There are few things that affect the prospects of the democratic governance in Iraq more directly than the level of oil exports. Everything that the government undertakes – the conversion of a socialist economy to a market economy; the compensation payments associated with the national conciliation plan; the maintenance of public food support; the investment in crucial infrastructure – all depend on ready cash from oil.
In the Daily Dispatch of June 16, we reported the reopening of the Iraq’s northern oil pipeline, connecting the Kirkuk oil depots to the Turkish port of Ceyhan. Since the overthrow of Saddam, this crucial export facility has been offline. It has been sabotaged not only by terrorists, but by smugglers who profiteer by diverting Iraqi oil from the legal export market, where the state benefits, to the black market, where they benefit.
Pre-war, the northern pipeline handled 700,000 barrels per day (bpd). It reopened June 14th to flows of 21,000 bpd. By the end of June, it was pumping 300,000 bpd.
Last month, Iraqi oil production finally reached its pre-war level of 2.1 million bpd. This month production topped 2.5 million – Iraq’s average level during the 1990s. But oil prices now are more than double what they were then.
Higher production, more exports, and elevated global demand – these factors in the oil market bode well for the al-Mailiki government. And they reflect well on oil minister Hussain al-Sharistani, who promised to halt corruption and smuggling in the energy sector