by Richard Giragosian
With a network of some 6000 kilometers of oil pipelines, the simplicity of acts of sabotage and damage offer a relatively easy and inviting target for insurgents. The attacks on oil production in the northern sector of Iraq, for example, is seen as one of the most daunting short-term obstacles to the imperative of reconstructing the country's energy sector. Oil industry analysts have affirmed that the oil field sabotage in the north is now markedly greater than in the south of the country, where oil production has risen steadily over the past months.
Some Iraqi oil, perhaps as much as 200,000-300,000 barrels per day (bpd), is being reinjected into oil reservoirs in the north due to constraints on both domestic processing ability as well as export outlets. As of August 2003, roughly 40 percent of northern Iraqi production was being transferred to the Baiji refinery, with the balance reinjected into the fields, ostensibly to maintain pressure. This means, however, that crude oil production is overstated by a level equivalent to the volume of oil reinjected (as it is not available for refining or export, but is still counted as production).
As of December 2003, total oil production in Iraq recovered to a daily average of almost 2 million barrels per day (mbd), excluding the crude oil that is being reinjected, with exports reaching almost 1.5 million mbd. But the vast majority of that output is from the southern fields, with the targeting of the northern sector seriously hindering production in the northern fields. This north-south divide also has important implications for domestic politics and stability, and exacerbates the complexities of power between the self-sufficient Kurds in the north, the emboldened Shi'ites in the south and the disgruntled Sunnis in between.
The key factor constraining future growth in Iraqi oil production centers on its export capacity. Current exports of crude oil are limited to only one external route: passage through the Mina Al-Bakr terminal on the Persian Gulf. This reliance on a sole export route is an inherent restraint on potential export expansion, especially as the Mina Al-Bakr terminal is now nearing its operational capacity. And although there are plans to reopen a second port facility at the nearby Khor Al-Amaya, with an initial capacity of about 500,000 bpd, this is not likely in the short term. This constraint only elevates the strategic importance of the export pipeline route to the Turkish port of Ceyhan.
The northern pipeline from Kirkuk to the Turkish port of Ceyhan was attacked twice in June 2003 and the pipeline from the giant Rumeila field in the south was also blown up twice by insurgents. With a nominal capacity of 1.6 mbd, the 480-kilometer Kirkuk-Ceyhan pipeline accounted for some 40 percent of Iraqi pre-war oil exports, but has yet to fully reopen since the March/April 2003 war for any sustained use beyond tests of its general technical condition. The Kirkuk-Ceyhan pipeline is also expected to be limited to only about 500,000 bpd for the medium term. Nevertheless, this pipeline is strategically important but is an especially vulnerable target given its route southwest through Bayji in the "Sunni Triangle" where resistance is strongest, before turning north towards Turkey.
According to some market analyses, the level of attacks in the northern fields seriously questions the likelihood for any resumption of crude oil exports through the oil pipeline to the Turkish port of Ceyhan on the Mediterranean Sea. The economic costs of these attacks and disruptions are also serious. Specifically, the blockage of oil exports from the northern fields to the port of Ceyhan costs Iraq in two ways. The first economic cost stems from the fact that a functioning and secure export route, such as the route to Ceyhan, offers a fairly quick avenue toward a significant rise in the total Iraqi output, perhaps by as much as an additional 1 million bpd. This is seen in the levels that Iraq achieved several years before the March/April 2003 war even despite the poor overall state of its oil infrastructure.
The second economic cost is just as important, particularly as it affects the most vulnerable of the population. The sabotage of the oil industry directly affects the Iraqi population by creating sudden and severe shortages of refinery products such as gasoline and, as sabotage of targets ranging from pipelines to electricity stations that provide power to refineries, coupled with technical breakdowns due to faulty machinery, have led to a chronic shortage of gasoline and heating oil throughout much of the country.
