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UN: Iraq Faces Tough Challenge To Raise Oil Production

Recent UN initiatives to allow Baghdad to sell more oil to buy food and medicine may not mean that increased supplies of humanitarian goods will reach Iraq soon. The reason is that Iraq first must increase its oil production -- a daunting task given the state of its oil industry. RFE/RL correspondent Charles Recknagel reports.

Prague, 14 February 2000 (RFE/RL) -- The UN has taken steps in recent months to increase the allowance of humanitarian aid for sanctions-struck Iraq.

In December, the Security Council passed a resolution lifting the ceiling on the oil-for-food program under which Iraq now sells up to $5.3 billion worth of oil every six months. At the same time, the Security Council said a twice yearly limit of $300 million on Iraqi purchases of spare parts for its oil industry can be lifted.

But how quickly Baghdad will be able to take advantage of these initiatives depends on its own ability to increase oil production. And analysts say that could take months given the dilapidated state of its oil infrastructure.

Manoucher Takin is an oil expert at the Center for Global Energy Studies in London. RFE/RL asked him to describe the challenge Iraq faces.

Takin says Iraq's production last year of 2.2 million barrels a day represents about the maximum it can do without new parts or without seriously damaging some oil fields.

He says Iraqi oil engineers are maintaining that level of production by using equipment well beyond its standard lifetime and by cannibalizing other, unused facilities for replacement parts.

"They have been able to increase production over the last year [by] repairing and using facilities to the utmost of ability. Under critical conditions, which is really like war conditions, those in charge use the equipment and facilities beyond the standard [lifetimes] and there have been many reports that there has been so-called cannibalizing, that parts and pieces from other equipment which were not in use have been taken and used to replace parts which did require replacement."

He says Baghdad also has pushed oil fields to produce at maximum rates, even at the risk of damaging some in the long term.

"Under these critical conditions, the oil fields have been pushed to produce greater than the sustainable capacity which is recommended on a technical basis, although in the long term, this would have adverse effects and will be non-repairable damage. So, they have pushed the reservoirs beyond the normal expectation and the high values which we saw reported last year were based on surge capacities, not normal maintainable capacities."

Takin says Iraqi engineers are using just a few wells to rapidly exploit oil fields rather than following the more standard -- but costly -- practice of drilling many wells to drain the fields gradually. He says such rapid removal of oil risks letting water and gas into a field, something which later makes recovering its remaining oil much more difficult.

The expert says Iraq now urgently needs spare parts if its hard-pressed oil industry is to produce more than its current levels. He says these include parts for drilling rigs, for pumps and for pipelines.

Most analysts believe if Iraq is able to buy sufficient spare parts, it could eventually reach a production level of some 3 million barrels per day. That would be almost 50 percent more than what it produces now.

Such a volume would be similar to what Iraq produced in the 1970s before a string of crises badly battered its oil industry. Those crises included the 1980-88 Iran-Iraq war, the 1990-91 Gulf War and subsequent UN sanctions.

But raising production to pre-crisis levels is certain to take time, even if spare parts become readily available.

"Iraqi authorities have said that if their requests were met for spare parts last year they would have been able to reach three and 3.5 million barrels per day in early 2000 and later this year. So [there is] something like a six months, one year lead time. But in practice, the actual spare parts have been received very late."

Any spare parts Iraq orders for its oil industry are subject to strict scrutiny by a UN committee before delivery is approved. The scrutiny is to assure the parts do not include equipment which could also be put to military use.

In the past, this screening process has been lengthy and the subject of bitter debate. Washington has said the scrutiny is needed to assure arms controls on Iraq, while Baghdad says the U.S. deliberately delays the approval process to heighten the pressure of UN sanctions.

The UN Security Council resolution in December sought to ease the conflicts over screening by saying parts and equipment to upgrade Iraq's oil infrastructure will be expedited through pre-approved lists by a group of experts. As part of the initiative, a panel is to survey Iraq's oil industry and recommend improvements.