Turf War Hits Iraq's Oil Industry, Baghdad Ousts Executive Who Boosted Production Despite Odds

WSJ ^ | 073008 | GINA CHON

[Fred]

BAGHDAD -- A political turf war is threatening the stability of Iraq's biggest cash cow: the embattled but so-far dependable South Oil Co.

After chasing gunmen off the streets of the southern oil city of Basra this year, Iraq's central government is trying to reassert control over South Oil, the state-owned oil company based there. In May, Baghdad said it was reassigning the company's top executive, Jabber el-Leaby, to an advisory position at the Oil Ministry -- a move many observers see as a demotion.

Mr. Leaby is widely credited by U.S. officials and Iraqi oil technocrats with having led South Oil's surprisingly successful effort to maintain output throughout the nation's chaotic insurgency over the past five years. South Oil is resisting Mr. Leaby's removal, and the squabble has some Iraqi officials and Western diplomats worried the company is being sucked into Iraq's crippling political infighting.

"Leaby was the only one who could make [South Oil] work," says Jabir Khalifa Jabir, an Iraqi lawmaker from Basra and a member of Parliament's powerful oil and gas committee.

South Oil's future could affect petroleum consumers around the world. It pumps some two million barrels a day -- the lion's share of Iraqi output and more than 2% of global demand. That makes it one of the world's biggest suppliers.

The company is even more important to Iraq's own stability. Iraq is on track to earn some $75 billion in oil-export revenue this year, most of it from South Oil, up from about $40 billion last year. The money, boosted by high oil prices, is essential to restoring basic services such as electricity and to financing the country's reconstruction. Security gains across Iraq are allowing the government to make such improvements a priority again.

The 61-year-old Mr. Leaby and his management

[Fred]

[decimon]

If you’re too good or too bad you’ll be punished. Mediocrity is the ideal.

[RightWhale]

NYMEX crude 126.59 up 4.40
RBOB Gasoline 3.12 up 11 cents
Shell has evoked Force Majeure due to disruption in the Niger Delta.

[Reeses]

$75 billion in oil-export revenue this year

That's only $2,500 per citizen per year. It's better than nothing but a Democrat could spend that in 2 minutes. Under Saddam the population tripled. Had he made birth control pills more available and avoided envying his neighbor's oil fields Iraq would be a very wealthy country right now.