THIS SHOULD COME AS NO SURPRISE TO ANY AMERICAN.
--
WE KNOW THAT THE BUSH REGIME ATTACKED AND OCCUPIED IRAQ TO ROB THEM
FROM THEIR OIL.
---
WE KNOW THAT IS WHY THE REPUBLICANS HAVE VOTED AGAINST THE 2007 BUDGET
BILLS WHICH MANDATE THAT OUR TROOPS COME HOME, I.E. WITHOUT OUR TROOPS
THERE, THE IRAQIS COULD STOP THIS ROBBERY OF THE ONLY THING THEY HAVE
TO SURVIVE.
---
WE ALSO KNOW WHY THE BUSH REGIME HAS BEEN PRESSURING THE SO-CALLED
"NEW GOVT. OF IRAQ" TO PASS THEIR "OIL LAW", AS SHOWN ON THIS THREAD,
THE OIL CORPS WILL KEEP 75% OF ALL OIL PUMPED OUT OF IRAQ, LEAVING
IRAQ WITH A MERE 25%.
---
SO WHY HASN'T OUR CONGRESS "INVESTIGATED THIS ROBBERY" OF IRAQ'S OIL,
WHEN IT IS CLEAR THAT MOST OF THE KILLING OF OUR TROOPS IN IRAQ IS
"OVER THIS ROBBERY OF THEIR OIL", ESPECIALLY SINCE DOZENS OF MEMBERS
OF CONGRESS "HAVE BEEN TO IRAQ AND CERTAINLY WOULD ASK ABOUT THE
STATUS OF OIL", YET TOTALLY REFUSE TO TELL US ABOUT IT, WHEN THEY
(CONGRESS) BRAG ABOUT "THEIR TRIPS TO IRAQ"?
---
THE ANSWER IS CLEAR:
OUR CONGRESS IS AS GUILTY AS THE BUSH REGIME IN THIS ILLEGAL CONTROL
AND ROBBERY OF IRAQ OIL.
---
THIS IS A BLATANT VIOLATION OF THE U.N. CHARTER, A TREATY THAT THE
U.S. HAS SIGNED AND ACCORDING TO OUR CONSTITUTION IS "THE SUPREME LAW
OF THE LAND".
---
BUT..LIKE THE PSYCHOPATHIC-THIEVES THAT ALL OF THEM ARE, THEY ONLY
CITE THE U.N. RESOLUTIONS WHEN THEY WANT TO ATTACK ANOTHER COUNTRY,
I.E. THE WORLD IS JUSTIFIED IN HATING THE U.S. AND "YOU" WHEN THIS
KIND OF CORRUPTION HAS BEEN GOING ON FOR GENERATIONS.
---
HERE IS THE ARTICLE, WHICH IS LONG BUT EXPLAINS IN DETAIL, HOW
CHENEY'S CORRUPT HALLIBURTON CORP. IS REFUSING TO METER ALL OF THE OIL
BEING PUMPED OUT OF IRAQ, UNDER THE GUISE OF "THEIR CONTRACT TO FIX
THE IRAQ OIL TERMINALS".
---
SEND THIS TO YOUR LOCAL MEDIA.
---
Subject: U.S./HALIBURTON-INVOLVED IN BILLIONS OF DOLLARS LOST IN SALES
OF IRAQ OIL
---
Subject:?Mystery of the Missing Meters: Accounting for Iraq's Oil
Revenue 3-22-07
---
http://corpwatch.org/article.php?id=14427&printsafe=1>
----
Mystery of the Missing Meters:
Accounting for Iraq's Oil Revenue
by?Pratap Chatterjee,?Special to CorpWatch March 22nd, 2007
----
The line of ships at the Al Basra Oil Terminal (ABOT) stretches south
to the horizon, patiently waiting in the searing heat of the Northern
Arabian Gulf as four giant supertankers load up. Close by, two more
tankers fill up at the smaller Khawr Al Amaya Oil Terminal (KAAOT).
--- Guarding both terminals are dozens of heavily-armed U.S. Navy
troops and Iraqi Marines who live on the platforms.
--
These two offshore terminals, a maze of pipes and precarious metal
walkways, deliver some 1.6 million barrels of crude oil, at least 85
percent of Iraq's output, to buyers from all over the world.
