Oil pro­duc­tion at risk as vi­o­lent protests rock Iraq’s Basra prov­ince

Tehran Times - - ENERGY -

Iraq’s oil-rich Basra prov­ince is be­ing rocked by re­newed vi­o­lence as sum­mer protests re­gain mo­men­tum, threat­en­ing oil fa­cil­i­ties and the coun­try’s lead­er­ship.

Thou­sands of Iraqis have been tak­ing to the streets daily over the last week, torch­ing gov­ern­ment build­ings and po­lit­i­cal party of­fices in a show of anger against ab­ject liv­ing con­di­tions, gov­ern­ment cor­rup­tion and for­eign in­flu­ence.

As home to most of the oil pro­duc­tion fa­cil­i­ties for OPEC’s sec­ond-largest pro­ducer, Basra in cri­sis could have a ma­te­rial im­pact on oil out­put and prices, an­a­lysts say.

It may also see Iraq’s Prime Min­is­ter Haider al-Abadi pushed from power, cre­at­ing even more un­cer­tainty for the war-scarred na­tion and its 15-year old democ­racy.

“We’ve seen protests around fa­cil­i­ties and threats be­ing made against oil com­pa­nies. Some com­pa­nies have taken their for­eign work­ers out,” He­lima Croft, global head of com­mod­ity strat­egy at RBC Cap­i­tal Mar­kets, told CNBC.

“Pro­duc­tion hasn’t been hit yet, but if you were to have one fa­cil­ity go down, you could lose up­wards of 700,000 to 800,000 bar­rels of pro­duc­tion, so it’s a big story to watch.”

The protests, which be­gan in July, kicked off again last week fol­low­ing a raft of hos­pi­tal­iza­tions due to con­tam­i­nated drink­ing wa­ter. In Au­gust alone, 17,000 Basra res­i­dents were sent to the hos­pi­tal with colic, di­ar­rhea and symp­toms of cholera, ac­cord­ing to Basra’s direc­torgen­eral of pub­lic health.

South­ern Iraq, de­spite sit­ting on 80 per­cent of the coun­try’s oil wealth and be­ing home to its only deep­wa­ter port, Um Qasr, has long been a site of se­vere poverty and dis­con­tent. In­stead of reap­ing the ben­e­fits of its nat­u­ral re­sources, which in­clude 70 per­cent of Iraq’s proven nat­u­ral gas re­serves, Basra suf­fers high un­em­ploy­ment, fre­quent elec­tric­ity short­ages, un­safe wa­ter and waste fa­cil­i­ties and crum­bling in­fra­struc­ture.

Demon­stra­tions dur­ing south­ern Iraq’s swel­ter­ing sum­mer months have there­fore be­come some­thing of a rit­ual in re­cent years, as res­i­dents lament de­crepit pub­lic ser­vices and ram­pant cor­rup­tion amid day­time tem­per­a­tures of more than 120 de­grees Fahren­heit.

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