Iraq has taken another step in taking ownership of its oil infrastructure, with the Oil Ministry recently telling companies which provide goods and services to the operators of the oil fields in the south that that private security companies are now forbidden, and subcontractors should instead rely on the country’s Oil Police for protection.
“All the security services related to the drilling contracts of the subcontractors who are contracting with the lead contractors for oil fields development […] should be cancelled and it will never be accepted from now on,” said a memo from the South Oil Company. “The Oil Police will provide the necessary protection.”
The memo goes on to state that the Oil Ministry requires security licences issued to private firms working for subcontractors, including oilfield services companies, be suspended immediately. Operators themselves can still use private security.
While private security firms filled a void left by an insufficient coalition military presence and a disbanded Iraq police force, they have political anthrax to the Maliki administration, after several incidences of civilian shootings. The use of armoured cars – a totem of occupation and fear for many Iraqis – for both oil staff and Iraqi MPs have been on the political agenda recently.
The government has also singled out security companies as overcharging for the protection they provide. This is a headache for the Oil Ministry as ‘private’ security firms are effectively indirectly on the public payroll, but are not subject to government costs scrutiny or control. The existing field development contracts signed between operators and Baghdad allow operators to pass on costs without penalty to the state by means of reimbursement in priority to state oil revenue, which Baghdad claims has led to a grossly overheated services market.
Drilling firms and the operators commissioning have also been accused of ‘gold-plating’ their work at southern oil fields. The fourth bidding round includes cost control provisions aimed squarely at logistics and security firms.
Oil & Gas Middle East contacted several security and oilfield services companies operating in Iraq, none of which were willing to comment on the South Oil Company statement.
The role of private security companies was always slated to diminish as Iraq’s military, police and specialist oil police increased in size and capability. But until this month it was understood that now deliberations had been made about restricting the role of private security. The spectrum of relations between Baghdad and security firms has at best run from fractious to hostile, with Baghdad using visa delays and other bureaucratic nuisances to hamper the ability of private firms to operate.
The concern for companies operating the southern fields is that the announcement is premature, and that the Oil Police still lack the expertise, equipment and numbers needed to keep oil staff and infrastructure secure.
Attacks on oil infrastructure have dramatically reduced – despite bomb attacks at the Rumaila field in October and December last year and a recent nighttime raid on seismic trucks at Sonagol’s Najmah oil project – but foreign companies still routinely use armoured escorts to travel around Iraq.
The recent wave of bombings throughout metropolitan centres despite heightened security ahead of the Arab League summit in Baghdad has only increased this fear. Companies may be tempted to ignore the announcement until direct communication from the Oil Ministry is made and a satisfactory assurance of protection is received.
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