C O N F I D E N T I A L SECTION 01 OF 03 BAGHDAD 000462

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/11/2017
TAGS: ECON EPET KCOR EIND IZ
SUBJECT: PRT TIKRIT: WHO REALLY RUNS THE REFINERY?

Classified By: Stephanie Miley, PRT Deputy Team Leader, for reasons 1.5
(b) and (d).


1. (U) This is a PRT Tikrit, Salah ad Din cable.


2. (C) SUMMARY. A shadowy group of influential sheiks and
politicians appears to exert a significant measure of
influence over operations at the Bayji oil refinery. The
exact composition of the group - possibly including the
Governor of Salah ad Din province, Hamad Hamoud al Shakti
al-Qaisi, and at least five powerful Bayji-area tribal
sheikhs - and the precise amount of control wielded is
unclear. During interviews conducted in January and February,
refinery contacts conveyed to IPAO that unofficial power
brokers regularly interfere in refinery operations, Ministry
of Oil (MoO) directives notwithstanding. These local sheiks,
provincial politicians, and their associates hold
considerable sway over the local detachment of the Oil
Protection Force (OPF) ) enabling fuel smuggling, preventing
anti-corruption investigations, and providing a means of AIF
infiltration of the refinery. While the Ministry of Oil is
ostensibly in charge, in practice the sprawling facility is
jointly controlled by a number of official and unofficial
actors. As the GOI and Prime Minister al Maliki attempt to
curb the rampant fuel smuggling and corruption at Bayji,
total control of refinery operations by the MoO from Baghdad
is likely a mirage. END SUMMARY.

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Outside Influences at the Refinery
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3. (C) The Bayji oil refinery - which supplies northern and
central Iraq with nearly all of its refined fuel - suffers
from numerous technical issues which greatly impede
production. These include sporadic crude oil supply,
intermittent power failures, and an oversupply of heavy fuel
oil waste product, which results in reduced functioning of
the refinery. In addition to the technical problems,
however, the facility is also subject to frequent
interference by local tribal sheikhs, provincial politicians,
and their associates. While the exact

number of persons of
influence is not clear, refinery contacts highlighted the
role of some of the key players during interviews conducted
on February 7-8 in Bayji (in and out of the refinery). A
group of at least five area tribal sheikhs (Ibrahim Khalef,
Nather Khalef, Musa Mayah, Raad Mehjoob, and Galeb Nafuz) may
exert a significant measure of control over local operational
decisions (especially in the Oil Protection Force, OPF).
According to contacts, this group is often joined by the
present governor of Salah ad Din, Hamad Hamoud al Shakti
al-Qaisi, who - together with his chief of security, Abu
Mazen (AKA Ahmed Abdullah al Jabouri) - appears to be heavily
involved in fuel smuggling activities at the refinery. The
existence of powerful sheikhs who exercise control behind the
scenes is not unusual in Iraq, and their control is far from
absolute. However, the continued influence in one of Iraq,s
most strategic facilities by a shadowy, unaccountable group
will threaten the success of even the best-intentioned GOI
initiatives aimed at increasing output and reducing fuel
smuggling at Bayji.

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Khader Out, Obeydi In
--------------


4. (C) The long-standing Refinery Director Abdel Khader will
soon be replaced by Ali Obeydi - a Director General with the
MoO from Baghdad. Considered by many to be a technocrat
aware of but aloof from the corruption, Khader will
apparently continue to work at the refinery as the Director
of the North Refinery. Khader told IPAO on February 7 that
he was being terminated as refinery Director for his refusal
to arrange for regular &salary8 payments ) in the form of
free tankers of fuel ) to be made to the Governor. Khader
described a meeting called by Governor Hamad on January 20
involving the Chiefs of Distribution and Production where
demands for fuel and cash payments were made by the Governor
and his Director of Security, Abu Mazen. Khader told IPAO
that shortly after he declined to participate in this
"program" (unlike the Regional Chief of Distribution, Samir
Abbas Mohammed) he received a call from an important Ministry
of Oil official (NFI) in Baghdad instructing him to
cooperate. According to Khader, his demotion was a direct
result of his refusal to defer to the Governor's authority.


5. (C) Other assessments of Khader are not as positive.
According to Ali Shakr Saman, a trusted local CF confidant
who lives and works at the refinery, Khader allows AQIZ
(through AQIZ agents who work in his Personal Security
Detachment) to steal up to USD 40,000 per day for protection,

BAGHDAD 00000462 002 OF 003


and also willingly cooperates with Abu Mazen and the Governor
to ensure that the "salary" payments are made. On February
9, Saman told IPAO that Khader meets once a week at the Al
Shahid mosque in Bayji with local sheiks in order to review
refinery operations and ensure their satisfaction. Saman
contradicted Khader,s claim that he was being deposed for
attempting to stop corruption ) stating instead that the
Governor recently sent a memorandum to the MoO requesting
Khader's reinstatement as facility director.

