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Iraq oil shipments to Turkey could continue any day now
BABA GURGUR, Iraq -- With security guards now deployed along Iraq's export pipeline to the Mediterranean, crude from one of the country's biggest oil fields could start flowing to overseas markets "in a matter of days," a senior Iraqi oil official told The Associated Press.
Sabotage attacks forced the Ministry of Oil last year to close the pipeline, one of its two main arteries to overseas markets, but repairs to the network are now almost complete. The North Oil Co., which pumps crude near the northern city of Kirkuk, could boost Iraq's exports by up to 320,000 barrels a day -- or about 20 percent -- as soon as the Oil Ministry gives the order, said the company's deputy general director, Manaa al-Obaydi.
Southern pipeline reliance
Since the ouster of Saddam Hussein last April, Iraq has only been able to export crude from its southern oil fields. The suspension of exports from northern Iraq has limited the North Oil Co. to producing solely for domestic consumption.
The long-anticipated resumption of oil shipments from Kirkuk to the Turkish port of Ceyhan would unlock a trove of crude and put Iraq on course to surpass its prewar production of 2.5 million barrels a day. Iraq needs to maximize oil exports to pay for repairs and improvements to its shattered economy and to undergird its future political stability.
Initial shipments would be modest in size but would have a big psychological impact, especially on the market for heating oil, said Peter Gignoux, an independent analyst based in London.
"The market needs it. North America has just been ravaged by staggered onslaughts of arctic air," he said from Aspen, Colo.
Iraq now pumps more than 2.3 million barrels a day. Its daily exports exceed 1.5 million barrels, almost all of them leaving from Iraq's Basrah Oil Terminal in the Gulf. Once the pipeline to Turkey reopens, Iraq could rapidly increase its crude exports by as much as 20 percent.
"The closure is not a forced closure. It's not that I cannot export and therefore I'm not exporting. I can export if the Ministry of Oil decides to do so," he said at his company's headquarters, 5 miles northwest of Kirkuk.
Security problems, which used to be the overwhelming reason for the pipeline's closure, are now a minor issue thanks to the employment of thousands of specially trained guards.
British security firm Erinys International Ltd. has hired many of the guards from villages near the same sections of pipeline that saboteurs have bombed and strafed.
It won't be long before North Oil can export again; shipments could restart within "a matter of weeks -- a matter of days even," al-Obaydi said.
Crude exports from Kirkuk to Ceyhan continued right until Saddam's ouster on April 9, but the Iraqi-Turkish pipeline has remained shut to normal operations since then.
Until now, the pipeline has been an easy target for saboteurs keen to deprive Iraq of much-needed earnings. Although the pipeline lies mostly underground, a string of pumping stations and power lines mark its route, and a service road runs parallel to it.
"It doesn't take much intelligence to discover where the pipeline is," said Fouad al-Kadhimi, a former ministry engineer who managed the pipeline's construction in the mid-1970s.
However, the Oil Ministry is deploying 5,000 security guards in northern Iraq, and it's making a six-fold increase in the number of vehicles for mobile security patrols. It may install electronic motion detectors along the pipeline and is already arranging aerial surveillance of it, possibly using unmanned drones.
"That is an option. There are capabilities out there to provide a visual picture on the ground day and night," said U.S. Army Col. Tom O'Donnell, who oversees formation of the oil security guard force.
North Oil Co. supplies crude to refineries in Beiji, some 125 miles north of Baghdad, and Doura in the capital city. It also produces oil so it can skim off any associated natural gas for use as cooking fuel. Because it lacks an alternative export route or storage space for this de-gassified crude, it must then reinject it back underground. The company currently reinjects 90,000 barrels each day of crude that it would otherwise ship overseas.
Iraq has at least 112 billion barrels of proven crude reserves, many of them in fields near Kirkuk. The biggest northern oil field contains an estimated 7 billion barrels of recoverable crude, putting it in the same league as Prudhoe Bay, Alaska, during its heyday in the 1970s, said Leo Drollas of the London-based Center for Global Energy Studies.
Production from Baba Gurgur and surrounding oil fields peaked in 1989 at more than 1 million barrels a day. Output fell to around 750,000 barrels just before last year's U.S.-led invasion.
"To bring me back to the level of 1 million barrels-plus, I would have to develop new fields. I can't develop those new fields with my own resources," al-Obaydi said. "I would need foreign investors."
Baba Gurgur is the birthplace of Iraq's oil industry. The Turkish Petroleum Co., a consortium including British oil giant BP, Royal Dutch/Shell and the precursor of France's Total, found Iraq's first commercially viable deposits of crude here in 1927.