Identifier
Created
Classification
Origin
05BAGHDAD3842
2005-09-17 15:14:00
CONFIDENTIAL
Embassy Baghdad
Cable title:  

NEC CONCERNED ABOUT LACK OF NORTHERN OIL EXPORTS

Tags:  ECON ENRG EPET MARR MOPS PGOV PINR PREL PTER KCOR KCRM IZ 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003842 

SIPDIS

E.O. 12958: DECL: 09/17/2015
TAGS: ECON ENRG EPET MARR MOPS PGOV PINR PREL PTER KCOR KCRM IZ
SUBJECT: NEC CONCERNED ABOUT LACK OF NORTHERN OIL EXPORTS
AND SMUGGLING IN THE SOUTH

Classified By: CHARGE D'AFFAIRES DAVID M. SATTERFIELD FOR REASONS 1.4 (
b) AND (d).

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003842

SIPDIS

E.O. 12958: DECL: 09/17/2015
TAGS: ECON ENRG EPET MARR MOPS PGOV PINR PREL PTER KCOR KCRM IZ
SUBJECT: NEC CONCERNED ABOUT LACK OF NORTHERN OIL EXPORTS
AND SMUGGLING IN THE SOUTH

Classified By: CHARGE D'AFFAIRES DAVID M. SATTERFIELD FOR REASONS 1.4 (
b) AND (d).


1. (C) Summary: On September 8 the National Energy Council
(NEC) approved Phases II and III of the Strategic
Infrastructure Battalion (SIB) program, and agreed to pick up
sustainment costs of the current four SIBs and the expense
for seven more SIBs and a brigade headquarters. Minister of
Finance Allawi asked Ministry of Defense (MoD) to work within
the GOI budget. Infrastructure Coordination Cell (ICC)
Director BG Kamal reported that, although the incident is
still under investigation, the major break in the northern
export pipelines at al-Fatah appeared to be the result of a
poorly executed repair rather than an attack. End Summary.


2. (U) Deputy Prime Minister Ahmad Chalabi chaired a
September 8 session of the National Energy Council (NEC).
Present at the meeting were Minister of Finance (MoF) Ali
Allawi, Minister of Electricity (ME) Dr. Muhsin Shalash,
Minister of Industry and Minerals Usama al-Najafi, Deputy JHQ
Commander LTG Abadi, ME Security Advisor MG Sa'ad Hashim,
Infrastructure Coordination Cell (ICC) Director BG Kamal, and
representatives from the Ministries of Oil and Water
Resources. Also attending were IRMO Deputy Director for
Operations MG Robert Heine, IRMO advisors, MNF-I reps and
Embassy Pol/Miloff and Econoff.

--------------
Northern Pipelines Remain Down
--------------


3. (C) BG Kamal reported that although the investigation was
ongoing, the September 3 break in the 40" line near al-Fatah
may have been a preventable accident, in spite of Ministry of
Oil (MO) claims that there had been an attack on the line. A

previous, poorly-executed underground repair had sprung a
slow leak that went unnoticed for several weeks until a
massive lake of oil had spilled. When crews tried to inspect
the site, a fire broke out. Currently, all three lines from
Kirkuk to Bayji are suffering from pressure failures near
al-Fatah. Moreover, one member of the repair crew was killed
approximately 10 km from al-Fatah the following day (although
BG Kamal said he did not believe that the man's death was
connected to attempts to repair the breach). The line was
repaired September 13 but failed again almost immediately.
The new date of repair is September 22.

--------------
SIB Phases II and III Approved
--------------


4. (C) The NEC signed a recommendation to approve Phases II
and III of the SIB program, as well as sustain the first four
SIBs (stationed between Kirkuk and Bayji) through the end of
the year for a cost of $11 million. Phase II will entail
training and deploying four more SIBs along the Bayji-Baghdad
corridor ($35 million) and providing a fifth battalion for
the Kirkuk-Bayji area ($8.2 million) and a brigade
headquarters ($8.75 million). Phase III will develop two
SIBs to guard the Baghdad Product Ring ($17.5 million). The
total projected cost of the program is $80.45 million. DPM
Chalabi also noted that the GOI must "build everything (the
SIBs) need" between Kirkuk and Bayji. (MNSTC-I Note:
Although MNSTC-I matched funding for the first four SIBs, no
promises of similar action have been made for subsequent
battalions. End Note.)