----
If the southern oil fields are the heart of Iraq's economy, its main
arteries are three 40-plus inch pipelines that stretch some 52 miles
from Iraq's wells to the ports.
----
Heavily armed soldiers spend their days at the oil terminals scanning
the horizon looking for suicide bombers and stray fishing dhows
(boats).
----
Meanwhile, right under their noses, smugglers are suspected to be
diverting an estimated billions of dollars worth of crude onto tankers
because the oil metering system that is supposed monitor how much
crude flows into and out of ABOT and KAAOT - has not worked since the
March 2003 U.S. invasion of Iraq.
----
Officials blame the four-year delay in repairing the relatively simple
system on "security problems."
----
Others point to the failed efforts of the two U.S. companies hired to
repair the southern oil fields, fix the two terminals, and the meters:
----
Halliburton of Houston, Texas, and
Parsons of Pasadena, California.
---
The Special Inspector General for Iraq Reconstruction (SIGIR) is
scheduled to publish a report this spring that is expected to
criticize the companies' failure to complete the work.
----
Smuggled Three Ways
Oil smuggling is believed to be occurring in three different ways in
Iraq:
---
1. Iraqi crude.
At ABOT, officials at Iraq's state-owned South Oil Company (SOC) that
extracts the crude, and at the State Oil Marketing Organization (SOMO)
that pipes the crude to the terminals, "would have to know about
smuggling", even if they were not benefiting from the scheme.
---
Buyers from Brazil to India, from Thailand to "the United States",
purchase crude from Iraq at ABOT.
----
"The tanker operators would also have to be part of smuggling
schemes." They would sign receipts for a lower quantity than they
actually receive, and pay the extra directly to the smugglers.
---
The most likely collaborators are either: "Iraqi or U.S. officials"
who supervise the production and delivery. "Or both."
----
2. Imported fuel.
Iraq spends a small fortune to buy fuel from neighboring countries
including Iran, Kuwait, Saudi Arabia, and Turkey. Much of this fuel
goes to local drivers at a subsidized rate, and constitutes possibly
the single most expensive item in the national budget after government
salaries.
----
In 2005 Iraq spent $4.2 billion of its $24.2 billion gross domestic
product (GDP) on imported oil;
---
the bill for 2006 is expected to exceed
$5 billion.
---
Smugglers siphon off a significant amount of the government subsidized
fuel to sell back overseas at full price:
---
The Ministry of Oil estimates the value at $800 million.
----
3. Theft of locally-produced gasoline.
Iraqi gasoline is stolen from refineries or illegal taps on pipelines
and resold within the country or smuggled abroad.
---
Another $800 million worth of black market fuels? is sold within Iraq,
in places from Penjwin in the far north, to Abu al-Khasib in the
south. (see next box)
---
"The U.S. military believes" that:
the money from these operations
"funds insurgent operations",
----
although evidence suggests that some also goes to straightforward
petty corruption.
---
In mid-March 2007, the U.S. military launched "Operation Honest Hands"
which brought the Beiji refinery:
"under control of the 82nd Airborne Division."
----
The U.S. government paid to install video cameras, digital weighing
machines for the trucks, and "sophisticated data-sifting methods" to
"identify senior Iraqi officials" with ties to black-market oil rings,
according to the Wall Street Journal.
---
Two senior officials have been arrested so far:
----
Ibrahim Muslit, who ran the Beiji refinery's oil-distribution
operation and allegedly allowed 33 tankers in a single day to receive
fuel without any paperwork.
----
Ahmed Ibrahim Hamad, a senior transportation official at the refinery
who allegedly tried to help smuggle out seven tankers of heavy fuel
oil.
---
Soldiers are also checking up on trucks and gasoline stations in the
neighborhood around the refinery to try and catch smugglers in the
act.
---
Rumors are rife among suspicious Iraqis about the "failure to measure
the oil flow".
----
"Iraq is the victim of the biggest robbery of its oil production in
modern history," blazed a March 2006 headline in Azzaman, Iraq's most
widely read newspaper.
----
A May 2006 study of oil production and export figures by Platt's
Oilgram News, an industry magazine, showed that:
"up to $3 billion a year" is unaccounted for."
