Measuring Stability and Security in Iraq - United States Department ...

Oil Production, Distribution, and ExportDamage to pipelines, fires, poor maintenance,and attacks have combined to slow productionof refined products and crude oil forexport, primarily in central and northern Iraq.Production and exports in the south remainthe primary driving force of Iraq’s economy,although aging infrastructure and maintenanceproblems impede near-term increasesin production and exports. Crude oil productionfor the October-December 2006 quarterwas 2.2 million barrels per day (mbpd), andoil exports were 1.49 mbpd, short of theGOI’s 2006 goal of 1.65 mbpd. Fall andwinter months generally have low productionrelative to the spring and summer. Otherfactors, such as high market prices for crudeoil, overcame this shortfall and resulted inrevenues of US$1.5 billion above thatforecast for 2006.Critical fuel shortages occurred throughoutthe fall and early winter, including gasoline,diesel, kerosene, and liquid petroleum gas,largely as a result of poor domesticproduction, reduced imports from Turkey,and continued distribution problems. Theregulated price of regular gasoline(87 octane) in Iraq is currently about250 dinars per liter (US$.72 per gallon);premium gasoline (92 octane) is about350 dinars per liter (US$1.03 per gallon).Gray marketeers continue to profit from thesale of stolen fuel, both within Iraq and inneighboring countries. Gray market prices inmany central and northern provinces werereported at 100%–2,000% above officialsubsidized prices for key fuels.Electricity Production and DistributionEstimated peak daily demand for electricitybetween October and December 2006 was9,091 megawatts (MW), an increase of 20%over the same period in 2005. During thisquarter, the actual average daily peak generationoutput was 4,226 MW, an increase of 2%over the same period in 2005, and 51% of theaverage peak daily demand of 8,237 MW.Many Iraqi citizens have established privateentrepreneurial generator arrangements toproduce electricity on a neighborhood orbuilding basis, therefore underestimating totalelectrical production. The gap between government-producedsupply and consumerdemand continues to increase due to the failureto add or rehabilitate capacity, as well asinadequate security, operations, and maintenancepractices for the generation and transmissioninfrastructure. A surging demand isexacerbated by the fact that Iraqis pay verylittle, if anything, for electricity. Reform ofelectricity charges for consumers is key to thelong-term viability of Iraq’s electricity sector.Government-produced electricity averaged10.7 hours per day over the reporting period(October-December 2006) and 9.1 hours perday for the month of December. Baghdad,however, averaged only 6.6 hours of powerper day this quarter, falling to 6.3 hours inDecember—5.7 hours short of the target goal.11March 2, 2007