Feral Jundi

Wednesday, May 23, 2012

Iraq: Exxon Mobil Leads The Charge North, As The Shine Of The South Wears Off

Filed under: Industry Talk,Iraq — Tags: , , , , , — Matt @ 1:49 PM

Iraq has ambitious plans to develop its huge southern oilfields – potentially the world’s biggest source of new oil over the next few years – and few oil firms dare risk being barred from such a bonanza by angering Baghdad.
But increasingly, some executives say, Kurdistan’s potential is also coming up in boardroom discussions, as sluggish output, red tape and infrastructure bottlenecks in the south take some of the shine off the central government’s oil program.
Oil majors are now waiting on the sidelines, watching the outcome of Exxon’s balancing act between Baghdad and Arbil, the northern capital. France’s Total is the latest company to provoke Baghdad’s ire by acknowledging interest in Kurdistan.
“What companies are trying to do is get to the point where they are investing in the north and the south,” said one industry source working in Iraq……Firms have experienced problems getting visas for contractors and security staff, delays in bringing in armored vehicles and holdups securing operating licenses. Such hassles make Kurdistan’s offerings look more tempting by comparison.
“Every delay we face cuts off a significant part of the internal rate of return,” said one oil company source. “Sometimes I wonder if we picked the wrong region.”

This is some interesting business going on in Iraq. Oil companies are playing a risky game in Iraq, and yet they are the actors that will more than likely drive Iraq to ‘pull it together’. It also looks like Exxon Mobil is leading the charge in this game as well.

I say this, because the divisions in Iraqi parliament/central government, along with corruption, is causing oil companies to seek safer and more stable leadership/relationships to do business with in order to keep extracting and shipping oil. For example, Exxon has signed contracts both in the North and the South, and it looks like they are starting to lean more towards moving north with the hopes that this will send a message to parliament. Of course parliament reacted by saying they cannot bid on any more contracts in the south.

The other area of interest with this, are the contracts signed in the disputed areas. Specifically the area near Mosul, which is the second largest city in Iraq.  I could see Exxon having all sorts of problems in that region unless some serious deals were made, and I was curious as to what the motivation was?  Perhaps the clues are in the state of affairs within the city itself. Check this quote from an interview with Mosul’s governor?

Mosul is an agricultural and oil region. However, it cannot properly and sufficiently use Iraq’s oil revenues. Mosul is also uncomfortable with the recent agreements between foreign oil companies and Arbil to extract oil from Mosul’s soil. For instance, Exxon-Mobil signed a contract with the KRG despite the fact that the site it will explore for oil is in Mosul. Nujaifi is holding talks with Exxon-Mobil and the KRG to resolve this problem. In addition, under the Iraqi constitution, Mosul should get 11 percent of Iraq’s oil revenue. However, it receives only 2 percent. According to Nujaifi, if the oil bill is not adopted and the oil revenues are not distributed evenly by the provinces, a political crisis will erupt. The poverty rate in Mosul is 23 percent, whereas it is 3 percent in the KRG. Nujaifi notes that the rising tension along the borders of Mosul is creating tension for them as well. As the KRG becomes more popular, it is impossible to explain the recent state of backwardness in Mosul.

I highlighted the key parts in this quote, and I think that is most significant. With poverty as high as it is, and a neighbor like KRG enjoying the good life, who do you think Mosul will want to do business with?  Especially if Iraq is only giving Mosul 2 % of Iraq’s oil revenue.  They are definitely getting the short end stick in this deal, and either the South pays up, or Mosul will probably join the Exxon party.

Also, the news of Kurdistan signing a deal with Turkey for a new pipeline that would completely shut out Baghdad is definitely some news to talk about here. That would mean they would have a way to capitalize on oil extraction without paying Baghdad. They could possibly bring cities like Mosul into the mix with this pipeline, and especially if Mosul can capture a better deal.

