Image: Motorists wait in line at a gas station in Baghdad
Khalid Mohammed  /  AP
Motorists faced waits of up to four hours to purchase gasoline in Baghdad on Tuesday.
updated 7/1/2008 11:21:38 AM ET 2008-07-01T15:21:38

Frustrated Iraqis faced miles-long lines at gas stations on Tuesday — a stark reminder that a country with one of the world's largest oil reserves still has major challenges delivering fuel to its people.

The lines followed Iraq's announcement Monday that it was opening six major oil fields and two natural gas fields to development by foreign firms, which could lead to the biggest outside stake in Iraq's oil industry since it was nationalized more than 30 years ago.

The government hopes these contracts will boost oil production by 60 percent from levels that are already the highest since the U.S.-led invasion in 2003. Increased production would provide additional resources to rebuild Iraq's infrastructure and deliver services to the people.

But the gas lines snaking nearly 2 miles down the streets of Baghdad on Tuesday show it will take a lot more than money to translate record oil prices and increased production into concrete improvements in the quality of life for the Iraqis.

Rampant corruption
Iraq's Oil Minister Hussain al-Shahristani has said the country expects to reap revenues of $70 billion by year's end if world prices remain high. Oil prices exceeded $143 for the first time ever on Monday and show few signs of falling.

But sectarian strife, rampant corruption, lack of adequate refineries and inefficient government institutions limit the positive impact that increased public revenues could have on average Iraqi citizens like Habib Hadi, who lined up for gas at 4 a.m. Tuesday.

After waiting more than four hours, he said he finally edged close to the gas station and "saw a catastrophe."

"The gas pump was not working because of the lack of electricity," Hadi said.

The fragile nature of the country's oil distribution system means that periodic shortages appear from time to time. But this week's crunch seems worse than most.

Sabotage blamed
Oil Ministry spokesman Assem Jihad blamed the shortage on sabotage of a pipeline bringing crude oil from the southern fields to a refinery in Baghdad. He gave no further details and would not say how long the shortage would last.

Fuel and electricity shortages increase hardships in Iraq in the summer, when temperatures soar well above 100 degrees Fahrenheit, making life uncomfortable without air conditioning.

The government continues to have problems providing regular power, and many rely on gas-run home generators for electricity.

The official price for a liter of gasoline in Iraq is the equivalent of about 38 cents, or about $1.44 a gallon. But the black market price, which has risen significantly in recent days, can be almost three times that amount.

Many residents in eastern Baghdad who lined up early Tuesday for fuel could do little more than stand outside their cars in the sweltering heat, waiting for the lines to move.

A vendor rode his bicycle cart by a group of frustrated Iraqis, as several drivers pushed their cars toward a gas station they couldn't even see, they were so far away.

'Very bad situation'
Falah Taweel, a gas station attendant scrambling to serve endless customers, said he blames the long waits on fuel shortages, rising summer demand and electricity problems.

"As official distributors, we are in a very bad situation. We can't meet the demand," said Taweel. Frustrated drivers behind him yelled at one another.

An Iraqi's simple demand for a tank of gasoline is in sharp contrast to the grand plans announced Monday on the opening of the major oil and gas fields to foreign firms to boost production by 1.5 million barrels per day.

Iraq currently produces 2.5 million barrels per day and hopes to raise that to 4.5 million by 2013.

Al-Shahristani named 35 foreign companies that would be eligible to bid for the development contracts, including seven from the U.S., three from Britain and others from countries like Russia and China.

Iraq had been expected to announce short-term, no-bid contracts with five major Western oil firms Monday as a stopgap measure to boost production until the government awards longer-term deals next June. However, the oil minister said the government was still negotiating with the companies, which he did not identify.

He said the firms wanted to participate in oil field production rather than simply provide consulting services for cash.

Some fear a dominant role for Western firms in Iraq's oil industry could feed perceptions that U.S.-led forces toppled Saddam Hussein to grab the country's natural resources.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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