--------------
Troop Redeployments and an Officer Shortage
--------------


5. (C) At DPM Chalabi's request, MNF-I liaison reported that
the number of troops between Bayji and Baghdad had doubled
since September 4, and another battalion from the 5th Iraqi
Army (IA) will be deployed in the coming week. The SIBs
stationed in the corridor are integrated into the 4th IA
Division command structure. Air reconnaissance has also
increased. MNF-I liaison said that the Iraqi air crews
training on the Seeker and CompAir surveillance aircraft are
making good progress, which will enhance their night
surveillance capability. During discussion of deploying
additional regular IA units between Mosul and Baghdad, LTG
Abadi noted a lack of trained officers to command them.
Abadi blamed the shortage on the Ministry of Defense (MoD)
de-Ba'athification Committee, which is firing officers even
though MoD is allowed to authorize exceptions.


6. (C) Once all the forces are in place, it will be more
difficult to hit infrastructure targets -- although DPM
Chalabi acknowledged that even the most careful troop
deployments would not prevent every attack. On September 3
insurgents hit the Ajeel pipeline, which supplies two of the
generators at the Mullah power station and the Bayji mobile
generators. The main Bayji refinery is running only on the
three days of supply on-hand. If the supply is not restored
over the weekend the plant could shut down altogether. Once
down, it would take a week to re-start.

--------------
Allawi Pleads for a Reality Check
--------------


7. (C) Minister Allawi called MoD's 2006 budget request
"astronomical," higher even than the sum total of Iraq's oil
exports. (MNSTC-I Note: The 2006 MoD budget has not yet been
officially submitted. MNSTC-I estimates, however, that MoD
requires between $5-7 billion. In the first eight months of
2005, Iraq's oil exports have earned approximately $17.5
billion. End Note). Allawi said he understood the
importance of the IA's mission, but asked the MoD to
reconsider its request: "You are a priority, but we can't
give what we don't have." Allawi urged the MoD
representatives to "be good leaders" and "serve your country
within our means."

-------------- --------------
Reconstituting the Facilities Protection Service Under MoD
-------------- --------------


8. (C) Several ministers noted dissatisfaction with their
Facilities Protection Service (FPS) forces. Chalabi asked
that the heads of the various ministerial security services
and the FPS be brought to an upcoming NEC meeting so that he
could hear from them directly. These commanders could learn
from the experience of the IA generals, Chalabi noted. "We
want to rescind CPA Order 27," Chalabi added, and put all the
FPS under MoD control. The ministries would only benefit
from the FPS's service. Minister of Industry and Minerals
Usama al-Najafi asked for a full feasibility study so that
the military does not demand excessive funds to carry out
this task, adding that the number of FPS is inflated.
Chalabi, however, insisted that if "we are even close to the
proper number" this plan should go ahead. (MNSTC-I Note:
MNSTC-I is unaware of any GOI plans to move the FPS to MoD
control, and has not programmed this activity into the MoD
force structure. End Note).

--------------
Tackling Theft in the South
--------------


9. (C) LTG Abadi noted an ongoing investigation into
corruption in the south. Increasing naval capacity would
help prevent smuggling of refined petroleum products, which
those present said was a greater problem than crude oil
smuggling. Chalabi requested a briefing on any information
that MNF-I can provide on corruption and looting in the
south, to include the scope, locations, and specific examples
of the problem. Chalabi said that political parties in the
south are "playing games" by supporting various commanders to
forward their own agendas and that local officials threaten
crews and abscond with equipment. "People think the
government is an annoying burden," Chalabi said, "so it is
okay to attack it."

--------------
Kharkh Water Plant Back Online
--------------


10. (C) On September 6 insurgents hit two electrical towers
supplying the Kharkh water treatment plant. Kharkh, which
supplies 70% of Baghdad's water supply, returned to service
September 8 after two days offline. BG Kamal said that
hitting the electrical generation would not have been a
problem if the main generator had been online. Although the
station's control panel still required work, the ME had the
two back-up 8.5 MW generators back online within a day.
Satterfield