On Sunday, Iraqi Kurdistan unveiled an agreement to sell oil through Turkey into the international markets, thereby leaving Baghdad completely out of the loop. The Kurdish oil minister Ashti Hawrami said Iraqi Kurdistan will construct a huge 1 million barrel per day pipeline over the next 12 months through which oil and gas will be carried through Turkey.
“We envisage the building of a new pipeline taking Kurdistan’s oil, particularly the heavier component part to Cihan,” Hawrami said at a conference with Taner Yildez, the Turkish energy minister.
Baghdad believes such an arrangement contravenes Iraqi laws, while Kurds assert they can sign any contract regarding their natural resources according to the terms of the constitution.

Oil fields like this also provide jobs to the locals and infuse money into the local economy. Security will be crucial–which means local security companies will be a huge player in this. (although if you look at how MEND operates in Nigeria, you could see the same thing happening in Mosul with insurgents) The question here is would Baghdad send the troops to protect these oil fields? lol Probably not, unless they are included in the oil deal. That is where this get’s interesting, and I am sure criminal groups and insurgents are looking at how they could use this to their advantage.

The other thing to look at is if Exxon and other oil companies have another pipeline they can use, that is being managed by a government that knows what it is doing and is stable, then I could totally see how this would be a better bet for those companies.  This is also another signal to Baghdad that ‘hey guys, if you come together and square away your house, then you too can enjoy the same prosperity as the Kurds’.

Or, the Iraqi government can try to exert influence or pull some military moves up north, but good luck there. lol The Peshmerga and terrain will dictate otherwise.

So we will see how it goes. My guess is that Exxon and others will continue to play the North against South in order to keep extracting. They will keep these two players of the country competing for these companies and their capability. That back and forth interaction, might be the kind of business that will force the country to square itself away in order to finally realize their oil extraction goals. The alternative is to be driven apart.

There is a lot of money in the ground, and if Iraq wants it, it will have to do business with the companies that know how to get it out and into the market. That takes compromise and leadership, and a divided parliament and corrupt government in the south will only force companies to take the path of least resistance. –Matt

 

 

Analysis: In Iraq, oil majors play north versus south
By Patrick Markey and Peg Mackey
Thu Apr 5, 2012
In the weeks before Iraqi Kurdistan revealed that Exxon Mobil had signed up to explore for oil there, executives at rival Shell faced a dilemma over whether or not to join the U.S. oil major in its foray north and risk angering Baghdad.
The fields in the autonomous region offered rich potential, an easier working environment, better security and attractive contracts. That seemed a winning combination for smaller oil companies already working there, such as Norway’s DNO, even though they struggled to collect profits.
But at the 11th hour, industry sources say, Royal Dutch Shell backed out and decided to focus on a $17 billion gas deal in the south rather than sign exploration contracts with the Kurdish Regional Government, which the central government could dismiss as illegal and could prompt reprisals.
Shell’s caution, Exxon’s silence on its deals and this week’s renewed dispute between Baghdad and Kurdistan over export payments reveal how delicate is the balance companies must manage between a central government and a Kurdish authority locked in a struggle over who controls Iraq’s vast oil wealth.
The dispute over oil is at the heart of a wider disagreement between Iraq’s central government in Baghdad and the Kurdish region, which are also increasingly at odds over regional autonomy, land and political influence.
Iraq has ambitious plans to develop its huge southern oilfields – potentially the world’s biggest source of new oil over the next few years – and few oil firms dare risk being barred from such a bonanza by angering Baghdad.

(more…)

Thursday, May 17, 2012

Iraq: Foreign Military Contractors Spearhead Effort To Train Iraqi Forces

Filed under: Industry Talk,Iraq,Training — Tags: , , , — Matt @ 12:04 PM

“This is the model that Iraq is very comfortable with –low .U.S presence in uniform, a lotta contractors, and they’re getting the quality instruction, the quality training that they really need,” Lieutenant General Robert Caslen

Here is a quick story and update on some more contractor training programs in Iraq. But in this case, this is training that the Iraqis want and need.  Perhaps the Police Development Program that DoS is running should take some notes?

What is interesting is that the article listed some numbers.  Check it out.

But they left behind the Office of Security Cooperation-Iraq (OSC-I), a group of about 157 military personnel under U.S. embassy authority, and some 600 civilian contractors, mostly retired soldiers.?They are working with the Iraqis on everything from training on new equipment, such as U.S. M113 armored personnel carriers and M1 Abrams tanks, to military education.