----
"Iraqi oil is regularly smuggled out of the country in many different
ways,"
an oil merchant in Amman told the Nation (U.S.) magazine last month.
---
"Emir al-Hakim [the head of the Supreme Council of the Islamic
Revolution in Iraq] is spending all his time in Basra selling oil as
if it were his own.
---
People there call him Uday al-Hakim, meaning he is behaving the same
way Uday Saddam Hussein was acting.
---
Other merchants like myself have to work through him with the big
deals or smuggle small quantities on our own. The petroleum is now
divided among political parties in power."
---
The Resource Curse
---
The smuggling and black market operations bear striking parallels to
Saddam Hussein's tactics for circumventing the UN embargo.
----
Saddam was accused of selling some
$5.7 billion worth of petroleum products on the black market over the
six years of the Oil-for-Food program while: "United Nations
inspectors turned a blind eye." Today, his successors stand accused of
similar abuses.
---
Iraq sits on 115 billion barrels of proven oil reserves, the third
largest in the world (behind Saudi Arabia and Canada).
---
>From a society that once used its oil revenue to "create a social
welfare state that provided education, health care and social
services,"
---
the country has plummeted into the ranks of the "poorest countries of
the world."
---
Economists call this the "resource curse." Those blessed with non-
renewable resources often benefit the least, because a few wealthy
people control the resources, or
---
"war prevents "almost" anyone from benefiting."
---
Iraq's main revenue source ?
----
earnings from the export sales of petroleum, petroleum products and
natural gas ?
---
is currently managed by the:
"Development Fund for Iraq."
---
DFI's May 21, 2003 document, United Nations Security Council
Resolution 1483, assigns this money to benefit the Iraqi people.
---
The resolution replaces the previous United Nations-run Oil-for-Food
scheme that lasted from 1997 until the March 2003 invasion.
---
Almost four years after the DFI was created, "officially logged crude
sales" have generated more than $80 billion.
************************
The U.S.-led Coalition Provisional Authority (CPA) managed the DFI
from the immediate aftermath of Saddam's removal until June 28, 2004,
when the CPA was disbanded.
----
During those 14 months,
the CPA spent $19.6 billion of Iraq's DFI funds.
**********************************************
The three succeeding governments have been officially in charge of the
DFI revenues,
---
"although the influence of the U.S. military and political advisors
has remained significant"
throughout.
----
In the 32 months after the CPA left, the three governments spent $47
billion more.
---
Three Kinds of Gasoline
---
A ten-foot-high hill of empty jerry cans is all that remains of a
recent unauthorized gasoline delivery. The green plastic containers
sit by the side of a road leading out of the town of Penjwin, high up
in the Kurdish mountains, a stone's throw from the border of Iran.
---
A little further down the road that winds through some of the most
heavily mined countryside in Iraq, boys and men openly hawk smuggled
gasoline.
---
A smiling boy runs up to drivers who slow and stop. He quickly
produces a funnel and up-ends full jerry cans into their gas tanks.
This is Iraqi's unofficial version of a gas station or petrol pump.
---
Authorities are well aware of the smuggling, but there is nothing they
can do.
---
"They bring it over the border from Iran," says a police officer
pointing east to the mountain pass just a couple of miles away. He
continues to direct traffic nearby and asks not to be named,
----
The official price of gasoline in Iraq today is about 300 dinar a
liter for regular and 350 dinar for diesel (about $1 a gallon).
---
Official gasoline supplies are in short supply and heavily rationed.
Drivers often queue for more than a day for a meager allotment.
---
This situation is in stark contrast to Saddam Hussein's Iraq where new
cars were rationed to wealthy or well- connected individuals, and
"subsidized gasoline sold for five cents a gallon."
----
Today at many busy street corners in Iraq, black market fuel is
readily available.
---
In northern Iraq, for example, three kinds of gasoline are available
to buyers:
----
a plastic 20 liter jerry can of the cheapest transparent Iraqi
gasoline retails for 12,000 dinar. It comes from the northern Iraqi
refinery of Beiji.
---
Better quality yellowish Iraqi gasoline retails for 15,000 dinar and
comes from the Baghdad refinery of Daura.
