Oil, Anbar and the Insurgency


An interview with Colonel John A. Koenig on the prospects of petrolium development in Anbar

Iraq's oil fields in 1992. Click map to view.

On February 18, The New York Times broke the news on the potential for major petroleum development in Anbar province. While the oilfields in Anbar aren't thought to as large as the fields in the Kurdish north and Shia south, the discovery of significant oil and gas reserves will influence the contentious debate occurring in the Iraqi parliament and cabinet over the future petroleum law. The Sunnis, who have access to few oil resources, have fought for central control over oil revenues and contract, but the discovery of reserves in the Sunni regions may soften this stance. The The New York Times also noted the Iraqi cabinet may be close to a compromise on the petroleum law, all but ensuring passage in the parliament.

I had the opportunity to interview Colonel John A. Koenig, USMC. Col Koenig is the II MEF (Marine Expeditionary Force) G-5 (Governance and Economics) concerning this development. The G-5 is in charge of all of the civil-military operations in II MEF's area of operation in Anbar province. The interview is published in full.

Bill Roggio: What are the main sources of economic income in Anbar province?

Col Koenig: The main sources are agriculture, minerals, factories (phosphate, cement, ceramics, etc.), government employment, transportation, and small businesses/markets.

Bill Roggio: How would petroleum development change the economic landscape in Anbar?

Col Koenig: It could have a profound impact if the income generated is equitably distributed. It would also create a significant influx of jobs and revenue would provide additional support for the economy.

Bill Roggio: How does the prospect of developing petroleum resources affect the insurgency in Anbar province? al Qaeda? Do you believe it will increase, decrease or have no change on the level of violence in Anbar?

Col Koenig: That is hard to say. It could have a positive impact if the people of Al Anbar feel invested in the project. A better view is what effect will the passage or non-passage of the Hydrocarbon law have? How will the local populace that is used to state owned industries adjust to private enterprise (no guaranteed job). Additionally, a number of tribes will claim ownership of the field.

Bill Roggio: Have the Anbar tribes and local politicians been apprised of the potential benefits of developing oil resources? If so, how was this information communicated, and what was the reaction to the news?

Col Koenig: All are aware of the oil field. The concerns now revolve around ownership, who can invest, and who is in charge of the revenues.

Bill Roggio: What employment opportunities will the development of oil infrastructure provide? Does the Anbar workforce possess the skills to operate pumping stations, refineries and other technologies?

Col Koenig: As I understand it, once oil infrastructure is built, it really doesn't require a large workforce. The significant job creation would come as a result of the second and third order effect resulting from the refineries being built there. The people of Al Anbar operate phosphate plants, cement plants, refineries, water treatment plants, and asphalt plants. They have mechanics, engineers, doctors, etc.

Bill Roggio: Do you think the tribes can provide the needed security to begin development in the next few years? Is there any discussion about deploying addition Iraqi Army units or Strategic Infrastructure Battalions to the region?

Col Koenig: This issue is not a tribal one. [The Iraqi Security Forces] are more than capable of providing required security, given the threat in that part of Al Anbar. The ISF should be in a position to provide security, in addition to the GOI authorizing private security if an investment law is passed.

Bill Roggio: What role has the central Iraqi government played in surveying the sites? Have any U.S. agencies assisted with assessing Anbar's petroleum potential?

Col Koenig: USGS [U.S. Geological Survey] conducted a survey. But to our knowledge, the detailed surveys required to assess the extent of the fields have not been done.

Bill Roggio: Are there discussions about profit sharing with the citizens of Anbar, or selling the gas and fuel at a reduced rate?

Col Koenig: These are excellent questions which are currently tied up in the hydrocarbon law which has not been passed yet.

Bill Roggio: What are the locations of the potential drilling sites?

Col Koenig: We know where some of the test wells are and that is it. Potential drilling sites will be determined by the company/industry that actually develops the field.

Bill Roggio: Is there a discussion on building a pipeline to Jordan to export fuel if the capacity is available? Is there any consideration to developing additional refineries?

Col Koenig: Both good ideas; but GOI would be the one to answer after an investement/hydrocarbon law is passed. There is a need for refining capacity - but these are major capital expenses exceeding a billion dollars and are on hold until the hydro-carbon law is passed.

Bill Roggio: When I was in Anbar in December of 2005, the Haditha Dam was estimated to be generating about 30% of its potential power output. What is the status of power generation at the Haditha Dam? Has the dam been upgraded to provide power to Anbar and beyond?

Col Koenig: The primary purpose of the dam is irrigation, the secondary purpose is electrical generation. When the dam was built in the 50's it was built on the then current water flow of the Euphrates river. Since then, Turkey and Syria have drawn more water off the Euphrates and reduced the water flow. For the dam to operate at full electrical output, more water would have to be allowed to flow through. This would cause flooding downstream. The current electrical generation is based on what can be produced from water let out of the reservoir at an equal pace with water coming into the reservoir, and taking into account the needs of the farmers for irrigation. It is a complicated formula that the Iraqis have worked out over time. Additionally, electricity from the dam goes into the national grid which is controlled by MOE in Baghdad. Al Anbar could have more power now if GOI decided to give it to them. As with most things, Baghdad is the priority.



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READER COMMENTS: "Oil, Anbar and the Insurgency"

Posted by Sean Bergin at February 21, 2007 7:59 PM ET:

Slight spelling error on petroleum.

You are doing an otherwise kick ass job.

Bergin

Posted by blert at February 22, 2007 12:47 AM ET:

Recent discovery?....

Anbar oil deposits have been on record for years and years.... They are long recorded in the CIA fact book.

Only the super huge discoveries near the coast and along the ill defined border with Kuwait make them seem small. By industry standards, the discoveries within al Anbar are large to great.

Iraq, Iran and Arabia have reserves so huge that a proper modern ( think big oil ) exploration has never occured in fifty years.

It was the discovery of the ultra massive deposits in the late fifties that weakened crude prices and directly triggered the formation of OPEC by Venezula cira 1958. Hence the exporters discovered that fresh discoveries hurt the price of current production.

With Russia, China, Arabia, Iran, et al handling the exploration for oil... no one CAN KNOW what the in the ground reality is. They're that incompetant.

I hope and pray that the departure of the British permits the Iraqis to really get going on their best immediate hope for commercial relief: exports from the deposits nearest the Gulf.

The mega-deposit astride the Kuwaiti border has ever been frozen by politics... not petrogeology. NOW is the time to draw from this field. Kuwait to get their end, Iraq to get theirs. And so convenient, too: so close to the coast and a virgin field.

Posted by Drazen Gemic at February 22, 2007 9:00 AM ET:

I don't believe that anything can soften anybodys
stance in Middle East. They will never organize their society, and there will always be a mass of poor, unemployed, uneducated people ready to take AK-47 or explosive belt.

DG

Posted by David M at February 22, 2007 12:58 PM ET:

Trackbacked by The Thunder Run - Web Reconnaissance for 02/22/2007
A short recon of what's out there that might draw your attention.

Posted by Anand at February 22, 2007 1:33 PM ET:

DG, look at Kurdistan, Turkey and Lebanon before Israel bombed them. All are making remarkable progress in economic liberalization and are pretty non-fundamentalist. Most Iranians also have a natural predisposition in this direction.

Posted by Drazen Gemic at February 22, 2007 11:10 PM ET:

in reply to Anand:

I hope that you are right and I am wrong.

DG