American Energy Production Inc(fka AENP)

[hardcase]

America's Achilles' Heel
By Robert Bryce
Salon.com

Monday 16 August 2004

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Indeed, most of the news from Iraq's oil sector, despite some $2.3 billion in investment by the United States in the months since Saddam Hussein was deposed, has been bad. Recent figures show that oil production now approaches 2.3 million barrels of oil per day. Exports have reached about 1.9 million barrels per day -- a fraction of the amount Iraq was exporting in the days before the first Iraq war in 1991. Although the exports are far less than the Pentagon had hoped for, they are helping Iraq's nascent government stay afloat. And the new regime has been bolstered by record-high oil prices, which show no sign of abating anytime soon. On Aug. 13, prices for September delivery of light sweet crude hit a record high of $45.93 a barrel on the New York Mercantile Exchange.

But along with the rising prices and an increase in production has come a dramatic increase in the number of insurgents. According to the New York Times, the number of insurgents in Iraq has grown from 2,500 in April 2003 to some 20,000 today. And those men understand that America's Achilles' heel in Iraq is oil.

"Whoever controls Iraqi oil controls Iraq's destiny," says A.F. Alhajji, an oil industry analyst at Ohio Northern University who closely follows the Persian Gulf. And now, says Alhajji, the insurgents are ensuring that Iraq's destiny is to continue in chaos. By strangling the country's oil exports, they are cutting off the lifeblood of Iraq's new government. Without reliable flows of cash from its oil industry, Iraq will not be able to rebuild. And the U.S. Congress is unlikely to fund the Iraqi rebuilding effort unless it shows some results quickly.

Since last June, insurgents have attacked various parts of Iraq's oil infrastructure at least 90 times. That figure is probably a fraction of the real number. Gal Luft, executive director of the Institute for the Analysis of Global Security, a Washington think tank that tracks energy issues, says the real figure may be twice as high. But the Pentagon is reluctant to talk about the attacks on oil targets. "Nobody really wants to provide information because it's a political hot potato," says Luft. According to IAGS's pipeline watch Web site, there were 90 attacks on oil targets between June 2003 and early August of this year. On Aug. 5 alone, there were three attacks, including an additional bombing of the Kirkuk-to-Ceyhan line. That same day, a bomb hit a gas pipeline that feeds an electricity plant in Bayji, north of Tikrit.
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Complete article can be found at:

http://www.salon.com/opinion/feature/2004/08/16/iraq_oil/index_np.html

It is worth reading, IMO and has lots more details in the rest of the article........