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It has become a routine. Iraqi insurgents blow up one of the North Oil Company's facilities out in the scrubland. Engineers go and patch it up. The guerrillas fire on them and they beat a retreat.
It has happened regularly for the past two years and is happening now as North Oil tries to repair a gathering centre hit last week by four explosions. At this rate, officials say, it will take at least a month to restart exports.
Ever since Saddam Hussein's forces burned oil pumped into pits to try to stall invading US troops in 2003, Iraq's main industry has been a favoured proxy target for opponents of its new, US-backed rulers. There is no sign that will change soon.
It is not just infrastructure that is the target. In late October, a North Oil assistant manager was shot dead in Kirkuk.
Foreign investors are interested, in spite of the security problems and political uncertainty ahead of a parliamentary election in December.
However, Oil Minister Ibrahim Bahr al-Uloum said even with cash injections, a vicious circle of violence and economic stagnation will cap exports at no more than 3.5 million barrels per day (bpd) for the next two years.
Iraqi officials and analysts said it was almost impossible to provide security for the oil sector. Until Iraq is secure, the oil sector will continue to struggle.
"You cannot divide security into oil security and the rest of the country's security. It is all one package," said Mustafa Alani, an Iraqi expert at the Gulf Research Center in Dubai.
"You cannot put a plan into action to protect the fields and the pipelines, for example. You can protect part of the oil industry, like a building or so, but not the whole sector. It is impossible," he said.
Exports from the north have been virtually at a standstill because of repeated attacks. Delays in restoring a pipeline network have forced Iraq to inject oil back into the ground.
"How can you protect thousands of kilometres of pipelines?" Alani said. "The oil is being hit for political reasons because insurgents want to hit the government which depends on the oil revenues, so with no political and security stability you cannot secure the oil sector."
Analysts linked development in the oil sector to improvements in the political process, security in Iraq and the withdrawal of US-led forces.
"There will only be a way out for the oil sector in Iraq when the country itself is out of its problems. The oil sector is not separate from what is going on in the country," said Saadallah al-Fathi, a former senior Iraqi oil official.
"We have the accumulation of 15 years of sanctions and now two-and-a-half years of occupation. No oil project has been completed in these two years."
Oil exports are Iraq's sole independent source of hard currency needed for reconstruction after crippling economic sanctions and three wars in the past quarter of a century.
Production has been stuck near 2 million bpd and a significant increase is not expected soon.
Repeated sabotage, combined with poor project management and political instability, have hampered Iraq's aim to boost output to 3 million bpd, last seen in 1990.
"Facts say that economy, security and political process are linked together and we cannot move any of this forward without moving the other sectors," Oil Minister Uloum told Reuters.
He was hopeful that, after the election next month to choose a four-year parliament and a government, things would improve.
"The political process is moving ahead so we hope that the economy will also move forward, especially the oil sector."
Uloum, like many oil officials, acknowledged that the oil sector needed immediate and urgent measures to help it recover and outside money was necessary.
"The main issue is that Iraq with a national effort cannot produce more than 3.5 million bpd even if we had the money for the next two years.
"As for Iraq's capacity, it could be increased to 6 million bpd in 2011 and this could not be done without foreign investment taking part."
Oil multinationals are waiting until a new investment code with a legal and regulatory framework is in place. International oil firms are eyeing the giant, largely undeveloped oil fields.
Companies are hesitant to invest in Iraq, even though many of them are showing interest and are in constant touch with the minister, said an oil official who declined to be identified.
"Many of them said they are ready to work under the current security situation but they needed more guarantees from the ministry," he said.
"But the current ministry could not give guarantees to any of them, it is an interim one and is leaving soon, besides there is no oil law that would protect any company."
Iraq has the world's third-largest known reserves of oil but decades of war, sanctions, under-investment and now widespread violence and sabotage have left it critically short of fuel. It has to import nearly half the gasoline it needs.
Alani said reforms in the oil sector were unlikely to take place overnight.
"Even if all the conditions in Iraq are good, like they have the money, security and political stability, the sector will not recover within three years."

Copyright Reuters, 2005

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