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Iraqi Minister Says July Saw "Largest Ever Oil Revenues"
August 10, 2005
A news conference by Iraqi Oil Minister Ibrahim Bahr al- Ulum to unidentified correspondents.
At the beginning of the news conference, the minister makes a statement on the Oil Ministry "recent achievements".
The minister says: "The ministry drew up effective plans commensurate with the size of the challenges that are facing the oil sector. This is a vital sector on which the state budget basically depends, taking into account the top priority of the phase in which we are living and the need to provide oil byproducts to the citizens.
"In general, it would be useful to mention figures that reflect the Ministry's plan. In the field of crude exports, the Oil Ministry has been able to raise the level of the export operations, reaching about 1.6 million barrels per day [bpd] from the Iraqi ports for last month. If we compare this with the daily exports in June, which was 1.44 bpd, and in May, during which the daily exports were 1.38 bpd, we will find that the Oil Ministry has been able to carry out the 100-day plan; namely, the expansion of the oil export capacity.
"It is also useful to recall that the Iraqi revenues for July were probably the largest in the history of the Iraqi oil industry. The revenues during July amounted to 2.5bn dollars. Furthermore, the Oil Ministry aspires to promote this plan further to reach the level that we reached during the first half of last year.
"Moreover, it is also useful to review the operations of the Iraqi refineries because this is of direct interest to the citizen. Perhaps we can indicate the increase in oil byproducts in our Iraqi refineries in the north, in the centre, and in the south. The average increase in the production of liquefied Gas and gasoline was between seven and 10 per cent. As for gas oil and paraffin, the increase in July was between 18 and 20 per cent. Perhaps if we look at some useful figures of Gasoline production in our refineries, we will find that in May it was 9.6 million litres per day. It increased to 10.25 million litres in June and 11 million litres per day in July. By solving the problems of the congestions and the problems that our refineries are facing, we hope to increase the production of gasoline to 13 million litres per day by the end of this month.
"The Central Committee, which was forced in the Oil Ministry two months ago to deal with this congestion, hopes production would go as high as 14 million litres per day by the end of October.
"When we talk about the refineries, we must also speak about the operations of exploiting gas in Iraqi areas. The staff of the Southern Oil Company realized a big stride in exploiting the accompanying natural gas and carried out a project that would supply our networks with 80 million cubic feet of gas for treatment [al- ghaz al-mu'amil] per day, which is considered a pioneering achievement in the gas exploitation operations.
"Moreover, there are operations to rehabilitate the refineries. These have been going on for the past two months, the most important of which is rehabilitating the Al-Samawah refinery with a 10,000 bpd capacity. The experimental work is still going on. The Al-Najaf refinery operations have begun with a capacity of 10,000 bpd during the first stage to be increased to 30,000 bpd. The first stage will be completed within six to eight months. Moreover, the unit of breakup and hydrogenation in the northern refineries is now operational. This would give us 20 per cent increase in the oil byproducts. This will start either today or tomorrow.
"The Oil Ministry has plans for refineries. The tender concerning the Kou Senjaq refinery rehabilitation with a 70,000 bpd in addition to the Al-Nahrayn refinery whose tender was submitted last week. That concerns the sector of byproducts. In this regard, we are holding negotiations with international refining companies to join investment operations to establish a refinery with a 300,000 bpd capacity in the south and we hope this new experiment in the oil sector will result in increasing the refining capacity in a way that meets the needs of the citizens.
"On the same level, you are aware that during the latest visit by the prime minister to the Islamic Republic of Iraq, an Iraqi- Iranian oil agreement was reached on this; namely, building two pipelines. The first will be to carry crude and the second to carry byproducts, which will provide Iraq with 12 million litres of oil byproducts per day. There has been much talk about this project in the media recently but we consider it a useful economic project that could alleviate the difficulties of the citizens concerning the oil byproducts. This agreement has still to be ratified by the higher leaderships in the two countries.
"Undoubtedly, we are aware of the concern of the Iraqi citizen. In terms of the distribution of oil byproducts, especially the gasoline, we have placed this issue on top of our agenda. You know, recently the gasoline consumption in Baghdad and its suburbs increased by over 2 million litres per day. Since 10 July, the Oil Ministry has been pumping into Baghdad and its suburbs 10 million litres per day. In March and April, the entire Baghdad Governorate consumed between 6 to 7 million litres per day. This increase in consumption was due to the intermittent electric current. Thus, demand for gasoline increased to operate the generators. The Oil Ministry was able to reassure the people that it would meet their requirements. If you visit gasoline stations, you will find the material available. There is a plan to increase imports through the various Iraqi outlets. The Iraqi refineries performance will also be improved. Thus, despite the extraordinary measurers that the Oil Ministry has adopted, in terms of supervision and production increase, there still are lines of vehicles waiting at gas stations to fill their gas tanks.
"Despite all these congestions, the Oil Ministry continued its work. It made several effective contributions in this regard. The first contribution is to increase the working hours in gas stations. The second is approving licenses for over 105 gas stations in the various Iraqi governorates to increase distribution. The third contribution, which is being studied and we will complete it, God willing, soon, was to involve the private sector in importing oil byproducts in addition to storing and transporting them and establishing new stations, as well as increasing monitoring operations. However, in general, there are still unusual congestions, which we are working to solve.
"Among the extraordinary measures that have been taken recently was the increase in the mobile stations of gasoline and gas in Baghdad and other governorates. There will be about 50 mobile stations in Baghdad by the end of this week. We will be trying to promote this idea in other governorates. In our field tour last week of the middle Euphrates governorates - Karbala, Al-Najaf, and al- Hillah - we have found out that this experiment can be generalized and exploited to increase supplies at gas stations.
