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Iraq says Syria war spillover hinders oilfields, pipelines

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[January 28, 2014]  By Peg Mackey, Lin Noueihed and Julia Payne

LONDON (Reuters)  Spillover attacks from the civil war in Syria have hindered development of Iraq's gas and oil reserves and a major pipeline to the Mediterranean has been blown up dozens of times, Iraq's top energy official said on Tuesday.

Violence in Iraq climbed back to its highest level in five years in 2013, with nearly 9,000 people killed, most of them civilians, according to the United Nations.

"The ongoing conflict in Syria has resulted in an increasing number of terrorists using vast desert areas between Syria and Iraq to establish bases from which they have carried out attacks against the civilian population and economic targets and infrastructure," Deputy Prime Minister for Energy Hussain al-Shahristani said.

"Attacking the energy sector has been among their top priorities to deprive the country of its main revenue source," he said.

"The attacks have been focused on oil export pipelines, power generation and transmission lines."

The al Qaeda-linked Islamic State of Iraq and the Levant (ISIL), which is also fighting in neighboring Syria, took control of the Iraqi city of Falluja west of Baghdad with the help of sympathetic armed tribesmen.


Unrest is not limited to central areas near Baghdad but is also spreading to the north where hundreds of thousands of ethnic Kurds fled the Syrian war to neighboring Iraq's semi-autonomous Kurdistan and Turkey.

"The Iraqi Turkish pipeline was blown up 54 times during 2013, averaging once a week yet we managed to repair and use that pipeline and pump on average 250,000 barrels per day last year," Shahristani said.

He said operations at much larger oilfields in Iraq's south which provide the bulk of oil exports from the Gulf remained unaffected.

However, he said security concerns hindered development of reserves in the western region and its Qayara and Najmah oilfields, operated by Angolan state oil company Sonangol in the al-Qaeda heartland of Nineveh province in the country's northwest.

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WAITING FOR A KRG RESPONSE

Despite the violence, Iraq is gearing up for one of the biggest oil output jumps in its history with international companies nearing completion of major projects which so far have not been affected by unrest.

Iraq will see its oil production capacity rise by more than 50 percent in 2015 to 4.7 million barrels per day (bpd) compared to more than 3 million at the moment, Shahristani said.

The long-term plan is to raise output to 9 million bpd by 2020 and sustain that rate over 20 years, he said.

Kurdistan has also signed deals with major and mid-sized energy companies in the hope of producing as much as 1 million barrels per day.

It has built a pipeline to Turkey, but Baghdad insists it has the sole right to export oil from all parts of Iraq, including Kurdistan.

"Any oil that leaves Iraq without the permission of (state company) SOMO is illegal and Iraq will have to take actions to protect its oil wealth," Shahristani said.

"We have informed Turkey and the KRG that we cannot allow this to continue," he said. "We are waiting for a response to our latest proposal".

(Writing by Dmitry Zhdannikov; editing by William Hardy and Jason Neely)

[ 2014 Thomson Reuters. All rights reserved.]

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