Washington – A project to build a critical oil pipeline in northern Iraq has fallen more than two years behind schedule, costing the Iraqi government $14.8 billion in revenue and jeopardizing the safety of local water supplies, according to a new report by U.S. government auditors.
The 31-mile pipeline, designed to connect Iraq’s northern oil fields with a major refinery, is intended to replace an old, decrepit line that has been leaking oil for years. But because contractors were unable to finish construction of the new pipeline by March 2004 as scheduled, oil is pooling in the open air rather than being sped to market, auditors with the Special Inspector General for Iraq Reconstruction say.
Even when the project is complete, the auditors conclude, there is no way of knowing whether it will actually be an improvement because reconstruction officials have not been monitoring its progress.
“There is no reasonable assurance that project construction will meet the standards of the design because the U.S. government’s processes to independently verify project completeness and quality were ineffective,” the authors wrote in a report released Monday.
The project, managed by the Army Corps of Engineers, is just the latest in a series of projects that have gone awry.
The U.S.-funded reconstruction program in Iraq has been plagued by cost overruns and schedule setbacks, in large part because of security concerns, but also because of flawed management and poor planning. Projects to build medical centers, prisons and power stations have all fallen short of projections.
The new pipeline – intended to stretch from Kirkuk to Baiji – was supposed to increase the flow of oil from 500,000 barrels a day to 800,000. An Iraqi firm was contracted to do the bulk of the work.
Reconstruction officials initially hired the Halliburton Co., a subsidiary of Kellogg Brown and Root, to monitor the project. But auditors found that KBR did not perform daily reviews of the project’s progress; instead company officials saw their role as advisers to the Iraqi firm doing the work.
In June 2004, U.S. reconstruction officials canceled the limited oversight KBR was doing in order to save money, even though KBR had found problems with the Iraqi contractor’s performance.