----
The best stuff, pale red Iranian gasoline, has been trucked over the
mountain and sells for 17,000 dinar for a smaller 16 liter jerry can.
---
This is two to three times the official price, and five times more
expensive than in Kuwait or Saudi Arabia.
---
Paradoxically, while Iraqis have to buy "smuggled gasoline from Iran",
some of their own reserves are being trafficked in the opposite
direction, "from Iraq to Iran."
---
Some 600 miles to the south of Penjwin, in the riverside town of Abu
al-Khasib, near Basra, a small flotilla of fishing boats sets sail
every morning.
---
The boats, "filled with fuel supplied by the Iraqi government" at the
specially subsidized price of just 10,000 dinar a ton (about $7.50),?
----
return every night, empty of fish, but stocked with cash.
---
The "source of their wealth is Iranian vessels" that deliver freight
to the harbor of Abu Floos, where prices are almost 100 times higher.
----
Ironically, Colonel Najim Abdulla,
"the commander of coast guard patrols"
in Basra, told a reporter that:
---
his force is denied enough fuel to pursue the scofflaws. "I can't
chase smugglers who are well aware of our shortages," he said.
---
Halliburton & Parsons
-----
U.S. contractors have played a key role in:
--
the repair and upgrading of Iraq's oil infrastructure and expected the
industry to pay for reconstruction.
---
In January 2004, under project:
"Restore Iraqi Oil II (RIO II)",
---
the Bush administration contracted with Halliburton to fix southern
Iraq's oil fields and with Parsons to handle the northern fields.
---
The two companies were supposed to be supervised by yet another
contractor,
"New Jersey-based Foster Wheeler."
---
(The first RIO contract was the infamous, secret no-bid contract
issued to Halliburton before the invasion of Iraq.
---
Although RIO II was competitively bid,
Sheryl Tappan, a former Bechtel employee wrote a book criticizing the
award as unfair.)
---
Halliburton and Parsons have long histories in Iraq, going back more
than 40 years.
---
Brown & Root, which is now part of Halliburton , began work in Iraq in
1961, while Parsons dipped into Iraq's oil sector in the 1950s.
---
Foster Wheeler dates its work in Iraq to the 1930s.
---
These companies have a lot of experience at the terminals where the
black market now thrives.
---
Indeed, Halliburton built the ABOT terminal, then known as Mina al-
Bakr, in the early1970s.
---
After it was damaged during the Iran-Iraq war in the 1980s,
Halliburton repaired the terminal, before it was bombed yet again
during the 1991 Persian Gulf War.
---
The Khor al-Amaya oil terminal also saw a similar cycle of destruction
and rebuilding. Built with Halliburton 's help in 1973, it was heavily
damaged by Iranian commandos during the Iran-Iraq war, then again
during Operation Desert Storm in 1991, and most recently in May 2006
by a major fire that destroyed 70 percent of its facilities.
----
During the sanctions, Ingersoll Dresser Pump Company, "a Halliburton
subsidiary",
"had a secret contract to sell Iraq spare parts", compressors, and
firefighting equipment for the refurbishment.
---
( Halliburton also has a long history near the Turkish port of Ceyhan,
from where Iraq sells oil produced at Kirkuk in northern Iraq.
----
"Halliburton runs the nearby U.S. military base" at Incirlik, which
was the staging ground for "Operation Northern Watch" that provided
air protection for the Kurds during the 1990s.)
---
Measuring the Oil
---
With billions of dollars to spend and extensive experience with oil
infrastructure and Iraqi ports,
---
"Haliburton and Parsons seem unable to deal with "the routine problem
of broken meters"
at the Southern Iraq terminals.
---
The kinds of meters they were supposed to repair or replace at ABOT
are:
---
"commonly found" at hundreds of similar sites around the world."
---
Because they are custom-built, shipped, then assembled and calibrated
on site, the process can take up to a year.
"But the problem has persisted for four years."
--------
After the 2003 invasion,
"the meters appear to have been turned off" and there have since......
"been no reliable estimates of how much crude has been shipped from
the southern oil fields."
---
(The northern oil fields in Kirkuk, which supply the Beiji refinery in
Iraq and export crude to the Turkish port of Adana, "has reliable
metering" but "little oil to measure" since insurgent attacks largely
shut down the facility.)
