Cablegate: Building Capacity at the Ministry of Oil
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3837/01 3290231
ZNR UUUUU ZZH ZDK
R 250231Z NOV 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 4497
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEHUL/AMEMBASSY SEOUL 0024
RUEHJA/AMEMBASSY JAKARTA 0012
RUEHRO/AMEMBASSY ROME 0106
RUEHBJ/AMEMBASSY BEIJING 0041
RUEHLO/AMEMBASSY LONDON 1790
RUEHMO/AMEMBASSY MOSCOW 0086
RUEHFR/AMEMBASSY PARIS 0147
RUEHKO/AMEMBASSY TOKYO 0059
RUEHNY/AMEMBASSY OSLO 0014
RUEHAT/AMCONSUL AMSTERDAM 0001
UNCLAS SECTION 01 OF 07 BAGHDAD 003837
STATE FOR NEA/I AND EEB/ESC
STATE ALSO PASS DOE FOR IA
E. O. 12958: N/A
TAGS: PREL PGOV ECON EPET IZ
SUBJECT: BUILDING CAPACITY AT THE MINISTRY OF OIL
BAGHDAD 00003837 001.4 OF 007
1. Summary and Comment: Capacity building at the Ministry of Oil
is a high mission priority. A modern, capable ministry would be
better able to make the sound investment decisions that will affect
the future economic and political viability of the Iraqi state.
Alternatively, a dysfunctional central-planning style ministry would
be vulnerable to corrupt actors and to misallocation of resources.
As a result the U.S., as well as other countries, has lavished
attention on the ministry, providing training on a wide range of
technical and organizational topics. Major oil companies have also
been active, with the goal of building the relationships with MoO
officials that will serve them well in the (hopefully) not too
distant period when Iraq invites foreign technical and financial
participation in the development of its hydrocarbons sector. This
message catalogs U.S. Mission and other bilateral and multilateral
training and ministerial capacity building programs underway as well
as those of international oil companies (that we have heard about).
One conclusion is that the MoO is no longer the isolated backwater
that it once was. But nevertheless MoO still represents an
especially "hard target" for engagement and capacity building, given
the poor security at ministry buildings, losses of trained staff to
third country jobs and in-country assassinations; and long-ingrained
reflexive nationalism of Iraqis when it comes to their oil
resources. As an epilogue, we have discovered that the great
majority of oil sector employees who travel to the U.S. for training
return to Iraq. End Summary and Comment.
MINISTERIAL ENGAGEMENT AT THE MINISTRY OF OIL
2. A wide range of Mission elements provide training and advice
in a variety of technical and policy fields. The core on-board
Embassy/MNF-I Ministry of Oil engagement team consists of an oil
section chief and three specialists in the Economic Section; the DoE
section (2); USAID (5); ITAO (3); Energy Fusion Cell (5 with more
enroute); Army Corps of Engineers (GRD) (4); MND-N (2); MNF-I (4).
This core staff meets weekly to compare notes and to plan trips to
EXAMPLES OF TRAINING COURSES AND SEMINARS
3. Cross-Border Oilfield Unitization: Embassy ECON staff geologist
conducted a two-session Seminar and Roundtable discussion on Oil
field Unitization to the Ministry of Oil Staff with participation by
other experts. The lectures and discussions were divided into field
and reservoir issues, commercial and economic consideration and
national and international legal concerns. The goal was to provide
a general understanding of unitization and unit operating agreements
and to recommend that the Ministry seek additional professional
guidance in the process. Iraq is currently discussing unitization
of fields crossing both the Iranian and Kuwaiti borders. The
Director General of the Reservoir & Fields Development Directorate
requested the seminar. The session was attended by the Director and
the Director Generals from the Oil Exploration Company and the
Planning Directorate as well as staff from all three Directorates.
4. Seminars on Interpreting Geologic Structures: Embassy ECON
staff geologist presented a series of lectures and workshops on
Structural Geology at the Ministry of Oil. The lecture series was
designed to introduce participants to new concepts and
interpretation techniques. The workshops were structured to move
from classroom examples to actual project problems. The initial
plan was to focus on concepts and techniques in interpreting
structures in compressive and transpressional regimes. This focus
was chosen because these are the types of structures that occur in
central and northern Iraq and because these classes of structures
are difficult to image with seismic data. The classes were modified
from seminars previously presented to international oil companies.
