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Safe investments in Southern Iraq

LNG Industry,


More and more business opportunities are arising in Iraq’s southern province of Basrah. Recent months have seen a flurry of contracts signed in the oil, gas, construction and shipping sectors and the area looks set to become an energy and logistics hub. Sitting on the shores of the Persian Gulf, the province is the maritime gateway to Iraq. Needless to say the area also has huge exploration and production potential, given that it is sitting on some of the world’s most significant oil and gas reserves. However, companies still need to address the issue of security when looking to establish a presence in the province. The level of risk in the area is certainly manageable but safety, training and protection will remain vital tools for investors seeking to capitalise on this potentially huge emerging market.

Violent scenes

Levels of violence last spiked in Basrah in March 2008 when Nuri al-Maliki sent the army to suppress local Shi’ah militancy. Operation ‘Charge of the Knights’ was backed by the USA and saw a major clampdown in the area. The protracted battle lasted a number of weeks, left several people dead and resulted in the damage and destruction of several local oil pipeline sections. However, numerous militants were arrested and levels of security gradually began to increase in the months that followed. Training of the Iraqi police and military by foreign forces helped bolster the professionalism of the local authorities and today they are considerably more capable than two years ago.

In the first three months of 2010, terrorist and militant attacks were occurring in Basrah province at a frequency of around one per month. This is considerably less than other parts of the country such as Baghdad, which is currently seeing up to 20 attacks per week. Low-level criminality remained widespread, with robberies, extortion and corruption remaining a concern in the south, but they are largely concentrated in Basrah city itself, whereas the majority of the latest business contracts are being awarded beyond the city perimeter. Nonetheless, even here occasional security incidents remain a consideration.

Al-Faw

The district of al-Faw lies on the coast of Basrah province and is likely to become a major focus of economic activity in the province. Major contracts to develop harbour and road facilities in the district have already been awarded. Furthermore, the district is one of Iraq’s quietest, with no recorded terrorist attacks in the whole of 2009. However, a kidnap gang was arrested by the police in the area on 8 April. Foreigners have not been abducted in the south of Iraq for many months but there are no grounds for complacency. Since the beginning of the year an average of one-to-two people have been abducted every week in Iraq. The majority of these are Iraqi nationals in the centre and north of the country but the groups responsible for abductions in the south will still regard foreigners as an attractive target.

Avoiding the risks

To help mitigate against the security risks presented in the region companies are advised to train their employees in how to work in challenging regions. Close protection is also currently recommended, as is the receipt of regular intelligence on the situation on the ground. Tracking services for personnel moving beyond the safety of your compounds may also be considered, while firms should obtain sufficient insurance (potentially including kidnap for ransom insurance cover) so that in the event of a worst-case-scenario the firm’s staff, property and operations are adequately covered.

These recommendations may sound drastic, but if sufficient safety measures are followed, the likelihood of a serious incident compromising employees or operations will be considerably reduced. Investment in the area is certainly encouraged. The arrival of businesses will stimulate the economy and create local jobs. Improved services, better infrastructure and the provision of stable employment will lower public discontent and convince many would-be terrorists to follow a civilian course in life. As such, businesses looking to invest in Basrah today look set, not just to benefit from the extensive resources and strategic location of the area, but are also likely to form part of the solution to instability in the south of Iraq.

Author: John Drake, AKE. AKE is offering free access to its daily Iraq intelligence reports until June. If you would like to arrange a temporary subscription to this service please email the AKE Iraq specialist John Drake; john.drake@akegroup.com.

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/23042010/securing_safe_investments_in_iraq%E2%80%99s_oil_and_gas_industry/

 

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