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Control of OPF Key
--------------


6. (C) Charged with maintaining internal and external
security at the refinery ) control of the Oil Protection
Force (OPF) is essential to circumventing any safeguards in
order to steal fuel. During two interviews on February 6-7,
the Assistant Manager of Operations of the Northern District
(and Chief of OPF activities in Bayji) Nebhan Mehjoob told
IPAO that the sheikhs hold veto power over all decisions made
regarding the OPF. According to Mehjoob, control of the OPF
brings significant benefits to the sheikhs, who ) like the
Governor, receive a monthly "salary", preferential hiring
benefits for their tribesman, and the ability to exercise a
veto over important organizational decisions made in Baghdad.
The penalty for non-compliance is steep; despite the fact
that he generally attempts to satisfy the sheikhs' demands,
Nebhan,s house was firebombed in December, resulting in him
receiving extensive injuries. (NOTE: According to Saman and
CF refinery contact Usama Sabat, Mehjoob is a "good guy mixed
up with bad guys." END NOTE.)


7. (C) In December, the Governor obtained permission from the
MoO to appoint a trusted confidant, Amar Sawadi, as the new
Director of the OPF at the refinery. (NOTE: In a meeting on
December 27, Minister of Oil Al Shahristani appeared to have
given the Governor clearance to appoint Sawadi to the
position. The Governor told PRT Team Leader on January 7
that he favored Sawadi to replace Nebhan who was "weak".
Sawadi is considered by most at the refinery to be considered
the "Governor's man", and there was a palpable sense of
relief that he did not take control of OPF. He was OPF
director in 2003, but was terminated for allegedly stealing
water trucks. END NOTE.) According to Nebhan, on January 2,
the above-mentioned sheikhs and the Governor summoned Sawadi
and Nebhan to a meeting in Tikrit. Nebhan's deputy, Sabah
Khalef, described the meeting as an interview, stating that
the sheikhs informed Sawadi at the meeting that the price of
their acquiescence to his appointment was a doubling of their
"salary" and two additional tribesmen of their choosing hired
to OPF from each of their tribes. According to Nebhan, the
meeting did occurr; however, Sawadi was ultimately rejected
by the sheikhs because "they couldn't trust him." Nebhan
emphasized that any future director of the OPF needs approval
from Bayji as well as Baghdad.


8. (C) Nebhan gave IPAO a copy of his "top secret" "Bayji
Refinery Protection Plan" on February 6. Listed as the
greatest threat to refinery security at the top of the
document was "a situation of disorder because of the
interference of Sheiks, government officials, etc."


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Ministry Control Limited...
--------------


9. (C) MoO's ability to exercise strict control of the
refinery through formal channels is often sporadic and/or
limited. For example, despite a formal memorandum signed by
the Oil Minister Shahristani in November 2006 which forbids
distribution of benzene to private gas stations, the refinery
regularly distributes fuel to numerous area gas stations.
When queried about the memorandum on January 4, Distribution
Chief Abbas informed IPAO and CF representatives that he
wouldn,t abide by it. There is no doubt intense pressure
upon Samir to distribute fuel to well-connected area power
players. During the meeting in January with IPAO, he
received a telephone call which may or may not have
communicated a threat - after which he appeared visibly
shaken.

--------------
...And Perhaps Arbitrary
--------------


10. (C) During the interview on February 7, Refinery Chief
Khader received a call from Deputy Minister of Oil Motasam
Akram Hassan ordering him to increase the daily allotment of
kerosene for Kurdistan for the week. According to Khader,

BAGHDAD 00000462 003 OF 003


seemingly arbitrary orders from Baghdad are a regular
occurrence. And fuel distribution is a zero-sum game: in
order to supply the extra kerosene for the north, reduced
quantities would be distributed to Salah ad Din, Diyala,
Ninewa, and Anbar. From the ground, it is difficult to
differentiate between reasonable changes to fuel allotments
and preferential, sectarian-based nepotism. However,
according to distribution totals produced by Samir on
February 7, Kurdistan already was receiving 44 percent of the
kerosene produced at Bayji.

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Comment
--------------


11. (C) COMMENT. It is no surprise that ) in the wild
west-like atmosphere of Bayji ) there are multiple power
players vying for a measure of control over one of Iraq,s
most strategic facilities. Influence over the refinery,s
Oil Protection Force offers great benefits: increased access
to smuggled fuel, the ability to offer employment to tribal
members, etc. Although from Baghdad the Ministry of Oil and
the Northern Oil Company may appear firmly in control of
daily operations and assignments, the reality on the ground
in Bayji is quite different. Memoranda are ignored,
candidates are rejected, and refined fuel is stolen due to
local pressure and intimidation, often assisted by the
acquiescence and/or ignorance of the central Ministry.



12. (C) Diminishing the influence of local, unofficial power
brokers will be critical to the success of the new Iraqi-led
initiative to limit fuel smuggling from Bayji. Ultimate
success in this endeavor will not only require boots on the
ground but also the will to use them against corrupt local
interests ) including the Governor and Abu Mazen - without
fear of reprisal. The recent assignment of IA Strategic
Infrastructure Battalions (SIBs) to refinery security is a
good start, but the task of rooting out the entrenched
corruption at the oil refinery in 2007 will be difficult at
best. It would be a mistake to think the Strategic
Infrastructure Battalions newly assigned to refinery security
will be immune to the local pressure which has been so
effective thus far; indeed some of the SIBs in the province
already have a track record for ineffective and corrupt
behavior. END COMMENT.


13. (U) PRT Tikrit thanks the soldiers of the 1st Battalion,
505th Paratroop Regiment, 82nd Airborne Division for their
invaluable contributions and support that make this reporting
possible.


14. (U) For additional reporting from PRT Tikrit, Salah ad
Din, please see our SIPRNET reporting blog:
http://www.intelink.sgov.gov/wiki/Tikrit.
KHALILZAD