Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Who are they to tell us we are corrupt: Baghdad policeman

Yes, Iraqi police are corrupt and yes, they are sectarian, but they are also badly paid, poorly trained and lay their lives on the line daily, says Baghdad policeman Mohammed Rahim.

"And who are the Americans to tell us that our police force should be disbanded?" asked Rahim, responding angrily Friday to a report of a commission headed by Marine General James Jones, the former top US commander in Europe.

Jones's 20-member commission was scathing.
"The Iraqi Police Service is incapable today of providing security at a level sufficient to protect Iraqi neighbourhoods from insurgents and sectarian violence," it said in its report released in Washington on Thursday.

"Sectarianism in its units undermines its ability to provide security; the force is not viable in its current form. The National Police should be disbanded and reorganised."

Rahim, father of four children, acknowledged that many police are unable to hide their loyalties to their particular sects and often act accordingly.

He also concedes that some Iraqi police are corrupt -- "er, yes, there are a few" -- but says that this is true of police around the world.

"Police are not the only ones who are corrupt in Iraq," Rahim added defensively, standing guard with his AK-47 rifle outside a government building in an inner Baghdad suburb in his blue shirt, grey trousers and brown shoes.

"What has happened to the billions of dollars which the Americans have pumped into the country for reconstruction? Where has it all gone? There is very little reconstruction going on."

In the two years he has been a policeman, he has been shot at, his base in Baghdad has been mortared, and he narrowly escaped a kidnapping attempt.

His friend Hassan, also a policeman, was abducted five months ago by Sunni insurgents. Since then there has been no word.

"Because he is a policeman, and because he is a Shiite, he must be dead," said the mustachioed policeman matter-of-factly.

Rahim, his hair starting to grey and his hairline to recede, dare not wear his uniform while commuting from his home in the sprawling Shiite Sadr City slum in west Baghdad.

"I change into my uniform after I get to work," he said, admitting a little shyly to being afraid to tramp the streets in his uniform.

Even that factor is not enough, however, to allay the fears of his 14-member extended family who share a humble four-roomed home in Sadr City.

"They worry every time I leave home," says Rahim, who works on a 24-hours on, 48-hours off basis for around 200 dollars a month.

His brother Hussein, 24, is also a policeman, giving a double worry to the family, especially since the brother often has to man one of the multitude of security checkpoints established across the city.

"He has been shot at often and escaped a car bomb attack," said Rahim, who was a soldier in Saddam Hussein's army until the military was purged after the US invasion of 2003. "The most dangerous job of all is at the checkpoints."

Jones's commission concluded that it is now the turn of the 26,000-strong police force -- most of them Shiites -- to be purged, while cautioning that the Iraqi military, which is slowly being transformed into a fighting force, is at least 12-18 months away from assuming combat duties from US soldiers.

Asked if he himself was corrupt or operated on sectarian lines, the Shiite policeman grew angry before ****ting out an emphatic "NO! I am a loyal policeman, I work for all Iraqis."

Soldier Hamid Salman was dismissive of his protestations.

"What do you expect, of course he'll deny it. But all police are corrupt. We work with them all the time and we can see how they favour their own sect. Armed militia will drive through checkpoints without being stopped," Salman told AFP.

Other soldiers too are clearly not impressed with the performance of the Iraqi police.

Last month, troops closed down a police station in Baghdad's western Khadra neighbourhood, gave policemen stationed there their last pay cheques and sent them home.

The reason -- not only were they in cahoots with the local militia but they were so incompetent they hadn't even detected a roadside bomb planted just 100 metres (yards) from their police post.

Who are they to tell us we are corrupt: Baghdad policeman - Yahoo! News UK

Rebuilding starts in Iraq's once-wild West

On a street surrounded by ruins of bombed-out homes, stonemasons were working into the hottest part of the day to finish the second-floor gallery of the grand house they are rebuilding for Sheikh Mausuf Murdi.

"I will have new ceramic tiles on the floor and on the facade," boasts the sheikh. "It will be better than before."

The reconstruction is part of a rebuilding boom in al Qaim, a district along Iraq's border with Syria that was turned into a depopulated ruin by street combat less than two years ago.

Al Qaim is part of Anbar province, a vast western desert region that is now Exhibit A when U.S. President George W. Bush is looking for good news to describe in Iraq.

Bush made a surprise visit to Anbar on Monday, saying its improved security was an example of what could happen elsewhere in Iraq.

Like many in the Albu Mahal tribe, Sheikh Mausuf fled al Qaim with his family in 2005, when militants from Sunni Islamist al Qaeda in Iraq took over the area.

From 2003 until last year, Anbar was the heartland of the Sunni Arab insurgency and the most dangerous part of Iraq.

Al Qaim, where the Euphrates River pours in from across the Syrian border, was a battleground for most of 2005, with Marines battling insurgents street to street.

Nearly half of its 15,000 homes, many holding families of 30 people or more, were damaged. More than 400 were reduced completely to rubble. Whole blocks of stone and concrete houses still look like they were hit by an earthquake.

