Iraq's Grim Oil Politics

[IDemo]

As civil war boils, the country's future depends on how sectarian groups divide what's underground.

By Michael Hastings
Newsweek

Issues 2007 - On the way to a surprise visit in Baghdad in October, U.S. Secretary of State Condoleezza Rice decided to talk to reporters about oil. "We believe that oil has to benefit the Iraqi people as a whole," she said at a press gaggle en route to the Iraqi capital. In a whirlwind of meetings over the next two days, she pushed the oil topic again and again with leaders on all sides—Sunni, Shiite and, most prominently, Kurdish President Massoud Barzani, to whom she reinforced her feelings that "oil needs to be a unifying factor, not one which will help to make the country less unified." In other words: please stop fighting and share.

Yet Iraq's sectarian fighting is, to an extraordinary degree, about the very issue of sharing oil. The country's political future and its energy future have converged. The side that wins in this burgeoning civil war gets control, in theory, over some $35 billion a year in oil revenue, making up 90 percent of the Iraqi budget. The side that loses—well, they fear they won't get anything at all. And Iraq's daily spasms of violence are closely tied to maneuvering over the future control of oil, as well as rampant oilfield corruption. Oil monies skimmed off the top are said to be funding the insurgency, say U.S. officials.

Of the competing plans to resolve the conflict, all depend on oil. Calls for a federated Iraq, broken up into three states, are hampered by fears of which state gets the most oil. The answer is well known—the Shiites in the southern region have more than 80 percent of Iraq's proven oil reserves. Kurdistan, in the north, has access to the fields of Kirkuk, which have been pumping petroleum since the 1920s. And the Sunnis, the minority that once dominated and profited from Iraq's black gold, are stuck in the middle with a desert and lots of sand, underneath which oil experts expect there is oil, but no fields are anywhere near being developed.

Oil was supposed to be Iraq's savior, with Bush administration officials promising that profits from oil revenues would pay for reconstruction. It was the Oil Ministry, almost alone among government buildings, that the U.S. forces protected after the fall of Baghdad.

http://www.msnbc.msn.com/id/16299313/site/newsweek/

[leveymg]

1. See related thread. Specifically, KBR's (Halliburton) contract stays in place with

the Army Corps of Engineers until Iraq's oil production rises to pre-war levels (2.5 mb/day). By some fantastic ledger-domain, and the continued fueling of sectarian violence, Iraq's oil production still remains just below that level.

"Task Force Restore Iraqi Oil (RIO) mission is to restore the capability for oil production, oil refining and gas processing to pre-war conditions. The Corps is supporting the U. S. Government's goal of restoring the Iraqi people's oil production resources as quickly as possible. RIO's end state objective is to have fires suppressed, environmental cleanup accomplished, oil production levels restored and our personnel safely redeployed back home. Under the humanitarian assistance portion of the mission, we are providing emergency supplies of gasoline, LPG and other petroleum products to distribution points operated by the Iraqi Oil Company. We are also assisting the Iraqi Ministry of Oil to export oil to benefit Iraq.

What are the RIO targets and timeline?

We began work before hostilities concluded.' The duration will depend on the extent of the damage. Damage assessments are ongoing as looting and sabotage continue. The Corps will continue to assist Iraq until pre-war production is maintained. A partnering meeting between the Corps and the Iraqi Ministry of Oil in July 2003 set goals of 2.5 million barrels per day by the end of March 2004 and 3.0 million barrels per day by the end of December 2004.

How do you plan to accomplish your mission?

All work is being performed through the use of Private Sector Contractors in conjunction with the Iraqi Ministry of Oil.

Are any Iraqi Ministry of Oil personnel helping you out?

The Iraqi Ministry of Oil was re-established on May 3, 2003. The U.S. Army Corps of Engineers, under the direction of the Coalition Provisional Authority, is assisting the Ministry.

What are the current production levels?

The Coalition Provisional Authority and the Iraqi Ministry of Oil have requested the Corps to allow the Ministry to release production volume figures. We agree with this strategy because information about production levels will have an effect upon world oil prices.

Iraqi Ministry of Oil: Dhia A-Bakka 914-360-3526 (pr DEE’-a a-BAKKA)


LOGCAP Contract

What contract did RIO use to start carrying out its mission?

An existing Army Field Support Command Logistics Civil Augmentation Program (LOGCAP) contract, competitively bid, was used to prepare contingency plans for the government. The contract was awarded to Brown & Root Services (later to be known as Kellogg, Brown and Root) of Houston on December 14, 2001.

When a potential requirement to develop contingency plans to extinguish oil well fires and to assess damage to oil facilities that might occur in Iraq in the event of hostilities was identified it became readily apparent that use of an existing contract (LOGCAP) would be the most efficient and expedient way to meet the very compressed time line for potential plan execution.

After DOD designated the U. S. Army Corps of Engineers as Executive Agent to implement plans to extinguish oil well fires and assess damages to oil facilities during Operation Iraqi Freedom, the Corps used the existing contract to pre-position firefighting equipment and personnel and to extinguish oil well fires in southern Iraq that were ignited during the war and to assess damages.


Kellogg, Brown & Root Contract (March 2003)

SNIP

(Posted 12/02/03)
When did the Corps issue its first contract in support of the RIO mission and to whom? On March 8, 2003 the Corps issued a contract to KBR to use for an interim period as a bridge to a competitive contract. It is an Indefinite Delivery/Indefinite Quantity (ID/IQ) contract. Task Orders are issued against this contract as needed to obtain services necessary to support the mission in the near term. This contract is specified to be for a maximum of $7 billion. It is for a maximum period of two years with three one-year renewal options. This is a cost plus award fee contract with a 2% fixed fee and a potential extra 5% for work achieved over and above what is normally achieved. This is determined by an award board that meets to go over all aspects of the work performed."

See, http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=2978789&mesg_id=2979698 ; http://www.hq.usace.army.mil/cepa/iraq/faq.htm