Western oilmen in Iraq brace for Syria backlash

Reuters News
Posted: Sep 11, 2013 9:26 AM
Western oilmen in Iraq brace for Syria backlash

By Isabel Coles and Peg Mackey

ARBIL, Iraq/LONDON (Reuters) - Sheltering in a bomb-proof safe room in a heavily-fortified office in Baghdad is the new reality for a senior Western oil executive who runs one of Iraq's oilfield mega-projects.

Intensifying violence and car bombs have already forced him to restrict his movements and now, security experts say, he is under even closer watch from Shi'ite militias that may hit out at Western targets if Washington attacks neighboring Syria.

"Every time there's a car bomb, we go into lock down mode," he said.

The Shi'ite groups, closely linked to Iran, are also tracking his colleagues working 500 km away in the giant southern oilfields clustered near Basra - a Shi'ite-dominated city that Iraqi officials say is a no-go zone for Western oilmen.

"The risk is of being in the wrong place at the wrong time," said a senior oil industry source.

So far, turmoil in Iraq has not hit the operations of international oil companies, or deterred them from boosting output and turning Iraq into OPEC's second-biggest producer. But Baghdad's oil revival has stalled due to bottlenecks at ports, pipelines and the customs office.

"Baghdad will make every effort to contain the fallout, but if we were to lose anyone, there would be huge pressure to withdraw - and we don't want to do that."

An Iraqi Shi'ite militia group has threatened to attack U.S. interests in Iraq and the region if Washington strikes Syria, whose President Bashar al-Assad is backed by Tehran.

Long accustomed to hostile environments, foreign executives from BP, ExxonMobil, Eni, Total and Royal Dutch Shell do not scare easily.

But Iraqi security sources say Exxon, particularly at risk because as an American firm, is taking no chances, re-basing most of its workforce from the southern West Qurna-1 oilfield project to Dubai until tensions ease.

"Exxon has zero-tolerance," said a source at a security company operating in Iraq. "Exxon has pulled out just about everyone."

The company declined to comment.

Despite the possibility of military action against Syria still alive, top executives visit Iraq. Paolo Scaroni, CEO of Italy's Eni, was in Baghdad at the start of the month - and senior management is staying put in the Iraqi capital.

"The others are reviewing measures and emergency response plans, but there are no plans to evacuate," said a Western diplomat.


Foreign oil companies are likely to take their cue from diplomatic staff, say security experts. Several hundred Western oilmen are estimated to be rotating in and out of the country, with most at the southern oilfields and only a handful in Baghdad, say industry sources.

While Washington is not actively removing people from its embassy, it is not allowing those away on annual leave to return. It has also issued staff with respirators and gas masks.

"We've told our clients to take additional precautions: limit your activities, don't take people in and out of the country, keep them off the roads and do everything you can to limit your exposure," said the security company source.

Since 2010, international oil companies have been tapping the southern oilfields, raising output by 600,000 barrels per day (bpd) to 3 million bpd.

Infrastructure and logistical snags, rather than security issues, have frustrated their progress this year.

U.S. oil firms have a fairly small footprint in southern Iraq compared with Chinese, Russian and British firms. Exxon is in charge at West Qurna-1, and Occidental has a small stake in the neighboring Zubair oilfield, run by ENI.

Other mega-projects in the predominantly Shi'ite and relatively peaceful south are Iraq's biggest producer Rumaila - run by BP; Majnoon - led by Shell; Halfaya - operated by China National Petroleum Corp; and West Qurna-2, run by Russia's Lukoil.

But the proximity of these fields to Iran make them vulnerable in the event of a retaliatory attack, security analysts say.

Security experts do not expect militants to inflict any lasting damage on Iraq's oil infrastructure, which has helped generate nearly $60 billion this year.

And the remote desert camps at the tightly-guarded oilfields offer expatriates a relatively high level of protection. Most of the bases have areas with hardened roofs to guard against missile attacks.

Nonetheless, Western executives in the area have been warned by Iraq's South Oil Co (SOC), which oversees operations around Basra, to restrict their movements.

"They'll throw rockets, they'll throw mortars - a few bombs," said the security source. "It's going to be more of a symbolic attack."

(Editing by William Hardy)