I always thought that the word “anniversary” is used on happy occasions. But it turned out that I am wrong as the media is filled with articles about the 15th anniversary of the invasion and occupation of Iraq.
This anniversary, just like its predecessors, does not mark any happiness or celebration with the country engulfed in violence, sectarian politics, regional divisions, mounting corruption and regression on almost every aspect of development and well-being of the Iraqi people.
Iraq is close to a failed state and Baghdad one of the worst cities to live in.
If it wasn’t for oil resources, things would have been even worse. Perhaps those who want to sweep the dirt of the invasion and occupation under the rug of the satrap governments that followed would point out to the success of Iraq in raising oil production. This does not necessarily mean a sound and well-developed oil and energy industry.
Iraq, against all logic, contracted international oil companies in 2009-10 to have a production capacity of 12 million barrels a day (mbd) by 2017. Its production last month was 4.43-mbd and is targeting 5-mbd by the end of next year.
An utter failure of policy that is costing millions of dollars in compensation to the contracting companies. Yet, Iraq is intent on developing additional fields that would exacerbate the difficulties faced with the current contracts. All at the expense of marginalising the Iraqi companies.
On refining, there is the low degree of utilisation such that on average for the last 15 years, the refineries did not operate beyond 60-70 per cent of capacity. With the exception of adding 3 large distillation units at the Daura and Bsara refineries, no additional conversion or treating units were added and product specifications remain the lowest in the region.
The 2010 plan to build four facilities through private investment is nowhere near implementation and the government was forced to finance the Karbala refinery at a capacity of 140,000 barrels a day costing $6.5 billion. This makes the unitary investment cost $46,429, almost double the cost of similar projects in the region.
The project is almost at a standstill for lack of financing and its completion may be delayed by years.
Yet, there are new announcements made for new refineries that Iraq’s capacity may surpass 2 million bpd. No one knows how these came about or on what feasibility studies. This does not constitute a comprehensive strategy, but serve local politics and not the industry.
A plethora of refineries announcements has made follow up difficult and confusing. The proposed refineries are without any feasibility studies and based on private investment that is not forthcoming. Iraq continues to import 90,000 to 100,000 bpd of light products on average since 2004 and costing billions.
The gas industry is even worse as Iraq continues to flare huge quantities every day. Between September 2008 and June 2017, on average, Iraq burnt 104,000 barrels a day of crude oil in power stations while the average flared gas in the same period is equivalent to 194,000 barrels a day. This would cost about $45 billion in the period under consideration, sufficient to build an entirely new gas industry and phase out flaring completely.
Instead, Iraq elects to import gas from Iran through two pipelines and total gas supply of 1,900 million cubic feet a day costing around $5.2 billion per year at the 2015 price. No new plants were built and the rehabilitation of the existing is not complete.
Accusations of corruption and theft of oil are rampant without serious investigation by the government, even though some parliamentarians demanded such actions. And they have said they have documents that prove the theft of 300,000 barrels of Basra oil by officials who modified the meters.
A foreign journalist friend said “My heart breaks for Iraq and what could have been. When I was covering it, the Iraqi industry was filled with brilliant and very capable professionals. There was so much hope for the future ... sad to see what is happening now.”
However, the Iraqi people were recently rewarded by a law to establish a “national oil company”, a law that will serve its formulators rather than the industry. It has been attacked by specialists right, left and centre. After waiting for more than 10 years, the law was voted on so quickly that something is fishy about it. Amendments are already in the coming.
Nonetheless, the tragedy of the oil industry is nothing compared to the death and misery brought by the invasion and occupation. In a recent report, AlertNet said that “our calculations, using the best information available, show a catastrophic estimate of 2.4 million Iraqi deaths since the 2003 invasion.”
Many cities, especially Mosul, are reduced to rubble where thousand are buried and others missing. Let there be happy anniversaries ... but not this one.
Saadallah Al Fathi is former head of the Energy Studies Department at the Opec Secretariat in Vienna.
