IRAQI ENERGY SECTOR STATUS ON ELECTION EVE

UNCLAS SECTION 01 OF 02 BAGHDAD 004998

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EPET ENRG ECON IZ
SUBJECT: IRAQI ENERGY SECTOR STATUS ON ELECTION EVE

REF: BAGHDAD 4851
SENSITIVE BUT UNCLASSIFIED - GOVERNMENT DISTRIBUTION ONLY
NOT FOR INTERNET DISTRIBUTION



1. (SBU) SUMMARY: Electricity and fuel supplies in Iraq
remain very limited. The GOI continues to have problems
paying for imported fuel supplies from Kuwait and Turkey.
The GOI again permitted arrears to Turkish and Kuwaiti fuel
suppliers to mount with the former threatening a fuel
shutoff. Partial payments on arrears of $600 million have
been promised after the election. Al Fathah pipeline
crossing construction across the Tigris is progressing, with
pipelines now installed. These pipelines may be placed in
service by late January 2006. Al Fathah upgrade will enable
expansion of oil exports from northern Iraqi oil fields. END
SUMMARY.

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FUEL STATUS
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2. (SBU) Fuel supplies across Iraq remain short. The
supply in Baghdad is still low, but improved from late
November. Reported days of fuel supply in Baghdad are as
follows: gasoline--2.7, kerosene--19.5, diesel--1.3, and
LPG--2.7. Countrywide supplies, though quite unevenly
distributed are as follows: gasoline--4.9, kerosene--
7.1, diesel--3.3, and LPG--15.1. The most consistently
supplied areas of the country are Baghdad, and Basrah. In
the remainder of the country many fuel stations are
intermittently empty of fuel between deliveries. The
regions shortest on fuel supplies are Kurdistan, Anbar
Province, and south-central Iraq.


3. (SBU) A verified report from a Civil Military Operations
fuel officer said the local government in Al-Kut has issued
a verbal and written statement to a fuel-supply trucking
firm that they will commandeer all tankers coming through Al-
Kut to Baghdad. Apparently the governor has requested more
fuel from Baghdad and had been denied. Nationwide, black
market prices for fuel remain five to ten times the official
prices for all types of fuel, and fuel continues to be
generally available from this source.

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FUEL PRICES
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4. (SBU) Prices for fuel at gas stations in major cities in
Iraq reflect the Ministry of Oil (MOO) increased price
schedule. Anecdotal reporting from Baghdad, Basra, Kirkuk
and Mosul indicate official government gas stations are
pricing regular gasoline at $.13-$.15/gallon. These prices
are somewhat lower than product prices expected by the IMF.
However, Minister of Finance (MOF) evidently submitted new
fuel prices as expected by the IMF without approval of the
MOO. This issue went to the Prime Minister for decision.
Deputy Minister of Finance Kamal Fields Al-Basry informed
the Treasury Attach that the increases would go into effect
on the date and in the amounts that the IMF expects.

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FUEL PAYMENTS STATUS
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5. (SBU) The GOI continues to have problems paying for
imported fuel supplies from Kuwait and Turkey. Turkish
arrears are reported at $600 million and total bills exceed
$800 million to Turkish firms. Dr. Radhwan, Finance
Director General (DG) for Ministry of Oil (MOO),said the
Ministry of Finance (MOF) is providing a greater
allocation to the MOO/SOMO (State Oil Marketing
Organization) for future fuel imports payments that may help
reduce the monthly accumulation of arrears. He discussed
the issue with MOF December 12 and said GOI should have the
arrears payments to Kuwait and Turkey settled after the
election. DG for SOMO and the Minister of Oil are both in
Kuwait this week and will return on Wednesday, December 14.
(NOTE: The government is shut down until Sunday, December

18. We do not expect any action to be initiated until that
time. END NOTE)

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ELECTRICITY STATUS
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6. (SBU) Baghdad's hours of power increased to 9 hours
December 12 after two weeks at 4-5 hours a day, while
Basra's hours of power step increased to 17 hours from 13
hours. Nationwide average hours of power increased to 13
hours. The rotation schedule was 2 ON/ 4 HRS OFF for
Baghdad and for the rest of Iraq, 3 HRS ON/ 3 HRS OFF. 149
MWs of power were transferred from the South Region to the
Central (Middle) Region. The North and West Regions sent 295
MW to the Central Region. The addition of the V.94 generator
at Kirkuk to the grid also increased the power transfers
from the North. This accounts for the slightly better power
situation in Baghdad. Baghdad consumption was 23% of the
nation's output. Iraq average MW availability was 3864 MWs.
The 400 KV lines remain the weak links in the Iraqi grid.
The Bayji to Baghdad lines are under repair, with one under
stress, but still functioning and the other interdicted.
The Bayji to Kirkuk line was repaired and then interdicted
again on Dec 10. The Mussaib line to Baghdad was repaired
on Dec 12. Repairs for the major lines from Bayji are
scheduled for later in December.


7. (SBU) The shortfalls in electricity across Iraq are
partially compensated by the presence of neighborhood and
household generators. These generators of electricity are
used to replace the power when the electricity is rotated
from sector to sector in the large cities and in the rural
areas. There are a reported 1-1.5 million small generators
in Baghdad used at the household level. There are 10-12,000
neighborhood generators in Baghdad, which supply groups of
houses and businesses with higher amperage replacement power
when the grid power is switched off to their sector of town.

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AL FATHAH CROSSING
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8. (SBU) The Al Fathah oil pipeline crossing is currently a
good news story with the successful laying of the pipelines
across the Tigris River. The tie-ins of the replacement
pipelines along the Kirkuk to Bayji corridor are expected to
be completed by the end of January 2006. These lines still
need to be connected into the national pipeline network
through connectors on the west side of the Tigris River.
The completion of the tie-in of the pipelines will enable
the production of crude oil in the Kirkuk oil fields to
expand and the export of oil through the Iraq-Turkey
pipeline to the port of Ceyhan on the Turkish coast.