600 hundred contractors training the Iraqis? I imagine that figure includes support contractors as well, because for every trainer or soldier, there is the logistical support in the background that keeps them going. That is still impressive. But what is equally important is the public private partnership that is going on to make that happen. 157 military personnel are there, helping to implement this training and advising as well. –Matt

 

 

Foreign military contractors spearhead effort to train Iraqi forces
Thursday, 10 May 2012
Explosions throw up clouds of smoke near Iraqi soldiers with armored vehicles, who check for casualties, spot enemy forces in the desert ahead of them and then open fire.?But the blasts are only simulated artillery fire and the “enemy forces” are pop-up silhouette targets, not gunmen and vehicles.
That is just as well for these soldiers on a training exercise, as the puffs of dust kicked up by bullets downrange indicate that their aim is often off the mark.?An Iraqi company commander led his soldiers in the exercise at the massive Besmaya military base southeast of Baghdad, but it was a foreign contractor who controlled the scenario.?It was the contractor who ordered the targets raised and lowered amid the sounds made by .50 caliber machine guns on the armored vehicles and the chatter of M-16 rifles.?Contractors, who also assist soldiers in preparing for drills and with after-action reviews, are at the forefront of U.S. efforts to train Iraqi forces.?Negotiations on a post-2011 U.S. military training mission broke down last year over Iraqi reluctance to offer the trainers immunity from prosecution, and almost all American soldiers left the country last December.

(more…)

Monday, May 14, 2012

Iraq: Iraq Police Development Program–Will It Be Scrapped Or Just Reduced In Size?

Filed under: Industry Talk,Iraq,Law Enforcement,Training — Tags: , , , , — Matt @ 11:34 AM

The trainers are mostly retired state troopers and other law enforcement personnel on leave from their jobs back home, and a number of officials who criticized the program questioned what those trainers have to offer Iraqi police officials who have been operating in a war zone for years.
Mr. Perito said that the State Department never developed a suitable curriculum and that instead, advisers often “end up talking about their own experiences or tell war stories and it’s not relevant.”
Retired Lt. Gen. James M. Dubik, now a senior fellow at the Institute for the Study of War, who oversaw the training of Iraqi security forces from 2007 to 2008, said, “The evidence suggests that the State Department never really engaged the Iraqis to find out what they need and what they want.”

In an effort to ‘right size’ the US mission in Iraq, and adjust to Iraq’s desire to enforce their sovereignty, we are seeing an adjustment happening.  Which makes sense and is totally reasonable. It is the Iraqi’s show now, and it will be very difficult to sell them on a massive program that they think they do not need or even want.

Or, like the quote up top and what SIGIR identified in the report, that DoS should work a little harder at creating a curriculum or program that the Iraqis actually like and want more of. And that would take talking with them, and using some kind of metrics to determine what is working with the course, and what is not.(as SIGIR recommends)

Also, more work needs to be done to convince the police commanders and leaders of Iraq that courses like this actually do increase the effectiveness of their police. But that takes action, not words, and the service out in the field must be evaluated and surveys taken in order to get a feel for what is effective. That old Jundism of ‘get feedback’ comes to mind.

Another point was brought up in the article below that was interesting. And that is security for these police advisers in Iraq. With the military gone, the security these days for operations are contractors.

The Iraqis have also insisted that the training sessions be held at their own facilities, rather than American ones. But reflecting the mistrust that remains between Iraqi and American officials, the State Department’s security guards will not allow the trainers to establish set meeting times at Iraqi facilities, so as not to set a pattern for insurgents, who still sometimes infiltrate Iraq’s military and police.

So as Iraq hassles contractors, or as the Iraqis do a terrible job of securing places that these advisers might visit or the people they might train, that operations in this environment becomes very complex and dangerous. But it isn’t impossible, and security contractor will make it happen–just as long as DoS is working hard about the issue of how Iraqis treat security contractors.

