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Last Updated: Tuesday, 15 June, 2004, 22:02 GMT 23:02 UK
Attacks cripple Iraq oil exports
Firefighters at pipeline
The attack was the second in just over a month
Sabotage attacks on a southern Iraqi oil pipeline have sharply reduced oil exports, the oil minister says.

Thamir Ghadhban said blasts on Monday and Tuesday had damaged a pipeline from the southern oilfields - severing the flow to the Basra oil terminal.

It was the second attack on the Basra terminal - one of the few operational outlets - in just over a month.

It comes two weeks before the US-led coalition is due to hand over power to an interim Iraqi government.

The latest attack effectively stopped the flow of crude through Iraq's main export route - reducing it by as much as two-thirds.

There were also reports of a suspected attack on a pipeline in northern Iraq on Tuesday evening.

North Oil company officials said an explosion between Dibis and a pumping station near Kirkuk was probably caused by saboteurs. Witnesses said the pipeline was in still on fire.

The pipeline from the oilfields around Kirkuk to Ceyhan in Turkey has barely been in operation since the war thanks to repeated sabotage.

Ninety percent of Iraqi government revenues comes from oil, and the flow of funds is essential to pay for the country's reconstruction, says BBC business reporter Mark Gregory.

Double blow

"There were two sabotage cases," Mr Ghadhban was quoted as saying.

"After the sabotage attack, oil workers tried to use an alternate pipeline, but it could not support the pressure because it was an old installation dating back to the 1970s," said Captain Mowayad Hashem, according to the Associated Press news agency.

"After that, exports stopped from Basra oil terminal and Khor al-Amaya."

It is estimated that repairs to the pipeline will take up to 10 days and cost $60m a day unless deliveries are resumed.

Recently crude exports have been running at around 1.7m barrels of oil a day - that figure has now been cut by as much as two thirds.

Officials recognise there is now no chance of meeting a target of pumping two million barrels a day in time for the transfer of sovereignty at the end of June, our correspondent says.

Iraqi oil exports are still below the pre-war level, even though a 14,000-strong Iraqi guard force has been set up specifically to protect pipelines and other vital parts of the oil infrastructure from attack, he says.

Vulnerable

The Basra terminal, together with the smaller Khor al-Amaya terminal, in southern Iraq jointly export 1.6 million barrels daily.

According to Iraqi Prime Minister Iyad Allawi, pipeline sabotage has cost the country more than $200m in lost revenues over the past seven months.

Mr Allawi recently blamed foreign militants opposed to the survival of Iraq for the attacks.

Iraq's oil exports are exceptionally vulnerable because there are only two main routes for crude to leave the country - via Basra and Kirkuk-Ceyhan.

Traders on the global oil markets have come to expect the resumption of Iraqi oil exports to be slow and subject to endless disruption, our business correspondent says.

But any sign of trouble in the volatile Middle East tends to make the markets jumpy - the latest pipeline attack in Iraq prompted an immediate spike in the price of crude, he says.




WATCH AND LISTEN
The BBC's Juliet Dunlop
"The pipeline here flows directly to...one of the country's few working outlets"



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