WASHINGTON - At the best of times running an oil-exporting complex isn't easy. With thousands of kilometers of pipelines, refineries and pumping stations, many things can go wrong. Add in the fact that people are literally blowing up portions of pipelines on a regular basis, and you have a real problem.
Consider the challenges that face Erinys Iraq Ltd, the private security company hired to protect Iraq's oil pipelines. Erinys Iraq, an affiliate of Erinys International formed in 2001, landed the Iraq contract. The company is headed by a South African, Sean Cleary, a former senior official in pre-independence Namibia and a senior political adviser to Angolan rebel leader Jonas Savimbi. He was one of the most vocal opponents of Executive Outcomes, the former South African-based private military company that had fought against Savimbi on behalf of the Angolan government. Erinys International headquarters is in Dubai in the United Arab Emirates.
The company originally obtained a nearly US$40 million contract in August 2003 to supply and train 6,500 armed guards charged with protecting 140 Iraqi oil wells, 7,000 kilometers of pipelines and refineries, as well as power plants and the water supply for the Iraqi Ministry of Oil. But that contract proved to be inadequate. Subsequently, the now-defunct Coalition Provision Authority (CPA) modified the contract to provide for the air surveillance and to increase the force.
Larger competitors questioned whether Erinys had the infrastructural size and financial reserves to handle the contract; though given that the CPA had extended the scope of its contract it seem to be handling it well enough. Erinys is now part of a joint contract worth $100 million to provide security for Iraq's vital oil infrastructure.
According to an article in Newsday in February, the July 25, 2003, CPA solicitation for bids provided no details of what would be required to provide security for Iraq's "multibillion-dollar oil infrastructure". It did, however, ask that the bidder submit "a list of five contracts of the same or similar type to demonstrate previous experience". Yet Erinys had never handled a job as large and complicated as this one, and its partner firm, Nour, has never worked in the security area.
Erinys co-director John Holmes, who gave a presentation at a seminar in The Hague in June, said the company's contract now calls for protecting 285 sites in Iraq. At that time it was deploying 12,165 guards, the vast majority of them Iraqi nationals, under the command of just over 100 Western soldiers, to serve as a lightly armed guard force whose job was to secure static sites and pipelines, and personnel working on those sites. Since then, the force grew to a peak of 14,500 before dropping slightly to its current 14,000 men. Most of the guards come from the former Iraqi army.
Eventually, the Iraqis hired and trained by Erinys will take over security completely.
Involving so many Iraqis in the Erinys contract brings with it a unique security challenge, with the threat that training or information acquired may be used by insurgents.
Contrary to many erroneous media reports it is indeed a guard force, not a paramilitary one. It seeks to deter attacks on oil infrastructure through an overt presence, aerial surveillance and liaison. When attacks do occur, it responds either on its own or jointly with coalition forces or Iraqi first-responder agencies, such as the new Iraqi Force Protection Service.
The CPA this year awarded a $10 million contract to Florida-based AirScan Inc for aerial surveillance of the pipelines in support of Erinys. AirScan provides night air surveillance of the pipeline and oil infrastructure, using low-light television cameras. Under the terms of the lease the Iraqi government has the right to buy the equipment after two years and will then use Iraqi pilots to conduct surveillance.
Erinys operates throughout the country under a North, Center, South regional structure, each with its own independent headquarters, and a further 14 subsidiary sectors each with its own headquarters. Its regional headquarters are in Mosul, Kirkuk, Baghdad and Basra. Overlying this is a management and communications infrastructure that enables nationwide VHF (very high frequency), HF and satellite voice/data communications. Each sector and regional headquarters, along with national headquarters, operates a 24-hour operations center.
At present, the oil-security forces are working under Task Force Shield, a project overseen by the US Army Corps of Engineers and executed by Erinys on behalf of the Oil Ministry. Erinys trains recruits for Task Force Shield. This builds on the old system whereby tribal leaders were responsible for protecting the oil pipelines for now-deposed dictator Saddam Hussein. Now the Iraqi interim government pays leaders to watch over the remote pipelines.
