Brain Cartwright meets Colin Hindley, CEO, Iraq – Agility Global Logistics
This month I met with Colin Hindley the CEO, Iraq for Agility Global Logistics. Colin has been with Agility for over 10 years and has spent much of his time leading major projects for them across the globe.
Its difficult to get a real insight into logistics in Iraq unless you are involved on a daily basis, so Colin was able to provide me with some really interesting insight into whats happening there in the world of logistics.
The majority of people only know Iraq based on what they hear or read in the news, which is generally negative, so what is the actual situation on the ground in Iraq when it comes to logistics?
Its important to understand Iraq as a whole, with a number of tribal influences and cultural aspects, which have a direct impact on the social and political situation. Given the current situation in the country, the primary focus of any operation is on security and compliance with laws and regulations.
Iraq remains divided at the moment, with heightened security concerns in the West and in areas North of Baghdad, making operations in these areas more onerous. Most of our logistics operations in Iraq revolve around the oil and gas industry, and thankfully the majority of oil fields are in the South and East, lessening the risk somewhat, although its still a prominent focus area.
In the majority of our on-going projects, we focus a lot on utilising local resources, training and employing Iraqis and developing the skillsets of the local workforce. Agility is very supportive of developing Iraqi talent, and has early plans to create a training centre at Rumaila Energy Park to further this initiative.
Whats required to provide a successful logistics service in Iraq?
Having the right infrastructure is vital for any logistics operation, regardless of the country. As for Iraq specifically, a modernisation effort is needed. For example, the market still requires basic infrastructure such as roads, bridges, railways, and even a proper telecommunications system. This poses a challenge for operations, because limited infrastructure is detrimental to the quality of logistics.
Naturally, the upgrading of infrastructure in Iraq is a work in progress and will take time. Given the size and scope of the oil and gas industry in Iraq, the development of the infrastructure needs to be done in parallel with the industry. International oil companies are doing their part to further this development, because they are reliant on it for their own operations.
Ultimately, it is the logistics business that drives both Iraq and its oil and gas industry. The international oil companies and their contractors depend on the fact that their equipment, such as rigs, turbines, generators, pumps and valves are able to enter the country and be delivered to them on-site within a given timeframe so as to maintain operations.
Often, the lack of security is cited as one of the reasons why logistics companies are faced with having to delay delivery, resulting in operators and contractors having to halt their operations. Risk appetite translates more into how willing you are to mitigate your risk and what measures you have to take to ensure these risks are mitigated. Every project we decide to take on is carefully analysed.
We understand what it takes to be successful in a market where the infrastructure and the regulations are not necessarily fully developed yet, and we are willing to take calculated risks in both emerging markets and underdeveloped regions. This is because we know how to mitigate these risks, which in turn enables us to get a head start on our competition.
How has your business in Iraq been affected by the low oil prices?
Given that Iraq has the fifth largest oil reserves in the world, and that there is a reliance on the oil and gas market, the slump in oil prices in addition to the political instability of the country has definitely impacted business in the country.
Most international oil companies operating in Iraq have large investments and long-term commitments to the market, meaning they have continued to operate, but on a reduced cost basis. Since a lot of our work in Iraq is done with these corporations, this means that we have also continued our operations, but with a focus on cost-saving initiatives and pursuing opportunities to become more efficient in the way we work.
At Agility, weve also diversified away from oil and gas, and we focused on the power industry in the short term to meet power outages. For example, weve already completed one fast track power project at Diwaniya. For the long term, we are using this period to better position ourselves to ramp up operations in line with a recovery in oil prices. Iraq will need to maximise production to optimise the income from the industry when its possible, so all parties are motivated to ramp up when its economically viable.
With the on-going conflict in Iraq do you see any opportunity to build a sustainable long term business?
Security incidents remain reasonably isolated, and the southern region of Basra is safer compared to the rest of Iraq, with the exception of the Kurdistan region. However, the security situation in the country is an obstacle to any company, whether local or international.
Companies have to take appropriate measures and secure their employees, their facilities, their assets and their business as a whole. At Agility, we always take necessary precautions and have to assess the daily security reports to determine whether moving shipments around the country is feasible and safe.
Whilst the oil price crash and the security situation mean there are challenges to overcome, Iraq can still be a positive country to do business in. The oil price will recover, and due to its reliance on the oil and gas industry economically, Iraq will need to ramp up production, meaning there is a strong foundation for a long-term presence in the market. We always have a strong focus on HSE, and compliance with regulations is the bedrock for everything we do, and with our emerging markets roots and expertise, we are equipped to operate in Iraq.