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Analysis: One strategy for Iraq oil, power


Published: Jan. 30, 2008 at 7:19 PM
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By BEN LANDO
UPI Energy Editor
WASHINGTON, Jan. 30 (UPI) -- There's optimism in Iraq, at least from a mysterious cadre called the Energy Fusion Cell, which for the past eight months worked to bring coherence to both U.S. and Iraqi initiatives in the oil, gas and power sectors -- the backbone of its citizens' quality of life and the bulk of the national budget.

It's a U.S. creation for sure, spearheaded by Iraq-based units in the Defense and State departments to meet U.S., U.N. and international finance and banking agreements. But it's now gotten active buy-in from a swath of Iraqi ministries in charge of building and protecting Iraq's energy sector.

"We offer advice to them on their own expressions of what their national policy is and give them the forum to come together with the coalition forces and the government of Iraq entities," one member told United Press International in a background conference call interview from Baghdad. "That wouldn't have happened a year ago" was a common refrain by members of EFC, which has weekly scheduled meetings and "a couple of layers of meetings … led by the government of Iraq."

Simplified, the EFC's goal is two-fold.

On a larger scale, to bring the Iraqi ministries of Oil, Electricity and Defense, as well as Planning, Finance, Water Resources and Interior to the table "to create an integrated energy policy for the country," which will also meet Iraq's economic obligations to the United Nations, International Monetary Fund and World Bank, a member said. "Vice President Barham Salih has adopted and is promoting" a first draft of the integrated energy strategy, UPI was told.

The EFC is also helping those Iraqi ministries apply the fundamentals of the strategy to current projects.

The electricity sector is dependent on oil and gas, and vice versa. Both require massive development and protection from insurgents and looters. "Getting them to collaborate in the past has been an issue and it seems to be moving to a more positive outlook, a more joint outlook," a member said.

Another member points to a recent combined Ministry of Electricity, Oil and Defense repair of a downed element of the energy sector, without U.S. support.

Power plants lacking fuel are getting "1 million liters a day shipped from Kuwait" and there are smaller projects ongoing to utilize the gas produced when pumping oil instead of just burning it.

But it's been a trying eight months, and efforts continue to be frustrated.

Violence this month has surpassed December -- the last of a successive seven-month decline -- and U.S. troop and Iraqi deaths are rivaling October numbers.

Oil production, exports and, with higher oil prices, income in 2007 surpassed 2006, largely because of a mid-summer repair and security increase on the northern pipeline infrastructure. The electricity sector has steadily grown as well, from early summer complaints from Baghdad of powerless days to single day output records.

But oil production last month plateaued and earlier this month attacks, accidents and outages in refineries and other parts of the oil sector and power plants resembled the chaos of early last year with Iraqis in dire need of fuel and electricity in a harsh winter. The ministries of Electricity and Oil blamed each other. The Baiji refinery, Iraq's largest, may start running on a power generator instead of the power grid. And electricity towers could be moved near newly guarded pipelines.

"Progress is not linear here. There's still a war going on," an EFC member said. "But I think from a strategic standpoint there's clear progress being made."

Also nearly a year ago political factions were near agreement on a controversial draft oil law; now disputes over it and other oil issues are the largest wedge.

The EFC members said the oil law is "part of the diplomatic mission at the State Department," not theirs. But such legislation would fold into a national strategy, and the EFC members said proudly Iraq's government will work with the European Commission to create new electricity laws that would be modeled on Jordan's, "significant first-step accomplishments that have been done under the umbrella of the idea of the Energy Fusion Cell."

Political factions, especially on the national level, are shaping and reshaping alliances. Legislation on reversing early U.S. anti-Baath Party controls and changing the Iraqi flag were passed, but both met with loud critics from minority parties, highlighting the polarization in Baghdad.

It's not clear exactly how factions in stark disagreement on micro-energy policy will agree on a national strategy necessitating compromise instead of historic absolute control.

"The big political issues and tension … is going to be settled at a political level above our pay grades," said an ever-optimistic EFC member. "The Energy Fusion Cell, along with the Iraqis, is pulling off a series of achievable successes. That's contagious."

--

(e-mail: blando@upi.com)

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