[A-List] Iraq: oil pipelines & private security firms

[Michael Keaney]

Protecting Iraq's precarious pipelines
By David Isenberg
Asia Times, September 24 2004

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.