As recently as a year ago, a senior intelligence officer with the Marines wrote in a report leaked to media that Anbar province was all but lost, with the central government and its U.S. allies exercising virtually no influence and al Qaeda in control of towns all along the Euphrates.
What a difference a year makes.

Now Anbar will likely feature as convincing evidence of progress when the U.S. commander in Iraq, General David Petraeus, reports to Congress on September 10.

RARE GOOD NEWS

Four years into the war in Iraq, much is still going wrong for U.S. forces. Some parts of the country are more dangerous than ever for U.S. troops and their allies.

Iraqi civilians are still being killed in large-scale attacks like the coordinated truck bombings that killed more than 400 members of the minority Yazidi sect last month. Fighting between Shi'ite groups for influence has intensified.

With good news so rare, little wonder Bush has seized on the change in Anbar.

For a Reuters reporter who was embedded in al Qaim during the height of combat in 2005, the quiet now is uncanny.

The current battalion of Marines has been based in the district for four months. They patrol the streets on foot from small bases inside the towns but have yet to engage in a single major firefight, fire one live artillery round or summon their first air strike.

They have lost just one Marine killed by a roadside bomb.
Many of them joke uneasily that they are bored.

Their commander, Lieutenant-Colonel Jason Bohm, rattles off the successes of the past few months: eighteen new schools that will open this year; a new system for registering cars; a vocational training centre; a volleyball league.

The main street in the border town of Husayba, once nicknamed "ambush alley" by the Marines, is now a thriving vegetable market.

The district had no formal Iraqi security forces two years ago. Now it has 1,400 Iraqi soldiers and 1,200 police. Both are commanded by two brothers from the Albu Mahal, a powerful tribe that initially fought the Americans but was one of the first to turn against al Qaeda.

When the Marines go on patrol, it is now often under the direction of an Iraqi sergeant, something unheard of just a few months ago.

Foreign fighters who once streamed in from the Syrian border seem to have vanished: Bohm's Marines have encountered just one.

The dependence on the tribes has its drawbacks. This week the mayor of Al Qaim revealed that he had turned over two prisoners to a tribe for a summary execution after they were accused of murdering a policeman.

"We are working hard to get the rule of law stood up here," said Bohm. "We still have a way to go."

Some sceptics worry that the fighting could return if the tribes fall out with one another or become impatient with a lack of support from the central government in Baghdad.

But Sheikh Mausuf is spending $120,000 (60,000 pounds) to rebuild his house because he thinks it will stay quiet.

"All Iraqis now know who the insurgents are, and we will never allow them back," he said.

Rebuilding starts in Iraq's once-wild West - Yahoo! News UK

Tribes Sabotage Kirkuk Pipelines

Masked men infiltrate the village of al-Milih, 75 kilometers west of Kirkuk, and approach an oil pipeline that passes nearby. Under cover of darkness, they steal oil from an opening they drilled into the pipeline weeks earlier.

Over a period of weeks, this scene is repeated nightly.

De****e the presence of special oil ministry units, pipelines around Kirkuk are destroyed and hundreds of tons of oil stolen every day by tribe members from surrounding villages, such as al-Milih, Wadi Zghetun, al-Muradiyya, al-Saduniyya, al-Kanaina and al-Safra.

The "oil protection units" were deployed to guard the pipelines after the government cancelled previous failed agreements with tribal forces to protect them. But in ****e of this, oil is stolen from pipelines stretching from the al-Riyadh sub-district, 55 km west of Kirkuk, to the al-Fatha area 90 km to the west.

Tribal sheikhs who profit from the stolen oil are likely to obstruct new measures planned by local authorities, including a special protection force, to stop the sabotage of the pipelines. Locals employed to protect the pipes are often from the same groups as those who are stealing the oil.

Ever since a British-controlled company discovered oil in Kirkuk in 1927, the fate of the city has been tied to black gold.

A thirst for oil drove Saddam's Baath party to assert control over Kirkuk, driving out thousands of Kurds and replacing them with Arabs. Before the fall of the old regime, the fields around Kirkuk produced nearly 850,000 barrels per day, more than 30 per cent of Iraq's total production at the time.

In the first few years after the fall of former Iraqi president Saddam Hussein's government, Sunni insurgents - many of whom as former soldiers had guarded oil routes under the old regime - blew up the pipelines to wreak havoc.

Since then, insurgents have realized that stealing oil is also damaging, and is far more profitable than pure destruction.

Today, Kirkuk's oil wealth is evaporating.

Qais al-Mifraji, a 34-year-old farmer in the village of al-Safra, 63 km west of Kirkuk, describes how the pipelines are destroyed.

"The insurgents usually come at night and plant a bomb to detonate the export pipeline," he said. "But if they want to steal, they just break it and fill their tankers. No one can stop them."