Participants were selected from the staffs of the Reservoir & Fields
Development Directorate and the Oil Exploration Company. The class
was planned to accommodate ten persons. However, the first class
was attended by sixteen people, indicating a significant interest by
Ministry of Oil staff.
5. Lectures on Geographic Information Systems and the application
to geoscience: Embassy ECON staff geologist gave a series of three
BAGHDAD 00003837 002.6 OF 007
lectures to about ten members the Oil Exploration Company staff on
Geographic Information Systems and the use of ArcView software. The
course was designed to establish the familiarity with the software
and data sets developed for Iraq. These data sets that provide the
basis for a countrywide map of oilfields and prospective structures
were delivered to the Ministry as part of the course.
6. Use of Letters of Credit: The Treasury Attache will soon be
presenting seminars on Letters of Credit execution for the Ministry
of Oil and its operating companies. The projected attendance is
expected to be approximately 30 or more individuals.
7. Management and Engineer Training under IRRF: Under the Iraqi
Relief and Reconstruction Act, ITAO experts and the Army Corps of
Engineers provided middle management and engineer/operator training
to the various offices within the Ministry of Oil. This program
utilized $5.47 million of the approved IRRF II appropriations.
Courses offered included training in bidding and procurement,
service contracts, lease sales, supply chain improvement for
petroleum depots, reservoir engineering, software suites and
operational effectiveness. Training was also provided in ethics,
information, records and knowledge management.
INFRASTRUCTURE SECURITY PROTECTION (ISP) PROGRAM
8. In 2006, ITAO established the Infrastructure Security Protection
(ISP) program, to coordinate the programs, policies and strategy for
infrastructure security protection for oil, electricity and water.
Via the FY 2006 Supplemental Economic Support Funds (ESF)
appropriation of $277M the ISP program is developing, coordinating,
and executing programs (through GRD) such as security barrier
construction, hardening of structures, implementing controlled
access to facilities, maintaining standoff distances/exclusion
zones, constructing observation facilities, support protection
force training, etc...
9. Included in this program as Capacity Development is the Support
Program for which approximately $26 million has been allocated. The
ISP Support Program is designed to develop the MoO's internal
capacity to develop and implement infrastructure security and
protection programs. Key projects include Identity Management,
Vetting Programs, and Support Programs. Classroom and training
facilities have been constructed to provide training for the Oil
Protection Force (OPF) and Electrical Protection Security Service
(EPSS) recruits. Identity Management and Vetting programs are being
implemented with the OPF and EPSS as well as with the Ministry of
Interior (MOI) to ensure integrity, identity and accountability of
security forces responsible for protection of critical energy
infrastructure. The programs are planned, executed and administered
through a collaborative and engagement-intensive process that
includes ITAO, the Energy Fusion Cell (EFC- MNF-I), USACE Gulf
Region Division, the Ministry of Oil, the Ministry of Defense, MNC-I
(specifically MND-N), and the individual Ministry of Oil Operating
Companies, including the North Oil company (NOC), South Oil Company
(SOC), and the Petroleum Pipeline Company (PPC).
ARMY CORPS OF ENGINEERS (GRD)
10. Under the Iraqi Relief and Reconstruction Act (IRRF), the USACE
executed as part of the approved projects contracts for training of
the various Ministry of Oil operating company's personnel in the
operation of equipment and facilities. This training was both in
Iraq and outside Iraq. Newly constructed or renovated systems and
facilities were completed and turned over to the Iraqis for
operation. This turnover required that the Iraqis be trained, as
necessary, in operation, maintenance, and repair of the constructed
facilities, equipment and systems to lay the groundwork for
sustainability. This type of training is fundamental to success and
is a cornerstone of Capacity Development.
11. The US Government had two primary Design Build Contractors. The
D/B Contractors' Capacity Development role was to accomplish
technology transfer and training as part of the facility
construction start-up and operational testing, commissioning, and
BAGHDAD 00003837 003.6 OF 007
turn-over activities on each construction project. Each contractor
was expected to assess the existing knowledge, skills and abilities
of the Iraqi people, and develop an approach to training,
transferring knowledge, skills and abilities to them.
