Corruption in the Iraqi oil sector continues to spread, with the dubious deals involved now worth tens of millions of U.S. dollars. This practice, which has taken Iraq to the bottom of the list that monitors oil-sector corruption, has spread so dramatically that Iraq is now comparable to other countries where corruption is endemic like Nigeria – which Transparency International classes as one of the most corrupt countries, especially in the oil sector. We will attempt to highlight in this article some of the material that has been published on corruption in the Iraqi oil sector in recent weeks: First, there was a report about the new-old crisis involving the failure to install metering and monitoring systems on the recently inaugurated floating platforms, which are otherwise necessary in order for the government to accurately measure the quantity of oil being exported via tankers. Otherwise, the financial assessment of the value of a given shipment becomes an arbitrary affair, and one that relies on the word of the ship's foreign captain or the local Iraqi official supervising exports. What is the justification for not installing the meters? As is known, the oil authorities in Iraq are fully aware of the possibility of manipulation, by using a method referred to as al-Dhir'a, a primitive way to calculate the amount of oil exported in a tanker manually – and of the possibility of the government losing tens of millions of dollars because of this failure. Why was there such haste in commissioning floating platforms without metering systems? What is behind the delay in installing the latter? And why has the Ministry of Oil not provided satisfying answers to these questions? This requires the parliamentary committee on oil to interrogate the oil minister about this. The news story that shed light on this was published by Al-Sumaria News on February 8, as follows: “On Friday, the Oil Ministry announced its intention to install an electronic metering system to measure the volume of oil being exported through the three new floating platforms in the Iraqi territorial waters, stressing that [the measurement of] exports through these platforms currently rely on the primitive Dhir'a method. The director of the first phase of the Iraq Crude Oil Export Expansion project Ammar al-Idani, speaking to Al-Sumaria News, said that ‘Iraq has three new floating platforms for the export of crude oil (Jaykur, al-Mirbad and Fayhaa), including two that are already in service, and a third one that has not yet been deployed.' [Idani] indicated that ‘Exports from the two floating platforms use the Dhir'a method to calculate oil quantities, as the project for the installation of metering systems in the platforms has not yet been completed.' Idani then pointed out that ‘the first quarter of 2014 will see the completion of the project for the commissioning and deployment of a floating platform for measurement equipment, which will be allocated for floating export platforms,' and reckoned that the Dhir'a method, though primitive, is widely used worldwide by many oil-producing countries, including Arab ones." Another issue involves corruption among officials responsible for marketing Iraqi oil. Here, we shall quote an official memo sent from the Iraqi State Oil Marketing Organization (SOMO) last week. We have redacted the name of the person it is addressed to and his job title, since investigations into his case are still ongoing. “... We would like to notify you that there is an issue that has arisen at SOMO. In The interest of the principles of integrity and the enforcement of the law (...) we will describe it here briefly as follows (We can provide you with all required details): 1- Mr. (...) at SOMO, who is one of the senior officials in charge of pricing crude oil and petroleum derivatives in SOMO, has been referred to a commission of inquiry at the Inspector General's office at the Ministry of Oil, after being reported for having leaked prices of oil and petroleum derivatives to foreign companies. 2- After an investigation by the Commission, it was found that he had been engaged in this activity for a long time. [The Commission] recommended that the individual in question be transferred from SOMO to the Research Department at the Ministry of Oil, and be issued a warning and demoted one grade. 3- Accordingly, the individual in question requested early retirement, which was approved, but an administrative decision was made to this effect (...) without implementation of the disciplinary action or circulating an administrative memo about the latter, so that it may set an example to all corrupt employees (....) This is evidence of collusion meant to marginalize and politicize the recommendations of the Office of the Inspector General, as the disciplining action must have instead been implemented after approving the desire of the employee in question to retire, by the party that he was supposed to be transferred to." Last but not least, on February 8, the Iraq Oil Report mentioned that ExxonMobil had appointed former U.S. ambassador to Iraq, James Franklin Jeffrey, as an adviser to the company in its operations in Iraq. The company also retains former White House national security officials such as Condoleezza Rice and Stephen Hadley as consultants on Iraq since 2011, in addition to retired ambassadors Zalmay Khalilzad and Ryan Crocker, who served in Iraq during the past decade. As is known, there are major disputes between ExxonMobil and the Iraqi oil ministry, most importantly over the former's decision to engage in oil exploration and drilling in the Kurdistan Region. This was taken by the Iraqi government as a blatant violation of its oil policy, upon which the government ordered ExxonMobil to relinquish its concessions in the West Qurna -1 field, one of the most important mega oil fields in Iraq and the world. But how does a company forfeit its share in a productive mega oil field with known reserves, in exchange for operating in a promised area but one that is so far unproductive? And what are the implications of ExxonMobil operating in Iraqi Kurdistan for the possibility of other mega oil corporations operating there, at the expense of the rest of the Iraqi territory? It is not odd for a mega corporation like ExxonMobil to retain retired senior officials as consultants in Iraq, which has become a customary practice worldwide. But what is striking is the focus on U.S. ambassadors who served during the U.S.-led occupation, since these individuals are naturally well familiar with many secrets in Iraq and have close ties with the ruling political class. This begs the question: What is ExxonMobil planning for Iraq and its oil industry in the future, to warrant so many high-caliber advisers? * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
