The Hindu : U.S. banks on Iraq oil to finance reconstruction

Online edition of India's National Newspaper
Friday, Apr 11, 2003

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U.S. banks on Iraq oil to finance reconstruction

WASHINGTON APRIL 10. The Bush administration is counting on Iraq's oil wealth to finance the country's recovery, but officials acknowledged on Wednesday that the U.S. was largely in the dark about Iraq's oil capacities.

Iraq has considerable oil reserves and low production costs, but there are widely varying estimates about the extent of its riches, even within the U.S. government.

For example, the Energy Information Administration, whose reports are used by most policy-makers, has significantly higher estimates for Iraq's oil wealth than the U.S. Geological Service or a private oil intelligence database both agencies rely on.

The energy agency uses statements by Iraqi officials, while the geological service did its own study over several years.

Iraq's oil fields have been mostly inaccessible to Western companies for more than a decade, and the few executives who have made deals with Baghdad say Iraqi officials have been parsimonious in releasing data.

American officials, including possibly some with the Central Intelligence Agency, obtained a secret geological map of Iraq in the 1990s that showed hundreds of potential undiscovered oil sites, private and government geologists say. But, the geologists added, the map alone does not prove that oil deposits actually exist.

"Iraq is a black hole,'' said one administration official involved in analysing Iraq's potential oil revenues. But most experts estimate Iraq's likely annual oil revenues, once the war ends and production reaches a level of between 2.5 million and 3.5 million barrels a day, at between $15 billion and $25 billion. Most of Iraq's oil is exported, and those sales would make up the bulk of the country's revenues.

Iraq's oil income will determine the extent to which the U.S. will have to finance the country's reconstruction and how much Iraq will need to rely on investment from foreign oil companies, including American corporations.

Bush administration officials say Iraqi oil belongs to the Iraqi people, but they have not spelled out what that means in practice.

— New York Times

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