12. These Design Build contractors executed 200 separate training
programs designed to provide the required knowledge transfer for the
sustainment of the facilities provided under US Government funding.
As the cost of these programs was included within the overall
project cost, it is estimated that for the $1.6 billion spent for
the IRRF II program, approximately 2 percent or $3.2 million was
spent on this training. (Engineers and Operators trained: 1,575.
Number of Courses: Heavy Equipment Training 55, Operation &
Maintenance 38, Maintenance 2, and Equipment Operation 102.)
DEPARTMENT OF ENERGY - USTDA
13. Under IRRF, the Department of State transferred $2 million to
the Department of Energy, which also provided $500,000, to execute
two contracts for training to the various organizations within the
Ministry of Oil. The program was developed at the request of the
Iraqi Interim Government in 2004. The IOTP was the result of
extended and close discussions between Iraqi and U.S. government
officials to: develop a training program that addresses the
immediate term training needs of the Ministry of Oil; provide a road
map for longer-term training that could be instituted by the
Ministry as part of its human resources management and development
strategy; and provide a foundation for continued linkage between the
Ministry and U.S. organizations in the areas of knowledge and
expertise in oil sector management and operations. A variety of
training programs and study tours were conducted over the succeeding
two years, with the last study tour just completed in September
14. Through its National Capacity Development Program for public
management (Tatweer), USAID works closely with the Government of
Iraq (GOI) to strengthen and expand the professional skills,
qualifications, and capabilities of public servants. Tatweer
established a scholarship fund to encourage advanced studies in
public administration. The program awards scholarships for Master's
or certificate-level studies in public management. Within the
Ministry of oil, Tatweer's accomplishments include:
Regular Courses in Public Management
Civil Servants Trained in Public Management: 103
Course Enrollees: 164 (126 Male, 38 Female)
Project Management: 41
Fiscal Management (Budget, Procurement): 51
Human Resource Management: 15
IT Management: 8
Leadership and Communication: 51
Special Courses and Projects
Beiji Oil Refinery: USAID/Tatweer's core advisor in Project
Management provided a special set of back to back Introductory and
Advanced Project Management courses to 10 managers.
North Oil Company: USAID/Tatweer recently traveled to Kirkuk and
reached agreements to provide public administration training,
especially in Project Management, Procurement, and Negotiation
Skills to as many as 1,200 company employees, through a system of
cascading training that will also create a cadre of trainers for the
company, via the Oil Training Institute in Kirkuk.
South Oil Company: USAID/Tatweer and South Oil Company have agreed
on a special training program combining Project Management and
Procurement, to be delivered by an international short-term
BAGHDAD 00003837 004.8 OF 007
consultant, beginning on December 1.
Directorate of Administrative and Legal Affairs: USAID/ Tatweer
conducted a Change Management Workshop for 22 senior managers
(number included in total trainees table above).
State Company for Oil Projects (SCOP): USAID/Tatweer and the
National Center for Consultancy and Management Development (Ministry
of Planning) have agreed to conduct a structured "Organizational
Self-Assessment Process" led by a Ministry of Oil team of 15
mid-level managers. A Change Management Workshop is also scheduled
to be delivered to SCOP managers in early December.
Procurement: USAID/Tatweer is working closely with the Deputy
Minister of Oil to design and implement a major international
procurement for steel pipe.
Metering Information: Tatweer is advising the Manager for Metering
on a comprehensive metering system, including IT management,
financial accountability, and fluid flow accountability (crude oil
and refined products).
Scholarships: A total of 8 civil servants in the Ministry of Oil or
Oil Companies received USAID/Tatweer scholarships for two-year
post-graduate study in Public Administration at Universities in the
Middle East Region. 6 of these awards are for study at English
Language programs (American University in Cairo) and 2 are for
Arabic language institutions.
Embedded Staff: USAID/Tatweer is finalizing the contracts for 3
Iraqi Nationals to be embedded in Ministry of Oil institutions.