The riddled pipes partially explain why four years after the US invasion, Iraq has not been able to match its pre-war crude production level of 2.5 million barrels a day. In 2006, production averaged 2.1 million barrels per day, mostly from oil fields near Basra in the south, which have not suffered the non-stop sabotage taking place in the north.

Kirkuk now produces just 180,000 barrels a day. It could produce at least 400,000 more a day which, at current market prices, would net Iraq seven billion US dollars in revenue per year.

Over the second half of last year, one stretch of pipeline connecting Kirkuk with the Turkish Mediterranean port of Ceyhan - the main outlet for Iraq's northern oil exports - pumped oil for only 43 days. The rest of the time, the pipeline lay idle, leaking crude through dozens of holes drilled along its 320-km run through the Iraqi desert.

Another pipeline has been tapped into 39 times so far this year, according to the state-owned Northern Oil Company, NOC, which operates the Kirkuk field.

Qadir Omer Rahman, director of the oil products distribution department in Kirkuk, said that the 80km-long pipeline from Kirkuk to the refinery in Bayji suffered many attacks.

"Those who protect and guard the oil pipelines are recruited from the people of the villages through which the pipelines pass," he said. "They are the ones committing these acts of terror and smuggling, with the help of other groups."

Unemployment and poor living conditions spurred Ayad Hamid al-Ubaidi from Hawdh village, who is in his thirties, to join the gangs who target pipelines and steal oil.

"There is no one who can give us our rights," he said. "We have to use our own hands to obtain our rights."

Rahman estimated that three million liters of oil are lost every month because of sabotage, which he said severely affects the provision of petroleum products to Kirkuk and the Kurdistan region's three northern governorates.

Each stage of oil production in the north is hampered by criminal activity.

It is not only the oil and its products which are stolen by outsiders. Pumps, transformers, generators and other valuable machinery and spare parts are frequently looted.

Oil company workers are coming increasingly under fire from militias. Pipeline repair crews have been shot at and hit by roadside bombs. Sunni insurgents have been dropping leaflets in Kirkuk warning all government employees, including oil company workers, to quit or to face death.

Last summer, Adi al-Qazaz, then NOC's director-general, went to Baghdad to visit the oil ministry. After his meeting, he was kidnapped by gunmen on the street, never to be seen again.

While some NOC employees are threatened, others are suspected of cooperating in stealing both crude and refined oil. Truck drivers, as well as managers of fuel stations, are taking their share of the illegal business, draining supplies for Iraqi citizens who struggle to find cooking oil and fuel.

A source in the NOC, who spoke on condition of anonymity, said that there is a mafia-like group operating inside the company which smuggles large amounts of oil through pipelines, in cooperation with individuals inside the company.

"When an explosion occurs in a pipeline and oil leaks from it, the people in charge neglect it, leaving the leak for several days until a large amount of oil has been taken from it," he said.

Much of the smuggled crude oil is sold to merchants in Erbil through local brokers. They meet to do their deals in a restaurant in the sub-district of al-Gwer, 40 km west of Erbil, according to Ahmed al-Jobouri, an oil tanker driver.

At small domestic refineries, the crude is transformed into refined fuel and then sold on the black market. Some will then be smuggled across the border.

According to the NOC source, "the revenue from oil smuggled into Turkey is used to support the Turkoman Front in Iraq, and revenue from oil smuggled to Syria is used to support the insurgent groups in Iraq".

Fuel is heavily subsidized in Iraq. Petrol stations receive limited supplies and citizens are given vouchers entitling them to buy a certain amount each week at the official low price. But because there is not enough subsidized fuel, most Iraqis end up buying oil products on the black market.

A source in the Bayji refinery near Kirkuk, who spoke on condition of anonymity, told IWPR reporters that some officials from the General Company for Oil Products, which is in charge of issuing paperwork for the subsidies, sells authentic as well as false receipts to merchants.

The stolen fuel is then smuggled and sold on the black market, either inside Iraq or across the border in Syria or Turkey.

There is also small-scale smuggling. Salah Ali, who has been working as a tanker driver for six months, said receipts are issued at the Bayji refinery for 36,000 liters per tanker, which is their official load.
But they are then filled to their full capacity of 40,000 litres, and the additional 4,000 liters are sold on the black market for five times the price of regular fuel.

Similar activities go on at the smaller refinery in Kirkuk, said Irfan Kirkukli, the deputy chief of security on the city council.

"Several trucks carrying oil products smuggled from Kirkuk have been seized," he said. "Vehicles have been caught smuggling 160 canisters of cooking gas from Kirkuk to Erbil, for example."

Some petrol station owners, he said, sell their share of state-subsidized fuel to black market dealers.

"Many such cases have occurred in Kirkuk and legal action was taken against [the culprits]," he said. "The filling stations weren't given [further] allotments and their owners were fined."

To protect the pipelines and prevent illegal smuggling of fuel, several measures are to be implemented. Kirkukli said a special protection force to guard the pipelines will be formed, consisting of members of the Iraqi army, oil protection forces and the tribes from the areas where the pipelines pass through.

