It would cost an estimated $5 billion to repair damage inflicted on Iraq's oil fields during its eight-year war with Iran in the 1980s and the 1991 Persian Gulf War, and $20 billion to restore the country's electrical generating capacity, which is needed to keep the wells pumping. Annual oil field operating expenses would consume $3 billion more.
Boosting Iraq's oil production to its full potential would require "tens of billions" of dollars more in investment capital, the report says. Experts predict that Iraqi production could rise from its current 2 million barrels a day to as much as 6 million barrels in several years.
Those needs would have to compete with the equally staggering costs of providing humanitarian relief and financing the country's other reconstruction needs.
Many experts say the logical solution is for the professional cadre of a reconstituted Iraqi National Oil Co. to assemble an international consortium of big oil companies to help provide the money, expertise and technology needed to do the job as quickly as possible. In return, the companies would receive a share of production revenue.
The report says the existing U.N. "oil-for-food" program provides a ready-made structure for ensuring that Iraqi oil revenue is used to protect and rebuild the country, and for adjudicating any legal disputes over prewar oil development contracts with countries including Russia, France and China.
The report's authors urged the Bush administration to issue official statements guaranteeing Iraq's full national ownership and control over its resources and to launch a "public diplomacy campaign" to dispel the perception that the U.S. is plotting to take over the country's oil assets.
That doesn't necessarily mean the United States would exert no influence over postwar oil production, or that U.S.-based companies would be excluded. "To the extent it can bring help to Iraq, to rehabilitate the oil industry and the infrastructure, the U.S. could play a key role," said Fadhil Chalabi, a former OPEC and Iraqi oil official who heads the Center for Global Energy Studies in London. Adam Sieminski, global oil strategist for Deutsche Bank in London, said administration officials who favor U.S. control of postwar oil production are underestimating the will of Iraqis to control their own destiny.
"What anybody in the U.S. might like to do in Iraq is going to be subject to what the Iraqis would like to do in Iraq," Sieminski said.
