Iraq oil line attacks spark price rise fear

Published on 26/08/2004 13:11

THERE were fresh fears over petrol prices today after saboteurs attacked a number of pipelines in southern Iraq.

The latest attacks add further pressure on petrol companies to raise prices at the pumps in order to protect their investment.

And the chief executive of the Scottish Motor Trade Association fears that if the attacks continue, new price rises will be inevitable.

The attacks took place in Berjasiya, 20 miles south-west of the southern city of Basra, an oil company official said.

Around 20 pipelines were attacked, with oil exports reduced by a third following the sabotage.

The pipelines were still ablaze today, and TV footage showed huge plumes of black smoke and flames leaping from the Zubayr 1 pumping station, south of Basra.

The parallel pipelines, which range between 12 and 20 inches in diameter, carry crude oil from the South Rumaila oilfield to the Zubayr station, which pumps the crude to two Gulf terminals.

Insurgents have repeatedly sabotaged Iraq’s crucial oil industry, its main source of income, in an effort to hamper reconstruction efforts.

The threats to the oil infrastructure have increased in recent weeks amid a violent uprising by Shia militants in southern Iraq, where much of the oil industry is located.

Oil companies have not imposed the expected price rises in the wake of these attacks however, because they are seen as having only short term effects.

But Douglas Robertson, chief executive of the Scottish Motor Trade Association, warned today that more serious damage would inevitably hit motorists.

"There have been repeated attacks on the oil fields of Iraq, which is a major oil producer," he said.

"At the moment the oil companies have not raised prices, as I think many people expected them to do, as they are aware that any damage done in these attacks has only affected the supply lines for 24 hours.

"If there was an attack that reduced supply by 50 per cent or which shut down an important pipeline for more than a week, then they would raise prices. They will only be charitable for so long.

"They are protecting their reserves but we should be grateful they have not made snap decisions based on the short term dip in supplies caused by these attacks."

Oil exports out of southern Iraq average about 1.85 million barrels a day. Officials said the sabotage cut exports to 1.2m barrels. Squadron leader Spike Wilson, a spokesman for British troops helping maintain security in the area, said he was only aware of one pipeline breach 12 miles west of Zubayr.

And exports from the southern terminals at Basra and Khor al-Amaya were expected to recover to full capacity soon, shippers and Iraqi oil officials said.

"The loading of vessels has not been affected by the attacks. All is normal," one shipping source at the region said, adding that loading was proceeding at 68,000 barrels per hour (bph) at Basra, or 1.6 million bpd.

Iraq’s interior minister has said that the government has taken "extreme measures" to protect the infrastructure.

Attacks have continued unabated in the south, which accounts for virtually all of the country’s oil exports.

Motorists were warned to expect a summer of high prices after the cost of crude oil hit a 14 year high earlier this year.

Opec put out a warning earlier this year that it would be impossible for them to increase production to meet global demands.