Thread: Archive Latest News - Think Tank - 01/01/08 - 14/04/08

Iraqi PM to fly to London for health checks

Iraqi Prime Minister Nuri al-Maliki is expected to fly to London for health checks on Sunday, the second time in two months he has visited the British capital for medical tests, officials in his office said.

Maliki flew to London on Dec. 29 for unspecified tests and the latest visit was to complete these, his media adviser, Yasin Majid, told Reuters.

He declined to give details on the tests but said the prime minister, who is in his late 50s, was fine.

"Prime Minister Maliki will travel to London after agreeing with the doctors during his first visit that he would return to complete the health checks," Majid said.

"I assure you that the prime minister is fine and the visit is just to complete the check-ups."

Maliki assured Iraqis when he returned to Baghdad after the first tests that he was in good health. An official in Maliki's office said at the time the Iraqi prime minister had been suffering from mild exhaustion.

PUKmedia :: English - Iraqi PM to fly to London for health checks

Trade Move between Kurdistan Region and Turkey Still Continuing

Trade moves between Iraqi Kurdistan region and Turkey are still continuous through Braim Khalil border gate in Zakho district of Duhok province and not affected by the Turkish incursion into Kurdistan region territories on pretext of chasing the PKK elements, Kurdsat satellite channel announced on Sunday.

The move of civilians between both the Turkish and Kurdistan region border sides are still going on, the source added.

PUKmedia :: English - Trade Move between Kurdistan Region and Turkey Still Continuing

Ali Dabagh: Turkish Military Operation Threatens Sovereignty of Iraq

Today the spokesman for the Iraqi government Ali Dabagh issued a statement:

The Ministerial Committee for National Security studied the situation of the Iraqi-Turkish border, the Turkish military operation, and crossing the joint border by the Turkish army.

The Iraqi government calls on Turkey to respect the sovereignty and the unity of Iraq. The government considers the unilateral military operation and transgression of the Iraqi border as threats to the security and stability of the region, despite regarding them as the violation of the Iraqi sovereignty. It calls on Turkey to withdraw their troops from Iraq as soon as possible, and start to hold bilateral talks with the Iraqi government.

The threat which is represented by PKK is a threat to Turkey and the bordering areas. It is necessary not to depend on the military option to cease that threat. The Iraqi government is committed to the joint treaties and agreements with Turkey to stop that threat. The government understands the Turkish legitimate security interests; therefore it does not let their territories (Iraq) to be used for threatening the security of Turkey.

PUKmedia :: English - Ali Dabagh: Turkish Military Operation Threatens Sovereignty of Iraq

Improvement in Iraq's power grid- ministry

An improvement has been noted in the performance of Iraq's northern, central and southern power stations, a spokesman for the Iraqi Ministry of Electricity said, citing various reasons for the amelioration.

"The Ministry has managed to repair most of the damaged power lines in Baghdad and its surroundings," Aziz Sultan al-Shamri said in statements to Aswat al-Iraq, Voices of Iraq, (VOI), adding that work is currently underway on the remaining lines after the defense ministry had provided security for the repair teams.

The northern grid improved following repairs to the pipeline which transports natural gas to the northern stations, al-Shamri explained.
The southern grid also improved following an increase in the capacity of southern Iraqi stations, he added.

Aswat Aliraq

Iraq's Kurds move in on oil stronghold Kirkuk

Iraq's Kurds are moving towards taking control of the vital oil city of Kirkuk as one of the most explosive disputes bequeathed by Saddam Hussein nears a resolution.

The rigs and pipelines around Kirkuk account for about one third of Iraq's oil output, now running at 2.4 million barrels per day.

In the past, this was a Kurdish city, but after the Kurds rebelled against Saddam in the uprising of 1987-88, the regime resolved to change this.

Tens of thousands of Kurds were deported from Kirkuk, with many ending up in mass graves. Arabs were settled in their place. After Saddam's removal in 2003, Kurdish leaders sought to reverse these clearances and regain control of Kirkuk.

If an independent Kurdistan ever emerges, this city would probably become its oil-rich capital. Arabs have been offered compensation to leave - and thousands are now signing up.

