Iraq's oil future may be vulnerable after US exit
Saturday, 4 September 2010 at 10:40, Reuters, Baghdad
After an explosive device tore through the back of an armoured SUV carrying Chinese oil workers in Iraq in mid-July, security contractors said the US military, not China's Daqing Petroleum, was the likely target.
The Explosively Formed Projectile, designed by Iran's Revolutionary Guard Corp and often used by Shi'ite militia in Iraq, shredded the rear of the car and exited on the other side just behind the passenger seat.
Three Chinese workers, who were helping develop Iraq's biggest oilfield Rumaila, received scratches and light burns. One security guard sitting in a front seat was hit by fragments.
Oil companies so far have shrugged off security concerns after sealing a dozen deals in Iraq, which have the potential to quadruple the country's production capacity to rival Saudi levels of 12 million barrels per day.
"We have not had indications of international oil companies being targeted in any sense, and I think at the end of the day that will depend on what will be the motivation for those attacks," said a foreign oil executive working in Iraq.
US military officials also said they did not think Shi'ite militia were targeting oil workers or facilities in the July 15 attack. "I think it is only a possibility," said Major General Stephen Lanza, the US military spokesman in Iraq.
Yet after US forces ended combat missions in Iraq on Aug. 31 and cut their numbers to 50,000 7-1/2 years after the invasion, some security firms and Iraqi officials are wondering whether Sunni Islamist insurgents and Shi'ite militia might now focus on the companies developing the vast oil reserves.
In a statement posted on a radical Islamic website last month, a writer called for attacks on oil pipelines across Iraq on the grounds that oil was a main reason behind the invasion of "Muslim homes by atheist and disbelieving countries".
Oil is viewed by Iraqi and US officials alike as the panacea for Iraq's ills. Everything depends on whether the OPEC member can secure its vital oilfields, export pipelines and refineries.
The government has placed security forces and oil police on alert for attacks by al-Qaeda-linked groups as the US ended combat operations and intelligence reports warned of a threat to oil facilities.
"Of course there will be some attempts to target (oil firms), but the areas where they work have good protection from Iraqi forces," said Safa al-Sheikh, acting National Security Adviser.
"We don't have accurate intelligence showing an increase (in attacks), but one thing we know about terrorists is that they resort to all possible means and attack anybody they can."
Murder, intimidation and smuggling are also expected to rise in places such as the southern oil hub of Basra, as the line between insurgency and crime becomes more blurred.
"We certainly haven't seen the end of terrorist attacks in Iraq," said Kyle McEneaney, who heads the Middle East practice at Ergo, an emerging markets consultancy.
"International oil companies may be affected somewhat, but these companies are used to operating in difficult environments, and they understand the situation in Iraq."
Overall violence in Iraq has fallen sharply in the past two years, and the Shi'ite south, where most current oil production takes place, is relatively peaceful. But still there are attacks.
Militants fired mortars in late July near the southern Halfaya oilfield, and one round landed 200 meters from an active oil well, the US Army said.
The Iraq-Turkey pipeline in the north, which carries around a quarter of Iraq's oil exports, is regularly hit by sabotage, usually blamed on al Qaeda and the banned Baath party.
So far oil majors have shown no signs of a weakening commitment to Iraq. Companies are moving ahead with issuing tenders for work in their fields to reach the production targets they have set.
"None of us has a crystal ball to tell whether there will be an increase in violence or not with the withdrawal of the US troops. I think it will primarily depend on the capability of the Iraqi security forces," the foreign oil executive said.
Although oil companies are used to tough conditions, a serious deterioration in security could still make some reduce their staffing or even leave.
"So far it has had no impact on our operations," said the executive. "We will need to evaluate those incidents to be able to judge what will be our next move. But then to be honest, everything is open."
Saturday, 4 September 2010 at 10:40, Reuters, Baghdad
After an explosive device tore through the back of an armoured SUV carrying Chinese oil workers in Iraq in mid-July, security contractors said the US military, not China's Daqing Petroleum, was the likely target.
The Explosively Formed Projectile, designed by Iran's Revolutionary Guard Corp and often used by Shi'ite militia in Iraq, shredded the rear of the car and exited on the other side just behind the passenger seat.
Three Chinese workers, who were helping develop Iraq's biggest oilfield Rumaila, received scratches and light burns. One security guard sitting in a front seat was hit by fragments.
Oil companies so far have shrugged off security concerns after sealing a dozen deals in Iraq, which have the potential to quadruple the country's production capacity to rival Saudi levels of 12 million barrels per day.
"We have not had indications of international oil companies being targeted in any sense, and I think at the end of the day that will depend on what will be the motivation for those attacks," said a foreign oil executive working in Iraq.
US military officials also said they did not think Shi'ite militia were targeting oil workers or facilities in the July 15 attack. "I think it is only a possibility," said Major General Stephen Lanza, the US military spokesman in Iraq.
Yet after US forces ended combat missions in Iraq on Aug. 31 and cut their numbers to 50,000 7-1/2 years after the invasion, some security firms and Iraqi officials are wondering whether Sunni Islamist insurgents and Shi'ite militia might now focus on the companies developing the vast oil reserves.
In a statement posted on a radical Islamic website last month, a writer called for attacks on oil pipelines across Iraq on the grounds that oil was a main reason behind the invasion of "Muslim homes by atheist and disbelieving countries".
Oil is viewed by Iraqi and US officials alike as the panacea for Iraq's ills. Everything depends on whether the OPEC member can secure its vital oilfields, export pipelines and refineries.
The government has placed security forces and oil police on alert for attacks by al-Qaeda-linked groups as the US ended combat operations and intelligence reports warned of a threat to oil facilities.
"Of course there will be some attempts to target (oil firms), but the areas where they work have good protection from Iraqi forces," said Safa al-Sheikh, acting National Security Adviser.
"We don't have accurate intelligence showing an increase (in attacks), but one thing we know about terrorists is that they resort to all possible means and attack anybody they can."
Murder, intimidation and smuggling are also expected to rise in places such as the southern oil hub of Basra, as the line between insurgency and crime becomes more blurred.
"We certainly haven't seen the end of terrorist attacks in Iraq," said Kyle McEneaney, who heads the Middle East practice at Ergo, an emerging markets consultancy.
"International oil companies may be affected somewhat, but these companies are used to operating in difficult environments, and they understand the situation in Iraq."
Overall violence in Iraq has fallen sharply in the past two years, and the Shi'ite south, where most current oil production takes place, is relatively peaceful. But still there are attacks.
Militants fired mortars in late July near the southern Halfaya oilfield, and one round landed 200 meters from an active oil well, the US Army said.
The Iraq-Turkey pipeline in the north, which carries around a quarter of Iraq's oil exports, is regularly hit by sabotage, usually blamed on al Qaeda and the banned Baath party.
So far oil majors have shown no signs of a weakening commitment to Iraq. Companies are moving ahead with issuing tenders for work in their fields to reach the production targets they have set.
"None of us has a crystal ball to tell whether there will be an increase in violence or not with the withdrawal of the US troops. I think it will primarily depend on the capability of the Iraqi security forces," the foreign oil executive said.
Although oil companies are used to tough conditions, a serious deterioration in security could still make some reduce their staffing or even leave.
"So far it has had no impact on our operations," said the executive. "We will need to evaluate those incidents to be able to judge what will be our next move. But then to be honest, everything is open."