Officials in charge of particular pipeline sectors will have to pay fines if their stretches are damaged or oil is stolen. Kirkukli also said that funds have been allocated to support oil infrastructure and to build observation towers along the pipelines in western and southern Kirkuk.

Sami Amin Othman, the Kurdish chief of the oil protection force in Kirkuk, has recently hired 290 new security guards whom he plans to deploy along the pipelines.

This, however, has already created unrest among the local Sunni Arab chiefs in the area. They seem to be afraid of losing power because the new guards will be paid directly by the government and not contracted through them.

Because the people hired to protect the pipelines are often from the same groups that sabotage the pipes, and tribal bonds are often stronger than national loyalty, the illegal drilling is expected to continue.

Sheikh Ziyad Hasan, who formerly served as a contractor protecting the pipelines, confirms that people from the area sabotage the pipelines and profit from the oil. Many locals, he said, lack the motivation to prevent thefts.

"They believe that this oil serves the Americans and the new government, and that it does not benefit the people," he said.

News & Analysis: Tribes Sabotage Kirkuk Pipelines

Iraq leaders broker oil deal days before U.S. report

September 7, 2007

WASHINGTON - Just in time for next week's Bush administration report to Congress on Iraq, most of the top leadership council in Iraq has reached a breakthrough agreement on a new oil law -- the thorniest of the political issues blocking political compromise in that cauldron of a country.

A Kurdish official predicted Friday to Newsday that if a final agreement can be announced to coincide with Army Gen. David Petraeus' testimony to Congress on Monday, it would be a major boon to President George W. Bush's argument that progress is being made in Iraq.

In recent days, Democrats in Congress have focused on the lack of political progress to counter Bush's claims that military progress is being made on the ground.

It was not clear Friday whether Iraqi Sunnis had approved the agreement yet, but it has been the Kurds -- not the Sunnis -- who have blocked progress. The Sunnis, who have little or no proven oil deposits in their region of Iraq, have long argued for central control of Iraq's oil and equitable distribution of the revenues by population.

Without it, experts on the region say, the country is likely to break apart.

According to one Middle Eastern source, the agreement would allow centralized control of the oil by the government in return for a larger share of the profits for the Kurds than originally proposed. Significantly, the agreement would cover future discoveries of oil deposits in addition to known oil fields, contrary to the vague provisions in the Iraqi constitution that seemed to leave such oil totally to the regions.

The Kurdish official confirmed the agreement, but said it calls for the central government and the regions to set policy together. Under the agreement, a federal council -- with both regional and federal government membership -- would be in charge of all the oil and gas in Iraq, he said.

Kurdish leaders had wanted Kurdish oil fields to be totally under their control. The Kurdish official, who asked not to be identified but was involved in the discussions, said Kurdistan, in northern Iraq, would continue to control contracts for oil exploration in their region, a major sticking point, but in coordination with the new council and its policies. The main point, the official said, is that "the center \[Baghdad\] cannot prohibit development in the North," as it did in the days of Saddam Hussein.

The deal was hammered out in recent days between the leaders of the two main Kurdish factions and two main Shia factions, with the Sunnis, who have been boycotting the government, not yet represented.

Iraq leaders broker oil deal days before U.S. report -- Newsday.com

I found this elsewhere....


Iraq Violence Drops as Economy Revives, Officials Say

Sep 07, 2007

WASHINGTON (Sept. 7, 2007) - The plus-up of U.S. forces has contributed to a marked decrease in sectarian attacks and other violence across Iraq, while a bevy of programs is breathing life into the country's battered infrastructure and economy, U.S. officials told reporters.

Cont'd
Iraq Violence Drops as Economy Revives, Officials Say

Real estate activity

Translated by IRAQdirectory.com - [9/7/2007]

Real estate activity at Baghdad's Al-Rusafa has witnessed remarkable steps led to a gradual rise in real estate prices when selling and renting, and especially renting which was more active than selling; this prompted the return of the owners of companies and real estate offices in most regions of Al-Rusafa to work, and this indicates the recovery of real estate activity. Some observers attributed this to the relatively stable security at Al-Rusafa, which made the population flee and congregate in those areas and this is natural, but it may lead to unnatural repercussions represented in the high real estate prices when renting and selling and the imbalance of the theoretical number of the population with the size of municipal services, health and education, which burdens those service institutions and requires them to take into consideration the exodus of the population from Karkh in Baghdad and the surrounding areas to work on providing services commensurate with the amount of their numbers.

Although real estate movement throughout Baghdad were and still linked to the security situation, however, it did not indicate any stable or positive feature but rather confusion in most aspects of economic life because of the deterioration of security and its negative points; de****e the active real estate movement in the areas of Al-Rusafa, however, this movement was marked with higher prices and rents on an irregular basis, without specific levels that can be followed by economic analyst for the real estate sector in Baghdad .. This confusion... This imbalance would cast a shadow over the economic cycle which the housing sector makes an important and vital pillar of it.