They have until the end of this month to register for a scheme which gives each Arab household £8,000 to move elsewhere. By the standards of Iraq's recent history, the process is orderly. Applicants stand near gun-toting sentries only because the government office has heavy security.

The offer of compensation was made on television - not on a piece of paper wrapped around a brick and thrown through a window. Yet many Arabs say their departure is anything but voluntary.

"Our ration cards are being cancelled and transferred," said Sheikh Hassan Rashid, who has lived in Kirkuk since 1989.

"How can we live without the ration card? It would be impossible to buy food. We are being forced out."

Salaam Adil, who comes from the Shia holy city of Karbala in southern Iraq, moved to Kirkuk in 1987 after being demobilised from Saddam's army. He said officials worked overtime to help Kurds return to Kirkuk.

Arabs trying to register for compensation are deliberately kept waiting.
"We have to wait here day after day but the Kurds are dealt with quickly," he said.

"What does this tell you? It says the government wants to make it easy for them to come back, but inflict as much suffering on us as it can."
The rush of Arabs out of Kirkuk has left a trail of abandoned livelihoods, with houses jettisoned at fire sale prices.

Hamad Khadam, who runs a photographic studio, said: "I have a business I cannot sell, my home is a flat and is worth very little. I have to move my wife and two daughters to Baghdad where it is not safe. I haven't lived there for 25 years. I don't want to go."

Abdulrahman Fatah, the governor of Kirkuk, acknowledged that there had been "administrative problems".

Later this year, Kirkuk's final status should be settled by a referendum. Its residents will be asked whether the city should be incorporated into the Kurdish governorates of northern Iraq, which would position it as the possible capital of an independent Kurdistan. Colonel David Paschal, of the US Army's 10th Mountain Division, said the city's ethnic composition remains delicately poised after five years of Kurdish expansion.

About half of the residents are Kurds, while 30 per cent are Arab and 20 per cent ethnic Turks. But few doubt the result of the eventual referendum.

When it takes place, the Kurds will probably be an absolute majority in Kirkuk. This leaves Arabs fearing for their future. "The day is coming when it will be bye bye for us," said Ahmed al-Jawash. "But it's our land, the Kurds might want it but no one can take it away from us."

Iraq's Kurds move in on oil stronghold Kirkuk - Telegraph

DNO: Iraqi Kurd oil needs export route

DNO, the Norwegian oil firm with assets in Iraqi Kurdistan, says it needs a route to send the oil if it's to increase production.

"In 2008, DNO is targeting a substantial resource potential through an extensive exploration program and a step change in production could be achieved once export permit is in place in Kurdistan," Managing Director Helge Eide said in a company statement. "During the last three months of 2007 we have delivered important operational results in Kurdistan. Re-testing of the Tawke-1 discovery well turned this well into the best producer to date and we revised the Tawke gross reserves by 130 percent. In addition we have re-commenced exploration activities in other areas of the PSAs in Kurdistan."

DNO's Kurdistan wells produced 6,301 barrels per day last month, up from 4,194 bpd in December, according to the company. Al-Sumaria TV reports DNO trucks its oil from the Tawke field.

DNO was one of two companies that signed exploration contracts with the Kurdistan Regional Government in 2004. Since then the KRG has passed its own regional oil law and signed 20 more, to the ire of Iraq's national government. The Oil Ministry has called all but the first KRG deals illegal and threatened to blacklist all the companies from future deals in the rest of Iraq.

Very little of Iraq's proven oil reserves are located in the KRG-controlled area, but the country as a whole is underexplored and there are expectations of oil to be found in the Kurds' territory. While DNO has helped prove that expectation true, it and others face a conundrum: what to do with the oil once it's pumped.

All of Iraq, including the KRG, faces a fuel shortage, but there are no refineries in the KRG. None of the region's oil installations is connected by pipeline, either to Iraqi refineries or for export. KRG Natural Resources Minister Ashti Hawrami told UPI in November he's confident he'll connect to the pipeline sending oil to Turkey, though both Turkish and Iraqi authorities have come out against it.

