On the Verge of Collapse
By Bernhard Zand
-- --The British and the Americans are
guarding Iraq's Persian Gulf oil platforms -- the troubled
country's only real sources of revenue -- like crown jewels. But
Iraqi oil is flowing sluggishly at best, while hoped-for
investments haven't materialized and the Iraqi oil industry is
on the verge of collapse -- both technical and political.
The HMS Bulwark, Her Majesty Elizabeth II's most
state-of-the-art warship, has been bobbing at the mouth of the
Shatt al-Arab River for days. With its crew of more than 600
men, the amphibious ship, outfitted with landing craft and the
latest technology, has a mission in fragile spots in the Persian
Gulf -- but nothing happens. The coasts of Kuwait, Iraq and Iran
are dimly visible on the horizon. The sea is calm as a dozen
fishing boats crisscross the waters around the ship. Sometimes
the calm lasts for days.
And then, suddenly, after weeks of monotony, something does
happen. Four Iranian patrol boats traveling at high speeds -- 45
knots, or about 80 kilometers per hour (50 mph) -- approach the
Bulwark from the East. They're manned by members of the Iranian
Revolutionary Guards -- not regular navy personnel. It's
considered an ominous sign.
Captain Clive Johnstone sprints from his cabin to the command
deck, and for a moment he loses his typically British cool. "All
men without orders leave the bridge immediately!" he barks.
Johnstone anxiously has his crew establish radio contact with
the Iranians. It takes a few minutes to make the connection, but
by then the Revolutionary Guards, or Pasdaran, have already
stopped their boats -- at a point they believe marks the
nautical border between Iran and Iraq.
The enemy that's making officers of the Royal Navy on the
Bulwark so nervous consists of bearded men piloting small,
agile, high-speed boats. Even the mightiest warship is
vulnerable, as the suicide attack on the USS Cole in the Yemeni
port city of Aden in October 2000 illustrates. In that incident,
explosives hidden on a fishing boat manned by al-Qaida
terrorists ripped an enormous hole -- six by 12 meters (19 by 39
feet) -- into the hull of the American destroyer, killing 17
Far more would be at stake if the same kind of attack were to
occur here in the northern Gulf. The Bulwark lies at anchor
between two giant oil platforms, the Basra and the Khawr al
Amaya terminals. Two pipelines running along the ocean floor
connect the platforms with the mainland 20 kilometers (12 miles)
away. When both platforms operate at full capacity, they can
load about 2 million barrels of oil onto waiting tankers --
about as much oil as France consumes in a day, or more than 2
percent of daily global demand. "A successful attack on one of
these terminals would raise the world market price by several
dollars within hours," says Commodore Bruce Williams, commander
of the multinational fleet that monitors the waters off the
Iraqi coast from its base on the Bulwark.
The world's most vulnerable economy
Because its northern pipeline into Turkey has been out of
commission for months as a result of ongoing terrorist attacks,
Iraq currently processes all its oil exports through the two
terminals on the Gulf, where it earns about 80 percent of its
revenues. No other country or economy in the world is quite as
vulnerable at a single point.
That's because oil revenues represent the only leverage
remaining to the government in Baghdad. This became abundantly
clear last week when Prime Minister Ibrahim al-Jaafari withdrew
his bid for reelection and, in doing so, eased a months-long
stalemate and reopened the wrangling for the government's 32
unoccupied ministerial positions. The Kurds promptly made it
clear that they were interested in the oil ministry. According
to Kurdish member of parliament Mahmoud Osman, the Kurds would
even be willing to part with the post of foreign minister, which
they currently hold, in exchange for the oil or finance
To this day, many Iraqis see the West's interest in Iraqi oil as
the real reason behind the 2003 US-led invasion. However, a look
at the actual state of the oil sector three years after
coalition forces marched into the country calls this view into
It isn't as though the occupying powers haven't tried to secure
control over Iraqi oil. Heavy new security nets hang down into
the sea from the rusty frame of the Basra platform, which dates
from the 1970s. Heavy gun emplacements have been set up, and
about 100 American and Iraqi soldiers are permanently stationed
on the platform. "Welcome to the Basra Terminal Hotel -- nice
view -- huge swimming pool" the Americans have written on a
steel girder in front of the containers that serve as their
sleeping quarters. Posters of Grand Ayatollah Ali al-Sistani
hang on the walls in the stifling section of the platform where
the Iraqi oil workers are housed.
A US destroyer and several coast guard vessels patrol a
two-kilometer perimeter around each of the terminals, while
ships operated by the fledgling Iraqi navy are stationed farther
out. Their mission is to escort the incoming supertankers
operated by international shipping companies to their berths
where, depending on their size, they spend up to two or three
days being tanked. It's a dangerous amount of time, but the
platform crews take as many precautions as possible -- the
result of previous attacks.
On April 24, 2004, three fishing boats approached the two
loading stations. Two exploded prematurely, putting the
terminals out of commission for a short time. But it was still
long enough to cause $28 million in lost revenues and a jump in
the global oil price from $33 to almost $40 a barrel. Terrorist
leader Abu Musab al-Zarqawi claimed responsibility for the
Although it's difficult to imagine a comparable attack
succeeding today, Commodore Williams admits that other threats
exist instead. "I'm really an ecologist," says the British fleet
commander. "That could come into good use here one day."