This active movement of housing at Al-Rasafa is linked to the security situation throughout the capital, which means that Al-Karkh may witness the same active movement if the security situation became better; however, this can not be regarded as positive, even though it had a positive impact on the owners of companies and real estate offices. According to the economic perspectives, this situation is confused and chaotic that will soon fade and disappear along with the security situation.

http://www.iraqdirectory.com/DisplayNews.aspx?id=4487

$ 50 billion for rehabilitating the oil and electricity sectors in Iraq

Translated by IRAQdirectory.com - [9/7/2007]

The Washington Post published a report, on Sunday, highlights the energy situation in Iraq, noting that Iraq is still far from achieving its targets in the oil and electricity sectors, and that these sectors need about $50 billion to meet the demand in the country, according to analysts and officials.

The paper says that since the American invasion of Iraq in 2003, Bush administration focused most of its spending on oil and electricity, from the amount of 44.5 billion dollars appropriated for the reconstruction plan. Now, with the approaching end of the reconstruction phase, led by the United States, Iraq will need to spend an additional $ 27 billion for the electric system, and from 20 to 30 billion dollars for oil infrastructure, according to estimates of the government Accounting Office collected from American and Iraqi officials.

Even with the provision of funding, according to the newspaper, the Accounting Office noted that the work will take until the year 2015 to enable Iraq to produce six million barrels of oil per day, and provide sufficient quantities of electricity to meet the demand.

The newspaper reported that a military general of the military engineering unit says that it is possible to provide sufficient quantities of electricity as soon as possible by the year 2010 or 2013.

Stuart Bowen, the American General Inspector of reconstructing Iraq, and in charge of detecting waste, fraud and corruption worth tens of millions of dollars, said that the "American money was devoted to operate these industries and qualify them," adding that "we are working in dilapidated sectors, and it is still a long way to go to reach to what we want."

The newspaper indicated that a former high-ranking official at the Pentagon was working on rebuilding the oil and electricity sectors talked more openly saying, provided anonymity, that "people say that the money was to build the country, but was merely an initial payment," saying that "that money was never enough to address what is in these sectors. It was just a help."

The newspaper said that if these problems were not specified, it would be difficult to build a strong economy and develop the living standards, which would lead to the loss of people's confidence in government.

The newspaper continues by saying that oil and electricity industries are the most important ones in Iraq and both depend heavily on each other. Iraq imports what is worth about two billion dollars of oil products per year. Oil exports constitute 90% of the proceeds of the Iraqi government, but oil production is paralyzed without the availability of sufficient electrical energy for the operation of refineries and pipelines transport. Electricity, in turn, can not be generated without fuel, which holds the majority of electric power stations in Iraq.

The paper says that American officials found the infrastructure of the country in worse condition than they had expected, especially after the severe damage in the 1990-1991 Gulf War and a decade of economic sanctions. Oil wells were not cleaned, and the apparatuses of the power stations were old and do not have spare parts. The paper recalls that one of the American auditors said that he had spent the entire day with 22 Iraqi electrical engineers explained to him proudly how they re-operated a generator using a piece of Pepsi machine.

The newspaper mentioned that Americans put $4 billion in more than 2600 projects to rehabilitate power plants, transmission lines and distribution networks. They also put $ 1.75 billion in developing the infrastructure of Iraqi oil. But the big problem is that, "armed groups regularly launch attacks on electrical and oil installations."

Analysts say that Iraq needs to invest money in the infrastructure of the oil pumping and treatment, and the modernization and maintenance of equipment, as well as in training of workers in the fields of electricity generation and oil refineries."

The newspaper quoted Brigadier General Michael Walsh, the general command of the military engineering battalion, brigade Gulf region, saying via a telephone call from Baghdad, "our work here was to create the infrastructure, and all what we did over the past four years was enough for a starting point. Now, the Iraqi government must continue our work."

http://www.iraqdirectory.com/DisplayNews.aspx?id=4486

Iraq Gears Up For Licensing Bid Round As MPs Prepare To Debate Draft Oil Law


10 September 2007

Iraqi oil officials have started preparatory work on identifying oil fields and gathering field data ahead of an upstream licensing round that will be launched soon after the approval of the much-delayed draft oil law. While this key package of legislation remains to be debated and adopted by the federal parliament – and there is plenty of evidence to suggest it will receive close scrutiny – a new sense of pragmatic optimism from Iraqi officials and their potential international partners was apparent at the Iraq Development Program-sponsored Iraq Oil, Gas Petrochemical and Electricity Summit, which started on 2 September in Dubai. De****e significant political differences among Iraq’s federal government partners, divisions that have held up progress on the law, senior officials are now striking a more positive tone ahead of the presentation of the law to MPs, as Bill Farren-Price reports.

