Baghdad, Big Oil on alert for retaliation to a Syria strike

By Isabel Coles and Peg Mackey

ARBIL, Iraq/LONDON, Sept 6 (Reuters) - Baghdad and foreign oil companies at work in Iraq's giant oilfields are adopting extra security measures in anticipation of retaliatory attacks if the United States strikes neighbouring Syria, industry sources said on Friday.

Car bombs and other attacks in recent weeks have led to the deaths of hundreds of Iraqis as the civil war in neighbouring Syria aggravates deep-rooted sectarian divisions.

So far the violence in Iraq has not hit the operations of companies such as Exxon Mobil, BP (LSE: BP.L - news) , Eni (Milan: ENI.MI - news) and Royal Dutch Shell (Xetra: A0ET6Q - news) or deterred them from increasing oil output and turning Iraq into OPEC's second-biggest producer.

Since 2010, these companies have been reviving the southern fields near the oil hub of Basra, helping raise output by 600,000 barrels per day (bpd) to 3 million bpd, and they want to carry on expanding output without incident.

"All the foreign companies are taking additional measures to guarantee their staff remain safe," a Western oil industry source said on condition of anonymity.

The oil majors, as a rule, declined to comment on their security arrangements.

As U.S. President Barack Obama prepares for limited strikes against Syrian President Bashar al-Assad's forces, Iraq's South Oil Co (SOC), which oversees operations around Basra, has warned Western oilmen to restrict their movements.

"After the fears of the Syria strike, we have notified all foreign companies: British, American and others, to reduce their movements inside the city," an SOC source said.

KEEEPING HEADS DOWN

Not only will Western firms keep a low profile, they are also likely to cut their exposure to risks in Iraq.

"I think all Western companies will be careful not to have too many people in Iraq as long as the American war games last," a senior oil executive in Baghdad said.

The Wall Street Journal reported on Thursday that the United States had intercepted an order from an Iranian official instructing militants in Iraq to attack U.S. interests in Baghdad in the event of a strike.

An Iraqi Shi'ite militia group also has threatened to attack U.S. interests in Iraq and the region if Washington strikes Syria.

The Ministry of Oil requires foreign oil companies to have representative offices in Baghdad, where bombings and attacks are killing scores of Iraqis on nearly a daily basis.

Compared with Chinese, Russian and British firms, U.S. oil companies have a fairly small footprint in southern Iraq. Exxon is in charge at West Qurna-1, and Occidental has a small stake in the neighbouring Zubair oilfield, operated by Italy's ENI (NYSE: E - news) .

Other mega-projects in the predominantly Shi'ite and relatively peaceful south are Iraq's biggest producer Rumaila - run by BP; Majnoon - led by Shell; Halfaya - operated by China National Petroleum Corp; and West Qurna-2, run by Russia's Lukoil.

"Incidents in the south are increasing, although there's been no impact on any of our projects," another senior Western oil executive said.

In the autonomous Kurdish region, companies are also urging caution, even though the northern enclave has so far managed to insulate itself from the violence that plagues other parts of Iraq.

"To date we have not increased our security measures, but as always in areas like Iraq, our personnel are on high alert, and travel to the area is restricted to essential personnel, requiring prior approval," a Western oil company source said.

The Iranian message was reportedly sent by the head of the Revolutionary Guards' Qods Force to Shi'ite militia groups it backs in Iraq, according to anonymous U.S. officials cited by the Journal.

Iraq's Shi'ite-led government, which opposes any international military strike on Syria and is close to Iran, is grappling with a Sunni insurgency fuelled by the conflict next door and recently reinforced the border between the two countries.

Iraqi forces are on high alert in the north, where suspected Sunni militants have repeatedly attacked the main pipeline to Turkey in recent months, disrupting exports to world markets and frustrating Baghdad's oil expansion plans.

"During the last few days, as preparation for any emergency, we increased checkpoints near the oil installations and increased the number of security forces protecting them, especially the sites where the extraction of oil and the refineries are," a source at Iraq's North Oil Company said.