Three years ago, the Bush administration predicted that Iraq would finance its own reconstruction.
While difficulties related to the war have hampered growth, recent oil-related developments show the nation is on its way to financing reconstruction efforts.
Iraq, a founding member of the Organization of Petroleum Exporting Countries, sits atop the world's third-highest proven reserves. Its estimated 115 billion barrels are more than any other OPEC member except for Saudi Arabia and Iran, in possession of 260.1 billion barrels and 132 billion barrels, respectively.
But the prediction grew more skeptical as oil production slipped drastically since the U.S.-led invasion in March 2003, to an average of 2 million barrels a day in early April, as the oil projects faced repeated insurgent sabotage, alleged corruption, theft and mismanagement.
There seemed to be no way to regain even the reduced production levels that prevailed in the 1990s, when Iraq was under tough U.N. sanctions. It extracted as much as 3.5 million barrels a day in its peak year in 1990.
The gloomy reality of the numbers was compounded by growing political uncertainty in neighboring Iran over its nuclear enrichment program and continued insurgency attacks. Those difficulties have severely dampened U.S. and British efforts to bring in foreign investment and capital to Iraq.
In 2003 the U.S.-led Coalition Provisional Authority drew up a framework for large scale privatization and opened up state-owned services to foreign investors. As of 2005, 64 percent of Iraq's oil reserves are being developed by multinational corporations, based on contracts with the Oil Ministry known as Production Sharing Contracts.
Iraq now reports record oil exports.
In the past three weeks, 6.2 million barrels of crude oil were exported from the northern city of Kirkuk to the Turkish port of Ceyhan, 290 km (180 mi.) north of Baghdad. Total exports from Iraq, including the southern port of Basra, have increased to 2.5 million barrels per day, the highest level since the invasion.
Oil Ministry spokesman Assem Jihad said 1.6 million barrels are being exported daily from the southern port of Basra, while 300,000 are being pumped from the northern city of Kirkuk to the Turkish port of Ceyhan, according to the Associated Press.
Iraq is now exporting up to 1.9 million barrels per day of crude oil, as crude from Iraq's vast reserves near Kirkuk began flowing to Ceyhan port. Activity there had been suspended for over a year due to persistent acts of sabotage to the pipeline.
Previously assigned to a special force in vain, distinct from the army and police, Iraqi oil minister Hussain Al-Shahristani told Reuters that after the military army took over security of the northern pipeline to Turkey, oil exports rose to its record levels.
The minister did not say when the army had taken on the security role.
Nevertheless, whether the attacks have stopped due to tighter security, improved expectations for oil prices, or even the death of most-wanted terrorist Abu Musab al-Zarqawi, thereby disrupting the chain of commands that ordered attacks, the results underpin a sign of progress toward rebuilding the nationâ€™s economy and oil sector after years of sanctions and war.
Already , State oil marketer SOMO is aiming to secure long term supply deals, in contracts rather than tender, as it grows more confident of the flow of Kirkuk crude.
Iraqi oil minister, Hussain al-Shahristani, said he was confident that Iraq's oil production capacity will hit 4.3 million bpd within the next four years and will reach between 6 million and 8 million bpd by 2015.
Only 80 fields are now being utilized out of a total of 500 oil and gas fields, Shahristani said. When all these fields are exploited, Iraq will have the world's biggest oil reserves.
Initial estimates place the cost of reconstruction in Iraq to be anywhere between $10 billion to $60 billion over the next five years. With a $60 a barrel market price in Turkey, officials believe exports so far amount to about $372 million since oil began flowing from the north.
With a stable and steady supply of oil as the biggest source of income for the Iraqi government and together with a corresponding oil export boom, the nation is poised begin providing basic necessities such as electricity and water, thereby taking a step towards the process of reconstruction.