Revival of Iraqi oil fields to cost billions

The price of restoring Iraq's oil and gas industry is about $1.14 billion and rising amid sabotage and looting, according to a plan.

    Other areas needing repair included gas facilities, the distribution network and refineries

    The bulk of the costs was related to two major contracts already put to tender for reviving oil fields in the north and south of Iraq, the 33-page final work plan showed.

    The plan was drawn up by officials of the Iraqi Ministry of Oil, the civilian occupation authority, the US Army Corps of Engineers and contractor Kellogg Brown and Root (KBR).

    Other areas needing repair included gas facilities, the distribution network and refineries.

    The officials met in Baghdad from 6 to 9 July and considered two reports: one by the Iraqi oil ministry and one by a US Army Corps of Engineers task force.

    "Both plans considered not only actual damage from the war but also post-war looting, damage and sabotage," said an executive summary of the final work plan for restoring the Iraqi oil industry to its pre-war state.

    Iraq's oil infrastructure had been further degraded since the plan was discussed, however, it said.

    "Of particular note are the continued and continuing attacks on pipelines and the electrical grid which services production, refining, processing and distribution facilities," the summary said.

    "The attacks continue to lengthen the time required and increase the cost to restore production capacity."

    But security remains precarious in parts of Iraq.

    "The attacks continue to lengthen the time required and increase the cost to restore production capacity."


    A KBR employee was killed Tuesday when his truck hit an anti-tank mine while on a routine mail run from central to northern Iraq, KBR said in a statement.

    And a section of a pipeline from the oil-rich northern city of Kirkuk was blown up on Thursday, although officials there played down its impact.

    Last month, the US Army Corps of Engineers said it would issue one contract for rebuilding the fields in the north of Iraq and another for the south, each worth from $500,000 to a maximum $500 million.

    The work is open to US and eligible foreign companies, replacing a controversial no-bid contract handed out to KBR, a subsidiary of Halliburton – a company run by US Vice President Dick Cheney from 1995 to 2000.

    The Army Corps of Engineers had come under fire over its granting of the  Iraqi oil contract on March 8 to KBR without putting it out to tender. The Corps argued that the KBR contract was an emergency measure.

    An overview of the new project execution plan said Iraqi oil ministry operating companies would have overall responsibility for the work.

    But KBR would still help procure commodities needed in restoration, act as a consultant for some projects and undertake engineer-procure-construct contract work itself for "a small number of selected projects."

    British and American troops are
    struggling to protect pipelines

    According to the plan, the total costs for a North Oil Company were estimated at about 320 million dollars, and for a South Oil Company, $332 million.

    Costs for a Northern Gas Company were $32 million, and for a Southern Gas Company $24 million.

    Repairs of downstream facilities such as distribution would cost $149 million, and refineries another $43 million.

    Restoration costs were estimated at $132 million for the Iraq Drilling Company, $68 million for the Oil Exploration Company, and $44 million for State Company Oil Projects.

    The final work plan was released by the Army Corps of Engineers among documents made available to bidders for the two major Iraqi oil restoration contracts.

    SOURCE: Agencies


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