DNO: Iraqi Kurd oil needs export route - UPI.com

Petrel gets Iraq extension, ready for deal

Ireland's Petrel Resources has received a one-year extension on its Iraq oil project and has registered for future deals, the company said.

The extension is in relation to the agreement to provide training and technology to Iraq's Oil Ministry for the Marjan oil field.

It is also moving forward on a project to assist the Iraqi State Co. for Oil Projects in developing the Subba & Luhais fields in southern Iraq. Petrel's contract, signed in 2005, is a $197 million deal to help engineer, procure equipment and supervise construction of the fields' expected oil and natural gas production.

The Oil Ministry is expected to offer more contracts for bid later this year and gave Feb. 18 as a deadline to register for qualification, which the company said it did.

"We are very pleased to have begun the process which will see us moving from managing technical studies and EPC projects to becoming a fully fledged exploration and production operation," said David Horgan, Petrel managing director. "Our longstanding experience in Iraq will give us vital first mover and technical advantage over competitors."

The company, which touts its work being done with little security incidents, expects an invite to discuss opportunities to develop the Western Desert Block 6. It has studied it since 2000, but deals with Saddam Hussein aren't guaranteed to be honored.

Petrel gets Iraq extension, ready for deal - UPI.com

Immense and untapped: Iraq's oil

Iraq has a vast and untapped oil wealth, perhaps 100 billion barrels worth. That's enough, industry experts say, to boost world oil supplies and trigger a decline in prices.

Government officials hope to increase output from an average two million barrels a day to an average six million barrels over the next four to six years.

Industry giants from Shell to Chevron are lining up to invest in Iraq's potentially lucrative oil sector, but their involvement depends on a number of factors: a stable security situation, sound Iraqi oil legislation, and significant investment in infrastructure.

It's a hefty checklist for a country that's split along sectarian lines and is struggling to gr***** with an active insurgency.

And even if that checklist is completed, Robert Powell, an analyst at the Economist Intelligence Unit, says progress in Iraq's oil industry is likely to be incremental.

"Once international money and expertise start coming in, then you'll find increases in oil production elsewhere," Powell says.

"But it will be a slow and gradual increase, to levels that are not especially spectacular compared with [Iraq's] potential."

Despite the significant challenges, Iraq's oil sector is seeing an uptick in productivity, says Iraqi Oil Minister Hussein al-Shahristani. And it's partly due to a security strategy similar to the coalition- backed "Awakening" movement.

"The people who have been attacking our pipelines, we have entered into discussions with them," al-Shahristani says.

"We have managed to convince them to join our Oil Protection Force and be paid for protection, for protecting those pipelines."

An improving security situation is only one piece of the puzzle.
"We need cash fast and we have a lot of reconstruction needs and we have to create jobs for our people," says Iraqi Deputy Prime Minister Barham Saleh. "That is crucial to whatever we try to do to the security environment."

But investors are unlikely to commit the funds needed to kickstart development without solid legislation governing the industry.

"The legality question is a very real one, because there is an absence of a hydrocarbons law," says Robert Powell, an analyst at the Economist Intelligence Unit.

"So those companies going in don't want to spend large amounts of money and then find contracts are annulled at some stage in the future and they lose their investments."

The negotiations surrounding Iraq's oil law have been going on for years, bogged down by bickering political factions who don't want to miss out on a potential economic boom.

The pending legislation is two pronged: the Oil and Investment Law and the Revenue Sharing Law. The Revenue Sharing Law, which will outline how the wealth will be divided between Sunnis, Shias and Kurds, is the more divisive of the two.

Without this legislation, Iraq's oil industry can't move forward.

And if Iraq's oil sector can't move forward, nor can the country, says Iraqi Deputy Prime Minister Barham Saleh.

"We also understand that the overall security gains cannot be sustained without a political settlement and without economic regeneration," Saleh says.

"Economic regeneration of Iraq requires emphasis on the oil sector."

