Onions sit in a net on the cabin of a fishing boat along the Shatt al-Arab River in Faw. Most of the town's fishermen have moved north in search of jobs as day laborers in Basra, locals say. (Photo by Ed O'Keefe/ The Washington Post) (Ed O'Keefe/WASHINGTON POST)

Iraq will supply the world with its last barrel of oil, according to local lore, and that barrel will come from Basra.

Sitting on an estimated 120 billion barrels of untapped crude, this southern province, tucked between Iran and Kuwait, is key to Iraq’s economic future. But local residents and officials worry that they are lagging behind their next-door neighbors, whose infrastructure and oil-drilling capabilities are far more advanced.

As the U.S. military prepares for an end-of-year deadline to leave Iraq, residents here are concerned that the central government in Baghdad will not be able to hold its own against those neighbors, which covet access to the nation’s vast resources and under-served markets.  

In recent months, Basra’s leaders have hosted business delegations from China, Italy and South Korea that are eager to build in the province, and the United States opened its first consulate here in July in hopes of spurring American investment.

But provincial leaders complain that Prime Minister Nouri al-Maliki’s government is more interested in doing business with Iran than in promoting their interests. The two countries last month signed agreements to work together on issues related to culture, science, technology and transportation, a move that Maliki said signaled “a new stage of cooperation.”

As the Iraqi and Iranian economies grow closer, however, officials in Basra say they believe that Iraqi leaders are allowing Iran to take the lead in extracting oil from border reservoirs that are accessible to both countries.

“The Iraqis were sleeping” while Iran started taking Iraq’s oil along the border, said Fareed Ayoubi, a member of the Basra Provincial Council and head of its oil and energy committee. “It’s a lost cause.”

Only now — years behind Iran and Kuwait — is Iraq signing deals with oil companies Royal Dutch Shell and BP to develop the fields and to provide enough security to deter illegal cross-border drilling, Ayoubi said.

Senior government officials in Baghdad declined requests to comment on oil drilling along the borders.

Meanwhile, despite attempts by Baghdad to stop the project, Kuwait is moving ahead with plans to construct a multimillion-dollar seaport on Bubiyan Island, a strategically important location at the northern end of the Persian Gulf. Ayoubi and others say Kuwait’s port will choke off Iraq’s access both to the gulf and to larger ships that could bring business to a similar port planned for the Iraqi fishing town of Faw.

At the current port in Faw, dozens of abandoned fishing vessels litter the shores of the Shatt al Arab River, which links the Tigris and Euphrates rivers to the Persian Gulf.

Nearly 70 percent of Faw’s residents once earned a living from fishing, but increased pollution in the river and disputes with Iranian border guards patrolling the waters are forcing most fishermen to find new work. An Iraqi fisherman was killed last month on the river by Iranian guards, the latest in a string of killings or kidnappings since disputes along the border intensified after the 2003 U.S. invasion.

“We consider that killing a crime,” said Hussein Ali Kamal, undersecretary at the Iraqi Interior Ministry. Iran, he said, “should understand that the blood of any Iraqi is valuable.”

But Kamal, whose ministry oversees border security issues, said his forces lack the manpower to conduct similar border patrols and are hampered by Iraq’s compliance with international border treaties.

That inability to act more forcefully infuriates Hamid Tahier Jaber, whose son, a fisherman, was killed by the Iranians three years ago. “We don’t have someone to protect us, to keep our rights, to keep Iran out,” he said.

Jaber said the central government’s inability to protect fishermen means they will continue to stay out of the water.

Basra’s governor, Khalef Abdul Samed, is a member of Maliki’s State of Law political coalition, but he is frustrated with the prime minister. Though Samed said he would rather be working to attract more international investment, he’s still dealing with electricity shortages, a chronic problem nationwide that Maliki’s government has yet to solve.

Much of Basra’s electricity comes from Iranian sources, another point of contention among residents who accuse their neighbor of purposely providing Iraq with unreliable, low-voltage power.

To quickly address electricity shortages, Samed said, he’s willing to tap the provincial coffers to spend $38 million on new generators and fuel. But he must first get approval from officials in Baghdad, and that has not happened.

“The summer is almost over, and since May we’ve been waiting to buy 1,000 generators to give electricity to the province,” Samed said.

He said he wants Maliki’s government to loosen its grip on daily affairs and allow him to establish a semi-autonomous regional government like the one in northern Kurdistan, which enjoys billions in international investment, mostly from Turkey. But Maliki is blocking such attempts, recently charging that those pushing for greater local control “undermine Iraq’s unity and stability.”

So Samed will have to wait longer for a final answer. And sometimes, he waits in the dark. As the governor listed his concerns with Baghdad, the lights in his office went out.

“Is today’s electricity from Iran?” someone in the room joked, provoking laughter.

Seated behind his desk, the governor, clearly annoyed, only smiled nervously.

Special correspondents Asaad Majeed and Emad Zainel in Basra and Aziz Alwan in Baghdad contributed to this report.