"These are some of the extraordinary measures. There is close cooperation with the Interior Ministry and Defence Ministry to streamline work at gas stations. There is another project, which we might start implementing within the next few days. It concerns the orderly operation of gas stations to ensure a more streamlined operation and reduce the period of waiting to purchase gasoline. The citizens continue to wait at certain stations more than usual. This might take one hour. Some wait at stations in Baghdad for about 15 minutes. However, when the electric current improved in certain Baghdad areas, this reflected directly on the lines at gas stations in certain areas of Al-Karkh. Therefore, we hope there will be improvement soon as the electric current supply becomes more streamlined.
"Concerning attempts to prevent the smuggling of oil byproducts, the Oil Ministry continues to take daring measures aimed at stopping or limiting the smuggling of oil byproducts. There is a big operations room in the Oil Ministry where meetings are held with the participation of the Interior and Defence Ministries to protect the oil facilities. Last month, they were able to raid several smuggling dens in the Baghdad area and impound a large number of tank trucks and forged documents. Therefore we were able to suspend some contracts with neighbouring states to stem the smuggling operations. However, this is not a new measure in Iraq but we must take decisive steps in this direction. There is still much to do in this regard.
"The other issue of interest to the Iraqi citizens - and winter is not far away - is the fuel ration card. As we told the media recently, we will, God willing, begin to distribute the cards next month. Working teams are continuously in contact with the Trade Ministry to distribute cooking gas and kerosene jointly with ration cards for foodstuffs.
"That was a brief account of the Oil Ministry achievements and I am ready for your questions."
The minister is first asked why he did not comment on the planning Ministry proposal to lift the subsidy of fuel and byproducts and "raise prices to extremely high levels that would burden the Iraqi citizens." The correspondent also asks the minister why decisive measures were not taken against "the big mafia" that smuggle oil byproducts. The minister says that the Planning Ministry proposal was discussed by the prime minister and the ministers "two weeks ago" and "eventually the prime minister ordered the formation of a ministerial committee to study the prices, but no decisions were made on this issue. There was an urgent desire to keep things as they are. The Government is committed to maintaining support for the citizens. The Oil Ministry was of the opinion that we should ensure the share of the Iraqi citizens by an organized process and through another ration card for gasoline and we are currently preparing for this." The minister says that "there is no plan to increase the cost of oil byproducts at this stage."
The minister admits the problem of "smuggling and sabotage." He says "in July alone, there were more than 11 sabotage attempts against oil pipelines in the centre and in the north." He thanked the Oil Ministry staff and companies that belong to the Ministry for their efforts to repair the damage as a result of "terrorist attacks." He says the Government is resolved to make oil byproducts available to citizens. He says that 70-80 per cent of the necessary supplies are available at gas stations in Baghdad.
On smuggling, he says that this has been an old problem since the days of the previous regime and notes that the security forces stormed the biggest den of smuggling in Baghdad but the smuggling operations are on a large scale and part of terrorist actions.
The minister says that in preparation for the winter season, and "to reassure the citizens that there will be no fuel crisis," kerosene is already being distributed in Baghdad and elsewhere in Iraq.
The minister says there is a Central Inspection Commission that has been visiting gas stations and gas and kerosene selling centres and it will be involved in distributing gas and kerosene. He adds: "We are determined to prevent any crisis in the winter."
Asked about the oil agreement with Iran, the minister says: "Opinions differ on this agreement and this is natural. Some think that it will be economically feasible and some do not, or that the project was politically motivated. I would like to assure you that this project was envisaged two years ago and it was subjected to technical and economic committees study. Perhaps there is ambiguity as far as details are concerned but I would like to take this opportunity to tell you that these are separate contracts. The crude oil sale contract is a separate contract and it is like the contacts by which Iraq sells crude to world countries and companies based on international prices. The contract of buying and selling oil byproducts is also a separate contract. We buy oil byproducts from Kuwait, Turkey, and Iran through land outlets and other Gulf outlets. This contract will be subjected to the world oil market prices. These are not barter contracts or liquidation contracts. They are separate contracts based on economic feasibility.
"Yes, the economic feasibility is great. There will be no transportation costs. We are paying exorbitant rates for transpiration of oil through the tank trucks that are filling our roads in the north and in the south. This is a good project, which might alleviate the suffering of the Iraqi people, supplying Iraq with 12 million litres per day. This is equal to the quantity that is produced by the Basra refineries in the south. It is also connected with the Iraqi production network and therefore, the material can be pumped from the south to the north. I and the other brothers consider this an economic project and if it is ratified by the Iraqi Government then we can go ahead with it to reduce the burden on the refineries and reassure the Iraqi citizens."
Asked finally where the Iraqi oil revenues go, given the huge amount of oil sales and the poor conditions of the Iraqi people, the minister says: "God be praised, after the transfer of sovereignty to the Iraqis on 28 June of last year, I would like to assure you, as a person responsible for the oil sector, that all the revenues of the Iraqi crude oil are handled by Iraqis and go directly to the Iraqi development fund. As to how these things are spent, this is done under the supervision of the prime minister and the finance minister." He says there are facts and figures and they can be published in a transparent manner, adding that "we are endeavouring to establish a transparent relationship between the Oil Ministry and the Iraqi citizen and to tell him where the oil revenues go."
Source: Red Nova
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