Immense and untapped: Iraq's oil - CNN.com

Why Iraqis Cannot Agree on an Oil Law

Introduction

Disagreements over oil production, exploration, and revenue sharing threaten to unravel hopes for a political breakthrough and national reconciliation in Iraq. A draft oil law (PDF) has drawn criticism from Iraq’s Sunnis, who prefer a stronger role for the central government, and from Kurds, who prefer a stronger management role for the regional authorities. The majority Shiites have sought to mollify the Sunnis by keeping control of Iraq’s oil sector primarily in Baghdad, not the regional governorates. The role of outside investors, as well as the classification of old versus new oil fields, also divides Iraqi politicians. Oil, of course, is the country’s most vital resource, and revenue generated by it accounted for the government’s entire $41 billion budget (PDF) in 2007. Yet output has fallen short of Baghdad’s production targets, mostly due to corruption, poor security, and lack of investment. Unable or unwilling to wait for a compromise, the Kurdistan Regional Government passed its own oil law (PDF) in mid-2007. The Kurdish government has also entered into dozens of production-sharing contracts with international companies, further straining relations between Kurds and the central government.

The Hydrocarbon Legislation*

The bill drafted in February 2007 gives exploration and production planning responsibilities to a newly created federal oil and gas council. The bill, approved by the Iraqi Cabinet but currently stalled in parliament, also spells out exploration responsibilities of the Iraq National Oil Company (INOC), a state-run company with origins tracing to pre-Saddam Hussein Iraq. The hydrocarbon law does not, however, offer specifics on how the currently inactive INOC would manage Iraq’s national reserves. Those plans are contained in a separate bill that, like the hydrocarbon bill, has stalled amid Iraq’s divided political system. Two other pieces of legislation—one that would reorganize the Ministry of Oil, and another that details how oil revenues would be collected and redistributed—have also faltered.

The Issues That Divide

Iraq’s Kurds and Sunni Arabs oppose the draft law for different reasons. The Kurds say it would cede too much control to Baghdad’s oil ministry, and eventually, the national oil company. The Kurds want more regional autonomy to develop existing and new fields on their territory, as well as those near the northern city of Kirkuk, which is under de facto Kurdish control. Moreover, they prefer greater authority to bypass Baghdad and sign contracts with foreign companies; the Kurdish government has already executed fifteen exploration contracts with twenty small international companies. “Kurdish dissatisfaction stems from its objection to a state-run, relatively unaccountable oil company that’s given almost all of Iraq’s proven reserves,” says Jonathan Morrow, legal adviser to the Kurdistan Regional Government’s natural resources minister. Yet most observers say that without federal legislation, major oil companies will stay out of Iraq, including Kurdish territory. “Big companies are not going to take the risk of damaging their relationship with the central government” by signing deals with the Kurds, says Rochdi Younsi, a Middle East analyst with the Eurasia Group.

The Sunnis, meanwhile, who reside mainly in regions lacking in major oil reserves, favor a hydrocarbon law that would give the central government greater managerial control over contracts and infrastructure development. Tariq Shafiq, who helped draft an early version of the oil law, told United Press International (UPI) the regions don’t have the “necessary institutions” or “required expertise” to manage their oil fields without the assistance of the central government and will become overly reliant on foreign companies. The central government appears to agree; the oil ministry has already cut off exports to some international firms in Austria and South Korean in protest of their dealing with the Kurdish government. Ben Lando, editor of the Iraq Oil Report blog and head of UPI’s energy resources desk, summarizes the sectarian disagreement this way: “The overall debate goes back to the ‘new Iraq’ and the status of federalism; what [style of] government would be the best to strategically develop the oil sector?”

