Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 27, 1991 TAG: 9102270316
SECTION: NATL/INTL PAGE: A-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: NICOSIA, CYPRUS LENGTH: Medium
Kuwaiti officials refuse to forecast how long it will take to get their oil industry going again. They won't know, they say, until they can better assess the amount of damage.
But Kuwait has already lined up experts to douse the blazes - apparently set by Iraq - and to start rebuilding their plundered refineries. Industry experts predict the emirate's oil will be flowing within months.
Iraq, hobbled by an international embargo, crippling debt and a regime few nations may want to deal with, could take years to bring its own oil industry back into the black, analysts say.
Although it has suffered major damage to its oil refining infrastructure from the most intensive aerial pounding in history, Iraq's crude production and pumping capacity is almost intact.
But getting the oil money flowing again is as much a political as a financial question, since embargoed Iraq will need to recover the major component it now lacks - customers.
Despite the loss of Kuwaiti and Iraqi oil - about 20 percent of OPEC production - the market is now glutted because of emergency production by other members of the Organization of Petroleum Exporting Countries.
"If after the war the allies, and especially the United States, don't get what they hope for in terms of political change in Iraq, they might impose an oil embargo on Iraq," said Pierre Terzian, editor of the Paris-based Petrostrategies.
The pipelines through which Saddam Hussein shipped most of his oil from the world's second largest proven reserves run through the hostile territory of Saudi Arabia and Turkey.
In what was apparently a scorched-earth policy, Iraq torched 590 of Kuwait's 950 oil wells, according to the U.S. military, and reportedly set explosive charges on others.
Fergus MacLeod, an oil analyst with London's County Natwest Woodmac investment firm, has discussed oil industry recovery with Kuwaiti officials.
"The best guess I've heard from any of them is maybe nine months to get production back to a significant level, which is half of pre-war production," MacLeod said.
Kuwait, with the world's third-largest proven oil reserves, was pumping 63 million gallons daily before the invasion.
MacLeod stressed that extinguishing the oil well fires would be less difficult than repairing oil transmission and loading facilities. And other analysts note that refining operations could be much harder to restart than the facilities that produce crude oil.
A Kuwaiti spokesman was more cautious than MacLeod, refusing to predict how long a comeback would take.
"It's very difficult to give any clear picture of the damage," the official said, speaking on condition of anonymity.
"We're not really that interested at the moment in ensuring that everything goes bang, bang, bang, bang."
Three American firms which have played a development role in the Persian Gulf oil industry - Bechtel Group Inc., Fluor Corp. and the Parsons Corp. - are leading Kuwait's oil recovery effort.
The Kuwait Petroleum Co. has also contracted with three U.S. oil firefighting firms to douse the well fires and resume their production of crude.
"It can only be six to nine months because the Kuwaitis can afford the very best," said Peter Bogin, Associate Director for Oil Markets with Cambridge Energy Research Associates in Paris.
"For the Iraqis, it will be a lot longer than that," he added.
The allies targeted refineries and other major oil installations in their bombing raids, apparently in an attempt to starve Saddam's war machine of vital fuels.
MacLeod predicted Iraq would have to import all its refined products for the foreseeable future, much like Iran, which still must buy much of its fuel because of refinery destruction during its 1980-88 war with Iraq.
The wider question governing Iraq's oil industry recovery is political.
by CNB