Working for Erinys is risky. Thus far it has had about 21 employees killed and 26 wounded from enemy action. Among the Erinys expats, the name for all non-Iraqis working in Iraq, the fatalities have included the following: November 11, 2003 - An Erinys team was attacked while traveling from Latafiya to Baghdad. James Wilshire and Majid Hussain Jasim were killed. Another bodyguard was injured. January 28, 2004 - Francois Strydom was killed when an ambulance vehicle-borne improvised explosive device was detonated in the vicinity of the Shaheen Hotel in Baghdad. He worked for SASI, an Erinys subcontractor. April 12, 2004 - Hendrik "Vis" Visagie, 29, a former member of the South African Pretoria Task Force, died after being critically injured during an ambush on April 7.
Even without attacks the Iraqi oil complex would have problems. These include years of poor oil-reservoir management; corrosion problems at various oil facilities; deterioration of water-injection facilities; lack of spare parts, materials, equipment, etc; damage to oil storage and pumping facilities; and more.
But sabotage by the insurgents has made a bad situation much worse. Despite thousands of guards, the pipelines have been steadily attacked since the beginning of the US-led invasion. They are proving to be a magnet for saboteurs eager to disrupt the economic lifeline of the interim authority and undermine any remaining legitimacy enjoyed by the US-led coalition and the Iraqi government.
Erinys has been negotiating a six-month extension to its contract, scheduled to expire on December 31. But Iraqi officials have expressed misgivings about its ability to protect the installations, particularly the pipelines from the northern Kirkuk fields, where attacks have all but choked off exports via Turkey. The Iraq-Turkey pipeline, which stretches for several hundred kilometers across Iraqi territory, is a sitting target for saboteurs, who have attacked it repeatedly. A bigger problem is around the town of Baiji north of Baghdad, which is one of Iraq's main pipeline junctions and is part of the "Sunni triangle" that runs south to Baghdad and then west to Tikrit.
While the northern oilfields were previously the main target of insurgents, saboteurs have turned their attention to the southern fields, which produce 90% of Iraq's oil, since the United States restored Iraqi sovereignty in June.
And those attacks have become more sophisticated. Insurgents have selected such targets as junctions of multiple lines or aging pipelines that are especially vulnerable.
Recently, attacks against the pipelines and other parts of the infrastructure, such as the nearly 18,000km-long power grid, have occurred almost daily, reducing average daily oil production by nearly 100,000 barrels, resulting in losses of as much as $1 billion this year.
According to the Institute for the Analysis of Global Security, a Washington think-tank, there were 12 attacks in June, 17 in July, 21 in August, and 12 attacks in just the first half of September.
The US Energy Information Administration (EIA) said shortly after Iraq's failed 1990 invasion of Kuwait and the imposition of resulting trade embargoes that Iraq's oil production fell from 3.5 million barrels per day to around 300,000b/d. By February 2002, Iraqi oil production had recovered to about 2.5mb/d. Iraqi officials had hoped to increase the country's oil production capacity to 3.5mb/d by the end of 2000, but did not accomplish this given technical problems with Iraqi oilfields, pipelines and other oil infrastructure.
EIA's oil-industry experts now generally assess Iraq's sustainable production capacity at no higher than about 2.8-2.9mb/d, with net export potential of about 2.3-2.5mb/d.
When the US attacked Iraq in March 2003, the country was producing 2.7mb/d. In mid-August that year, CPA head Paul Bremer gave the impression that daily production stood at around 1.5 million barrels. But the real figure then was 780,000 barrels and rarely does production reach 1 million.
The attacks have clearly caused significant disruption. According to a memo released by the Washington, DC-based Brookings Institution in June, the attacks have crippled the country's oil industry, hindering its ability to export crude. Iraq was at that time producing about 2.4mb/d, of which 1.6-1.9mb/d are exported. However, these figures are declining. Data released by the US Army Corps of Engineers show that crude production in May dropped to 1.95mb/d and exports are down to 0.86mb/d, the lowest level since last October.
These figures fall short of the coalition's stated goals of 2.8-3mb/d. As a result, Iraq's oil export revenues, which are considered critical to rebuilding its battered economy, totaled $8 billion in 2003 and are expected to climb to no more than $15 billion in 2004. This is much less than the revenues anticipated by the US administration of President George W Bush prior to the war.
David Isenberg, a senior analyst with the Washington-based British American Security Information Council (BASIC), has a wide background in arms control and national security issues. The views expressed are his own.
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