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Iraq investigates tripling costs at state-run oil company

May 14, 2019 at 12:49 pm

Iraq’s Commission of Integrity (COI) revealed yesterday it was investigating the inflation of two loading arm contracts between the state-run Basra Oil Company and two international firms.

The allegations of corruption were detailed in a statement on the COI’s website which said that three loading arms were priced at $124 million though they should not have cost any more than $40 million.

“This information was discovered by the investigative directorate, which said that the real price of one lifter is only $13 million,” the statement added.

A loading arm is used to transfer oil or liquefied gas to a tanker for transportation.

The statement didn’t name which international companies were involved but, it did say that evidence was being sent to the court to be processed.

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“The evidence gathered is to be presented before the investigative judge at Integrity in Basra to take the necessary legal measures,” it said.

Iraq has one of the world’s largest oil reserves and ranks as the second-largest oil producer in the Organisation of Petroleum Exporting Countries (OPEC).

Last week, Iraqi Prime Minister Adil Abdul Mahdi was poised to sign a $53 billion oil mega-deal with two international petroleum giants, Chinese PetroChina and American Exxon Mobil.

Abdul Mahdi told reporters that the deal would increase the output of oil production in the south of the country from 125,000 barrels per day (bpd) to 500,000 bpd.

The infrastructure agreement would seek to repair and build new export pipes and construct a water injection project to feed oil wells in Nahr Bin Umar and Artawi in Basra Governorate in the south of the country.

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There are also plans to process 100 million standard cubic feet of natural gas per day from the same fields.

Iraqi contracts are some of the most valued in the oil industry. Though earning the country billions of dollars, the public are yet to see the benefits of an improving economy with many politicians accused of syphoning proceeds.

The Iraqi Commission of Integrity was created in 2005, after the 2003 invasion of Iraq, to hold politicians and civil servants to account. Its remit involves investigating and instituting laws to combat corruption. According to its mission statement, it seeks to “foster a culture of integrity, honesty, transparency, accountability and submission to questioning and fair dealing with the government.”

Transparency International – a global corruption watchdog – ranked Iraq as the 12th most corrupt country of 180 in 2018.