Iraqi to Import Fuel for $800M

By SINAN SALAHEDDIN Associated Press Writer
© 2006 The Associated Press

BAGHDAD, Iraq — Iraq, a country with some of the largest oil deposits in the world, is in the odd position of having to import oil products to solve a fuel shortage.

The Iraqi oil minister on Tuesday announced that the government will spend $800 million to import refined oil products during the rest of the year.

Despite the fact that Iraq has the world's third largest proven oil reserves, it is currently suffering from an acute shortage of gasoline, kerosene and cooking gas.

In the capital, cars often have to line up at gas stations overnight to get what little fuel is available. The shortage means people suffer through hours-long power outages during the day, spoiling food stored in the refrigerator and making it difficult to sleep without air conditioning in the hot Iraqi summer.

The $800 million "will help resolve the fuel shortage and will improve our strategic assets of oil products," Oil Minister Hussein al-Shahristani said in a statement.

Oil Ministry spokesman Assem Jihad told The Associated Press that the country is importing oil products from Iran, Turkey, Syria and Kuwait.

Iraq's three main oil refineries _ Doura, Beiji and Shuaiba _ are working at half capacity, processing a total of only 350,000 barrels a day, compared to about 700,000 barrels a day before the U.S.-led invasion in March 2003, Jihad said.

The country's oil industry, already suffering during Saddam Hussein's regime from a lack of capital, has gone even further downhill since the 2003 U.S.-led invasion. Parts of the oil infrastructure such as pipelines have often been shot at or blown up by insurgents.

On Tuesday, a section of a subsidiary pipeline carrying crude oil to Kirkuk, 180 miles north of Baghdad, was blown up about 24 miles south of the city, police said. The attack was not expected to affect oil deliveries because it wasn't a major pipeline, police said.

What little fuel is available for ordinary Iraqis is often very expensive.

In August, a liter of gasoline was selling on the black market in Baghdad for $1.30, while the official price was 17 cents. The price of a cylinder of cooking gas on the black market was $18, while its official price was only a few cents.

Al-Shahristani said that according to an agreement signed recently with Syria, some 80 trucks transporting oil products have started crossing from Syria to Iraq daily. He said Iraqi officials are holding talks with their Turkish counterparts to open a new border point to allow gasoline trucks to enter Iraq.