The logistical challenges of operating in Iraq
Iraqi logistics companies share their thoughts on operating in Iraq
Companies may be sprinting into Iraq as new opportunities open up, but there is no shortage of hurdles for them to jump. Check out what logistics providers in the country have to say about setting up in Iraq.
In order for an oil and gas project to come together efficiently, and safely, you need to have all the right parts. What might seem like the slightest complication can quickly dissolve into a major setback to construction, assembly or production, and every day wasted is even more money flushed down the drain.
Pulling all these parts together requires serious planning and foresight, especially in a country as full of surprises as Iraq, where the slightest hiccup can lead to a logistical nightmare.
In order to operate smoothly in Iraq, one must first understand the many logistical challenges that can present themselves in the country.
“There are many logistical challenges that companies face while working in Iraq, which in most cases are also significant obstacles to companies wishing to set up operations there,” says John Elsner, senior vice president and general manager of Logistical Solutions International (LSI).
Obtaining visas to enter Iraq continues to be an issue. Generally speaking, companies in the oil and gas industry and the contractors that are working with them are only able to obtain visas after they have secured a contract with one of the ministries or government affiliated companies such as the South Oil Company.
It is possible to obtain visas through other avenues, but having a contract in place is the only way to get visas in large numbers and on a consistent basis.
“This creates an obstacle for companies wishing to do business in Iraq, as there is a built in Catch 22,” says Elsner.
“In order for companies to have a good chance at securing work through IOCs and their contractors on major projects in Iraq, they need to have the capability to fulfil the expected work; however it’s difficult to have the experience necessary if you are not able to get visas on your own to accrue that experience,” he says. This natural barrier has reduced the pool of potential companies that could be benefitting from Iraq.
“The traditional model for the oil and gas industry has been an environment in which IOCs and major services companies were able to bring expertise to a certain location/country and fast-training,” says Elsner.
“Because of the limitations on visas, it’s difficult to do this on a mass scale, not only are physical resources in much less supply than necessary, but personnel resources are extremely limited as well.”
At the same time, companies are having problems obtaining visas for Iraqi personnel that they are hosting to attend meetings, training programmes, and other events outside of Iraq.
“The visa process is complicated at best and requires governments that have a blanket ban on Iraqis entering their country and many others that make the restrictions so rigid that it makes entry, for all intents and purposes, banned,” says Elsner.
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Even those countries that do allow entry often reject visa requests because the applicant provided incomplete or inconsistent information.
Communications can also be a major challenge for many operators in Iraq. “One of the largest concerns for any company, no matter the product or service, is good communications, both locally and internationally,” says Peter Day, chief executive officer of Petronor, a private company which is developing the Iraq Energy City, an oilfield supply base in Basra.
Telecommunications and internet services are crucial to operating anywhere, especially in Iraq with its mountainous terrain, sparsely separated hubs and under-developed communications networks.
But the country’s networks are beginning to improve. There is a general consensus across the industry that cell phone coverage is adequate in the municipal centres, even Blackberrys and the internet. “It comes down to home much you are willing to pay for these types of services,” says Day.
Wireless communication in and around Iraq has certainly improved, but logistics strategies need to consider the physical geography and infrastructure as well. “The congestion and new infrastructure projects, be it bridges, pipelines and roads, can also be considered challenges in Iraq,” says Osman Tari, chief executive officer of Bernekon Limited.
Physical infrastructure has also presented itself as a challenge for companies such as Bertling, a ship-owning, chartering and transport logistics company with operations throughout Iraq. The main ports which are available in Iraq are Umm Qasar and Khor Al Zubair.
“All the other ports are in such poor state they’re not even considered,” according to Peter Robinson regional director Middle East, Bertling.
The customs rules and ministry rules can also be a problem in Iraq, “we might go in there today and they might say that things have changed, we’ll ask how it’s changed but there’s usually no clarity, they change the rules but sometimes they don’t know why,” says Robinson.
“Anyone who has worked in Iraq will tell you that the unclear and consistently changing rules and regulations make it difficult to do business there,” says
At a practical level, if someone asks a local government worker to produce an official written copy of a given regulation, the chance of receiving it is extremely low.
Also, that person runs the risk of offending the government worker, either through highlighting their inability to produce it or by creating a perception that the asker doesn’t believe the regulation is official.
While the country may be rife with logistical challenges, Elsner and many others who have been working in Iraq for a while believe that things are beginning to look up.
“The overall infrastructure in Iraq is developing on a daily basis. The issue is simply that there is so much to be done,” says Elsner.
As a personnel logistics provider that supports employees on assignments outside their home country, LSI has seen how this usually takes the form of government offices simply not being used to working extensively with internationals. But, as the numbers and activity has grown, policies and practices have changed.
“Early on, international travellers to Basra would land at the airport and have virtually no immigration process at all,” he remembers.
“They would simply enter directly into the gate of the Contingency Operating Base, which was run by the U.S. military. Today, immigration and residency issues are fairly complex.”