DOHA, Qatar (AP):
THE REBIRTH of Iraq's once-booming oil industry could challenge the world's big oil exporters and bring down prices -- if it cranks up production to fund reconstruction projects and is unfettered by market controls.
Political wrangling over international sales and the fitful restart of meagre domestic supplies highlight the obstacles. Analysts warn that oil is no magic bullet for Iraq's economic woes and say big money is a long way off.
"The degree to which Iraq will ramp up production is largely overstated," said Jon Rigby, an oil analyst with Commerzbank Securities in London. "It's not just a matter of turning the taps back on again."
The fragility of Iraq's rebound was underlined yesterday as engineers raced to repair oil leaks that stymied efforts to restart a key oil refinery in southern Iraq, where supplies of finished products such as gasoline are running short.
Amid pomp and ceremony, the oil flow to the Basra refinery was restarted last Wednesday for the first time since the war began March 20. But several line leaks, some of which caught fire, have since forced oil officials to suspend the stream.
"Multiple lines have caught on fire all over the place," said an oil engineer familiar with the repair work in southern Iraq. "Because the urgency of getting the oil in there is real, we're moving as fast as we can."
Over the weekend, U.S. reconstruction officials said supplies of gasoline, fuel oil and lubricants were running short around Basra, Iraq's second-largest city. Now, despite sitting on some of the world's largest oil reserves, Iraq may need to import refined petroleum products from other oil-rich nations in the region if the refinery sits idle too long, officials said.
Restarting the oil industry is key to rebuilding plans. Refinery problems won't affect exports of crude oil, which will eventually be sold to help pay for reconstruction. But refined fuels are crucial for the domestic economy.
Exports face hurdles, too, political as much as technological.
The U.S.-led interim administration in Iraq wants to resume exports as soon as possible. But they are hindered by U.N. sanctions imposed on overseas sales after Iraq's 1990 invasion of Kuwait.
