This is a small but sometimes overlooked part of the Iraq story. It starts prosaically:
The line of ships at the Al Basra Oil Terminal (ABOT) stretches south to the horizon, patiently waiting in the searing heat of the Northern Arabian Gulf as four giant supertankers load up. Close by, two more tankers fill up at the smaller Khawr Al Amaya Oil Terminal (KAAOT). Guarding both terminals are dozens of heavily-armed U.S. Navy troops and Iraqi Marines who live on the platforms....Heavily armed soldiers spend their days at the oil terminals scanning the horizon looking for suicide bombers and stray fishing dhows (boats). Meanwhile, right under their noses, smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT - has not worked since the March 2003 U.S. invasion of Iraq.
But murder and corruption cannot be far behind...
The world consumes about 80 million barrels per day (MBPD) of oil. The US Government Accountability Office reported in January 2007:
Iraq’s oil reserves, estimated at 115 billion barrels, are the third largest in the world. The oil sector currently accounts for about two-thirds of Iraq’s gross domestic product and over 90 percent of exports and revenues. However, Iraq’s oil wells and associated infrastructure have deteriorated due to years of neglect, mismanagement, and international sanctions. Considerable looting after Operation Iraqi Freedom, the government of Iraq’s reluctance or inability to approve equipment replacement or rehabilitation of oil field construction projects, and continued attacks on crude and refined-product pipelines also have contributed to Iraq’s reduced oil production and export capacities.
Iraq used to pump almost 4 MBPD before the Gulf war. Today it pumps about 1.8 MBPD. This production is reputedly sold via secret oil sales:
The ABOT is under the control of Iraq's state-owned South Oil Company, which is now dominated by Shiites in southern Iraq, and the sales are managed by the State Oil Marketing Organization (SOMO). Morris says SOMO refused to divulge its export contracts, records of sales, or even the names of buyers in order for him to estimate how much oil is being stolen. "There's a certain secrecy behind that. So, that if you don't know what's being moved in country, then you don't know what's being lost, and you don't know what's being sold," he said.
Here's someone who's selling:
"Emir al-Hakim [the head of the Supreme Council of the Islamic Revolution in Iraq] is spending all his time in Basra selling oil as if it were his own. People there call him Uday al-Hakim, meaning he is behaving the same way Uday Saddam Hussein was acting. Other merchants like myself have to work through him with the big deals or smuggle small quantities on our own. The petroleum is now divided among political parties in power."
That's OK, our friends at Halliburton and Parsons are on the case:
These companies have a lot of experience at the terminals where the black market now thrives. Indeed, Halliburton built the ABOT terminal, then known as Mina al-Bakr, in the early 1970s. After it was damaged during the Iran-Iraq war in the 1980s, Halliburton repaired the terminal, before it was bombed yet again during the 1991 Persian Gulf War....With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals....After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields.
But the contracts were assigned to Halliburton and then Parsons:
When Parsons took over the contracts, two years after the invasion, it hired a Saudi Arabian sub-contractor, Alaa for Industry, to help repair or replace the meters. The turbine meters were shipped to Kuwait for repairs but do not appear to have been fixed in a timely manner, although some have been fixed and re-installed earlier this year. Unofficial sources suggest that the Kuwaiti bureaucracy delayed the repair work: "The real reason for the hindrance to work at the ABOT is because Kuwait has a vested interest in minimizing Iraqi oil exports," an anonymous source who worked on the project told CorpWatch. His claim could not be verified. In mid-September 2006, the Iraqi oil ministry abruptly announced that it would pull the plug on the oil metering project, making future monitoring even less certain.
And without those meters:
Morris said, "It's like a supermarket without a cashier. There is no metering. And there's no metering at the well heads either. There's no metering at any of the major pipeline junctions."...Morris says powerful people inside Iraq's Oil Ministry repeatedly blocked installation of meters and fought against other measures that would help stop pervasive corruption....Morris also became a target. He says Oil Ministry insiders tipped off insurgents about his visits to oil facilities as well as to the ministry's headquarters in Baghdad. In 2005, his Army convoys suffered deadly attacks by a suicide bomber and another by a roadside bomb.
