Between 100,000 and 300,000 barrels per day of Iraq's declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, a draft US government report has claimed.
Using an average of $50 a barrel, the report said the discrepancy was valued at $5 million to $15 million daily, the New York Times reported.
The report does not give a final conclusion on what happened to the missing fraction of Iraq's output of 2 million bpd.
The report also covered alternative explanations for the billions of dollars worth of discrepancies, including the possibility that Iraq has been consistently overstating its oil production.
Iraq and the State Department, which reports the numbers, have been under pressure to show tangible progress in Iraq by raising production levels, which have languished well below the US goal of 3 million bpd, the newspaper said.
The draft report, expected to be released within the next week, was prepared by the United States Government Accountability Office with the help of government energy analysts, and was provided to the New York Times by a separate government office that received a review copy.
The accountability office declined to provide a copy or to discuss the draft.
But a State Department official who works on energy issues told the newspaper that there were several possible explanations for the discrepancy, including the loss of oil through sabotage of pipelines and inaccurate reporting of production in southern Iraq, where engineers may not properly account for water that is pumped along with oil in the fields there.
"It could also be theft," the official said, with suspicion falling primarily on Shi'ite militias in the south.
Shi'ite militia groups hold sway around Iraq's southern oilfields, the State Department official said. For that reason, he said, the Shi'ite militias are more likely to be involved in theft there than the largely Sunni insurgents, who are believed to benefit mostly from smuggling refined products in the north.
In the south, the official said, "There is not an issue of insurgency, per se, but it could be funding Shia factions, and that could very well be true."
The report by the accountability office is the most comprehensive look yet at faltering American efforts to rebuild Iraq's oil sector.
For the analysis of Iraq's oil production, the accountability office called upon experts at the Energy Information Administration (EIA) within the US Department of Energy.
Erik Kreil, an EIA oil expert, told the New York Times that a review of industry figures around the world - exports, refinery figures and other measures - could not account for all the oil that Iraq says it is producing.
The administration also took into account how much crude oil was consumed internally, to do things like fuel Iraqi power plants and refine into gasoline and other products.
When all those uses of the oil were taken into consideration, Kreil said, Iraq's stated production figures did not add up.
"Either they're producing less, or they're producing what they say and the difference is completely unaccounted for in any of the places we think it should go," he told the paper. "Either it's overly optimistic, or it's unaccounted for."
The report also contains the most comprehensive assessment yet of the billions of dollars the United States and Iraq spent on rebuilding Iraq's oil infrastructure, which is falling further and further behind its performance goals.
Adding together both civilian and military financing, the report concludes that the United States has spent $5.1 billion of the $7.4 billion in American taxpayer money set aside to rebuild both the Iraqi electricity and oil sectors. The US has also spent $3.8 billion of Iraqi money on those sectors, the report says.
American reconstruction officials have continued to promote what they describe as successes in the rebuilding program, while saying that problems with security have prevented the programme from achieving all of its goals.
But federal oversight officials have frequently reported that the program has also suffered from inadequate oversight, poor contracting practices, graft, ineffective management and disastrous initial planning.
The discrepancies in the Iraqi oil figures are broadly reminiscent of the ones that turned up when some of the same energy department experts examined Iraq's oil infrastructure in the wake of the oil-for-food scandals of the Saddam Hussein era.
© Upstream 2007
