September 19, 2007

Smuggler's Paradise for Iraqi Oil Runners

After a revenue-sharing bill that would have opened Iraq’s oil fields to foreign investment failed in parliament, Iraq’s domestic oil industry has seen business as usual — theft, corruption and destruction of pipelines for political gain.

With Basra’s oil fields and ports under the control of warring Shiite tribes, militias illegally export millions of barrels of crude to Iran by boat under the noses of Iraq’s maritime forces.

On any given day, up to 300,000 barrels are smuggled into Iran, according to the Institute for War & Peace Reporting.

The Iranian coast guards and the Iraqi Navy are said to be involved in the trade, but the main culprits are the main ruling parties and militias of Basra, as well as the most influential tribes.

Iraqi maritime forces say they may arrest smaller smugglers but the government won’t allow them to arrest the larger gangs.

Meanwhile, the oil shortage means the price of gas and fuel put them out of reach of most Iraqis. Under a stable oil system, the country could be earning billions of U.S. dollars a year.

Tribal sheiks around Kirkuk also benefit from oil smuggling.

Insurgents used to destroy the oil pipelines at night, but now they dismantle them and capture the crude, reports the IWPR.

Oil companies can’t stop them, and sometimes won’t stop them, because the people hired to guard the pipelines are often from the same tribes as the smugglers.

The state-owned Northern Oil Company is said to have a mafia-like element that helps the smugglers divert the oil through the pipelines.

Rather than wait for the state to impose regulation, oil-rich Kurdistan’s regional parliament passed its own law to regulate oil production and sales as it prepares to open its fields to foreign investment.

Environment News Service reports that at their peak, Kurdistan’s oil fields could produce nearly half of all the oil in Iraq — more than the oil produced by Nigeria, Africa’s petroleum king.

Sunnis, whose tribal lands hold little oil, oppose the arrangement, as does the central government.

Agence France-Presse reports that the Kurdish regional government called for the resignation of Iraqi Oil Minister Hussein al-Shahristani after he said any external oil deals the region would pursue would be “illegal.”

Sources:

“Smuggling thrives in Basra”
Institute for War & Peace Reporting, September 7, 2007

“Tribes sabotage Kirkuk pipelines”
Institute for War & Peace Reporting, September 7, 2007

“Iraqi Kurds demand oil minister’s resignation”
Agence France-Presse, September 13, 2007

“Kurdistan’s gushing crude spawns conflict”
Environment News Service, September 12, 2007

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