Billions in oil "missing"

It looks like smugglers, possibly controlled by Shiite militias, may be siphoning some of Iraq's oil away to small refineries in China or the Caribbean, where they can get high prices for it on the black market. The New York Times reports:

Between 100,000 and 300,000 barrels a day of Iraq’s declared oil production over the past four years is unaccounted for and could have been siphoned off through corruption or smuggling, according to a draft American government report.

[...]

The report does not give a final conclusion on what happened to the missing fraction of the roughly two million barrels pumped by Iraq each day, but the findings are sure to reinforce longstanding suspicions that smugglers, insurgents and corrupt officials control significant parts of the country’s oil industry.

-- The New York Times, May 12, 2007. (Site requires registration)

What I wonder is, where are these small refineries, and how is their cooperation with the smugglers going undetected? Do they have the support of local governments?

[Note: this is a World Without Oil post, but quotes here are real.]