Decades of neglect hinder oil repair efforts

DOHA, Qatar -- The unexploded bombs littering Iraq's oil fields aren't the only obstacle to rebooting the country's petroleum sector.

Other damage dates back to decades of conflict, neglect, patchy repair work and environmental disregard by a cash-strapped Iraqi regime -- problems now surfacing as U.S. oil engineers peel back the curtain on what was a secretive national industry.

"We're trying to put something back together that was being held together with string and chewing gum. It's tough," said one U.S. oil engineer involved with repairs.

Broken parts, missing parts, bypassed safety standards and pools of sludge are just some aspects of Saddam Hussein's legacy that still challenge oil workers.

Iraq's oil industry was savaged by the 1980-88 Iran-Iraq war and the 1991 Gulf War. It was then cannibalized, neglected and run into the ground over more than a decade of U.N. sanctions imposed as punishment for invading Kuwait.

Jump-starting the business is key to U.S. reconstruction plans. Iraq has the world's second-biggest proven crude reserves. And cashing in on exports is billed as a way to pay for reconstruction costs that could reach $600 billion over the next decade.

But the industry's fitful start highlights how damage done long ago still hurts.

The latest struggle has been trying to restart a key refinery in the southern city of Basra, where supplies of gasoline and propane are running out. Officials hoped to restart it Monday, but now say it could take four or five more days.

The refinery is riddled with leaks of years gone by. And one of its two production trains is inoperable because of Gulf War damage and a lack of maintenance, according to an oil team official from the Office of Reconstruction and Humanitarian Assistance.

"There was damage left over from the first war and then the lack of spare parts and other issues," he said, speaking on condition of anonymity. "There's going to be a lot of ongoing work."

Analysts long knew Iraq's oil industry had fallen on hard times, but it was difficult to tell how bad things were. The inner workings of the Oil Ministry were closely guarded by Saddam's regime, and estimates on oil production and exports were distorted by widespread smuggling and sanction-busting.

Catastrophic predictions that retreating Iraqis would sabotage hundreds of oil wells never happened in the latest war. But repair workers say they are just as surprised by how decrepit the oil system appears to have been before the bombs fell.

The U.S. interim administration wants to restore Iraqi crude production to its prewar level of 2.8 million barrels a day as soon as possible. But analysts say that level was sustained by shoddy safety and environment standards that don't pass Western muster.

"It's no big secret that the Iraqis have had to improvise, to put it mildly, to keep the industry operating," said Jan Stuart, an oil analyst with ABN Amro in New York. "Whether all those improvised measures are deemed to be safe and sound in practice in the understanding of the new regime is up for question."

The huge Baiji refinery of northern Iraq is a case in point. Even before the war, its poorly working machinery could convert only half the 310,000 barrels of oil it processes each day into usable fuel.

The other half became waste, a sulfurous goo held in giant pits at the plant or pumped off to evaporation ponds in distant valleys -- to the horror of nearby farmers.

The refinery also lacked equipment to clean the nearly 21,000 cubic feet of water used every hour. A canal carried the highly sulfurous waste water to the Tigris River.

Since the war ended, U.S. engineers point to other problems, including oil reservoirs waterlogged by slipshod pumping practices. They also claim U.N.-approved oil repair equipment allowed during the 1990s appears to have sat unused.

For Iraq to reach prewar production capacity, analysts estimate it will take an infusion of $600 million or more. To reach the 1970s heyday output capacity of 3.5 million barrels a day, it could take billions of dollars more in investment, they say.