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January 14, 2005

Analysis: Oil, Electricity Ministers Criticized For Iraqi Fuel Crisis

by Kathleen Ridolfo

Attacks on Iraqi oil wells are the root cause of the shortage

Iraqi Oil Minister Thamir al-Ghadban has come under fire in the Iraqi media in recent weeks for the burgeoning fuel crisis that is plaguing the country.
Commentaries in the media have widely criticized the minister, as well as Electricity Minister Ayham al-Samarra'I for the crisis, despite claims by both men that militant attacks on oil pipelines and installations are to blame for the crisis. According to media reports, Iraqis are queuing for several hours for gas in some areas. The cost of bottled cooking gas has risen tenfold, and the cost of paraffin for heating has more than quadrupled.

The result has only aided black-market traders, who now get $5.22 a gallon for gas compared to 53 cents a gallon a few months ago, Bloomberg.com cited U.S. military officials as saying in a 10 January report. Propane, which retails for 40 cents a container, is being bought for $8.28 on the black market. The shortages at retail outlets are such that Iraqis who can afford to pay black-market prices are willing to pay the inflated prices rather than face meager supplies and long lines.


Oil Minister Al-Ghadban told Al-Arabiyah television in an 8 January interview that the crisis -- which has affected the flow of oil to ports in southern Iraq and to the north, crippled the electricity sector and left long lines at the pumps -- will not end any time soon. The crisis has affected large portions of the country, particularly the areas south of Kurdistan. "The aim is to deprive the city of Baghdad of oil derivatives through blowing up of the pipelines that carry various kinds of such derivatives," he said. The attacks have halted the flow of crude oil to the Al-Dawrah Refinery and stopped the flow of dry gas that feeds power stations. "This war [on the oil industry] is also aimed at disrupting the activities of the tanker trucks that carry oil products from various areas, particularly in Bayji where the biggest Iraqi refineries are located," he added.

Electricity Minister al-Samarra'I told Al-Sharqiyah television in a same-day interview that some 16 attacks on the Bayji-Kirkuk pipeline has meant that no gas is flowing to power plants. "The electric power generation stations are working just fine. They can supply citizens with electricity for a period of 15-16 hours each day, which is very good. However, we need fuel and gas. If we do not have that, how will we give them electricity?" he asked. Al-Samarra'I told Al-Diyar television the following day that he expected a marked improvement in electricity production after "there was a good supply of fuel to some important plants" earlier that day. An attack later in the day on the Bayji-Kirkuk pipeline and subsequent attacks the following day on two gas and oil pipelines near Kirkuk appears to have caused a further setback.

Continuous attacks have forced the interim government to cut its Al-Basrah light-crude supply contracts by 10 percent beginning on 1 February and continuing through June, oil officials said on 11 January. The cut amounts to 160,000 barrels per day. Exports through northern Iraq to export terminals in Turkey have reportedly been halted altogether. Al-Jazeera reported on 12 December that the attacks have forced Iraq to import some $200 million a month in oil products trucked in from Turkey, Iran, Jordan, and Syria, and through the Khor al-Zubeir terminal in the Gulf. But tanker trucks are also vulnerable to attacks, and the transportation costs exorbitant.

U.S. and Iraqi officials have been aware of the crisis for months, but Iraqis say there is not much they can do to avert attacks on the vast network of pipelines strewn throughout the country. In early December, an unnamed diplomat penned a memo circulated among coalition partners that said: "If the current situation does not improve quickly, public confidence in the government may deteriorate significantly," theage.com.au reported on 11 December. A U.S. State Department spokesman told the website that multinational and Iraqi forces were working to address the crisis, which he acknowledged was related to security issues.

Meanwhile, the crisis has prompted at least one militia to take matters into its own hands. The Imam Al-Mahdi Army, led by rogue cleric Muqtada al-Sadr, has been maintaining order at distribution centers in eastern Baghdad for weeks, ens-newswire.com reported on 5 January. Local residents said that the militia drove out black-market dealers and sent armed gunmen to gas stations to maintain order. The militia is also reportedly distributing gas tanks and kerosene in neighborhoods throughout Al-Sadr city. All reportedly at official state prices. Abu Hazim al-Khazali, a member of the cleric's so-called economic committee, said the militia wanted to prove it will help anyone who needs it -- even the government. He claimed that the militia would readily cease its activities once the National Guard was ready to take over.

[For more on events in Iraq, see RFE/RL's dedicated The New Iraq webpage.]
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