Business | Oil & Gas
Iraq sees windfall from higher prices
The Iraqi government could see a windfall from higher oil prices this year, while it moves to assume greater responsibility for security and economic development, a US government watchdog said yesterday.
- Reuters
- Published: 01:28 January 31, 2008
Washington: The Iraqi government could see a windfall from higher oil prices this year, while it moves to assume greater responsibility for security and economic development, a US government watchdog said yesterday.
Oil revenues represent more than 80 per cent of Iraq's $48 billion 2008 budget, according to the US Office of the Special Inspector General for Iraq Reconstruction.
But the government of Prime Minister Nuri Al Maliki has based its revenue estimates on an average oil price of $57 a barrel, well below an average price of $85 per barrel forecast for 2008 by the US Department of Energy.
"Average oil production in Iraq... hit a post-war high of 2.38 million barrels per day, enhancing the likelihood that Iraq's national income in 2008 will significantly exceed expectations," the special inspector general, Stuart Bowen, said in his office's latest quarterly report.
The report did not say how big a windfall Iraq might see from rising oil prices. But the Energy Department's higher price forecast is 49 per cent above current Iraqi expectations.
Higher revenue would come at a time when the Bush administration has begun to withdraw combat forces from Iraq as part of a plan to adopt a lower US profile focused on the training and supervision of Iraqi security forces.
The administration expects to withdraw at least 20,000 soldiers by the end of July, and top defense officials say they would like to reduce US troop levels further in 2008.
"2008 will be a 'Year of Transition' in Iraq, bringing with it the continued evolution of the US programme," Bowen said.
"The government of Iraq must assert ever greater responsibility for national security and economic planning, including the full funding and sustainment of ongoing relief and reconstruction efforts," he added.
Lack of agreement on how to divide the oil revenue among Shi'ite, Sunni and Kurdish communities is one of the main obstacles for reconciliation in Iraq nearly five years after the US invasion that toppled President Saddam Hussain.
Bowen's office said Iraqi security forces could be ready to lead security efforts in all 18 of Iraq's provinces by the end of 2008.
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