28-05-03 Oil exports so pivotal to the rebuilding of Iraq could resume by the end of June, but only if the country's oil industry repairs key facilities and protects them against looting, Iraqi oil executives said. The UN decision to end 13 years of economic sanctions should help meet the first of these conditions, but the second -- lack of law and order -- remains a bigger challenge.
The lifting of sanctions opens the way for Iraqi oil sales overseas for the first time since the US-led invasion on March 20, said the operations manager of state-run South Oil Co., Mohammed Al-Waely. The Iraqi Oil Ministry will also be able to import the spare parts needed to repair decrepit facilities and even boost its anaemic crude production, Al-Waely said.

Iraq will also be opened to an untold variety of foreign-made consumer goods. Without so many middlemen and smugglers taking their cut, prices on just about any imported item should fall, businessmen in the southern city of Basra said. "Importing used to be justfor special people -- for Saddam and his clique. But now anybody will be able to import," auto-parts dealer Abdul Almaliki said.
Iraq has 112.5 bn barrels of proven oil reserves, the world's second-largest, and crude exports are expected to pay for much of the country's reconstruction. "This is what we were waiting for. But who's going to deal with this? There is no government and no authority except the Ministry of Oil, and they're just at the beginning of their work," South Oil's Al-Waely said.

The oil industry's next challenge will be to empower Iraq's oil marketing company, the State Oil Marketing Organization, to sign sales contracts for crude shipments. The marketing agency is working now to resolve this problem, Al-Waely said.
Since the invasion, buyers have balked at loading Iraqi oil on their tankers because the country has had no internationally recognized agency to act as the seller. They fear that if they were to load the oil, other firms might lodge rival claims to it and try to impound their tankers.

About 9.3 mm barrels of Iraqi crude has been sitting in storage for several weeks in the port of Ceyhan, Turkey, awaiting shipment. Once that legal question is resolved, exports depend on fixing and refurbishing processing plants and other installations and -- even more important -- stopping the thieves who continue to prey on these facilities.
"We can export after one month if these conditions are met quickly," said South Oil's general director, Jabbar El-Leaby. El-Leaby, whose company runs the oil fields and pipelines in southern Iraq, spoke at a makeshift office in his company's badly damaged headquarters in Basra. The eight-floor main building is an empty, windowless shell. Allied bombardments inflicted the initial damage, and looters pillaged and burned what was left.

Iraq's goals for oil production look good on paper. The country is producing about 100,000 bpd in the south and a similar amount at wells in the north. South Oil expects to pump 500,000 barrels of crude by the first week of June -- enough oil to meet domestic demand for gasoline and cooking gas throughout the South, El-Leaby said.
The company aims to ramp up production quickly after that. Together with oil fields in the north, the country could pump 3.5 mm bpd by the first quarter of next year, El-Leaby said. The lifting of sanctions could speed development of Iraqi fields, especially if foreign oil companies are allowed to invest there.

New oil fields in the south, like Majnoon and West Qurna, that are just beginning to produce. Majnoon, which was producing about 30,000 bpd before the invasion, could eventually yield 20 times that amount. West Qurna could double its pre-war output to 400,000 barrels, El-Leaby said.
Iraq's biggest oil fields, Rumaila South and Rumaila North, contributed more than half of the 2.1 mm bpd that Iraq was pumping on the eve of the US-led invasion. However, the Rumaila fields have produced for decades and are only 25 % as prolific as they were at the start, said operations manager Al-Waely.

For now, oil officials are more concerned with the lack of law and order. South Oil has at least 400 newly British-trained police guarding the Basra refinery and other facilities, and it plans to boost that force to more than 1,000, Al-Waely said.
The guards can try to stop thieves, but they have no authority to make arrests. Nor have the British forces occupying southern Iraq done as much to stop looting as Al-Waely would have liked.
British Army spokesman Lt. Col. Ronnie McCourt argued that some Iraqis expect instant results. "But if we rush now and we get it wrong," he said, "then we'll be castigated."