Pentagon report: Iraq oil production up

WASHINGTON, Dec. 19 (UPI) -- Iraqi oil production and exports are up, as are the prices they fetch on the market, but corruption is still a concern, a new Pentagon report says.

The quarterly report highlighting security and progress in Iraq said Iraq's oil production increased from an average of just over 2 million barrels per day to 2.28 million bpd from September through November.

Exports last month were just below 2 million bpd, largely because of improvements in security and repairs to the northern pipeline sending crude from Kirkuk to Turkey.

"For example, the Kirkuk to Bayji (Iraq) crude and Iraq to Turkey export pipelines were operational for 70 days between August and October," the Defense Department report said, "compared to seven operational days during the same period in 2006."

Most of Iraq's oil exports head to market via ports in Iraq's southern Basra province.

Iraq relies on oil exports for most of its federal budget and is attempting to boost production to levels the world's largest oil reserves can clearly handle.

"Higher oil prices are expected to compensate for the temporarily plateaued production levels, resulting in actual government budget revenues exceeding planned revenue targets for the year," the report states.

"Corruption at all levels in the oil industry remains a significant problem," it added.

Although it lacks refining capacity, a strong smuggling market is depriving Iraqis of fuels, as well as tapping into the oil itself.

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Ben Lando, UPI Energy Editor

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(e-mail: blando@upi.com)