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U.S. says Iraq oil output could survive foreign exodus
Tuesday April 13, 2004 1:32 pm ET

By Khaled Yacoub Oweis

BAGHDAD, April 13 (Reuters) - A possible exodus by foreign oil workers from Iraq in response to a spate of kidnappings does not pose an immediate threat to the country's oil production, Mike Stinson, oil chief in Iraq's U.S.-led administration said on Tuesday. U.S., Russian, Italian and Japanese civilians in Iraq have been targeted by insurgents as the U.S.-led coalition attempts to quell resistance that flared up in Falluja and other cities.

Stinson told Reuters U.S. oil workers were mostly confined to their bases until the violence subsided but he did not expect a U.S. pull-out from the sector, and said oil production should not suffer even if employees did leave.

"There will be some effect, but the Iraqis have talented personnel who can keep the industry going even if foreigners leave without replacement," said Stinson.

The main impact could be to restrict imports of replacement parts needed to increase output from Iraq's delapidated oil infrastructure, he said.

Iraq has only just restored oil exports to pre-war levels of around two million barrels per day after its post-war recovery was delayed for months by sabotage and looting.

"We know that Iraq kept its oil industry going in difficult periods before. It is a difficult situation. There is a great worry over the lives of people above all else," Stinson said.


Russia's main contractor in Iraq, state-owned Tekhpromexport, said on Tuesday it had decided to evacuate its 370 Russian staff because of rising violence. Engineering firm Siloviye Mashiny (Power Machines) said it may follow suit.

Eight employees from Russian firm Interenergoservis, which has been executing contracts from the Saddam Hussein era, were freed on Tuesday after being abducted a day earlier.

But of Russia's 500 or so workers in Iraq -- plus around 40 in its embassy -- the vast majority are involved in power projects, with few in the oil sector.

U.S. engineering giant Halliburton said it has no plans to pull out its workers even though about 30 of its staff and sub-contractors for its subsidiary Kellogg Brown and Root (KBR) have been killed.

"KBR is resolved to continue support of the U.S. troops and to fulfil all contract obligations and move forward with the logistical support to troops, the reconstruction effort and assisting the Iraqi people rebuild the country's oil infrastructure," said Halliburton spokesman Wendy Hall.

"As a result of recent action in Iraq, KBR has stepped up its security precautions," she added. Seven KBR workers have been missing since Friday after their convoy was attacked.

Iraq has been issuing tenders to buy spare parts covering everything from pumps to wells and refineries to push total crude production back up towards 2.5 million bpd.

Iraq has also asked for international bids to build new internal pipelines with domestic technology lacking to execute projects that involve river crossings.

Ahmad Barifkani, a senior Iraqi oil ministry official, said Iraq had more resources to rebuild its oil industry than during the 1990-2003 United Nations economic embargo, when even obtaining the most basic spare parts was a struggle.

"We rebuilt the sector before and we will continue to do miracles," Barifkani said. "I used to look at the war damage to our facilities and say to myself this could never be repaired."