Iraqi Economists Network

شبكة الاقتصاديين العراقيين

Energy, Oil & Gas Policy

Baiji Refinery must be salvaged before it’s too late. By Saadallah Al Fathi

The rehabilitation of the refinery is going to be extremely difficult, but with looting the task will be double the cost and more difficult
In this column, I am appealing to whomever it may concern in — or out — of Iraq regarding some sad aspects of Baiji refinery, where, for a great part of my career, I was involved in its planning, construction, follow-up and management. The readers will excuse me if I am not entirely objective, but I will do my best to be.
The Baiji refinery is a 300 thousand barrels per day (BPD) plant, the largest and most sophisticated in Iraq. Before June 2014 it supplied some 43 per cent of the domestically produced petroleum products. Following the upheaval of Daesh in June 2014, the refinery was occupied but later changed hands with government forces more than once. The refinery was finally controlled by government forces on 14 October 2015, and after a couple of weeks the Ministry of Oil sent a survey team to assess the damage to the refinery. It came back with a preliminary report, which concluded that one of the production lines, Salahudin 1, is the least damaged and repairs could start there. The report did not mention anything about the loss of warehouse materials or mobile equipment that would be deemed necessary for any substantial repair.
Around the same time, the refinery management itself prepared a report with a recommendation to rehabilitate the first production line mentioned above within a reasonable time and budget, approved by the ministry.
However, a second survey team, accompanied by army officers, local government officials and a ministry security staff, tried to visit the refinery in December, probably to make a more detailed survey of how the repairs would start. They were not allowed to enter the refinery by one section of the volunteer’s army or militia controlling the site. They turned back after they were fired on.
Refinery staff still living close to Baiji and even some other sections of the volunteer’s army privately reported large-scale organised looting of the warehouses, moving equipment such as vehicles and cranes, generators and so on. There are even rumours of the planned dismantling and removal of diesel generators of 84MW total capacities, which are brand new and were installed just before the Daesh takeover. The staff fear later on the looting may reach the fixed equipment and machinery and that the government is helpless in stopping the militia.
Al Quds Al Arabi reported on 19 October 2015 a statement by an unnamed security source regarding looting from the liberated portions of the refinery, even while the battle was raging on.
As far back as 29 October the local government of Salahudin province, as reported by ‘Al Mada Press’, were calling for repairs to the refinery and promised to tender what it could. The call was repeated on November 2 and December 7 and stressed the need to protect the repair teams and companies that may be involved in this undertaking. The report in ‘Al Mada Press’ dispelled the rumours that the ministry is not serious about rehabilitating the refinery.
The Alliance News, as reported in the British ‘Morning Star’ daily newspaper on 30 October 2015 said that “Gunmen have stormed Iraq’s biggest oil refinery in the northern town of Baiji and plundered it weeks after government forces retook the complex from the Islamic State (Daesh).” It referred this to a security official who said that “The refinery has been exposed to an unprecedented looting and sabotage campaign.”
The European Iraqi Freedom Association, (EIFA) based in Brussels and headed by Struan Stevenson, president of the European Parliament’s Delegation for Relations with Iraq from 2009-2014, went as far as saying on December 23 that “Baiji oil refinery, the biggest in Iraq, is currently being dismantled and transferred to Iran.” While I believe this is far-fetched, there are reports about the presence and activities of Iranian revolutionary guards and advisers in the area as reported by the London based Al Quds Al Arabi on September 3.
The EIFA report said that “the militias are looting the heavy construction machinery and electric cables, as well as the private property of the residents in this area.” It called on Prime Minister Haider Al-Abadi “to expel the Iranian regime and its agents from Iraq and once again reminds the UN Security Council of the need to act to stop such flagrant breaches of Iraqi dignity and sovereignty.”
Up front I say there may be some smoke in what is being reported here, but there is no smoke without fire. It is up to the government and the Ministry of Oil to set up an independent investigation for the Iraqi people to get to the truth.
I know that the rehabilitation of the refinery is going to be extremely difficult, but with looting, the task will be doubly more costly and difficult.

Source: Gulf Newes, Published: 12:46 January 10, 2016

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