IRAQ - MINISTRY OF OIL'S TRAINING AGREEMENTS
15. Iraq's Ministry of Oil (MoO) has signed agreements with
international oil companies to train Mid-Level Iraqi managers on
different aspects of technology developments, foreign languages, and
management training. The MoO officials have shown extreme interest
in training its Mid-Level staff on modern technology since sanctions
and wars hindered development in the oil sector. Companies such as
Norway's Statoil, Japan's Japex, France's Total, Russia's LUKOIL,
US' Chevron-Texaco and ExxonMobil, UK's BP and Royal Dutch Shell-NL,
China's CNPC, Italy's ENI, Indonesia's Pertamina, and South Korea
have shown an interest in training the Iraqi MoO personnel as a
first step to get modernize Iraq's oil and gas industry and market.
The European Union (EU) and the USG, both US-DoE and US-DoS, are
also assisting the MoO. Agreements are usually memoranda of
understanding or technical service agreements to train mid-level
staff. Finally, the Minister of Oil has told us that he is in
conversations on a training agreement with the University of
Oklahoma. In it, OU would build capacity at the Ministry's own
hydrocarbons engineering training center.
16. Norway has been interested in training the MoO. The
Norwegian government allocated USD 4.3 million to fund this
assistance effort. A memorandum of understanding between the two
governments on the assistance program was concluded. The Norwegians
are interested in helping Iraq build up its oil industry in data
collection, management training, enhanced oil recovery techniques
and "developing national competence." High-level MoO officials have
expressed a deep respect for Norway's state-owned company and have a
keen interest to implement most of Norway's methods in Iraq.
17. Japex will mainly provide technical assistance including
analysis work for data gathered through the 3-D seismic surveys in
the four onshore areas: the East Baghdad Field, the northeastern
part of Iraq, the western desert along the Syria-Iraq border, and
the al-Gharaf oil field in the south. The company will also conduct
a training program for Iraqi petroleum engineers for oil
BAGHDAD 00003837 005.6 OF 007
exploration, drilling and exploitation. Japex and the Iraqi oil
ministry have formed a steering committee to jointly conduct
analytical work for data gathered through these geological surveys
in tapped and untapped fields. In addition Japex has a training
program underway with the Ministry of Oil that has currently trained
approximately 1,000 middle management and supervisory personnel.
18. Total, the French oil company, had an agreement with the MoO to
train geologists in two rounds of 60 days courses each. 8 geologists
attended the first round.
19. The first group of Iraqi experts arrived in Volgograd and
Kogalym on May 25th for internships at LUKOIL-Nizhnevolzhskneft and
LUKOIL-West Siberia, News outlet Portal Iraq reported.
20. The Russians are interested in gaining a foothold in Iraq's oil
sector. While the former regime cancelled a contract with LUKOIL
over the West Qurnah field, this has not deterred the Russians from
engaging Iraq. LUKOIL and MoO established a Joint Technical
Committee on the coordination of activities and joint cooperation in
oil and gas. The first meeting was held on June 22, 2004. The
third meeting of this committee occurred from March 21 to 22, 2005
in Dubai. Abdulila Al-Amir, consultant of the Iraqi Ministry of
Oil, Alexander Kolomatsky, Regional Director of LUKOIL Overseas for
Middle East, as well as oil production, planning and HR training
experts of the parties took part in the meeting.
21. This Committee acts in pursuance of the Memorandum of
Understanding and Cooperation signed by LUKOIL and the MoO on March
10, 2004 in Baghdad. The meeting's participants considered a number
of issues regarding the cooperation in the oil and gas industry of
Iraq. According to the Memorandum, in 2005 120 of oil technical
workers and engineers from Iraq underwent traineeship on facilities
of LUKOIL-Western Siberia and 71 oilmen on facilities of
22. LUKOIL also organized academic education for 100 Iraqi
students. In addition to 29 students hosted in 2004, 71 more
students have completed studies. In particular, Gubkin State Russian
Oil and Gas University enrolled 6 new students from Iraq, Ufa State
Oil and Gas Technology University hosted 41 students and 24 students
went to the State Petroleum Academy of Azerbaijan. The Ministry of
Oil of Iraq addressed LUKOIL requesting possible expansion of the
training and professional development program for the national oil
industry. In accordance with the Memorandum, LUKOIL provides
internships for Iraqis at the Company training centers and
production facilities. In 2004, 100 people were trained; 150 Iraqis
will hold LUKOIL internship positions and for the next four years.
