Sun, Aug 15, 2004 - Page 1 News List

Iraqi fears of sabotage shut crucial oil pipeline

AFP , BASRA, IRAQ

Iraq shut down a crucial southern oil pipeline for security reasons, a spokesman said yesterday, piling pressure on world oil prices that have repeatedly smashed all-time highs in four days.

Loyalists of rebel leader Moqtada al-Sadr, whose Shiite Muslim militia have fought US-led troops in Najaf for more than a week, have threatened southern oil infrastructure if the offensive continued against the central city.

Despite a tentative ceasefire in Najaf, clashes with militia flared further north in Hilla overnight and yesterday the Southern Oil Company announced the pipeline had been closed for security reasons.

"The production has been stopped since the start of the crisis and now we have stopped pumping too through the pipeline," a spokesman said.

Oil ministry officials were not immediately available for comment, while the British military, which offers back-up support to security guards for the southern pipelines, expressed ignorance.

"Till late Friday night the oil was flowing in the pipeline. I do not have any latest report of the pipeline status," spokesman Major Ian Clooney said.

The company halted production last Monday following the threats from Sadr supporters.

Since then, crude exports from Basra's two main offshore terminals, the only outlet for Iraqi oil, have been slashed in half, costing the government at least US$30 million a day in lost revenue.

Shutting the pipeline will only deepen the financial crisis faced by the debt-ridden Iraqi government.

"If the entire pipeline is blocked, Iraq will suffer from a daily US$60 million financial loss," the national security council has said.

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