Iraq cracks down on oil smugglers with new law

The Oil Derivatives Smuggling Law will give authorities the power to seize smugglers' assets, including tankers and other vessels, impose fines and jail offenders for up to five years.

Iraq cracks down on oil smugglers with new law
Iraq is to take tougher action against oil smugglers under a new law passed on Thursday aimed at plugging leaks in its oil industry that cost it billions of dollars every year in lost revenue.

The Oil Derivatives Smuggling Law will give authorities the power to seize smugglers' assets, including tankers and other vessels, impose fines and jail offenders for up to five years.

"This law is essential to fight the smuggling of oil which costs the country billions of dollars every year," the head of parliament's oil and gas committee, Ali Hussain Balu, told Reuters.

He said current legislation was seen as too weak to deter oil smuggling, a criminal activity that has flourished in the security vacuum that followed the U.S.-led occupation in 2003.

But enforcement of the new law may be difficult. A report by the Pentagon in June 2007 said members of the Oil Ministry's own Oil Protection Force, responsible for guarding oil infrastructure, were suspected of collusion in smuggling.

Iraq is hoping to boost oil revenues after oil production and exports reached a post-war high in May. Oil Minister Hussein al-Shahristani told Reuters on Sunday he expected oil revenue to reach $70 billion this year if crude prices stayed high.

Iraq, whose main source of revenue is oil, needs huge investment after decades of sanctions and occupation. But sabotage and oil smugglng have robbed it of billions of dollars and hampered reconstruction.

"According to official reports handed to parliament, Iraq is losing roughly 105,000 oil barrels a day from the southern fields in smuggling operations," Balu said.

"Smuggling is a flourishing industry in the south, and parliament is taking this action to put an end to such a dangerous crime that could undermine the economy," he said.

A report by the U.S. Government Accountability Office (GAO) in 2007 said that inadequate metering, reinjection, corruption, theft and sabotage robbed Iraq, which has the world's third-biggest oil reserves, of 100,000-300,000 barrels per day.

The GAO said U.S. State Department officials and other reports estimated that about 10 to 30 percent of refined fuel was diverted to the black market or smuggled out of Iraq.

As much as 70 percent of the fuel processed at Iraq's main refinery of Baiji, worth about $2 billion, was lost to the black market before the Iraqi army assumed control of the refinery, the Pentagon said in its June 2007 report on Iraq.

Government forces took control of the southern oil city of Basra in March in an effort to reassert Baghdad's authority over an area that is home to the country's largest oilfields.

Reuters

Güncelleme Tarihi: 06 Haziran 2008, 15:41
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