinking back to those energy meetings Cheney had pre-9/11 where maps of Iraq were involved. Are our oil companies making double money from both getting some of that oil and then selling oil back to Iraq? Is there a way to find out? (i'm hoping someone here will have real facts and/or answers, gesamt--i don't trust any of them so automatically believe the worst possible explanation, given their behavior and lies so far.)
posted by amberglow at 7:45 PM on April 4, 2006

see, gsteff, i remember hearing how the first thing we did when we invaded was secure the refineries and oil fields. ...As part of its planning for the assault, the Department of Defense established detailed plans to seize Iraqi oil fields and installations during the first days of the war. "It's fair to say that our land component commander and his planning staff have crafted strategies that will allow us to secure and protect these fields as rapidly as possible," a top Pentagon official told news reporters on January 24, 2003. Once U.S. troops entered Iraq, special combat teams spread out into the oil fields and occupied key installations. In fact, the very first operation of the war was a commando raid on an offshore loading platform in the Persian Gulf. "Swooping silently out of the Persian Gulf night," an over-stimulated reporter for the New York Times wrote on March 23, "Navy Seals seized two Iraqi oil terminals in bold raids that ended early this morning, overwhelming lightly armed Iraqi guards and claiming a bloodless victory in the battle for Iraq's vast oil empire."
This early "victory" was followed by others, as U.S. forces occupied key refineries and, most conspicuously, the Oil Ministry building in downtown Baghdad. So far, so good. But almost instantaneously things began to go seriously wrong. Lacking sufficient troops to protect the oil facilities and all the other infrastructure in Baghdad and other key cities, the military chose to protect the oil alone ...
posted by amberglow at 7:49 PM on April 4, 2006

Well, we were going to use the oil money to pay for the "reconstruction of Iraq". Remember?
posted by delmoi at 7:52 PM on April 4, 2006

Well, wasn't Iraq in Opec and their oil output was metered and regulated by the UN too, no?

Isn't it fairly well documented that Saddam supplied a blackmarket for oil? And this is how he stayed wealthy in spite of the stiff sanctions on his nation. Do the UN metering and OPEC regulations take that into account or was that totally off the official books?
posted by aburd at 7:58 PM on April 4, 2006

As for why they're importing while they're exporting, it seems concievable that they're having problems with their refineries in particular, and thus export crude while importing more usable stuff.

Also, pure geography may play a part. Makes no sense to ship your oil across you whole county if a neighbor has reserves right across the border. This show Iran having fields right on the border.
posted by thrako at 8:13 PM on April 4, 2006

I thought all the investigations into the UN and the Oil-for-Food stuff revealed all the blackmarket stuff? And should we be doing what Saddam did?
posted by amberglow at 8:32 PM on April 4, 2006

Bayoil, Houston
posted by shnoz-gobblin at 8:39 PM on April 4, 2006

The numbers I've seen are "hundreds of millions" (anyone with a more accurate number?) for the Oil-For-Food skimming. Isn't that essentially in the noise compared to the amount of money that has gone missing since the US occupation?
posted by dopeypanda at 10:13 PM on April 4, 2006

And a certain Mr. Chalabi has been "interim" oil minister for almost a full year now. 'Nuff said.
posted by rob511 at 10:49 PM on April 4, 2006

Hmmm, are slush funds conducive to price fixing?
OPEC’s been price fixing as far back as I can remember.
And Hussein sold oil on the black market you say?
Lotsa questions here.
posted by Smedleyman at 10:11 AM on April 5, 2006

No oil for blood! - Chalabi's motto
posted by nofundy at 12:25 PM on April 5, 2006

This is an interesting enough post, in that it points out that metering isn't going on. That said, I think the poster is giving people the wrong impression here. It's not that there is any convincing evidence that the US is secretly pocketing a ton of money here for exports above and beyond the estimated 1.1M BPD in Iraqi exports. It's that there is no public information to let people know how much oil is being pumped but isn't arriving at the point of destination. That's the scandal here.

It's easy to determine how much oil is being exported. It either goes out from Basra, or it comes in on the pipeline to Turkey. In that sense, 1.1M bpd sounds about right, because as I've mentioned before on MeFi, the total amount exported is in the dumps, and has decreased since the onset of the conflict.

The problem comes when you start metering how much is being pumped through pipelines, and start comparing that amount to how much is arriving on the other end of the line. It's a known fact that insurgents are tapping into the flow, and using that oil, in part, to finance the insurgency. The question is, how many other factions are doing the same thing? Do Sadr's people do this in areas they control? How about SCIRI, or Iraqi Army / police?

