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Viewing cable 06BASRAH45, SOUTH OIL COMPANY - TOO MANY RUMORS AND NOT ENOUGH

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Reference ID Created Released Classification Origin
06BASRAH45 2006-04-03 16:03 2011-08-24 16:30 UNCLASSIFIED REO Basrah
VZCZCXRO0690
PP RUEHDA RUEHDE RUEHIHL RUEHKUK RUEHMOS
DE RUEHBC #0045 0931603
ZNR UUUUU ZZH
P 031603Z APR 06
FM REO BASRAH
TO RUEHC/SECSTATE WASHDC PRIORITY 0289
INFO RUEKJCS/SECDEF WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCNRAQ/IRAQ COLLECTIVE
RUEHBC/REO BASRAH 0307
UNCLAS BASRAH 000045 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ETRD ENRG EINV IZ
SUBJECT: SOUTH OIL COMPANY - TOO MANY RUMORS AND NOT ENOUGH 
TECHNOCRATS 
 
REF: A) 05 BASRAH 089 B) 05 BASRAH 142 C) BASRAH 038 
 
1.  Summary:  On March 29, Regional Coordinator (RC) and Poloff 
met with General Manager of South Oil Company (SOC) Jabbar Ali 
Husayn Al Lu'aybi at the Regional Embassy Office Basrah (REO). 
Al Lu'aybi refuted concerns of oil smuggling through the SOC 
terminal and questioned a report he had received that said that 
Ambassador Khalilzad is campaigning to have him removed from his 
position.  He asserted that the way to eliminate rumors like 
these and to improve SOC performance is to revamp the Oil 
Ministry and provide it with a strong technocrat to lead it. 
End summary. 
 
2.  SOC General Manager Al Lu'aybi visited the REO on March 29 
to meet with the RC as part of a regular series of contacts 
between the SOC and the REO.  With no professed agenda, Al 
Lu'aybi began with his oft-repeated lament that the Oil Ministry 
ignores the SOC and is rarely in contact with him.  He said he 
has had little, if any, contact with senior officials in the 
Ministry in the past month, but expressed his hope that the new 
Oil Minister would be a technocrat and not someone beholden to 
other interests.  In the meantime, SOC is struggling to maintain 
its infrastructure with little help from Baghdad. 
 
3.  Al Lu'aybi said that recent reports of oil smuggling from 
the terminal are not true and bring an unwanted focus on the 
terminal.  He requested that the U.S. Embassy pressure the Oil 
Ministry to investigate the smuggling allegations to remove this 
unwarranted allegation.  Al Lu'aybi said that this propaganda 
against the SOC smears its reputation and is similar to a report 
he received in an email from an acquaintance that stunned him. 
The email contained a copy of a report dated March 24, 2006, and 
entitled Iraq Information Report, a report prepared by a 
Lebanese-based advisory group.  It stated that Ambassador 
Khalilzad is campaigning to have Lu'aybi removed from his 
position because he close to Iranian parties supported by the 
Iranian Revolutionary Guard Command. 
 
4.  Al Lu'aybi made it clear - as he has in the past (see Refs) 
-- that he is apolitical and tries to avoid entanglement with 
any of the political parties.  His concern about this allegation 
is for the damage it may cause the SOC; for himself, Al Lu'aybi 
asserted, he is ready to leave the SOC at any time if necessary 
for the benefit of the company.   He expressed his fear that if 
something should happen to the company it would plunge the oil 
sector in the south into chaos.  Returning to his theme of a 
lack of direction and assistance from Baghdad, Al Lu'aybi said 
that a competent Oil Ministry with strong leadership would 
improve the situation and remove the political jockeying that 
causes these unfounded allegations (see Ref C). 
 
5.  Comment:  Al Lu'aybi obviously was concerned about the 
rumors and the effect they could have on the SOC.  As an 
employee for SOC for the past 31 years, he has a genuine 
interest in the welfare of the company.  His complaint about the 
lack of support and direction from the Oil Ministry is well 
founded.  Though Al Lu'aybi brought SOC back from the dead 
following the end of the war, maintenance on its infrastructure 
is overdue and production will slip unless additional investment 
is made soon.  And the risk to SOC from various individuals or 
entities anxious to obtain control over one of the potentially 
richest companies in the south is very real.  Al Lu'aybi has 
managed to avoid serious entanglements with political interests, 
but he is clearly worried that unless a technocrat is named as 
oil minister the SOC could become the fiefdom of a political 
party.  End comment. 
 
GROSS