Iraq Energy Roundup

Iraq invites oil and gas bids.

The State Co. for Oil Projects in Iraq said it would upgrade its Basra refinery following a tender for bids on pipeline projects.

The Czech Republic's Prokop Engineering and its state-owned trading company, Technoexport, offered bids for the refinery ahead of an Aug. 10 deadline, Middle East Business Intelligence reported.

The Czech deal involves the installation of a distillation unit capable of producing 70,000 barrels of crude per day as well as a natural gas plant by 2011.

Meanwhile, Iraq's state-run North Oil Co. invited bids for drilling in the massive western Akkas gas field, which has proven reserves of 7 trillion cubic feet of gas.

North Oil Co. bids are due by Sept. 30.

Basra oil wells get upgrade.

Iraq has repaired or upgraded some 225 oil wells with production capacity topping 250,000 barrels per day in the south, officials say.

Jabbar Allaibi with the South Oil Co. told the al-Bayan newspaper that repairs over the past nine months could double oil production in the region.

Allaibi said there are additional plans to drill 10 wells in oil fields along the Kuwait border, and completed projects in the southern Arkatah field are producing around 20,000 barrels per day.

Exports down for Iraqi crude.

Exports of crude oil from Iraq dropped below highs near 2 million barrels per day in May because of a crumbling infrastructure and a lack of electricity, analysts say.

Crude exports reached 1.99 million barrels per day in May but have declined in each consecutive month. While Iraq has rebuilt some of its export capacity, the decline may signal a high point given current human and logistical resources, the United Arab Emirates' newspaper The National reported.

A study by financial analysts at Global Insight says the Iraqi Oil Ministry lacks industry experts, as many have emigrated since 2005, and oil development is hampered by "severe endemic power shortages."

With civilian electricity production barely reaching "subsistence levels," the oil sector has taken a back seat to the public, the report said.

Iraqi Electricity Minister Karim Wahid says it may take another three years to get the electrical grid upgraded, meaning international energy consumers will have to wait out the bullish market conditions before additional Iraqi supplies come online.

GAO says Iraq should finance its own reconstruction.

The government of Iraq is generating enough oil revenue to finance its own reconstruction but provides little to the effort, a U.S. government report says.

A report by the Government Accountability Office, the investigative arm of Congress, found the Iraqi government contributed little of its operating and investment budget to the maintenance of U.S.- and Iraqi-supported reconstruction activity.

Oil exports from Iraq account for 90 percent of the government revenue, reaching an estimated $73 billion in 2008. Of that, the government spent the vast majority of its budget on operating expenses.

Since the 2003 invasion, the report said, the U.S. government appropriated about $48 billion on reconstruction efforts, with $23.2 billion on security, oil and other basic services. Since 2005 the Iraq government spent only $3.9 billion on these same sectors.

U.S. and other officials said the Iraqi government is handicapped from efficiently distributing its revenues because of a shortage of trained staff, a deficient procurement and budget system, and a general lack of security.

The GAO report offered no recommendations, and defense officials had no comment on the report. U.S. Sens. Carl Levin, D-Mich., and John Warner, R-Va., the lawmakers who requested the report, however, said in a joint statement that it was time for Iraq to start financing its share of the reconstruction effort.

"It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves. We should not be paying for Iraqi projects while Iraqi oil revenues continue to pile up in the bank," the statement said.

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