Nabil al-Jurani/ASSOCIATED PRESS - Oil workers work at Zubair oil field near Basra, 550 kilometers (340 miles) southeast of Baghdad, Iraq, Sunday, May 15, 2011.
RUMAILA OIL FIELD, Iraq — Here in Iraq’s southern desert, efforts to boost oil production have pushed the country’s dilapidated oil infrastructure to the brink.
Rusted pipelines are running full and are in danger of rupturing on the floor of the Persian Gulf. Rickety pumps seize and spring leaks in the heat. The entire network meant to get oil from fields to tankers is maxed out and prone to backups that cause permanent damage to wells.
Iraqi leaders travel here to use the backdrop of roaring flames from oil-well flares to illustrate a dramatically different point. By the numbers, Iraq’s oil industry is red-hot. Production is on pace to be the best in more than 20 years, since the beginning of the Persian Gulf War of 1991, and the money is rolling in. In the first five months of 2011, rising exports and high oil prices have all but erased Iraq’s full-year deficit of more than $12 billion.
As Iraq has bogged down in so many other areas, it has gone full throttle when it comes to oil. Its trajectory to raise oil profits has been audacious and at times dangerous.
Pushing its systems to capacity is the first phase of an outsize plan to increase production fivefold, and by 2017, to rival Saudi Arabia as the largest exporter of oil in the Middle East.
Iraq’s announcement of that plan two years ago attracted little attention, other than skepticism from most industry watchers. But in hot pursuit of that goal since, Iraq has been moving quickly and in some ways recklessly.
Despite pleas from the United States and other international observers, for example, it has not yet signed contracts for how to contain a spill or conduct emergency repairs should its roughly 35-year-old pipelines burst underwater.
Scientists believe the 31-mile pipeline used most heavily to send oil to offshore loading docks has in places nearly entirely disintegrated, leaving only an outer ring of concrete tunneling oil in the right direction.
The pipeline, considered a top terrorist target in the region, is so fragile that Iraq has not dared conduct a pressure test to see how much it can handle. But it has continued to pump nearly all of its growing exports through the line.
More than a dozen multibillion-dollar contracts that Iraq signed with international oil companies also now appear to have been done in haste. Nearly all are in need of renegotiation, less than two years after they were signed, Iraqi officials and industry analysts said.
Iraq structured most of the deals in such a way that it could be impossible for most companies to realize the profits they were counting on unless Iraq reaches its goal on paper to rival Saudi Arabia. New deals are likely to have to include better terms for oil companies at the expense of country profits, Iraqi officials and industry analysts said.
Iraqi officials still have high hopes that their country might one day rival their southern neighbor. But Iraqi officials have begun to acknowledge the dream remains far out of reach. Iraqi Oil Minister Abdul-Kareem Luaibi this month began inching toward acceptance of an industry consensus that Iraq might be able to accomplish half of Saudi Arabia’s output, or less, over a much longer time frame.
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