Iraq Declares War on Petroleum Smuggling

(it's probably Cheney and Halliburton who are declaring war instead)

BAGHDAD, Iraq (AP) - Smugglers were loading gasoline on a ship at an illegal port in southern Iraq when police surprised them with a raid that ended with five smugglers and two policemen dead.

The October clash at Abu Flus was one of many attempts by security forces trying to stop smuggling of Iraqi petroleum products to neighboring countries, a practice that is costing the country billions of dollars every year.

Smugglers are selling millions of gallons of Iraqi gasoline, kerosene and diesel fuel outside the country every year. They then reap huge profits by selling the petroleum products back to the government for import.

"The most serious challenges facing the oil industry are smuggling and terrorism. They are both hitting the national economy, robbing Iraq and blocking development," said Oil Ministry spokesman Assem Jihad.

Despite the fact that Iraq has the world's third largest proven oil reserves, the government is forced to import refined oil products to cover domestic demand. As recently as September, the country's three main refineries were working at half their pre-invasion capacity, processing only about 350,000 barrels day compared with about 700,000 barrels a day before March 2003.

Aging refineries, corruption and attacks by insurgents on infrastructure, such as pipelines, have been blamed for the production shortage.

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