- The Washington Times - Tuesday, June 15, 2004

BAGHDAD — Explosions ripped through two pipelines yesterday in southern Iraq, cutting oil exports from the south by more than half, the Iraqi South Oil Co. said. Officials blamed Saddam Hussein loyalists and al Qaeda for the attacks.

Firefighters were able to control the blaze that broke out on pipelines in the Hamdan area just north of Faw, but the damage was so extensive that pumping had to be halted, said South Oil official Samir Jassim.

“We hold Saddam followers and al Qaeda responsible for the two attacks,” Mr. Jassim said.

The first explosion early yesterday set the pipeline on fire and was followed by another blast. The two pipelines export crude oil from a pumping station called Zubeir 1 to a crude oil depot in Faw, 40 miles southeast of Basra.

Iraq’s southern pipeline has been its main export artery since the U.S.-led invasion. Repeated sabotage has forced Iraqis to curtail shipments from the north of the country, and most of Iraq’s crude exports now come from southern oil fields.

Contracts of U.S. light crude for July delivery were up 21 cents at $37.80 per barrel in New York. July contracts of Brent crude were down 4 cents at $35.45 in London.

The Iraqi attack has been responsible for “all of the movement off the bottom” by oil prices in yesterday’s trading, said Paul Horsnell, the head of energy research at Barclays Capital in London.

If oil flow to Persian Gulf export terminals has been interrupted, there’s not much storage space there for tankers to continue loading for long, Mr. Horsnell said.

Although the Iraqi Oil Ministry had aimed at exporting 2 million barrels a day in June, Mr. Horsnell said that “looks unlikely now.”

Mr. Horsnell said the Iraqis would be lucky to average 1.5 million-to-1.6 million barrels per day in exports from the south because of the attack.

Iraqi exports had averaged 1.7 million barrels per day from the south, Mr. Jassim said. With the attack, that has dropped to 800,000 barrels per day.

Iraq’s oil pipelines are frequently attacked, and coalition officials fear that insurgents will step up attacks on infrastructure targets prior to the June 30 transfer of sovereignty to an interim government to undermine public confidence both in the U.S. occupation authority and the new regime.

In May, a main export pipeline was set ablaze on the Faw Peninsula, stopping the flow of crude oil through one of the lines feeding the Basra oil terminal, a key export point. That attack forced Iraq to reduce exports to 1.1 million barrels a day from the south.

at a time when oil markets are highly concerned about tight supplies.

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