Baghdad's Big Oil Bust; It's Open Season on Iraq's Refineries and Pipelines

Article excerpt

Byline: Scott Johnson and Michael Hastings (With Christopher Dickey in Paris)

Guarding the Fatah oil refinery used to be a pretty straightforward job for Saif Mohammed. Insurgents hit only sporadically, and usually missed important targets. But by early last year, attackers were using rocket-propelled grenades, mortars and heavy machine guns in brazen daylight assaults. They seemed to know about everything and everybody in the refinery. Ambushes were common. "We were afraid to even take vacation and go home," says 26-year-old Mohammed. "The people who worked with us used to tip off the fighters. They wanted to play both sides--to keep their jobs and be informants for the terrorists."

When insurgents killed the man Mohammed shared guard duty with last April, then threatened Mohammed with the same, he quit. In the past year, there have been close to 20 large-scale assaults on Fatah, part of Iraq's largest oil-production complex in Bayji. Last month the Bayji site shut down completely for two weeks. It re-opened with the New Year, but three days later insurgents pinned down a 60-truck fuel convoy in an hourlong gun battle. Across the country, there's a major attack on oil facilities about once every three days. December was the third month in a row that Iraqi oil production went down, and it marked the lowest level of exports since the invasion. At a time when global supplies are stretched to their limits, the Iraqi oil bust helps keep world prices near record highs. But most of all, it's a disaster for efforts to get the country back on its feet.

Only three years ago, before the United States led the invasion of Iraq, the Bush administration dreamed of liberating the country on the cheap. Billions in untapped oil reserves were going to pay for reconstruction and nation-building. But hundreds of billions of American tax dollars later, Iraq's oil still isn't flowing at prewar levels. And in a country where 90 percent of the government's $35 billon in revenues comes from petroleum, the old promise has come to seem a curse. …