According to Williams, the condition of the two terminals,
especially the Khawr al Amaya platform, which was heavily
damaged in the Iran-Iraq war, is deplorable and the pipelines
haven't been properly serviced in years. "Much of the
infrastructure needs improvement," he adds.
A disaster waiting to happen
It's a diplomatic way of describing a potentially devastating
problem. Before the Iraq war, Mohammed Said, then manager of the
Subeir pumping station 250 kilometers (155 miles) inland, warned
against an environmental catastrophe in the Persian Gulf. He
claimed that the pipelines, installed in the 1960s and 1970s,
were full of holes and had defective valves, and that a reserve
basin for emergencies was nonexistent. "Whenever a tanker docks
at the offshore terminal and I start up the pump, I pray to God
that nothing happens," he says.
At the time Iraqi oil engineer Said, toeing the government's
propaganda line, blamed the problems on damage from the first
Gulf war in 1991 and sanctions the United Nations subsequently
imposed on the Saddam Hussein regime. Baghdad, he said, simply
didn't have the means to repair its oil facilities.
But to this day, three years after the invasion and the lifting
of UN sanctions against Iraq, there has been no significant
improvement in the condition of these facilities. The Southern
Oil Company's (SOC) ailing equipment continues to operate on the
verge of collapse. The safety valves on the Fao Peninsula, the
last sluice before the giant 48-inch pipelines drop to the ocean
floor, are permanently open. "They're so heavily corroded," says
a British engineer on board the "Bulwark," "that they probably
can't even be closed completely anymore."
Even today, there would hardly be any reserve tanks available in
the event of a leak in the underwater pipelines or an accident
on the platform. After the war, the US government awarded repair
contracts worth more than $10 billion to companies like oil
multinational Halliburton -- and yet the central Subeir pumping
station is still marked by deep craters once occupied by tanks
with holding capacities of up to 33,000 cubic meters (about 1.2
million cubic feet). The Hamden Junction south of Basra,
formerly the point of control for the flow of oil to the two
terminals, is out of order. To this day, the remark "all storage
destroyed" is written next to the locations of the Rumeila 1 and
Fao storage tanks on British technical maps.
Experts describe the condition of the oil wells themselves in
even more dramatic terms. Saddam began a policy of
overexploitation of Iraq's oil resources in the 1980s that
included neglecting to replace depleted oil with gas or water to
maintain the necessary pressure in the wells. Many of the
approximately 850 oil wells in southern Iraq are now "dead" and,
with the exception of the West Kurna reservoir, all so-called
super-giant fields are exhausted, writes oil engineer Abd
al-Jabbar al-Halfi. "We milked them like cows -- but without
giving them anything to eat."
After the fall of the Saddam regime, Iraq's oil technocrats
hoped for a turnaround -- but in vain. "The new government is
also constantly demanding that we step up oil production, even
though our equipment is outdated and primitive, the situation at
the oil wells is deteriorating and the pipelines are corroding,"
Whereas the insurgency has hampered reconstruction in central
Iraq, the southern part of the country has been relatively
secure until now, and yet little has been achieved. On the eve
of the war, Iraq was pumping about 2.5 million barrels of crude
oil per day. In the first three months of this year, the rate of
export was just over 1.7 billion barrels -- a far cry from the
predictions the Americans had given the Iraqis after the
invasion, when US officials were talking about production levels
of more than 6 million barrels a day by 2010.
A political tug o' war
The failure of the Southern Oil Company is politically explosive
material in Iraq's ethnically and religiously heated climate. In
February, the company's 15,000 workers and engineers sent an
urgent letter to Baghdad, in which they accused the government
of "deliberately" neglecting their company. "Our company," the
letter read, "has the world's largest oil reserves -- but we
have yet to find someone who will listen to us." The regime in
Baghdad, the oil company employees wrote, even spent months
blocking the decision to lease a pair of new, more powerful
tugboats so that large oil tankers could be safely guided into
the terminals in rough weather.
The solution the SOC employees have proposed -- that the company
be made independent of Baghdad -- is part of a political trend.
"What we want is an energy council operating directly within the
provincial government in Basra," says oil engineer Halfi. "This
council could then find ways to attract foreign investors to the
region, as is already being done in Kurdistan."
In fact, the Kurds are already pursuing a largely independent
oil policy with almost no regard for the central government in
Baghdad. Some of the Turkish, Canadian and Norwegian companies
drilling for oil in Kurdish northern Iraq have signed contracts
directly with the regional administration in Arbil, bypassing
the oil minister in Baghdad -- a model the Shiites in southern
Iraq apparently wish to emulate.
Baghdad appears to have accepted the change as inevitable.
"According to the constitution, the central government retains
authority over oil wells that are already producing," says the
former and possibly future Oil Minister Ibrahim Bahr al-Ulum.
"But the provinces have control over newly developed resources."
That's one way of reading the Iraqi constitution, and it's the
interpretation favored by the Shiites and Kurds. But Iraq's
Sunnis have a different view. They see it as unconstitutional
when regional parliaments negotiate oil controls directly,
circumventing the central government.
There is a simple reason behind the Sunnis' opposition. Iraq's
oil reserves are estimated to be at least 115 billion barrels,
and the most productive fields lie in the country's Kurdish
north and Shiite south. The Sunni-dominated center, on the other
hand, is dry.
Translated from the German by Christopher Sultan
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