- The Washington Times - Wednesday, August 13, 2003

ANKARA, Turkey — Iraq began pumping crude oil from its northern oil fields yesterday for the first time since the war — a milestone in the restoration of the country’s oil production that augurs well for thirsty world markets.

Iraq sits atop the world’s second-largest proven crude reserves, after Saudi Arabia, and oil exports are vital to its postwar reconstruction and the success of U.S. efforts to foster democracy in the country. Before the war halted Iraq’s oil production, the country pumped about 2.1 million barrels a day, most of it for export.

Analysts said it was not clear how reliable the flow of oil from fields near the northern Iraqi city of Kirkuk might prove to be, but the reopening of the pipeline to Turkey’s Mediterranean coast is a key step in rebuilding Iraq’s oil industry.

Saboteurs and looters have obstructed efforts to rehabilitate the 600-mile pipeline from Kirkuk to the Turkish city of Ceyhan. The lack of storage and export facilities forced the Iraqis to reinject much of the northern crude left over after refining for domestic use back into natural underground reservoirs.

“The export program has been stymied by unfortunate but continuing acts of sabotage. This is still the issue,” said Michael Rothman, chief energy strategist at Merrill Lynch in New York. He said Iraqi oil exports were a paltry 300,000 barrels a day last month.

Iraq began exporting from its giant southern oil fields last month, sending fresh crude to ships waiting offshore in the Persian Gulf at the export terminal of Mina el-Bakr. These southern exports have been intermittent, however, owing to power outages at the terminal and other interruptions.

Although Iraq’s big northern fields also resumed production after the U.S.-British invasion, crude from the north had been unavailable for export until now.

Delays in Iraqi exports have helped lift U.S. oil prices to well above $30 per barrel. Despite historically low inventories of crude in major importing countries, members of the Organization of the Petroleum Exporting Countries agreed on July 31 to keep output steady — a decision that provided no comfort to consumers.

“At the end of the day, the oil coming out of Iraq is something the market needs right now,” Mr. Rothman said.

Crude from Iraq’s northern oil fields began pumping at around 4:30 p.m. local time, a Turkish oil official at the Ceyhan terminal said, speaking on the condition of anonymity. Turkey’s semiofficial Anatolia news agency quoted Energy Ministry officials as saying that the first Iraqi oil reached the Mediterranean port at 9:30 p.m.

“In a couple of weeks, you should be able to start inviting tankers to come on down,” said Peter Gignoux, head of the petroleum desk at Salomon Smith Barney in London.

Iraqi Oil Ministry officials could not confirm that crude was flowing into the pipeline.

Iraq was expected to pump 300,000 to 400,000 barrels a day to Ceyhan. No oil tankers are booked to load there, and oil was expected to flow for about 10 days before any vessels would be sent for loading.

Ceyhan holds about 500,000 barrels of Iraqi crude in storage and has room for about 7.5 million more barrels. Turkish energy officials said Iraq stopped pumping crude to Ceyhan on March 23.

The pipeline from Kirkuk is actually two parallel lines, one of which hasn’t been used for years. The operable pipeline has a capacity of about 1 million barrels a day.

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