US embassy cable - 05BAGHDAD3842

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003842 
 
SIPDIS 
 
E.O. 12958: DECL: 09/17/2015 
TAGS: ECON, ENRG, EPET, MARR, MOPS, PGOV, PINR, PREL, PTER, KCOR, KCRM, IZ, Petrolium, Energy Sector 
SUBJECT: NEC CONCERNED ABOUT LACK OF NORTHERN OIL EXPORTS 
AND SMUGGLING IN THE SOUTH 
 
Classified By: CHARGE D'AFFAIRES DAVID M. SATTERFIELD FOR REASONS 1.4 ( 
b) AND (d). 
 
1. (C) Summary: On September 8 the National Energy Council 
(NEC) approved Phases II and III of the Strategic 
Infrastructure Battalion (SIB) program, and agreed to pick up 
sustainment costs of the current four SIBs and the expense 
for seven more SIBs and a brigade headquarters.  Minister of 
Finance Allawi asked Ministry of Defense (MoD) to work within 
the GOI budget.  Infrastructure Coordination Cell (ICC) 
Director BG Kamal reported that, although the incident is 
still under investigation, the major break in the northern 
export pipelines at al-Fatah appeared to be the result of a 
poorly executed repair rather than an attack.  End Summary. 
 
2. (U) Deputy Prime Minister Ahmad Chalabi chaired a 
September 8 session of the National Energy Council (NEC). 
Present at the meeting were Minister of Finance (MoF) Ali 
Allawi, Minister of Electricity (ME) Dr. Muhsin Shalash, 
Minister of Industry and Minerals Usama al-Najafi, Deputy JHQ 
Commander LTG Abadi, ME Security Advisor MG Sa'ad Hashim, 
Infrastructure Coordination Cell (ICC) Director BG Kamal, and 
representatives from the Ministries of Oil and Water 
Resources.  Also attending were IRMO Deputy Director for 
Operations MG Robert Heine, IRMO advisors, MNF-I reps and 
Embassy Pol/Miloff and Econoff. 
 
------------------------------ 
Northern Pipelines Remain Down 
------------------------------ 
 
3. (C) BG Kamal reported that although the investigation was 
ongoing, the September 3 break in the 40" line near al-Fatah 
may have been a preventable accident, in spite of Ministry of 
Oil (MO) claims that there had been an attack on the line.  A 
previous, poorly-executed underground repair had sprung a 
slow leak that went unnoticed for several weeks until a 
massive lake of oil had spilled.  When crews tried to inspect 
the site, a fire broke out.  Currently, all three lines from 
Kirkuk to Bayji are suffering from pressure failures near 
al-Fatah.  Moreover, one member of the repair crew was killed 
approximately 10 km from al-Fatah the following day (although 
BG Kamal said he did not believe that the man's death was 
connected to attempts to repair the breach).  The line was 
repaired September 13 but failed again almost immediately. 
The new date of repair is September 22. 
 
------------------------------ 
SIB Phases II and III Approved 
------------------------------ 
 
4. (C) The NEC signed a recommendation to approve Phases II 
and III of the SIB program, as well as sustain the first four 
SIBs (stationed between Kirkuk and Bayji) through the end of 
the year for a cost of $11 million.  Phase II will entail 
training and deploying four more SIBs along the Bayji-Baghdad 
corridor ($35 million) and providing a fifth battalion for 
the Kirkuk-Bayji area ($8.2 million) and a brigade 
headquarters ($8.75 million).  Phase III will develop two 
SIBs to guard the Baghdad Product Ring ($17.5 million).  The 
total projected cost of the program is $80.45 million.  DPM 
Chalabi also noted that the GOI must "build everything (the 
SIBs) need" between Kirkuk and Bayji.  (MNSTC-I Note: 
Although MNSTC-I matched funding for the first four SIBs, no 
promises of similar action have been made for subsequent 
battalions.  End Note.) 
 