---
Oil Meters
---
Three kinds of meters are used around the world today:
----
positive displacement meters,
---
turbine meters and
---
ultrasonic meters.
---
A "displacement meter" measures the rate at which compartments of
known volume are filled with the liquid or gas;
---
"a turbine meter" is simply a pipe with a spinner that measures the
volume that passes through it;
--
while an "ultrasonic meter" uses sound frequencies to measure flow
rates.
---
Each has advantages and disadvantages.
----
Before the 1991 Gulf War,
ten turbine meters were installed on ABOT's platform A,
---
while ABOT's platform B got 16 positive displacement meters.
----
In January 2007,
the U.S. government installed ultrasonic meters to verify the older
meters.
----
In the late 1990s,
the United Nations hired Saybolt International, a Dutch company, to
make sure that Saddam Hussein was only selling crude under the Oil-for-
Food program.
----
However CorpWatch interviews indicate that the inspectors could not
rely on the meters at the time because they were not calibrated.
---
Instead Saybolt relied on a simple and effective way of determining
how much was being shipped: It measured the amount of crude loaded
into the tankers.
----?
Lieutenant Aaron Bergman,
the U.S. Navy officer in charge of
"Mobile Security Squadron 7 at ABOT", says:
----
export authorities have "guesstimated" how much is being sold, with a
back-of-the-envelope formula:
----
Every centimeter a tanker lowers into the water equals 6,000 barrels
of oil cargo.
---
"So you can imagine," he said earlier this month to Stars & Stripes, a
newspaper serving the U.S. military,:
---
the numbers could be off, "A couple of inches could equal 180,000
barrels of fuel."
---
"I would say probably between 200,000 and 500,000 barrels a day "is
probably unaccounted for in Iraq,"
----
Mikel Morris,
who worked for the
"Iraq Reconstruction Management Organization (IRMO)" at the U.S.
embassy in Baghdad,
told KTVT, a Texas television station.
----
"Neither US officials nor contractors"
have provided good reasons why,
"for four years into the US occupation",
---
the meters have not been:
*****************************
calibrated, repaired, or replaced.
---
One excuse is that:
--
the job of calibration "requires special devices" to assess the
current meters and
security issues make importing these devises problematic.
---
Yet that and other security-related explanations fall apart given
that:
---
the "oil terminals are under 24 hour high security guard",
---
lie more than 50 miles off-shore, and
---
are accessible only by helicopter or ship.
---
There are two possible explanations that the project has been delayed:
---
by bureaucracy or
---
that vested interests benefiting from the lack of oil metering (such
as smugglers or corrupt officials) have prevented the project from
moving forward.
---
Skyrocketing Costs
---
"The RIO II project", which includes:
---
the meter repair work, has come under much criticism, although
specific details are scarce.
---
For example, the Bush administration issued Halliburton the RIO II
order:
---
"in January 2004" and gave detailed task orders in June.
---
But despite "not starting work"
until November 2004, the company
---
"charged the government millions of dollars" for engineers who sat
idle.
---
Halliburton 's $296 million bill included at least 55 percent
overhead. (In an estimate due later this month, SIGIR predicts even
higher overhead costs.)
---
A Parsons joint venture (with Worley of Australia),
---
was also issued a contract in January 2004, given detailed task orders
in June, and started work in July 2004.
---
It has also been accused of charging high overhead costs while idle,
although not as much as Halliburton . SIGIR's estimates its overhead
at 43 percent.
---
In addition, in a series of scathing internal reports:
---
uncovered by Congressman Henry Waxman,
---
supervisors at "Foster Wheeler" criticized Halliburton 's cost.
---
The U.S. Army Corps of Engineers issued a "cure" notice on January 29,
2005, ordering Halliburton to do a better job or else.
---
After Halliburton did improve its cost controls, the military turned
over the southern oil work to Parsons in mid 2005.
---
When Parsons took over the contracts,
"two years after the invasion, (2005)
---
it hired a "Saudi Arabian sub-contractor", "Alaa for Industry",
---
to help repair or replace the meters.
