Tuesday, May 27, 2003

Iraq's Oil Terminal Ready for Exports 

From: spliffslips

Iraq's Oil Terminal Ready for Exports

AP Business Writer

May 25, 2003, 6:11 PM EDT

FAW, Iraq -- With Iraq preparing to ship out oil for the first time since the war, this languid fishing port will once again become a vital gathering point for Iraqi crude destined for tankers waiting offshore in the Gulf.

Until the war, more than half the country's oil exports flowed from its southernmost tip at Faw, coming mostly from oil fields and processing plants in southern Iraq. Two underground pipelines carried the crude here, then out to sea to Iraq's only functioning marine terminal.

British troops, appreciating Faw's strategic importance, captured the town, together with its oil storage tanks and the Mina al-Bakr terminal, during the first days of the U.S.-led invasion. The terminal is intact, and final repairs to a war-damaged section of pipeline were under way Sunday.

"Once the signal is given to begin exporting, we can do it any time," said Mohammed Al-Waely, operations manager of the state-run South Oil Co.

Iraq's acting oil minister, Thamer al-Ghadhban, said Saturday in Baghdad that Iraq would begin exporting crude again within three weeks. Oil revenues are essential to help pay for the country's postwar reconstruction, but the war has halted shipments.

Last week's U.N. Security Council decision to lift economic sanctions against Iraq was the first step in putting Iraq's crude back on the market. The oil ministry still must appoint an official seller of Iraqi crude, but repairs to its most important export facilities are nearing completion.

Iraq has the biggest proven crude reserves after Saudi Arabia. In the last years before the war, it exported most of the 3 million barrels it produced each day. Mina al-Bakr is one of Iraq's two main export outlets; the other is a pipeline to the Mediterranean port of Ceyhan, Turkey.

Not only is Iraq desperate for money from oil exports, but it has too little storage for the crude it pumps to extract natural gas, which Iraqis use for cooking. Iraqi oil executives worry they won't be able to process adequate volumes of crude to meet this politically important demand for domestic cooking gas.

These logjams are delaying production in at least one Iraqi oil field. Rumeila North, which produced more than 500,000 barrels a day before the war, is ready to come back two months after its wells stopped pumping.

"They could produce now, but where's it going to go?" said U.S. Army Corps of Engineers spokesman Steve Wright.

Iraq has several long-term export options. Besides using Mina al-Bakr and Ceyhan, it could try to refurbish an old pipeline to the Syrian port of Banyas. Iraq evaded sanctions by using this pipeline even during the recent war. It also could seek to reopen a pipeline, closed in 1986, that passes through Saudi Arabia to the Red Sea.

When exports resume, Iraq should be able to ship more than 1.2 million barrels a day from Mina al-Bakr, an offshore platform with berths for four large oil tankers lying 31 miles from Faw.

Mina al-Bakr was built in 1975 and suffered damage during the 1980-88 Iran-Iraq war. The U.S. company KBR helped rebuild it soon afterward. The Iraqis repaired subsequent damage inflicted during the first Gulf War, but analysts say the facility requires further work to reach its full export capacity of 1.6 million barrels a day.

A second Gulf export terminal, Khor al-Amaya, was destroyed during the first Gulf War and has only been partially repaired. South Oil's Al-Waely described it as "a jungle of pipes and burnt buildings in miserable condition."

However, the ocean is often calmer at Khor al-Amaya, making it easier for tankers to load oil there. South Oil wants to refurbish and enlarge the facility to ease demands on Mina al-Bakr.

The two pipelines that eventually will carry first crude to Mina al-Bakr run south along the Faw Peninsula, scene of the climactic battle of the Iran-Iraq War. Tank treads, pillboxes, and gun emplacements still litter the arid flatlands where almost 200,000 men on both sides were killed.

The pipelines emerge above ground at a gathering point near a beach at the town of Faw, about 40 miles south of Basra, southern Iraq's largest city. Iraqi troops laid mines in the sand to try to protect this vulnerable installation, and five British soldiers with heavy machine guns have taken over guarding the site.

"Oil is such an important part of Iraq's exports that we don't want to let looters hamper the effort," explained British Army Capt. Jim Hurst, 29, of Kingsbridge England.

Faw once had a base camp and heliport for oil workers and one of the world's biggest tank farms for storing crude. Iranian bombardments destroyed all 54 storage tanks, and only two have been rebuilt.

The tank farm is now a vast junkyard of mangled steel and pools of leaked oil that has congealed into tar. A stray dog became hopelessly trapped in one of the tar pits on Saturday, and a British soldier shot the animal to stop its suffering.

Copyright (c) 2003, The Associated Press


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