Iraq 'aims to increase oil flow'

Iraq is struggling to reopen its refineries

Iraq's newly appointed oil minister, Thamir Ghadbhan, has said his country aims to export two million barrels of crude oil a day soon.

Mr Ghadbhan said the interim Iraqi government has earmarked $800m to spend on rebuilding oil infrastructure.

It also plans to expand the existing 14,000-strong security force protecting oil installations, he said in an interview with Reuters news agency.

Iraq has the second biggest proven reserves of oil, at 112.5bn barrels.

Big task

But years of neglect and underinvestment under UN sanctions imposed during ex-president Saddam Hussein's rule have crippled Iraq's output.

Since he was deposed by US-led troops, Iraq's new rulers have struggled to regain pre-war output levels of 3 million barrels a day as militants have waged a campaign of attacks on pipelines.

"We have a force of 14,000 people and we are expanding it. If things go well we want to sustain an export figure of two million barrels per day in the coming months," said Mr Ghadbhan, who has spent 30 years working in Iraq's oil industry.

A further 800,000 barrels of oil a day are needed for Iraq's domestic needs, as demand is rising rapidly, he said.

Mr Ghadbhan is part of the interim government which will take over from the US-led coalition on 30 June, paving the way for elections in January 2005.

Top challenge

"The number one challenge is security for the whole country. Number two is that we have to avoid facing the crisis of the availability of products locally," said Mr Ghadbhan.

Local demand for petrol is soaring because of a "huge influx" of imported cars, so the oil ministry is "taking measures to get our refineries working in proper conditions," said Mr Ghadbhan.

Difficulties restoring the flow of oil from Iraq have disappointed Western hopes that its reserves help bring down global prices. Instead, instability there has become a factor in pushing oil prices to record highs.

Although Iraq is a member of Opec, its oil exports are not counted as part of Opec output.

Exports

During the years of sanctions, Iraq was only allowed to sell oil abroad as part of the UN's oil-for-food aid programme, suspended in November 2003.

At present, any money earned from oil sales is paid into an account at the Federal Reserve Bank of New York controlled by the US.

Iraq is expected to take control of the funds after the 30 June handover. The new government is lobbying the UN to abandon a 5% levy on oil revenue to cover war reparations imposed alongside sanctions.

Iraq has exported $9bn-worth of oil since the US-led invasion last year.