---
The "turbine meters were shipped to Kuwait" for repairs but do not
appear to have been fixed in a timely manner, although some have been
fixed and re-installed earlier this year. (2007)
---
Unofficial sources suggest that the Kuwaiti bureaucracy delayed the
repair work:
---
"The real reason for the hindrance to work at the ABOT is because:
---
Kuwait has a vested interest in minimizing Iraqi oil exports," an
anonymous source who worked on the project told CorpWatch. His claim
could not be verified.
----
In mid-September 2006, the Iraqi oil ministry abruptly announced that:
---
"it would pull the plug on the oil metering project, making future
monitoring even less certain.
---
Asim Jihad,
the oil ministry spokesman, told Al Hayat:
---
"The American company had failed" in keeping its promise to "finish
installing these meters";
---
also, "refusing to reveal the exact cost", except for saying that it
is executing it within the:
---
"American grant to Iraq" and
the sum of that grant is unknown to us too.
---
This relieves the ministry from its obligation to it.
---
Besides, "many international companies presented good offers" to:
---
implement the project in a record time due to its importance."
---
The oil ministry then invited:
"British Petroleum and Shell"
---
to plan a "comprehensive national metering project" that:
---
would cover not only the oil terminals, but also the productions wells
and even the refineries.
---
A SIGIR team traveled to ABOT in November 2006 to check on progress.
Its unpublished report suggests that the work was less than half
complete.
---
Suddenly, in December 2006,
----
"a high-level U.S. team"
traveled out to ABOT to inspect the meters.
---
In a little-noticed announcement issued on a Saturday just before
Christmas,
---
John Sickman,
the resident oil expert at
the U.S. Embassy in Baghdad, said:
---
"the meters had been fixed and were
working fine."
---
"The measurement using the existing turbine meters and displacement
meters at the offshore terminal at ABOT is transparent and the
measurement devices are more than adequate," Sickman was quoted in the
press release.
---
"Furthermore, the crude oil vessels have measurement and quality
samplers."
---
Indeed this is how the Dutch company Saybolt measured oil export under
the United Nations Oil for Food program.
---
The problem even today, according to experts consulted by CorpWatch,
is that:
---
"the meters have yet to be calibrated",
so the data are basically useless.
---
Even if the meters are working properly, smuggling could still occur.
"It's easy to steal crude if you knew what you were doing,"
---
Don Deaver, a petroleum metering expert who worked for Exxon for 33
years, told CorpWatch. ---
"If you meaure too low or too high, someone will lose and some will
one gain. It's why you need professionals who understand how the
meters work to make sure that nothing is being lost or stolen."
---
"U.S. government officials claim" that:
---
"little is being stolen."
---
SGS (a British consultancy):
"is providing independent third party loading certifications onsite
for the customers.
---
This, coupled with "the recent installation" of "ultrasonic meters"
provides more than redundant measurement capability," said Sickman in
December.
---
Days after the press release, in early January 2007, Parsons began
work on the meters under a:
---
$57.8 million U.S. government-funded contract supervised by Major Dale
Winger of the
"Joint Contracting Command in Basra".
---
Almost as soon as work started,
"Winger was replaced" by
Lieutenant Commander Brian Schorn.
---
When CorpWatch reached Schorn, he said:
---
he was not up to speed on what work had been done, and referred
questions to his "front-office" in Baghdad at the U.S. Army Corps of
Engineers.
---
Parsons Iraq Joint Venture spokesman,
Don Lassus also refused to comment to CorpWatch.
--
"The contract with the military"
does not permit the release of "any unclassified information," he
said, without prior approval of the military.
---
Today "no government officials"
have been able to establish conclusively "whether oil is being
smuggled or not."
---
Even the future of the oil metering remains unclear.
---
The latest report issued by SIGIR in January 2007 notes that:
---
repair and rehabilitation work at ABOT is scheduled to be finished by
May 2007, but
---
"it is unclear whether this project will be completed because of de-
obligation requirements" that is to say, that the funding could be
cut.
---
This is the second in a series on the failure of reconstruction in
Iraq.
---
The first article, on healthcare in Iraq, may be read here:
---
http://www.corpwatch.org/article.php?id=14290>
---
To contact the author, e-mail
pra...@corpwatch.org--