The Iraqi Oil Pipeline Fiasco.
Published: April 27, 2006
The Bush administration's promise that Iraq's reconstruction could be paid for with the country's own oil revenues was one of the many false assertions and assurances that ushered in the invasion. But unlike the predictions of weapons of mass destruction and streets filled with cheering Iraqis, this claim might have been at least partly true — if the administration had more carefully supervised the lucrative no-bid oil industry repair contract it awarded to a subsidiary of Halliburton, the firm formerly headed by Vice President Dick Cheney.
Part of that contract involved repairing a crucial pipeline link that American bombing had severed in the course of the invasion. Had the repair been done right the first time, Iraq would have been able to export much more oil from its northern oil fields in the past few years, making it far less dependent on American reconstruction aid, which has amounted to about $30 billion so far.
How this costly and unnecessary failure came about was spelled out by James Glanz in a compelling investigative report in Tuesday's Times. He described the easily avoidable engineering errors that delayed the reopening of the crucial Fatah pipeline link while the contracted funds ran out and the security situation for reconstruction workers deteriorated drastically. It is instructive to recall the circumstances in which Halliburton was awarded this contract just prior to the Iraq invasion — with no competitive bidding. Later, when Democrats in Congress began raising questions, the Pentagon pointed to Halliburton's special expertise in oil-field management and its long experience working under Army Corps of Engineers' supervision.
But neither the expertise nor the supervision were much in evidence on the Fatah repair job. The Halliburton subsidiary managing the project ignored the clear warnings of its own consultants and let the drilling begin without any rigorous testing of the ground it needed to work in, which turned out to be a geological fault zone. As a result, drill bits repeatedly snapped and drill holes kept collapsing. It took an unconscionably long time for the corps to find out about the problems. By then, months had passed and almost all of the roughly $75 million allocated for the project had been spent.
There are crucial lessons to be learned here about the rarely justified practice of awarding no-bid contracts based on presumed special expertise. There are lessons as well for the Corps of Engineers, which is also supervising much of the Katrina rebuilding effort — some of the reconstruction work there is also being done by Halliburton.
On the Fatah pipeline crossing project, American taxpayers got a particularly raw deal. The repair work they originally paid for wasn't done. The government agency that was supposed to supervise the work did not do an effective job. And the oil exports that could have helped pay Iraq's reconstruction bills never made it through the pipeline.