Upstream and midstream facilities will get top priority in efforts by coalition and Iraqi authorities to reconstruct the Mideast countryís oil and gas infrastructure. Under a memorandum of understanding signed last month between the Coalition Provisional Authority, the Iraqi Ministry of Oil and the U.S. Army Corps of Engineers, the goal of oil infrastructure reconstruction is to enable Iraq to return to its prewar production level of 3.0 million barrels per day, said Thamer Ghadhban, provisional oil minister, in a recent interview.

ìThe priorities will definitely be given to the upstream sector, oil and gas production, gathering, pumping and transportation,î Ghadhban said. ìThis is a reflection of the extent of the damage afflicted on this sector. The refineries were less affected.î

Unofficial reports have put the total cost of the program at $1.6 billion, but the Corps of Engineers would not confirm the figure. ìThe funding for the plan will come from two different sources,î Ghadhban said. ìThe hard currency will be supplied by the U.S. component. We are providing funding. This is close to Iraqi dinar 30 billion.î There is no official exchange rate, but this figure is equivalent to roughly $20 million at black-market rates. Iraq will pay with oil revenue for work conducted by the Ministry of Oil, the Southern Oil Co., the Northern Oil Co. and State Co. for Oil Projects.

The central parties involved in rebuilding Iraqís oil infrastructure are ìin agreement as to how to proceed based on this plan,î says Steven Wright, public affairs officer for the Corpsí Kuwait-based Restore Iraqi Oil task force.

The Ministry of Oil and Team RIO aim to reach the production target in incremental steps. ìI agreed to a restoration plan linked to certain oil production targets,î Ghadhban said. ìWe are talking about a sustained oil production of 1.5 million barrels per day by October and 2.0 million barrels per day by December this year.î By March 2004, Ghadhban expects sustained production to hit 2.8 million bbl/day, while climbing to the target of 3.0 million bbl/day by April.

Iraqís current oil production is a difficult figure to pin down. Ghadhban puts production at 1.5 million bbl/day when tankers are loading crude oil at the Persian Gulf lifting terminal at Mina Al-Bakr. But the figure drops to 800,000 bbl/day when there is no lifting at the terminal, he added.

The crude oil then goes to supply demand at the Basra and Al-Nasiriyah refineries in the south. The refined products then target the local market, where Iraq consumes around 15 million liters of gasoline per day. But domestic supply is well short of demand, with fuel oil bartered for gasoline from Jordan, Kuwait and Turkey.

The security situation remains the unknown variable. ìThe success of implementing such a plan is totally dependent on political stability and security,î said Ghadhban. ìThe prime factor is really security.î

The 7,000 kilometers of oil and gas pipelines remain vulnerable and fragile, with punctures, ruptures and explosions occurring regularly. On Aug. 2, a 42-in. oil pipeline between the 150,000-bbl/day Baiji Refinery and the As-Saneen Pumping Station, southwest of Baiji, was damaged. Local police officials describe the damage as a destructive act, pointing to sabotage.

To protect the oil infrastructure, Ghadhban said the ministry wants to establish a modern and qualified force. ìThis force will be trained and will be part of the Ministry of O il,î he said. ìIn the past, the ministry deployed an oil police force to guard key facilities. This force is really not that efficient now. We are working to improve on its capabilities.î

The Corps of Engineers is already engaged in a number of projects. ìWe are working on restoring the Qarmat Ali Water Pumping Station in southern Iraq,î Wright says. ìWater from this plant is used to remove salt from the crude oil at the gas oil separation plants and to inject into the oil fields to replace oil being removed from the reservoir. In the north, there is ongoing work on the Kirkuk-to-Baiji pipeline, which currently has a maximum capacity of 500,000 barrels per day. The pipeline is old and corroded, limiting capacity.î

The Corps plans to start work on the Al-Fathah Bridge section of pipeline damaged by U.S. coalition forces near Baiji (ENR 6/16 p. 18). ìWe will soon have a plan to address this issue,î says Wright. ìThe current production in the north is limited by the capability of two pipelines under the river at the bridge.î

These pipelines had been decommissioned due to corrosion, but they are now being used with a capacity of about 500,000 bbl/day. ìNew pipelines at the river crossing will eliminate any artificial limits to production in the north as well as provide needed product lines to replace lines lost when the bridge was damaged by coalition forces,î Wright says.