The fall in oil prices has profoundly changed the prospects for national oil industries across the world – Iraq is no different. With prices likely to remain low for a number of years, projects have been put on hold or cancelled entirely, and the government forced to reconsider its strategy for the oil sector.
But the realities of low prices and fierce competition for investment are only part of the problem. Obstructive bureaucracy and corruption are pervasive, often competing with efforts to improve operations.
Oil provides 90% of Iraq’s national wealth. If the country is to overcome both economic and political instability, and provide the services the public demand, it clearly has to optimize oil operations, but also address entrenched attitudes to work practices and the nature of public service.
In the summer of 2015, USAID-Tarabot was tasked to carry out an oil sector assessment, and focus its skills on helping the Ministry of Oil towards greater efficiency. Combined with its predecessor project, USAID-Tarabot has more than a decade of experience in Iraq, helping to strengthen public institutions and improve services. Better management systems make for better governance, and reduce opportunities for waste, inefficiency, and misappropriation of funds.
Tarabot’s oil assessment reflected a sector in crisis, with outdated pipelines, terminals, and loading systems; inadequate storage; and refineries with technical and environmental flaws. Basra Port is just one example of this chronic lack of capacity. Lines of tankers wait for up to10 days to load with oil, longer in bad weather. With tanker costs at tens of thousands of dollars per day and rising, the knock-on effect on cost is substantial. Iraq’s export infrastructure simply does not have the ability to keep up with production. It cannot sell let alone store what it can produce, and is losing opportunities for revenue day in and day out.
Less obvious to the outside world was the dire state of the Oil Ministry’s administration systems, especially the procurement, contracting, and project management departments of its state oil companies. Like other parts of the Iraqi government, they battle a culture of top-down bureaucracy, and debilitating corruption inherited from past administrations.
Tarabot’s oil assessment called for rapid intervention as a tactical necessity, with the immediate goal of raising production and increasing revenues. It put forward a variety of interlinked projects in both the export and refining sectors, providing practical and innovative solutions to technical problems, streamlining administrative processes, and modernizing procurement systems. The Ministry of Oil approved, and work began. It was the first success – demonstrating the institutional will for change.
Set in a technically and administratively complex industry, quick wins alone are not enough; the enduring objective of Tarabot’s work in the oil sector had to be the introduction of new ways of working. The civil service lies at the heart of good governance, and bolstered by the checks and balances of modern systems, practices, and technology, it can both fuel national development and stand as watchdog.
In less than a year, Tarabot has helped the Ministry to introduce standard bidding documents to all its departments, and improved the delegation of decision making to engineers and project managers across the country. It has helped arbitrate contractual disputes for major oil projects, reform customs and banking procedures, and solve technical problems such as cutting tanker waiting time, troubleshooting refinery inefficiencies, or rehabilitating pipelines. It also helped to train procurement experts, certify project management, qualify departments for ISO certification, open a public procurement help desk, and get priority contracts moving.
All these steps, some small, others profound, have an impact on the government, the oil sector, and the attitude of the people who run it. The Ministry of Planning Procurement Help Desk is a great example, where Tarabot has helped introduce a system, an entity, and expert staff capable of both running it and training others. The Help Desk deals with dozens of procurement inquiries a month, helping sort out tenders and get projects off the ground; some in the oil sector, others for public services, such as two new hospitals in Najaf and Babil.
It is these civil servants – cost-estimators, project management schedulers, contract personnel, engineers, and administrators – who are reinforcing the veracity of these new work practices; promoting efficiency, tracking, and oversight. They are shedding light, and open Iraq’s doors to the world.
Recent media allegations continue to rightfully point fingers, and demand investigation of corrupt contractors, middle men, and politicians in Iraq and across the world. But this does not detract from, nor should it deny, interventions by development organizations such as USAID-Tarabot, JICA, (the Japan International Cooperation Agency) the UN and others that play their part in indirectly curtailing it.
The current economic environment, brought about by low oil prices, offers an opportunity for the Iraqi government to refocus their efforts on defining a mandate that supports their national vision and priorities. Prime Minister Haider al-Abadi has pledged this. Quick wins like Tarabot’s initiatives are helping solve an immediate fiscal crisis, but the knowledge and skills that they impart will reinforce the future, one where opportunities are for all, and not the few.