The political hurdles faced by those preparing Iraq’s oil law have been well reported since the draft legislation was approved by cabinet in February this year (MEES , 5 March). Opposition from the Kurdish members of the government and the Kurdistan Regional Government’s (KRG) decision to proceed with its own laws have highlighted the paralysis that has at times gripped the federal government as it has striven to achieve consensus on the package of laws that will regulate the oil sector and the revenues flowing from it. But discussions in Dubai this week between international oil companies (IOCs) and Iraqi officials appeared to take on a slightly more pressing tone as the prospects for a breakthrough on the law loomed larger (see below for MEES interview with Iraqi Oil Commission Chairman Thamir al-Ghadhban). The summit provided an opportunity for major western IOCs including BP, Chevron, ConocoPhillips, Marathon and Shell to meet with Iraqi officials while representatives from India and China were also present. While it is clear that MPs are expected to debate the package vigorously, and that political opposition to some of the measures is likely to continue, Iraqi officials, while refusing to forecast a timeline for parliamentary approval, sounded more upbeat than when the original May deadline was missed and MPs went into recess (MEES , 6 August).

Former oil minister and government advisor Ibrahim Bahr al-?Ulum said he was optimistic MPs would approve the law but could see further delays. “I am optimistic it will be passed but don’t ask me about the timing. I even have doubts they (MPs) are going to read it in September,” he told MEES . “The majority of MPs are ready to approve it but there will probably be some slight changes.” He pointed out that the draft law left room for the Federal Oil and Gas Council (FOGC) to make adjustments after the law was approved, as a “legislative safety valve”. Dr Bahr al-?Ulum said he believed that the KRG would ultimately support the federal law, de****e public misgivings over some aspects of it (MEES , 13 August). “I do believe they would like to stick to the center and push the political process,” he said, noting the natural strategic alliance between the Kurdish and Shi?a parties. The former minister said the significance of the oil law could not be underestimated since it would set the tone for other types of investment in the country. “The investment future of Iraq will depend on this law. Even though it is specific to oil, it will open the door to other investors,” he said.

As expected, MPs from the Parliamentary Energy Committee gave divergent views on the draft legislation. Deputy Head of the committee and Da?wa party member 'Abd al-Hadi al-Hasani told delegates that while there were constitutional amendments outstanding, approval of the draft oil law should be postponed. “We hope to shed light on the different opinions of the citizens – they believe the law has not been given enough time to be discussed,” he said. He argued that the government should continue to consider all types of upstream contract and questioned the need for exploration contracts. “We can’t exploit existing fields – let’s spend the money there,” he told delegates. Independent MP and prime ministerial advisor Sami al-Askari, meanwhile, spoke in favor of the legislation, arguing that those who sought to freeze its progress wanted to demonstrate the inefficacy of democracy. He also accused regional players of obstructing progress on the law to prevent Iraq from resuming its historic place as a major oil producer and regaining its full role within OPEC. Mr Askari argued that the law provided the framework to switch the Iraqi economy from a so******t command economy to a market-based one and that the revenue-sharing law would enhance the unity of the country. “The oil sector cannot be developed without foreign capital – the hydrocarbon law sends the message that this investment will be protected by the constitution and laws,” he said, adding he believed the law would achieve parliamentary approval: “I believe this law may be amended slightly but it will be approved in the end. All of us are on the same side.”

As the parliamentary debate draws closer, MEES understands that Iraqi oil officials have already started work on drawing up a list of some 15 fields and projects that will form the basis of the first licensing round by delineating project scopes and collecting data for data room sessions. The list contains some large redevelopment projects, as well as development of discovered but non-producing fields and the development of several fields that have been chosen for their location in governorates where it is hoped the prospect of international oil investment will strengthen political unity. IOCs, for their part, remain concerned about security issues but are making headway in establishing preliminary consortia and alliances to bid on projects, as required by the government, although few details on these tie-ups have yet emerged.

Oil And Gas Targets

In his presentation to delegates, Iraq Oil Commission Chairman and former oil minister Thamir al-Ghadhban laid down government targets for oil production, which see capacity rising from the present 2.25mn b/d (2mn b/d from the south, 250,000 b/d from the north) to 2.8mn b/d by the end of 2007 (2.2mn b/d from the south, 600,000 b/d from the north). Pointing to proven oil reserves of 112bn barrels, probable reserves of 214bn barrels and proven gas reserves of 3,100 bcm (20% free, 9% gas cap and 71% associated), Mr Ghadhban said the government’s exploration objectives were to convert some 25-30% (60bn barrels) of probable oil reserves into proven, focusing on the Western Desert, the Mesopotamian sedimentary basin and the Kurdish areas in the north. He said efforts would be focused on boosting national oil production to 4mn b/d in the period 2006-15 with IOCs adding an additional 2.5mn b/d in the period. On the gas side, the plan involves boosting overall gas production from 1,500mn cfd to 6,700mn cfd, of which free gas production would be lifted from 250mn cfd to 1,850mn cfd. This increase would necessitate a reduction in the 1bn cfd of flared gas and the construction of new projects to gather, process, transport and export gas, he said. In the downstream sector, Mr Ghadhban said the government had established a medium term target of 42,000 liters/day of gasoline production and 60,000 l/d of middle distillates through the upgrading of existing refineries and the establishment of new ones.

