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Last Updated: Monday, 23 June, 2003, 12:30 GMT 13:30 UK
Rebuilding Iraq's oil installations

By Mark Gregory
BBC business correspondent in Iraq

Chuck Miles is used to hot summers: he comes from the southern states of America.

US troops guarding Kirkuk refinery
Looting has dented export hopes
But he says he's never been anywhere as hot as this before. The gauge on my vehicle showed a temperature of 52 degrees celsius.

Chuck works for the US Army Corps of Engineers and right now he is in charge of repairing a water treatment plant on the Rumeila oilfield near Basra in Southern Iraq.

Water from the plant plays a crucial role in processing the crude oil produced from nearby wells.

Chuck said the water plant had been in reasonably good shape when the war ended nearly three months previously.

But then the looters came and completely stripped the place, taking everything of value and quite a lot with none.

Destruction frenzy

Even the supports for the roofs had disappeared and buildings were left as empty, broken shells.

One of Chuck's colleagues said many of the materials had been used by the locals to build new houses or to repair existing ones.

Troops at oil installations
Security is tight at oil installations

This level of devastation is routine on the Rumeila oilfield where most facilities associated with crude production have been thoroughly trashed.

Chuck said he was puzzled as to why people should so thoroughly destroy the environment in which they live, although it is not always clear who is responsible for the looting.

Some of the looters came from the locality, while others, including organised gangs, probably came from far away.

Chuck was dispirited by the damage but he had nothing but praise for the Iraqi workers on his site.

And he said he was determined to get the plant functioning in some fashion within weeks just to demonstrate that it could be done.

Favouritism?

The US Army Corps of Engineers is in overall charge of the renovation while the work is being carried out by the US firm, Kellog Brown & Root, a subsidiary of Halliburton.

There were accusations of favouritism when Halliburton was awarded a contract to repair basic oil infrastructure in Iraq because US vice president Dick Cheney was at one time the chief executive.

Similar repair projects are to be found all over the Rumeila oilfield as the coalition authorities race to restore oil exports.

Ultimately the reconstruction of Iraq will be paid for with revenues from oil.

The country has the world's second largest proven reserves, and production costs - once the system is up and running again - are some of the cheapest in the world.

Starved of investment

But producing oil is a complex business; it's no good just pulling the stuff out of the ground.

It also needs to be processed, transported and stored.

A US soldier outside the Oil Ministry in Baghdad
The ministry is desperately trying to get oil exports back on track

Clearly it will be some months before the pieces of this complicated jigsaw are back in place in Southern Iraq, such has been the devastation caused by looting and to a lesser extent by the war.

Facilities on the Rumeila oilfield were, in any case, already in bad shape because of decades of international sanctions against Saddam Hussein's regime, which starved the place of investment and routine repair.

However, there are some success stories.

The Basra oil refinery is about half an hour's drive from Chuck Miles' water plant and it is almost fully operational.

The refinery's Iraqi chief engineer told me it had emerged unscathed from the looting largely because of the commitment of the workforce.

Security concerns

They turned up en masse in the period of maximum chaos just after the war, even though they were not being paid.

That was enough to keep the looters at bay, presumably deterred by the display of public spirited workers.

In other places people preferred to stay at home to protect their property from attack.

Security is still a daily concern in the oilfields around Basra.

At one point the man in charge of our security readied his hand gun and told me to keep my finger on the electric window button in case it needed to come down in hurry to give him an unobstructed path to shoot.

He said disaffected militia men from the former regime were prone to throw open the back doors of white vans to launch their attacks.

On average one American soldier gets shot and killed each day in Iraq.


SEE ALSO:
Iraq oil 'to flow from July'
23 Jun 03  |  Business
Iraq's first oil exports due
19 Jun 03  |  Business
UN approves US Iraq plans
22 May 03  |  Middle East
Q&A: Lifting sanctions on Iraq
22 May 03  |  Middle East
US eases Iraq sanctions
07 May 03  |  Business



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