Here is a fact: the new Iraqi constitution says the oil belongs to the Iraqi people. That is all well and good. But here is another fact: no one really knows how much oil Iraq is producing because the meters are broken. The meters have been broken since 1996 according to the UN. In 2006 the Iraqi government signed a contract with Shell Oil to advise it on establishing a system "to measure the flow of oil, gas and related products within Iraq and in export and import operations". Still no working meters. The best thing Iraq terminal personnel can do is measure the oil as it leaves the export terminal in the Persian Gulf. They do that, according to a US Navy lieutenant interviewed by Stars and Stripes, by watching each tanker settle into the water as they are loaded. Each centimeter up the waterline marker indicates another 6,000 barrels of oil. Go figure. No one knows how much oil is stolen either. Some thieves simply back their modified pick up truck to a convenient spot on a pipeline and drill a hole. Others, with more capital and connections, bribe officials to look the other way as they fill tanker trailers at inland terminals. The Iraq Study Group said that 150,000 to 200,00 barrels of oil per day are stolen. That is a lot of oil, but given the chaos that exists in the country, the amount is not beyond the realm of possibility.
Both the Department of Energy and the State Department have tried to get accurate measures of Iraq's production levels. When first reported, the State Department's production figures were consistently higher than the Energy Department's. The DOE stated that the difference, often as much as 300,000 barrels per day, could be due to the fact that it does not count barrels as produced if they are injected back into the ground for lack of oil storage facilities. In Iraq, if the crude cannot be immediately refined or exported, it must be returned to the reservoir. The process is wasteful according to engineers, and Iraq is the only country in the world that does it. Worse yet, some of the surplus crude is stripped of it's lighter gasoline fraction and then injected, thereby diminishing the quality of the entire field. Iraq also flares, or burns off as waste, $10 million worth of natural gas every day. Of course the gas could be processed into needed energy products, if enough infrastructure existed. The supreme irony of the country is that with all the oil literally laying around, it is a net importer of refined products like gasoline, kerosene and fuel oil.
Iraq's production infrastructure has suffered through three wars and 30 years of neglect. Some of the equipment is still pasted with notices printed in Russian. Iraq has an estimated 115 billion barrels of proven reserves. At $90 a barrel, Iraq could finance a rebuilding of the industry. But it also has a lot of other bills to pay. Oil money is the government's only source of revenue besides foreign aid. Engineers think that it will take twenty years and perhaps as much as $100 billion to bring the industry up to international standards. No risk adverse multinational with the necessary technical resources is going to touch such a massive rebuilding project for chump change. Especially when bombs are still going off and a comprehensive, national hydrocarbon law is hung up on the splinters of the Baghdad government.