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Iraq oil flow down as funds criticized


Published: April 9, 2008 at 5:54 PM
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WASHINGTON, April 9 (UPI) -- Iraq oil production decreased in March, along with OPEC as a whole, as Baghdad was pressed by Washington to spend more of its revenues.

Iraq oil production hit 2.4 million barrels per day in February, and dropped slightly to 2.37 million bpd in March, according to the new OPEC survey by the global energy information firm Platts.

The Organization of Petroleum Exporting Countries had been increasing its output each month, but dropped from 32.33 million bpd in February to 32.22 million bpd in March. It's still more than the cartel's production quota and Platts reports the two other countries with declining flow, Nigeria and Venezuela, had scheduled maintenance last month. Iran, Ecuador and Qatar all increased production.

Iraq had been steadily increasing production beyond the just below 2 million bpd mark it had been stuck at or near for most of the post 2003 invasion. This is largely because of increased security on a patch of the Kirkuk-Ceyhan pipeline that has been a major target of insurgents.

Oil flow has been steady at as much as 350,000 bpd according to Iraq's Oil Ministry. Exports from the south have been around 1.6 million bpd. The rest is consumed domestically.

During hearings this week on Capitol Hill, General David Petraeus, commander of multi-national forces in Iraq, and U.S. Ambassador to Iraq Ryan Crocker, have been scolded by members of Congress for not requiring Iraq to spend more of its funds.

All of Iraq's oil sales are collected in an account of the Central Bank of Iraq at the Federal Reserve Bank of New York, per U.N. mandate to prevent theft and misuse after Saddam Hussein's toppling.

The money is then transferred from the CBI's account to the Iraq Finance Ministry to be disbursed as part of the budgetary process. Iraq, however, not only lacks the institutional capacity to spend the money, but is hampered by politics, fears and reality of corruption, and violence and spends only a fraction of its capital budget.

Members of Congress have suggested legislation requiring the funds be spent or U.S. expenses incurred since the invasion to be repaid by Iraq.

Iraq's budget for reconstruction both this year and last year is larger than the U.S. budget for Iraq reconstruction.

--

Ben Lando, UPI Energy Editor

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