As for Iraq importing gasoline, it's a longterm problem in the most insurrection-prone parts of the country. It's not that Iraq is incapable of refining enough oil to handle their own needs. It's that they cannot reliably deliver it to market via tanker trucks. No amount of protection suffices, as they are just too big of a target. If you can hit the broad side of a barn with an RPG, you can definitely ruin the day of a poor Iraqi truck driver. Why is the truck driver an Iraqi? Because given the risks, nobody else sane would even consider doing it!

Baghdad is being strangled when it comes to gas. Most of their gas is supposed to come from the northern Iraq refinery complex at Baiji, but the truck drivers have repeatedly walked off the job, because they feel unprotected. They recently did a convoy run from Baiji to Baghdad with full military HMMWV escort, air patrols... the works. They still got badly shot up. John Robb has done a good job covering this subject... see here, here, and here.

Things in/near Baiji aren't getting better anytime soon. Quite the opposite. It's arguably the most dangerous place to work in all Iraq right now. Recent news from there isn't any better.


"...a certain Mr. Chalabi has been "interim" oil minister for almost a full year now."

Chalabi isn't interim oil minister anymore. Hashem al-Hashemi is the oil minister. He certainly wasn't the interim director for a whole year, as you seem to suggest.

Not that I'm any friend of Chalabi, but still, facts is facts.
posted by insomnia_lj at 12:40 PM on April 5, 2006

Thanks for the correction, insomnia. I guess I didn't, um, dig deeply enough.
posted by rob511 at 1:28 PM on April 5, 2006

Give us an inferiority complex whydontcha insomnia_lj?

Nice meaty one.
posted by Smedleyman at 1:35 PM on April 5, 2006

thanks, insomnia--i was hoping someone would have real info. Give us more, and do you know why one day Speckhard says it's 2million barrels a day and one day it's 1.5 while someone else says another figure? Why is it we don't know, or do we know? And is there any other oil-producing country on Earth where it's unmetered? Why are we keeping it that way? Why did we stop the metering when we invaded? What possible reason is there for it still being unmetered 3 years later?
posted by amberglow at 2:35 PM on April 5, 2006

"do you know why one day Speckhard says it's 2million barrels a day and one day it's 1.5 while someone else says another figure?"

One likely answer: politicians talk smack. Especially a lot of the Iraqi politicians. Some want to report the "good news", some want to make things look bad, a la "the squeaky wheel gets the grease", and some extrapolate on legitimate good news over a short period of time to say "Hey, if this keeps up, things could look good this month!"

Part of this is also likely to be a case of "the blind men and the elephant." There is obviously some confusion going on between people citing total production figures, and total export figures, which are entirely different creatures...

Let's face it. Most politicians aren't experts at this stuff, and probably would have a hard time really defining what the figures they spew truely mean anyway.

Oh... and did someone mention there isn't any official metering going on, and that everyone is just guessing?

"And is there any other oil-producing country on Earth where it's unmetered?

Any major producer? Not that I am aware of.

"Why are we keeping it that way?"

It could be related to the risk of having people go over there and do the work. Barclay's recently said "The general integrity of Iraqi oil infrastructure appears to us to be heading backwards rather than forwards." Under such circumstances, metering the oil might not be the highest priority. As it is, a huge amount of reconstruction has been canceled, and the money is all spent. Seems likely that similar things are happening in the oil field too.

There is also the possibility that metering would expose an embarassing secret or two. If you're the US and you know that your Iraqi friends guarding an oil facility are skimming off the top, do you have contractors install something that will prove their theft? (Sure hope those contractors have good security, because they're going to need it to protect themselves from our aforementioned Iraqi friends...)

There's also a "need to know" issue here. The US military knows how much is exported, I bet... but do they want the Iraqis to know, especially if the details of where, when, and how much get back to people in the Iraqi government, and from there, to the insurgents?

"Why did we stop the metering when we invaded?"

I would assume for many of the same reasons, or possibly related to the disorder, destruction, etc. that might've made metering either impracticable or not the highest priority at that time.

"What possible reason is there for it still being unmetered 3 years later?"

Dunno. I can only theorize. That said, it seems quite likely to me that rather than there being this huge glut of oil that we're secretly importing and pumping into a big tank in the midwest somewhere, odds are good that Iraq is underproducing or that there is a significant degree of internal theft within Iraq. Perhaps embarassingly so.
posted by insomnia_lj at 3:55 PM on April 5, 2006

well, given who's in charge of restoring oil services in Iraq, why should we blame Iraqis? or trust them at all? -- Halliburton Co. repeatedly overcharged the government and exhibited "profound systemic problems" under a $1.2 billion contract to restore oil services in Iraq, according to internal government documents released yesterday by one of the company's fiercest critics. ...
posted by amberglow at 6:18 PM on April 5, 2006