Now why would anyone want those meters turned off?
"I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq," Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station.
If you take that 500,000 barrels at $60 a barrel, that gives you about a billion dollars a year of unaccounted, untaxed money. And here's how you sell it, according to Amy Myers Jaffe, an energy advisor to the Iraq Study Group:
Jaffe says a cottage industry exists for re-documenting stolen oil cargo with phony bills of lading so that it can be sold into the market through corrupt brokers...."Many of the oil trading entities that helped Saddam in the days of oil for food could be seen loading oil in Iraq after the war. So there's no question that an enterprising individual, if there were not good control systems, which of course there were not after the war, could get those same players that were fooling the U.N. to set up similar systems to fool whoever is now in the Iraqi government to continue this corruption."
And, really, all you have to do with the oil is round-trip it through Iran:
Paradoxically, while Iraqis have to buy smuggled gasoline from Iran, some of their own reserves are being trafficked in the opposite direction, from Iraq to Iran. Some 600 miles to the south of Penjwin, in the riverside town of Abu al-Khasib, near Basra, a small flotilla of fishing boats sets sail every morning. The boats, filled with fuel supplied by the Iraqi government at the specially subsidized price of just 10,000 dinar a ton (about $7.50), return every night, empty of fish, but stocked with cash. The source of their wealth is Iranian vessels that deliver freight to the harbor of Abu Floos, where prices are almost 100 times higher. Ironically, Colonel Najim Abdulla, the commander of coast guard patrols in Basra, told a reporter that his force is denied enough fuel to pursue the scofflaws. "I can't chase smugglers who are well aware of our shortages," he said.
Could be a bit risky, but what's another war between friends?:
It was in this murky stretch that 15 British military personnel were captured by Iran earlier this year and accused of straying into its waters. A long-running dispute over the nearby Shatt al-Arab border river has helped spark war in the past.
And Uncle Sam always pays with your tax dollars (KBR is a subsidiary of Halliburton):
Waxman also charged the Corps of Engineers with "effectively foreclosing" a December audit into evidence that KBR overcharged its fuel imports by $61 million by waiving any requirements for KBR to provide cost and pricing data from Altanmia.
But we are fixing the problem, honest:
U.S. Navy Capt. Thomas Brovarone, Gulf Region Division Oil & Water Sectors director, said the most important improvement at ABOT is the installation of 24 custody transfer meters and associated flow provers that measure how much crude oil is exported from the terminal.
And it was all about democracy, never about the oil:
There have been 4,020 coalition deaths -- 3,722 Americans, two Australians, 168 Britons, 13 Bulgarians, one Czech, seven Danes, two Dutch, two Estonians, one Fijian, one Hungarian, 33 Italians, one Kazakh, one Korean, three Latvian, 21 Poles, two Romanians, five Salvadoran, four Slovaks, 11 Spaniards, two Thai and 18 Ukrainians -- in the war in Iraq as of August 22, 2007, according to a CNN count.
Though it may be a bit late for their inhabitants:
By the end of the year (2006), more than 400,000 people had fled their homes for other locations within Iraq, most because of the sectarian violence. UNHCR, the UN refugee agency, estimated that the number of Iraqis living as refugees in neighbouring countries, mainly Syria and Jordan, had swelled to 1.8 million.
But the Surge is working!
The parade of political tourists to Iraq in recent weeks, during which easily impressed pundits and members of Congress came to be dazzled by the wonders of the troop surge, probably ensures that this murderous adventure will continue well into the next presidency—even if the Democrats win.
And here's a Roman finale: a snippet from Tacitus which has been taught at West Point for the last hundred or so years:
Auferre, trucidare, rapere, falsis nominibus imperium; atque, ubi solitudinem faciunt, pacem appellant. (I’d translate it this way: They rape, slaughter, and wrongly convert to their own name, and this they call "empire;" they make a desert and then have the affrontery to call it peace.)