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RUEHKO/AMEMBASSY TOKYO 0059
RUEHNY/AMEMBASSY OSLO 0014
RUEHAT/AMCONSUL AMSTERDAM 0001

UNCLAS SECTION 01 OF 07 BAGHDAD 003837 
 
SIPDIS 
 
SIPDIS 
 
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 
Ministry facilities. 
 
----------------------------------------- 
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 
¶2007. 
 
------------------------ 
USAID/TATWEER ACTIVITIES 
------------------------ 
 
¶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) 
 
Courses Completed: 
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. 
 
------ 
NORWAY 
------ 
¶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. 
 
----- 
JAPAN 
----- 
 
¶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. 
 
------ 
FRANCE 
------ 
 
¶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. 
 
------ 
RUSSIA 
------ 
 
¶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 
LUKOIL-Nizhnevolzhskneft. 
 
¶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. 
 
-------------- 
UNITED KINGDOM 
-------------- 
 
¶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. 
 
----- 
CHINA 
----- 
 
¶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 
technologies. 
 
----- 
ITALY 
----- 
 
¶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. 
 
--------- 
INDONESIA 
--------- 
 
¶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. 
 
----------- 
SOUTH KOREA 
----------- 
 
¶30.  The South Korean government allocated $5 million to train 100 
Iraqis for 32 weeks in Seoul. 
 
-------------- 
EUROPEAN UNION 
-------------- 
 
¶31.  The EU promised technical assistance for capacity building in 
Energy and Trade for a project value of 15 million Euros. 
 
-------- 
EPILOGUE 
-------- 
 
¶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 
percent) 
 
¶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. 
 
CROCKER