Iraq Doubles Funding for Oil Imports

The Associated Press
Thursday, August 17, 2006; 10:22 AM

BAGHDAD, Iraq -- Iraq has doubled the money allocated for importing oil products in August and September to tackle the country's worst fuel shortage since Saddam Hussein's 2003 ouster, a senior Iraqi official said Thursday.

Even though Iraq has the world's third-largest proven oil reserves, it is forced to depend on imports because of an acute shortage of refined products such as gasoline, kerosene and cooking gas. Sabotage of pipelines by insurgents, corruption and aging refineries have been blamed.

Falah Alamri, head of the State Oil Marketing Organization, which is responsible for Iraq's imports of oil products, said the money normally allocated by the government to buy oil products was doubled in August, to $426 million. The normally allocated amount would be doubled for September, too, Alamri told Dow Jones Newswires.

A gallon of gasoline now sells on the black market in Baghdad for about $4.92, although its official price is $0.64. Lines of cars at many Baghdad fuel stations stretch several miles, and drivers sometime wait overnight to fill their cars.

Iraq has been plagued by periodic fuel shortages since the 2003 U.S.-led invasion. The current crisis comes amid higher demand for fuel to power generators and cool homes and offices as summer temperatures reach 120 degrees.

Alamri said the shortage was further aggravated by the closure of the Beiji refinery north of Baghdad, which produces 140,000 barrels a day. Sabotage of pipelines carrying crude from Kirkuk oil fields shut down the refinery for the last four weeks before resuming operations earlier this week, he said.

Iraq's three main oil refineries _ Dora, Beiji and Shuaiba _ are working at half their capacity, processing only 350,000 barrels per day compared to 700,000 barrels a day before the war.

Alamri said the state oil agency would conclude new deals with Turkish companies to supply fuel.

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