2006 press releases AL BASRA OIL TERMINAL METERING Basra, Iraq December 23, 2006

15 positive displacement meters are operational The Al Basra Oil Terminal (ABOT) is the conduit for exporting 97% of Iraq’s crude oil into the world market. Both existing metering facilities at ABOT and third party verification of loading provide transparency of all crude oil exports. Ensuring ongoing operations at the ABOT is important to the Government of Iraq, as crude oil sales represent 95% of the Iraq government’s revenues. John Sickman, the Senior Consultant for Oil with the Iraq Reconstruction and Management Office (IRMO) says even a temporary closure of the ABOT results in a substantial revenue loss, estimated at approximately $80 million for every day the loading terminal is shut down. “Uninterrupted operations at the ABOT are critical to the prosperity of Iraq,” says Sickman. 10 turbine meters will be operational The ABOT facility is over 30 years old and sustained damage during the Iraq-Iran war, though the terminal has since undergone partial repairs. The recently refurbished loading berths at the ABOT have improved tanker loading efficiency. Design and construction of a new offshore loading terminal for (6) six loading berths would be required to fulfill Iraq’s goal of exporting between 3-4 million barrels per day by 2010. Contrary to some reports, meters have been used at the ABOT since 1976. Iraq’s State Oil Marketing Organization (SOMO), Iraq Reconstruction Management Office (IRMO) and The Office of the Special Inspector General for Iraq Reconstruction (SIGIR) have all verified the existence and operation of meters at the ABOT. SIGIR is expected to publish these findings in a forthcoming report. The last time meters were replaced at the ABOT was after the Iran-Iraq War in 1990. The ABOT currently features ten turbine meter runs on Platform A, and 16 positive displacement (PD) meters installed on Platform B, of which 15 are operational. Turbine meters are not new technology. The basic design is nearly 200 years old. Turbine meters have been used in the hydrocarbon industry since the early 1940s with the most current Turbine meters incorporating digital readouts. A turbine meter is simply a pipe with a spinner that measures the volume that passes through them. The turbine meters at ABOT are currently capable of measuring the maximum oil flow rate that can pass through Platform A. The ten turbine meters on Platform A are undergoing complete rehabilitation in Kuwait while one PD meter still needs repair. Reinstallation of the ten meters is anticipated in late December, 2006. PD meters are widely used in the oil industry. PD meters at ABOT have an analog read-out. Unlike turbine meters, PD meters can easily handle high-viscosity liquids, such as crude oil. For this reason, they are often used to measure petroleum at terminals, in production, and downstream for delivery. PD meters can measure heavy crude oil accurately, and they are not affected by variations in velocity or viscosity of the measured product. However, turbine meters have better capacity for larger volume measurement. While PD meters are losing out to newer technology meters for some hydrocarbon measurements, they still occupy a niche where they are the considered a good solution. And with annual worldwide sales that exceed $500 million, PD meters will be around for many years to come. 10 turbine meters will be operational Additionally, the U.S. government, in coordination with the Iraqi Government, recently installed state of the art ultrasonic meters to further enhance metering capacity at both platforms. Ultrasonic meters typically have accuracy levels of 1% or better. These new technology meters confirm measurements taken by the turbine and PD meters. Sickman says the existing meters and the ultrasonic meters are more than adequate because they are only there as a check on the meters utilized by vessels that come to load oil. “What ABOT does not have but needs is continuous sampling to determine the average API (American Petroleum Institute) gravity weight of the blended crude loaded. This would provide the quality of the oil, which, combined with the volume of oil, helps to determine the value of the oil sold, “says Sickman. Currently, the Iraqi government has to depend on the vessel analysis for quality. The International Monetary Fund reported in August 2006 that it does not have any concerns about the immediate replacement of the export metering at ABOT for the Standby Agreement. Between January and November 2006, the loading of 345 oil tankers has been metered at the ABOT, with total exports averaging 1.595 million barrels per day. Third party verification of exports is performed by SGS, a widely known industry expert in inspection, verification, testing and certification. SGS certifies that systems or services meet the requirements of standards set by governments, standardization bodies or by SGS customers. Purchasers of crude oil employ SGS to verify and certify loaded volumes for every tanker embarking from ABOT. Sickman, who has 30 years of experience in the Oil and Gas industry including executive responsibility for offshore loading operations in the North Sea, went on to say that “In the oil business, you don’t shut your money maker down unless you absolutely have to. Changing from one metering device to another does not warrant shutting down the platform.” “The measurement using the existing turbine meters and displacement meters at the offshore terminal at ABOT is transparent and the measurement devices are more than adequate. Furthermore, the crude oil vessels have measurement and quality samplers. In addition, SGS is providing independent third party loading certifications onsite for the customers. This, coupled with the recent installation of ultrasonic meter provides more than redundant measurement capability,” says Sickman. For more information on metering of Iraqi Oil, interviews can be arranged with IRMO Oil Senior Consultant John Sickman. Please contact the Press Office at the numbers above.

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