led invasion, Iraq's oil sector is at last pumping at the level it managed under Saddam Hussein, but it could take years to make further progress. Iraq holds the world's third-largest oil reserves, a resource key to meeting future global energy demand and to funding the reconstruction of the country's shattered economy. But violence, political wrangling and corruption have stalled foreign investment and forced Iraq to produce what it can with ageing oil infrastructure. “Iraqis have become masters of the patch-it-up approach,” said one Western oil company executive. “They have even managed to improve oil output in a very challenging environment, but there is a worrying lack of investment.” Oil exports reached around 2 million barrels per day (bpd) in January and February, a post-war peak around level with shipments under the international sanctions of Saddam's era. Officials have made upbeat forecasts for higher output. Baghdad aims to pump an average of 2.6 million to 2.7 million bpd over 2008, up from around 2.3 million bpd at the start of the year, Oil Minister Hussain Al-Shahristani told Reuters in January. The latest gains have resulted from improved security around Iraq's giant Kirkuk oilfield and its northern export pipeline to Turkey. Persistent sabotage and technical problems had kept the route all but idle since the US-led invasion in 2003, but since last summer Iraq has managed to sustain flows. “The government is determined to restore the prominent status of Iraq as a leading oil-producing state,” Asim Jihad, Iraq's oil ministry spokesman, told Reuters on Wednesday. “Talks with oil majors are just the first step which will open the way for global companies to develop Iraq's oil industry.” Optimistic forecasts for oil sector growth have been consistently dashed over the past five years, and insiders see no reason for that to change. “Things have gone from bad to worse,” said one senior Iraqi official on condition of anonymity. “The national government has not been able to manage the oil sector.”Majors, invesmtentUS officials say the main reason foreign oil majors have avoided Iraq is the lack of an oil law and the country appears no closer to finalizing one. Until it is in place and security improves, majors will be reluctant to spend the billions of dollars the sector needs and to send their own staff into Iraq. “How long can you sustain this without major investment?” said Mustafa Al-Alani, senior consultant at the Dubai-based think-tank the Gulf Research Centre. “We're not going to get out of stagnation in the foreseeable future. Things are getting worse, the outlook is more cloudy. Where is the oil law?” The law is meant to help bridge the divides between Iraq's Shi'ites, Sunni Arabs and Kurds. But the lack of consensus between them on Iraq's future political shape and how oil revenues will be shared have stalled the bill. Factional bickering has also made negotiating energy deals increasingly tough, the oil executive said. “Each entity has its own voice,” he said. “Aligning two or three was difficult. Aligning 20 or 30 groups is nigh on impossible.” Iraqi officials are negotiating service contracts with the world's biggest oil companies, which it hopes will boost output by 500,000 bpd. The firms will help to manage the country's largest oilfields from afar, a stop-gap measure while the ministry awaits the oil law.ExodusThe human cost of the war, which has killed tens of thousands of Iraqi civilians, has taken its toll on the energy sector. Top oil officials are among the millions that have fled the country. Their exodus has exacerbated management problems and oil majors complain there are few experienced officials left with whom they can negotiate. For Iraqis living most of the day without electricity and facing shortages of petrol, heating fuel and cooking gas, there is little reason for optimism. “After five years of the so-called liberation war, Iraq's energy sector is getting worse,” said Ahmed Azeez, a lawyer living in western Baghdad. “Iraq has huge oil and gas reserves, but its people can only dream of buying fuel easily and spending a scorching summer under air conditioners. It's a mess.” __