23. The one-month internship program provided for theoretical and
practical training for power, oil and gas production engineers;
oilfield and power equipment maintenance technicians; and water
separation and desalting unit operators. Western Siberia hosted 52
interns with 30 staying in Volgograd Region. The interns are
representatives of Iraqi oil, gas and service companies: South Oil,
South Gas, North Oil, North Gas, Oil Projects, Iraqi Drilling, Oil
Pipeline, Oil Products Distribution, Oil Exploration, Gas Filling,
South Refineries and Midland Refineries.
24. In addition, the Ministry of Oil has signed two contracts with
LUKOIL, as part of the humanitarian aid program for restoration of
the Iraqi Ministry assets in petroleum and state oil companies, for
the supply of ambulance vehicles, excavators and a forklift.
UNITED STATES OIL COMPANIES
25. Chevron-Texaco and ExxonMobil have signed technical service
agreements and memoranda of understanding with the MoO.
BAGHDAD 00003837 006.4 OF 007
Chevron-Texaco brought several MoO officials to facilities in the US
and UK. Chevron-Texaco training will include English and IT courses.
In addition, Chevron-Texaco has provided funding for 3 English
language labs in Kirkuk, Basrah, and Baghdad. Moreover, this
included 20 computers each along with instructors for mentoring.
The Language training was completed end June 2005.
26. The UK has an agreement with MoO for training in Petroleum
Technology and English Language. 18 refinery Engineers were trained
in London October of 2004. Training engineers will be on refinery
optimization and Oil and Gas Technology development over the past 20
years. The training took place in London October of 2004, and in
Dubai June 2004. The program completed delivery of training courses
to 3000 employees at the end of 2006.
27. The Chinese oil company, CNPC, has trained MoO technical staff.
The MoO had five training sessions/seminars in various specialties
where 40 plus employees participated. The training session included
on the job training in the fields and getting to know the modern
technologies of the petroleum industry. China has been requested to
emphasize the importance of Chinese presence in Iraq to develop its
oil industry and also for training MoO employees on the latest
28. ENI is enabling MoO employees to complete postgraduate studies
in 6 different disciplines in compliance with Ministry requirements,
including maximum age limit of 45, and to be within the first
quarter of graduates in graduation year with an average mark of 70
percent. Italian language courses are part of the training program.
The training program has been active since the fall of 2004 where
10 Iraqi employees has completed their studies. More are on their
way to Italy.
29. Indonesia's Pertamina signed a memorandum of understanding for
cooperation in the field of training, exchanging experience and
providing oil equipment for Iraq's oil sector. This agreement was
signed in April of 2002.
30. The South Korean government allocated $5 million to train 100
Iraqis for 32 weeks in Seoul.
31. The EU promised technical assistance for capacity building in
Energy and Trade for a project value of 15 million Euros.
32. Embassy Baghdad's consular section, noting the high numbers of
Iraqis traveling to the US in the oil field, recently conducted a
'mini-validation' study of travelers to the US from the Ministry of
Oil. Looking at the period November 2004 - October 2007, Consular
selected application records which listed the applicants' employer
as the Ministry of Oil. An Arabic speaking section employee then
BAGHDAD 00003837 007.4 OF 007
called the contact phone numbers for this group. Eliminating cases
that were refused, or that were issued but the visa recipients never
traveled, the following results were found:
Total applicants who were issued visas and traveled: 106
Number of returned applicants: 78 (73.58 percent)
Number of applicants who did not answer phone: 10 (9.44 percent)
Number of applicants whose phone cannot be reached: 18 (16.98
33. Even more notable, thirty of thirty applicants (100 percent)
have returned since June 2007. (Consular is working to resolve the
remaining cases -- there's no proof of any 'overstays' in the U.S.)
34. This is heartening data, demonstrating that Iraqis are not only
anxious to gain the knowledge they need to rebuild their oil sector,
but that they are also coming home again to apply that knowledge for
the benefit of their nation.