Iraqi Oil Pipelines are Ready to Crack

Key pipelines to Iraq's oil industry are in such poor condition they could rupture at any time, preventing the oil supply from the region and shattering the country's economy.

The Financial Times newspaper reported that a previously undisclosed notification to the US Congress says the ageing underwater pipelines, which link storage facilities near Basra to offshore tanker fuelling terminals, are in urgent need of back-up or repair.

"The likelihood of a worst-case catastrophic failure, subsequent collapse of Iraqi crude oil export revenue resulting in a devastating drop in the Iraqi GDP, global economic market impacts and a possible ecological and environmental disaster should warrant concern," the document says.

The two 50km pipelines carry nearly all of Iraq's oil exports, linking the southern fields, where about three-quarters of the country's oil reserves are found, to the Gulf. Oil revenues finance more than 90 per cent of the government budget.

"Oil experts in US Army Corps of Engineers and at [Iraq's] South Oil Company have concluded based on available information that the dual 48-inch crude export lines could potentially fail at any time," the notification says. According to a preliminary assessment, the pipelines could be suffering from "severe corrosion and vulnerability to rupture, thus reducing their ability to withstand attempted interdiction or sabotage".

It adds that remedial action - possibly including a new pipeline - could cost up to $5bn.

"The pipes are 10-20 years past their useful life and are operating at roughly 25 per cent of their designed capacity," the notification says, adding that reports of oil leaks are "routine" and pointing to claims of increased salinity and rust in the oil itself.

Hussein Sharistani, Iraq's oil minister, told the FT: "We are very conscious of our need to expand our export facilities, especially in the south."

But US officials indicate concern that Iraq has not proceeded more quickly to deal with the problem. "It is in Iraq's interest to begin this project as soon as possible," a State Department official told the FT, noting that Iraq often took longer to make such decisions than would "an established democracy".

Iraq produces 2.2m barrels of oil a day, 300,000 b/d less than its average before the US invasion in 2003. Iraq pumped as much as 3.7m b/d before the outbreak of war with Iran in 1979.

Author: Jo Amey