Mr Ghadhban also described the complex array of institutions and their responsibilities under which the federal oil sector would be managed.

The FOGC is to be chaired by the prime minister and include federal ministers of oil, planning, finance and the governor of the central bank; presidents of oil companies, ministers from the federal regions, representatives from the oil producing governorates and three independent experts. The FOGC will issue oil policy, exploration and field development plans; issue regulations for licensing and contracting; prepare model contracts; assess and approve signed contracts; and decide the level of overall oil production. The Office of Independent Advisors – comprising the three independent experts - will advise the FOGC on contracts and development plans and also assess revisions to any contracts signed before the law’s enactment, such as those signed by the KRG.

The Ministry of Oil meanwhile will propose federal policy, laws and planning; prepare draft regulations; monitor and supervise oil operations; and prepare draft upstream policies with the regions to determine production levels and geographic distribution of development projects for submission to the FOGC. Regional governments such as the KRG are tasked with proposing oil plans to the deferral government to be included in the national plan and carrying out licensing rounds in areas not delegated to the Iraq National Oil Company (INOC), although this is to be done in accordance with FOGC directives and with the participation of a representative of the oil ministry.

Finally, INOC, whose chairman will have the rank of federal minister and will report direct to the prime minister, will fully manage the South and North Oil Companies and run its financial and administrative affairs independently. Its remit will cover managing and operating existing fields; developing discovered but non-producing fields close to existing infrastructure as delegated by the FOGC, participating in exploration on a competitive fields elsewhere while operating the main oil and gas pipeline network and export terminals.

Ghadhban’s MEES Interview

Chairman of the Iraq Oil Commission and former oil minister Thamir al-Ghadhban gave the following interview with MEES in Dubai on 3 September.

Q: What is your outlook on the prospects for the oil law’s approval (and then a bid round after that)?

A: The law is now with the House of Representatives. I believe that parliament will take it seriously and it will give it priority. There is of course a procedure within parliament on how to legislate laws: there will be a first reading followed by a second reading after four days, and they will make an opportunity for amendments, and a third reading shall follow that and they will vote on each amendment per article. Once all the articles are voted in, they will vote on the law as a whole. Once it is passed it will be sent to the presidential tribunal for their approval. Once that is done it will be published in the Iraqi Gazette and it becomes official and valid. What I have been hearing and [after] counting numbers, I think the law has a good chance of being passed but I don’t want to give forecasts – I think it is better to leave it to parliament to handle as it likes and as it deems right.

Q: Once the law is approved, how long before the government can launch a licensing round?

A: There is now a plan with milestones: a call for bids, data room, a certain time for submitting offers, then assessment of offers, negotiation of contracts and final awards. We hope that this would be done in the shortest possible time.

Q: Will it take six months to launch a round and make awards?

A: Let us say within a year. If you take other countries’ experiences of bid rounds, they usually take some time.

Q: The points of contention appear to relate to the annexes of the oil fields – the KRG has raised issues on that. What will be the key to unlocking the remaining points of disagreement?

A: Well I don’t think really this a serious point. I was ready for discussing and agreeing on those annexes. Those annexes are only lists of oil fields. Three of them are lists of producing fields and non-producing fields and so on and the fourth provides the coordinates of the blocks. So after consultation even with our colleagues from the Kurdistan coalition in government and even in the federal parliament, it was suggested by them to leave this matter to the Federal Oil and Gas Council (FOGC) to let them handle it rather than involve parliament with these detailed matters. There is nothing political in it at all. It is only the names of oil fields. And if it is required by parliament that we present to them annexes then we could do it. In a day or two we could agree on this. I don’t think it’s really a problem.

Q: The structure that you laid out in your presentation shows quite clearly that the FOGC and INOC will take a leading role with the Ministry of Oil in more of a regulatory role, a lesser role. Is that true?

A: No, that is not exactly correct because the ministry will be charged with a number of powers. One is, as you said, regulatory: it will prepare all the drafts, model contracts, plans and coordination and consultations with the federal regions and producing governorates and present them to the FOGC. But the ministry is going to be the Iraqi body negotiating with foreign companies on all exploration in Iraq, except in the Kurdistan region, as well as negotiating development contracts for already-discovered fields within Iraq outside the KRG but not allocated or assigned to INOC. So it has this role of negotiation. Once the ministry signs a contract with a foreign company on exploration, or on development of a discovered field and it is approved by the FOGC, then INOC will represent the Iraqi government within that consortium if Iraq elects to have a participatory interest, which most likely will happen.

Q: So INOC will in many cases behave as a standard NOC?

A: It will have a role in policy-making but there is one difference: it will not have a monopoly on the Iraqi land in terms of exploration. INOC has the right to compete and in this way we will be assured that there is competency for INOC to compete with IOCs in exploration. It is a unique model.