If you are on this program and disagree with what was said in this NYT’s article or what was said in the SIGIR, definitely come up in the comments section and speak up. Also, if anyone at DoS wants to come up and speak about the program on this blog, by all means feel free to do so. Although DoS did make a public statement in regards to this article, and I posted that below along with the SIGIR report done last year about this program. –Matt 

 

U.S. May Scrap Costly Efforts to Train Iraqi Police
By TIM ARANGO
May 13, 2012
In the face of spiraling costs and Iraqi officials who say they never wanted it in the first place, the State Department has slashed — and may jettison entirely by the end of the year — a multibillion-dollar police training program that was to have been the centerpiece of a hugely expanded civilian mission here.
What was originally envisioned as a training cadre of about 350 American law enforcement officers was quickly scaled back to 190 and then to 100. The latest restructuring calls for 50 advisers, but most experts and even some State Department officials say even they may be withdrawn by the end of this year.
The training effort, which began in October and has already cost $500 million, was conceived of as the largest component of a mission billed as the most ambitious American aid effort since the Marshall Plan. Instead, it has emerged as the latest high-profile example of the waning American influence here following the military withdrawal, and it reflects a costly miscalculation on the part of American officials, who did not count on the Iraqi government to assert its sovereignty so aggressively.
“I think that with the departure of the military, the Iraqis decided to say, ‘O.K., how large is the American presence here?’ ” said James F. Jeffrey, the American ambassador to Iraq, in an interview. “How large should it be? How does this equate with our sovereignty? In various areas they obviously expressed some concerns.”

(more…)

Tuesday, April 17, 2012

Legal News: DoS Statement On The Comprehensive Contingency Contracting Reform Act Of 2012

Filed under: Legal News — Tags: , , , , , , — Matt @ 1:20 PM

This is cool. Patrick Kennedy is commenting on this reform act, which will certainly have an impact on contracts with the government for future and current contingency operations. There is also a video of his testimony.

What is of interest is State’s concern of how this law would negatively impact the flexibility they require in order to deal with today’s problems. The Arab Spring is just one example of how quickly things can change out there. Here is the quote:

With regard to the automatic suspension provisions set out in proposed Section 113, we believe that the current, long-standing policy requiring a reasoned decision from the SDO based on a totality of information remains a sound approach, and would have concerns with a provision that imposes automatic suspension and debarment which will likely lead to due process challenges by the affected contractor community and potential court action that could delay necessary action in crisis situations.
Reorganization of Contracting Function (Sec. 131)
We respectfully do not concur with the re-organization of our contracting function proposed in Sec. 131. Defining the acquisition organization of the Department of State in statute would reduce our flexibility and codify the structure, making future adjustments to support new 21st century challenges cumbersome and time consuming. Future legislation would have to be drafted and passed to allow the Department to adjust to the fast changing world of diplomacy, rendering the Department less agile and thereby potentially handicapping the Department’s ability to respond to contingencies. Also, the proposed re-organization would constitute a bureau with not only the contracting function but logistics, motor vehicles, diplomatic pouch, household effects, shipping and storage. If a bureau were to be formed with only the contracting program, it would not be of sufficient size to warrant bureau-level status.

Probably the most relevant section of the statement to the readers of this blog was point about PSC’s and command and control. Here is the quote:

Private Security Contractors (Sec. 202)
The Department has a long history of using contract guards for protection of facilities and personnel stretching back to the 1970s, with enhanced capabilities in the 1990s. Private security contractors (PSCs) are critical to our readiness and capability to carry out American foreign policy under dangerous and uncertain security conditions. Maintaining this capability is particularly important when the Department is taking on expanding missions in contingency operations environments or areas that are transitioning from periods of intense conflict, such as in Iraq and Afghanistan.
That said, we appreciate the intent of section 202. We have sought to reduce risks associated with using contractors through robust oversight of our PSCs, as in CWC Recommendation 4. Contractors are operationally overseen and contractually managed by direct hire Department of State personnel, and we have instituted cultural training requirements, and contractor behavioral standards of conduct to ensure the professionalism of PSC personnel. The Department is staffed to properly oversee PSC compliance with these contractual requirements in Iraq and Afghanistan.
State strongly disagrees with the language of paragraph Sec. 202 (b)(1), which has the combatant commander determining whether performance of security functions by contractor personnel for the Department of State in overseas contingency areas is appropriate and necessary. This language is too open-ended and is not acceptable as it infringes upon the Secretary of State’s primary role in leading and carrying out foreign policy. The Secretary of State and the Chief of Mission have statutory responsibility for the safety and security of personnel under Chief of Mission authority. We routinely discuss the security situation in-country with DoD and other agencies present at post; and in situations where U.S. military forces are present, that coordination is intensified and ongoing. We fully comply with OFPP’s new Policy Letter on inherently governmental and critical functions, and our PSCs never engage in combat operations. We hope to work with you and your staff to find mutually acceptable language in this section.

