May 14, 2011: In Iraq, oil production supplies 90 percent of government revenue. Terrorists still attack the oil facilities, but the big problem these days are thieves who tap into the pipelines and steal the oil. They then sneak it out of the country for resale to shady brokers, who buy it at a steep discount, then sneak it into legitimate supplies for export. Even if the thieves only get 20-30 percent of the current legal price (over $100 per 159 liter/42 gallon barrel), it's easy money. The oil police constantly patrol the pipelines, seeking to make oil theft less easy.
There are supposed to be 42,000 oil police, but corruption and recruiting problems mean that only 30,000 are on duty. There are also shortages of equipment (especially helicopters and sensors for detecting intruders, and taps into pipelines. Despite these shortcomings, the oil police have been effective, greatly reducing the attacks on oil facilities over the last five years.
The success of the oil police have an enormous bearing on Iraq's future. Sunni Arab terrorist groups recognized this from the beginning. Between 2003-9, terrorists launched over 500 attacks on the oil infrastructure, and cost Iraq more than $12 billion in damage and lost sales. But between 2007-9, attacks on oil targets dropped over 80 percent. That was mainly because the U.S. helped Iraq recruit, and train a 17,000 man oil security force. These troops not only guarded the oil fields, and 7,500 kilometers of pipelines, but also cracked down on the oil theft and smuggling racket, that has made gangsters, and dishonest oil industry employees, rich, while costing the government billions. That effort continues, although oil gangs bribing the oil police is a constant problem.
The oil police were originally formed in the 1950s, but that force was disbanded in 2003, because most of its members were Sunni Arabs, the same group that most of the terrorists belonged to. The new oil police are mostly Shia Arabs, although Sunni Arabs are hired if they belong to a tribe living near oil facilities and have demonstrated loyalty in the past.
Iraq has oil reserves of 142 billion barrels, worth over $1.5 trillion at current prices. Currently, Iraq exports 2.6 million barrels a day, and is on the way to doubling this in the next six years.