Iraq oil exports slip; minister quits

By Mariam Karouny and Gideon Long

BAGHDAD (Reuters) – Iraq’s oil exports hit their lowest
level since the war, according to figures released on Monday,
heightening a sense of crisis as fuel supplies grow scarce and
political leaders struggle to form a government.

Iraq exported 1.1 million barrels per day (bpd) of oil in
December, a senior official said — less than any month since
exports resumed in mid-2003 after the U.S. invasion and about
half the level seen during sanctions under Saddam Hussein.

Sabotage is damaging plants and blocking investment,
keeping exports at a fraction of targets officials say should
be met if Iraq’s vast reserves are to provide its people with
the prosperity that might draw the sting of civil conflict.

The oil official was speaking after Oil Minister Ibrahim
Bahr al-Uloum announced his resignation in opposition to fuel
price rises imposed last month as part of an aid deal with the
International Monetary Fund that demands big cuts in subsidies.

The price rises have been unpopular among Iraqis, already
struggling with poor basic public services and appalling
violence on their streets.

At least 12 people, including two children, were killed by
bombs and bullets on Monday. In the bloodiest incident, a
suicide bomber rammed his car into a bus full of policemen,
killing seven and wounding 13.

Sunni Arab and Kurdish political leaders met in the north
to discuss the formation of a government capable of addressing
these daunting problems in the wake of last month’s election,
which many Sunnis say was fraudulent.

If the new government is to revitalize the economy,
economists say, it must harness Iraq’s vast proven oil
preserves — the third largest in the world.

But successive governments have struggled to do so since
the fall of Saddam, and the latest export figures suggest
things are getting worse.

December’s 1.1 million bpd was down from 1.2 million the
previous month, said Shamkhi Faraj, Director General of
Economics and Oil Marketing, who oversees Iraq’s oil exports.

That compares with a post-war peak of around 1.8 million
bpd in early 2005 and is well below exports under Saddam, when
Iraq regularly exported 1.8-2.5 million bpd. Officials say Iraq
could sell some 3 million bpd if the industry were not under
attack and could double that in time.

Since the U.S.-led invasion, production has been hampered
by guerrilla attacks on pipelines and refineries.

The government closed the country’s main refinery in the
northern city of Baiji last month following sabotage of a
pipeline and threats of attacks against truck drivers.

That triggered a rush to petrol pumps as people feared they
would be left without fuel.

OLD-STYLE COUP

Uloum’s resignation as oil minister came after what looked
like an old-style ministerial coup last month, when he was
placed on leave against his will and replaced by Iraqi Deputy
Prime Minister Ahmad Chalabi.

Uloum had opposed the December 19 fuel prices rises, saying
they should have been introduced more gradually. The price of
premium gasoline went up by 200 percent, with other fuels
doubling in price. However, given the level of subsidy, further
price rises seem likely under the IMF’s strictures.

The government remains committed to cutting fuel subsidies
further to meet the demands of the International Monetary Fund,
which agreed a landmark credit arrangement with Iraq on
December 23.

The violence which claimed the lives of thousands of Iraqis
and nearly 850 U.S. soldiers in 2005 continued, with a suicide
car bomber targeting a bus full of policemen on a road between
Baquba, north of Baghdad, and Kurdish Sulaimaniya.

Firemen found the charred bodies of seven policemen inside.

Two children were killed when gunmen opened fire on a car
between the cities of Tikrit and Kirkuk.

In Baghdad gunmen attacked the convoy of the Turkish
ambassador. Nobody was hurt.

In the latest of a series of bilateral discussions aimed at
forming a new government, leaders from Iraq’s main Sunni Arab
parties traveled north to meet Kurdish leader Massoud Barzani.

They said afterwards they remained committed to joining a
national unity government of Kurds, Sunni Arabs and the
majority Shi’ites, whose representatives dominated the December
15 election.

The Sunnis, who were also expected to meet President Jalal
Talabani later, welcomed the imminent arrival of four
international monitors to check the results of the election.

Their findings are not however expected to have a major
impact on the results, which suggest Iraq’s next government
will once again be dominated by Shi’ite Islamists.

Electoral Commissioner Farid Ayar insisted the team, whose
international body has already declared the election fair,
would not re-count the ballots but simply review the processes
used.

(Additional reporting by Aseel Kami and Deepa Babington in
Baghdad, Aref Mohemmed in Kirkuk, Faris al-Mehdawi in Baquba
and Darren Butler in Istanbul)