The resulting shortages of crucial oil products also lead to greater Iraqi frustration and anger, and exacerbate a lessening of credibility and legitimacy for the coalition. For example, as the price of the liquefied petroleum gas (LPG) has doubled in recent months, all Iraqi families are affected since they rely on it for all cooking, and especially for the "hobutz" flat bread, a basic staple for all Iraqi families.
To offset these shortages in the shorter term, the U.S.-led Coalition Provisional Authority (CPA) has begun a broad effort to import gasoline from Kuwait, although this has led to some problems with allegations of unfair/improper pricing arrangements with Kuwaiti suppliers. Additional imports of oil products by truck from Turkey were also curtailed in late 2003, as drivers have come under increased attack on northern roads.
There are generally two types of these attacks: the first comprising a general looting and plundering of the oil infrastructure, including fields, pumping stations, pipelines, and refineries. In this first category, elements of organized (and unorganized) crime are involved, as demonstrated with the seizure of a barge carrying 1,000 tons of stolen Iraqi oil. Smugglers are typically shipping oil to Iran, which then re-flags and re-exports it.
The second type of attacks is a much more serious threat and comes from the real insurgency, comprising members of the opposition, including Ba'ath or radical Sunni groups like Ansar al-Islam, and fringe Al-Qaeda elements.
The most important aspect of defending the pipeline network has been the formation of an Iraqi Facilities Protection Force, a form of infrastructure police that utilizes native Iraqis to monitor and guard against pipeline sabotage. First announced in September 2003, the administration initially sought $60 million to train and equip an "oil infrastructure security force," whose sole purpose will be protecting Iraq's oil facilities. Additional funding was also sought for a "quick reaction pipeline repair team" that would be dispatched to damaged pipelines within 96 hours after the site had been secured. The plan also included measures to provide "continuous personal security" to Iraq's oil minister and his director-generals.
The CPA has also sought to enhance energy security through a complicated combination of security arrangements utilizing U.S. military personnel, independent security contractors, and local tribes living along the pipeline routes. Securing the full 480-kilometer segment of the Ceyhan pipeline is a priority of this plan and the number of Iraqi guards has been steadily increasing past the initial 4,000, with more local tribes being hired to guard the infrastructure.
By November 2003, the plan was progressing rapidly and Colonel Robert Nicholson, chief engineer of the 4th Infantry Division based in northern Iraq, confirmed a force would be in place by mid-November. The force, dubbed Task Force Shield, consists of U.S. military personnel, independent security contractors and local tribes living along the nearly 1000-kilometer pipeline who have been employed to protect it from saboteurs.
The reliance on a mix of private contractors for pipeline security has been somewhat controversial, however. A $39.5 million contract was signed in August 2003 with the Erinys International security firm of South Africa to improve security along the northern pipeline system. This firm, an international business-risk consultant, is engaged in the recruitment, screening, and hiring of some 6,500 Iraqis to guard 140 key installations, including oil wellheads, pipelines and refineries, and electricity and water facilities.
Although this firm is also engaged in providing "protection services" to such high-profile contractors as Bechtel and Halliburton's subsidiary Kellogg Brown & Root, little is actually known of Erinys International. The Johannesburg-based company is barely a year old, and although its website names five managers and directors, most of whom have been affiliated with Armor Holdings, a Florida-based security company and Defense Systems Limited, a British company which merged with Armor in 1997, its ownership structure remains opaque.
This firm and its staff have been further plagued by a series of questions over its security work in the Niger Delta and Angola, its role in protecting the British Petroleum pipeline in Colombia, and have been subjected to allegations of human rights violations at the Ashanti gold mine in Ghana.
In addition to Erinys, other key players in this privatized security effort include DynCorp, which is recruiting and training the revamped Iraqi police force, and Northrop's subsidiary Vinnell, which is implementing a $48 million contract to train a new Iraqi Army.
January 27, 2004 (http://www.albionmonitor.com) All Rights Reserved. Contact email@example.com for permission to use in any format.
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