Out of gas in Iraq

By Beth Potter

Baghdad, Iraq - Sweat streams down Qusay Yahiya’s well-tanned face as he complains about the hour it has taken to make it to the front of the line at the gas station to fill his blue Kia station wagon.

"This is caused by the Americans," Yahiya, 34, who makes about $4 per day as a taxi driver, said, waving his hand at the line of cars stretching down the street. "I waited for such a long time to fill up my tank when my country is rich in oil. Is this freedom?"

Lines more than a mile long continue to form at the mostly government-run gas pumps around Iraq, despite stepped up imports — an 10 million additional liters of gas per day that is costing the Iraqi government up to $150 million per month.

Now, an oil ministry official says he knows what is causing the lines. Halliburton subsidiary Kellogg Brown and Root buys gas illegally from the stations to fulfill its contract with the U.S. military, creating huge market shortages, the official said, declining to be named.

"KBR knows they are receiving stolen goods. They buy it from Iraqi truckers. It is stolen through the local gas stations," said the oil official. "We end up importing it twice and three times."

Megan Mason, a KBR spokeswoman in Baghdad, strongly denied the charge.

KBR buys a small amount of gas locally, she admitted. Kuwait companies supply virtually all of the U.S. military’s fuel needs in Iraq, however, and their trucks are sealed to prevent funny business, Mason said.

KBR is currently under investigation in the United States for allegedly over-charging the U.S. government $61 million for gas for consumers in Iraq last year, according to press reports.

"KBR does purchase a minimal amount of fuel off the local Iraqi economy for use at one of their sites," Mason said. "This fuel is used to run auxiliary lights and an auxiliary generator at the facility."

Lt. Col. Mark Snyder, a spokesman for the U.S. Army Corps of Engineers working on oil reconstruction projects in Iraq, explained how KBR might get more gas from the local market than it knows about.

"There are several layers of subcontractors, so it is possible, say, that a Turkish driver to a company that is a subcontractor to KBR would do this," Snyder said. "But there is no way there’s a conspiracy or a concerted effort on the part of KBR to make that happen."

Iraq’s "culture of bribes, theft and corruption" contributes to the likelihood that gas will continue to be smuggled or stolen from gas stations, Snyder said. Sealing the trucks protects KBR, he said.

"A seal would be to make sure there’s quality, so they don’t sell some of the gasoline or dilute it," Snyder said. "There’s a problem with some truck drivers siphoning off some of the gas. There are systems being put in place to make sure that can’t happen anymore."

The 10 million liters in additional daily imports used to be paid for through an $18.4 billion supplemental bill approved by the U.S. Congress in November to reconstruct Iraq, Snyder said. Development Fund for Iraq, or DFI, money now pays for the imports, an estimated $13 billion left

over from former oil-for-food program funds. During the more than 10 years Iraq was under international sanctions, the United Nations oil-for-food program brought food and humanitarian goods into the country.

Iraq was never able to refine even 50 percent of what consumers needed, Snyder said, even before a U.S.-led invasion in the spring of 2003 ousted former president Saddam Hussein. With an estimated 500,000 new cars in the country and oil trucks getting hijacked on the roads, even the rumor of a gas shortage can turn into a self-fulfilling prophecy, Snyder said.

Gas smuggling and theft will continue as long as it is subsidized at such a cheap rate — less than 10 cents per liter, Snyder said. Saddam set the price, which is less than it costs even to refine the crude oil into fuel, Snyder said. Iraq pays more than 40 cents per liter to import the fuel, losing millions of dollars monthly to the subsidy, minister of oil Thameer Ghadhban has said. (UPI)

http://www.washtimes.com/upi-breaking/20040806-062223-6930r.htm