Saturday, May 12, 2007

Missing Oil Billions And Missing Meters

By Cernig

The NY Times reports today that billions of dollars worth of Iraqi oil is missing according to a new government study - but the report doesn't speculate where the oil cash disappeared to. However, a recent CorpWatch article did speculate - mostly right into the pockets of corrupt officials and the oil companies who do under-the-table deals with them.

The NY Times:
Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.

Using an average of $50 a barrel, the report said the discrepancy was valued at $5 million to $15 million daily.

The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.

The report also covered alternative explanations for the billions of dollars worth of discrepancies, including the possibility that Iraq has been consistently overstating its oil production.
And CorpWatch:
smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT - has not worked since the March 2003 U.S. invasion of Iraq.

Officials blame the four-year delay in repairing the relatively simple system on "security problems." Others point to the failed efforts of the two U.S. companies hired to repair the southern oil fields, fix the two terminals, and the meters: Halliburton of Houston, Texas, and Parsons of Pasadena, California.

The Special Inspector General for Iraq Reconstruction (SIGIR) is scheduled to publish a report this spring that is expected to criticize the companies' failure to complete the work.

...These companies have a lot of experience at the terminals where the black market now thrives. Indeed, Halliburton built the ABOT terminal, then known as Mina al-Bakr, in the early1970s. After it was damaged during the Iran-Iraq war in the 1980s, Halliburton repaired the terminal, before it was bombed yet again during the 1991 Persian Gulf War.

...The kinds of meters they were supposed to repair or replace at ABOT are commonly found at hundreds of similar sites around the world. Because they are custom-built, shipped, then assembled and calibrated on site, the process can take up to a year. But the probelm has persisted for four years.

After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields.

...Lieutenant Aaron Bergman, the U.S. Navy officer in charge of Mobile Security Squadron 7 at ABOT, says export authorities have "guesstimated" how much is being sold, with a back-of-the-envelope formula: Every centimeter a tanker lowers into the water equals 6,000 barrels of oil cargo.

"So you can imagine," he said earlier this month to Stars & Stripes, a newspaper serving the U.S. military, the numbers could be off, "A couple of inches could equal 180,000 barrels of fuel."

"I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq," Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station.

Neither US officials nor contractors have provided good reasons why, four years into the US occupation, the meters have not been calibrated, repaired, or replaced. One excuse is that the job of calibration requires special devices to assess the current meters and security issues make importing these devises problematic. Yet that and other security-related explanations fall apart given that the oil terminals are under 24 hour high security guard, lie more than 50 miles off-shore, and are accessible only by helicopter or ship.
And a sidebar notes that:
At ABOT, officials at Iraq's state-owned South Oil Company (SOC) that extracts the crude, and at the State Oil Marketing Organization (SOMO) that pipes the crude to the terminals, would have to know about smuggling, even if they were not benefiting from the scheme.

Buyers from Brazil to India, from Thailand to the United States, purchase crude from Iraq at ABOT. The tanker operators would also have to be part of smuggling schemes. They would sign receipts for a lower quantity than they actually receive, and pay the extra directly to the smugglers. The most likely collaborators are either Iraqi or U.S. officials who supervise the production and delivery. Or both.

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