Panel on Iraqi oil lacked White House optimism

Estimates of revenue fell far below rebuilding costs


WASHINGTON - The Bush administration's optimistic statements this year that Iraq's oil wealth, not American taxpayers, would cover most of the cost of rebuilding Iraq were at odds with a bleaker assessment of a government task force that was secretly established last fall to study Iraq's oil industry, according to public records and government officials.

The task force, which was based at the Pentagon, produced a report that described the Iraqi oil industry as so badly damaged by a decade of trade embargoes that its production capacity had fallen by more than 25 percent before the war, panel members have said.

The Pentagon is playing down that report, but Deputy Defense Secretary Paul D. Wolfowitz told Congress during the war that "we are dealing with a country that can really finance its own reconstruction - and relatively soon."

Expectations lowered

Moreover, Vice President Dick Cheney said in April, on the day Baghdad fell, that Iraq's oil production could hit 3 million barrels a day by the end of the year, even though the task force had determined that Iraq was generating less than 2.4 million barrels a day before the war began.

Similarly, Bush administration officials announced this year that Iraq's oil revenues would be $20 billion to $30 billion a year. L. Paul Bremer III, the top civilian administrator in Iraq, now estimates that Iraq's total oil revenues from the last half of this year through 2005 will amount to $35 billion.

Senior administration officials said Cheney, Wolfowitz and Defense Secretary Donald H. Rumsfeld were aware of the oil group's overall mission, but could not say whether they knew of its specific findings.

The Energy Infrastructure Planning Group, whose existence has not been previously disclosed, drew on the expertise of government specialists, including some in the Central Intelligence Agency, and retired energy executives. It planned how to secure the oil industry during the war and, afterward, restore it to its prewar capacity.

It concluded that although Iraq's stated production capacity was just over 3 million barrels per day, the system was producing only 2.1 million to 2.4 million barrels, panel members said.

Best-case scenario used

The revenue estimates made public in spring were in line with the very top range of projections made by the task force.

According to a Pentagon official who served on the task force, its projections for yearly oil revenues were $25 billion to $30 billion "in the very best case, no sabotage and little or no battle damage," and about $16 billion in the "worse-than-best case."

The worst case was no revenue for a few years, if there was "major sabotage and some significant battle damage."

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