US sees no cut in Iraq oil attacks after Zarqawi

By Tom Doggett

WASHINGTON (Reuters) – The United States is not expecting a
decrease in attacks on Iraq’s oil infrastructure in the short
term after the death of Al Qaeda’s Iraq group leader Abu Musab
al-Zarqawi, U.S. Energy Secretary Sam Bodman said on Monday.

“We are not counting on any change, at least near term,”
Bodman told reporters. But he added: “I suppose time will only
tell.”

Bodman pointed out that attacks from the insurgency were
still occurring in Iraq. “I would expect that would continue at
least for a while,” he said.

Iraq’s oil sector, which the Bush administration hoped
would be a big revenue raiser to help rebuild Iraq, has been
subject to repeated attacks on its pipelines and oil export
facilities.

Iraq’s crude oil production in May was 1.9 million barrels
a day, down sharply from almost 2.6 million barrels a day in
January 2003, just before the start of the U.S.-led invasion of
Iraq, according to the U.S. Energy Department. Its oil exports
averaged 1.5 million barrels a day in May.

Before the war, energy experts had estimated that Iraq had
sustained oil production capacity of between 2.8 to 3 million
barrels a day and a net oil export potential of 2.3 to 2.5
million barrels per day. Iraq has the world’s third largest
crude oil reserves at 115 billion barrels.

After speaking with reporters, Bodman left for Camp David
in Maryland where President Bush and other members of his
cabinet were holding two days of meetings on Iraq’s future.

Bodman said the discussions will likely include “steps that
our government could take to encourage” an increase in Iraq’s
oil production and exports.

He said that Iraq’s oil sector was very important to the
Iraqi people and the country’s economy. Iraq is also the sixth
biggest foreign oil supplier to the United States.

Key to boosting Iraq’s oil production is investment by
foreign energy companies in the country’s underdeveloped and
undiscovered oil fields.

Iraq says it needs up to $20 billion in investment to
increase its oil production to 6 million barrels a day.

However, many foreign oil companies are reluctant to do
much business with Iraq because of the country’s ongoing
violence that has caused unsafe working conditions for their
employees.