The US government's independent inspector on Iraqi reconstruction reported that Iraq's largest industry, the oil sector, has lost $US16 billion in oil export revenue over a 2 year period and insurgent attacks on the country's energy infrastructure have prevented it, in part, from maintaining adequate electricity supplies.
"A number of factors, including attacks, aging and poorly maintained infrastructure and criminal activity are adversely affecting Iraq's ability to develop a viable energy sector," said Inspector General for Iraq Reconstruction Stuart Bowen.
In an unclassified summary Bowen said that these factors are working together to hold down Iraq's oil exports and the availability of electricity.
The oil sector in Iraq which was expected to be a big revenue raiser for the rebuilding of Iraq, has been subjected to repeated attacks on its pipelines and oil export facilities.
Iraq is paying billions of dollars to import gasoline and other refined petroleum products for its people, in spite of owning huge oil holdings.
The US has invested about $320 million to help Iraq improve its capability to protect its oil and electricity infrastructure.
Bowen noted that in addition to the initiatives Iraqi leaders are taking to enhance security and performance of the oil and electricity infrastructure, they also need to take "bold action" to protect energy sites in the country.
Iraq's oil production is far below pre-war levels when Iraq pumped between 2.8 million and 3 million bpd. Currently the country's oil exports have been running at almost 1.7 barrels a day.
Iraq needs investments by foreign energy companies in its underdeveloped and undiscovered fields to boost its oil production.
Iraq claims to need up to US$20 billion in investment to reach oil production limits of 6 million bpd.
However, many foreign companies are apprehensive about doing business in Iraq due to the ongoing violence.
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