New York Times

Oil production barrels along to prewar levels
By Neela Banerjee
Baghdad
March 2, 2004

Iraq's oil industry is producing and exporting almost as much crude oil as it did before the war.

A month before the April 1 deadline set by Iraq and American officials for restoring the industry to prewar levels, the country is producing 2.3 million to 2.5 million barrels a day, compared with 2.8 million barrels a day before the war.

With additional production increases expected, oil exports this year could add $US14 billion ($A18 billion) to Iraq's threadbare budget, in contrast to a little more than $US5 billion last year, said a senior official with the Coalition Provisional Authority, the occupation government.

"We're well ahead of the targets that we set in the aftermath of the war," said Robert McKee, 57, a retired oil executive from Houston, who has led the drive to restore Iraq's oil fields. "We feel pretty good about it, but we have a lot of challenges left."

Iraq has the third-largest oil reserves in the world, after Saudi Arabia and Canada, and its economy is almost solely reliant on oil exports. That revenue could help finance an economic revival, Iraqi and occupation officials say, improving political stability as the country moves to sovereignty over the next four months.

The revival of the oil sector is the result of the $US1 billion in repairs undertaken by the Americans and Iraqis, as well as some dogged ingenuity by the Iraqis in keeping their badly damaged industry running. After the power transfer, set for June 30, Iraqi officials and their US advisers must fashion a modern industry from one starved of investment by Saddam Hussein and further diminished by the skimming of billions of dollars from oil sales under UN sanctions after the Gulf War in 1991.

The United States has so far spent $US1 billion rebuilding Iraq's oil industry and $US1 billion more on importing petrol and other fuels. A further $US1 billion is expected to be spent this year.