------------------------------------------- 
Troop Redeployments and an Officer Shortage 
------------------------------------------- 
 
5. (C) At DPM Chalabi's request, MNF-I liaison reported that 
the number of troops between Bayji and Baghdad had doubled 
since September 4, and another battalion from the 5th Iraqi 
Army (IA) will be deployed in the coming week.  The SIBs 
stationed in the corridor are integrated into the 4th IA 
Division command structure.  Air reconnaissance has also 
increased.  MNF-I liaison said that the Iraqi air crews 
training on the Seeker and CompAir surveillance aircraft are 
making good progress, which will enhance their night 
surveillance capability.  During discussion of deploying 
additional regular IA units between Mosul and Baghdad, LTG 
Abadi noted a lack of trained officers to command them. 
Abadi blamed the shortage on the Ministry of Defense (MoD) 
de-Ba'athification Committee, which is firing officers even 
though MoD is allowed to authorize exceptions. 
 
6. (C) Once all the forces are in place, it will be more 
difficult to hit infrastructure targets -- although DPM 
Chalabi acknowledged that even the most careful troop 
deployments would not prevent every attack.  On September 3 
insurgents hit the Ajeel pipeline, which supplies two of the 
generators at the Mullah power station and the Bayji mobile 
generators.  The main Bayji refinery is running only on the 
three days of supply on-hand.  If the supply is not restored 
over the weekend the plant could shut down altogether.  Once 
down, it would take a week to re-start. 
 
--------------------------------- 
Allawi Pleads for a Reality Check 
--------------------------------- 
 
7. (C) Minister Allawi called MoD's 2006 budget request 
"astronomical," higher even than the sum total of Iraq's oil 
exports.  (MNSTC-I Note: The 2006 MoD budget has not yet been 
officially submitted.  MNSTC-I estimates, however, that MoD 
requires between $5-7 billion.  In the first eight months of 
2005, Iraq's oil exports have earned approximately $17.5 
billion.  End Note).  Allawi said he understood the 
importance of the IA's mission, but asked the MoD to 
reconsider its request: "You are a priority, but we can't 
give what we don't have."  Allawi urged the MoD 
representatives to "be good leaders" and "serve your country 
within our means." 
 
--------------------------------------------- ------------ 
Reconstituting the Facilities Protection Service Under MoD 
--------------------------------------------- ------------ 
 
8. (C) Several ministers noted dissatisfaction with their 
Facilities Protection Service (FPS) forces.  Chalabi asked 
that the heads of the various ministerial security services 
and the FPS be brought to an upcoming NEC meeting so that he 
could hear from them directly.  These commanders could learn 
from the experience of the IA generals, Chalabi noted.  "We 
want to rescind CPA Order 27," Chalabi added, and put all the 
FPS under MoD control.  The ministries would only benefit 
from the FPS's service.  Minister of Industry and Minerals 
Usama al-Najafi asked for a full feasibility study so that 
the military does not demand excessive funds to carry out 
this task, adding that the number of FPS is inflated. 
Chalabi, however, insisted that if "we are even close to the 
proper number" this plan should go ahead.  (MNSTC-I Note: 
MNSTC-I is unaware of any GOI plans to move the FPS to MoD 
control, and has not programmed this activity into the MoD 
force structure.  End Note). 
 
--------------------------- 
Tackling Theft in the South 
--------------------------- 
 
9.  (C) LTG Abadi noted an ongoing investigation into 
corruption in the south.  Increasing naval capacity would 
help prevent smuggling of refined petroleum products, which 
those present said was a greater problem than crude oil 
smuggling.  Chalabi requested a briefing on any information 
that MNF-I can provide on corruption and looting in the 
south, to include the scope, locations, and specific examples 
of the problem.  Chalabi said that political parties in the 
south are "playing games" by supporting various commanders to 
forward their own agendas and that local officials threaten 
crews and abscond with equipment.  "People think the 
government is an annoying burden," Chalabi said, "so it is 
okay to attack it." 
 
------------------------------- 
Kharkh Water Plant Back Online 
------------------------------- 
 
10. (C) On September 6 insurgents hit two electrical towers 
supplying the Kharkh water treatment plant.  Kharkh, which 
supplies 70% of Baghdad's water supply, returned to service 
September 8 after two days offline.  BG Kamal said that 
hitting the electrical generation would not have been a 
problem if the main generator had been online.  Although the 
station's control panel still required work, the ME had the 
two back-up 8.5 MW generators back online within a day. 
Satterfield