Q: Can Iraq proceed with oil field development and investment under present security conditions?

A: There are areas in Iraq that are relatively secure. Kurdistan is fairly safe and small IOCs are working there and normal business is being done in commercial trade and so on. Areas like Basra, 'Amara and Nasiriyya are fairly safe now. I am not saying they are 100% safe, no-one can give that assurance. But there are some operations in oil field services and supply being conducted in North and South Rumaila and West Qurna. I believe once the contracts are awarded and IOCs are ready to be there, I think the Iraqi government will take serious measures to provide what I would call Area Security and Protection. The government would secure the perimeters of the fields, the main access roads, ports, airports and pipelines. The government will concentrate on these while internal security will be done by the companies themselves, who will hire sub-contractors to do that.

Q: To what extent is the absence of reliable gas and power supplies going to be a challenge for oil operations?

A: I don’t think it is going to be a challenge. All companies whether national or international should go ahead with local captive power generation. Before drilling they can use alternative fuels if gas is not available. Most likely they could use gas oil, fuel oil and once the facilities are operational there will be power generation.

Q: Will you need additional gas for EOR projects?

A: I don’t think so because most of the cases, especially in the south of Iraq, even some of the fields in the north, we have always preferred water injection because of the impact on recovery.

Q: How is INOC going to finance its share of capital investment?

A: INOC will be self-financed from oil production through a fee with two components – one to finance the operating budget and the other to finance the investment budget. There will be a profit margin built into it. And there will be a capital amount from the very start to be provided by the government. We have taken these measures to ensure that INOC will be a stand-alone oil company. The company will have the right to raise capital and to borrow and also to form JVs and alliances with IOCs in Iraq and even outside Iraq. In the law there is even an article about these JVs having the right to issue bonds internally and externally.

Q: Why are you encouraging IOCs to form alliances and consortia as they line up to invest in Iraqi upstream?

A: We encourage consortia formation because this has been clearly stipulated in the law. We believe in the benefits of diversification and we want the maximum number of IOCs to work in Iraq to help in providing technical expertise and managerial skills and financial capabilities but also to help in enhancing the strategic balance of Iraq.

Q: What prospects are there for the oil contracts signed with the Saddam regime?

A: In general, there is a clear article in the draft law that old contracts will be reviewed by the Ministry of Oil with the contractor and they should be made consistent with the new law in order to make the maximum benefit to the Iraqi people as laid down in the constitution. The reassessed contract will then be submitted to the FOGC and they will either approve or reject it.


© Middle East Economic Survey (MEES) 2007.

MEES@zawya Review of Energy, Finance and Politics

Iraqi Sunni party ends boycott, attends parliament session

Baghdad - The Iraqi National Dialogue Front (INDF), which has 11 seats in Iraq's Council of Representatives, ended its parliamentary boycott on Saturday, declaring their 'demands met.'

The Sunni deputies attended Saturday's session after two months of boycott, according to MP and party member Mostafa al-Hiti. He said the INDF would resume its duties as a 'positive opposition force.'

The politicians had suspended their membership early July in solidarity with the Sunni Iraqi Accord Front, who walked out of the government in protest at both a probe against a Sunni culture minister and pressures on the parliament's speaker, also a Sunni, to resign.

The Accord front and its supporters from other Sunni blocs had said that the government was deliberately ignoring Sunni demands.

Meanwhile, al-Hiti told Deutsche Presse-Agentur dpa that the government had finally responded to their calls.

'Among them was allocating a monthly allowance of 150,000 dinars to families uprooted (from their home towns) inside and outside Iraq,' said al-Hiti. 'The way will be open to further discussions on oil and gas draft laws.'

Al-Hiti said that he expects the parliament to enjoy more activity in the forthcoming months 'since new coalitions and blocs will be formed.'

Iraqi Sunni party ends boycott, attends parliament session - Middle East

Bush appeals for impartiality, plans to present new Iraq strategy

Washington - Two days ahead of the progress report on Iraq to be presented to Congress by the most senior US commander in Iraq, General David Petraeus, President George W Bush Saturday called for impartiality from his critics.

In his weekly radio address, the president announced that he would be presenting his new vision for the future course of the war in Iraq in the coming week.

It was a vision, which he believed the 'US people and its elected representatives' could support, he said.

Together they could go forward towards strengthening Iraqi democracy, stabilizing the situation in the Middle East, thus assuring the greater security of the United States, he said.

According to media reports, the president was planning to make a television appearance on Thursday or Friday evening to present his new vision for Iraq.

In his radio address, Bush emphasized the progress made in the Iraq province of Anbar, which he visited Monday. Violence has been curbed in the area and local administration was once again functioning in the province with the support of the Baghdad government, he claimed.
Bush appealed to members of Congress, General Petreaus and the US Ambassador to Iraq, Ryan Crocker, not to jump to hasty conclusions in presenting their reports on progress in Iraq on Monday and Tuesday.

Bush appeals for impartiality, plans to present new Iraq strategy - Middle East