What is interesting here is that 202 (b) (1) is a challenge to State’s control over their security force. It also causes confusion over who is really in charge of that force, which is not good in contingency operations.

If anything, the two groups should work together to ensure State’s security force is on the same sheet of music with the mission. Unity of effort is what should be the focus. But the language of this section is vague as to who is really in control of those forces. So I think State has a point here, but that is my personal opinion. Either way, check it out. –Matt

 

The Comprehensive Contingency Contracting Reform Act of 2012
Testimony
Patrick F. Kennedy
Under Secretary for Management
Statement before the Senate Committee on Homeland Security and Governmental Affairs Committee, Subcommittee on Contracting Oversight
Washington, DC
April 17, 2012
Good morning Chairman McCaskill, Senator Portman, and distinguished members of the subcommittee. Thank you for your invitation to appear here today to discuss Senate bill 2139, the Comprehensive Contingency Contracting Reform Act of 2012.
We share the Committee’s desire to ensure that efforts continue to strengthen contingency contracting. S. 2139 raises a number of important issues. While our review of the bill is ongoing, we welcome the opportunity to discuss our initial views on the bill’s provisions.
We understand that this legislation builds on the recommendations of the Commission on Wartime Contracting in Iraq and Afghanistan – an independent, bipartisan panel that you, Senator McCaskill, created along with Senator Webb in 2007. The State Department worked continuously with the Commission on Wartime Contracting (CWC) from when it was formed in early 2008 until it sunset last August, and gained valuable insight from the Commission’s efforts. We have taken many steps to improve our contingency contracting over the past several years, based on the CWC’s reports, recommendations from other oversight entities, and our own lessons learned.
The Department’s participation in CWC’s study was headed by the Office of the Under Secretary for Management and the Bureau of Administration. In addition to numerous meetings with the CWC, senior Department officials testified at seven formal CWC hearings.

(more…)

Monday, April 16, 2012

Iraq: No Iraq Visas Issued to USG Security Personnel Since December 2011?

Filed under: Industry Talk,Iraq — Tags: , , , , — Matt @ 1:23 PM

I recently came across a blog post by Diplopundit that was very interesting. They are reporting that no Iraqi Visas have been issued to USG security personnel since December of last year. This is not surprising and I posted about guys getting arrested and hassled last year and this year because of visa/paper work issues. Here is the quote and DoS has yet to refute this or comment over at Diplopundit.

“No visas have been issued to security personnel since December and there is no straight answer coming from the Department of State or the Ministry of Interior.”

What is funny is that the DoS stated this in their travel warning for Iraq.

“The U.S. government considers the potential threat to U.S. government personnel in Iraq to be serious enough to require them to live and work under strict security guidelines. All U.S. government employees under the authority of the U.S. Ambassador must follow strict safety procedures when traveling outside the Embassy. State Department guidance to U.S. businesses in Iraq advises the use of protective security details.”

We also know what the Oil Ministry thinks about private security in Iraq. lol

So how is it that anyone can legally provide this security throughout Iraq if they don’t have visas? So I take it that folks are just sitting at the embassy and not traveling throughout Iraq because their security is without a visa? Or I wonder if any other countries have been denied visas and the US is the only one? (There are various oil interests in Iraq, to include China’s, and I wonder how they are being treated?) Let me know what you think or if you have any updates? –Matt

« Newer Posts — Older Posts »

Powered by WordPress