Points of Contention

Legislative delays notwithstanding, criticism of the draft laws runs deep. The hydrocarbon bill, for instance, would give representatives from regional authorities the opportunity to sit on the oil and gas council, as well as on the national oil company’s board. But the move is viewed by the Kurds as a misguided attempt to give the central government too much control over local resources. Another point of contention is the creation of four so-called oil annexes by the Iraqi oil minister, Hussein al-Shahristani, a Shiite, as another means of ceding greater management control to the national oil company. The Kurds argue these annexes—in essence a list of current and potential oil fields—were drafted without their input and violate the constitution. The annex provision states that Baghdad, together with regional authorities, will determine the management of untapped fields, wording the Kurdish government opposes. Other issues holding up passage of oil legislation:

Revenue sharing: The draft hydrocarbon law does not delve into specifics of revenue sharing, though a companion bill that does also is stalled within parliament. What’s more, observers say the constitution is vague on the subject of distribution; Article 111 states simply that “oil and gas are the ownership of all the people of Iraq,” while Article 112 calls for a distribution of revenues “in a fair manner in proportion to the population,” taking into account regions deprived by Saddam’s regime that would be first in line for payments. Article 112 also requires the Iraqi parliament to pass a law regulating revenue distribution—the one currently mired in sectarian rancor.

The classification of new versus old oil fields: Kurds maintain that under the Iraqi constitution, new production will be under the control of regional authorities, while Sunnis and Shiites envision a partnership between federal and regional powers. Yet some say the definition of “new” varies from region to region. Lando says a principal disagreement rooted in the constitution is over the definition of “present fields,” a classification he says leaves much to interpretation, including whether “present” includes a proven field or only a producing one. A January 2008 Kurd-supported legal opinion (PDF) adds that the constitutional wording says nothing about “non-producing and future fields.” It remains unclear how these disputes will be settled.

The role of foreign companies: Iraqis disagree over whether to allow foreign companies to develop their country’s untapped oil fields. Sunnis in particular are worried that doing so would erode Iraqi sovereignty and redistribute oil revenues away from Iraqis and into foreign hands. But many experts, including those inside the Iraqi oil ministry, say outside investors are needed to stimulate development of Iraq’s dilapidated oil infrastructure.

Oil to Fight For

In 2001 Iraq's proven oil reserves were estimated to be around 115 billion barrels, making them the world’s third largest after Saudi Arabia’s and Canada’s. The bulk of Iraq’s known oil reserves (PDF) lie primarily in the Kurdish-controlled north near Kirkuk and Shiite-controlled south around Basra. But Frank A. Verrastro, director of the energy program at the Center for Strategic and International Studies, estimates that because of sanctions, neglect under Saddam, and lack of investment, less than 20 percent of the country has been fully explored. Verrastro estimates undiscovered reserves could be anywhere from 45 billion to 110 billion barrels, a conclusion supported by the U.S. Energy Information Administration. “Iraq’s western desert” (PDF)—which is Sunni controlled—“is considered to be highly prolific but has yet to be explored,” writes Amy Myers Jaffe, an energy expert at Rice University’s James A. Baker III Institute for Public Policy.

Stalled Production

In the run-up to the April 2003 war in Iraq, the Bush administration predicted that within five years Iraq would be producing 6 billion barrels of oil per day, more than enough to pay for its reconstruction. Verrastro says U.S. engineers evaluated the pumps and pipes, but until Shell and BP were commissioned to do so, below-ground analysis to assess the reservoirs and damage caused by Iraqi management practices had not been conducted. He estimates that Iraqi oil production, currently around 2.5 million barrels per day, will not reach 4 million barrels per day until after 2010.

Experts say production shortages over the past few years are mostly due to poor maintenance, corruption within the oil ministry, and a lack of security that has fueled smuggling and sabotage. Baghdad has gone so far as to blame Iran for “illegally pumping Iraqi crude oil,” according to the U.S. State Department’s Iraq Weekly Status Report (PDF). What’s more, there has been virtually no development of new fields since the April 2003 invasion of Iraq, according to Jaffe. Many experts say the problem dates back to the onset of severe UN sanctions in 1991. Even during the oil-for-food program, which started in the late 1990s, Iraq’s oil infrastructure was badly neglected. The Brookings Institution’s Iraq Index estimates over 460 insurgent attacks have targeted Iraqi oil infrastructure since 2003, though strikes have declined dramatically since August 2007.

Another problem is the flight of trained technicians needed for Iraq’s oil industry. Jaffe points to “a looming gap in technical and managerial expertise,” combined with the “intimidation of key experts.” Many of the industry’s most capable technocrats under Saddam either fled Iraq or are of retirement age, says Verrastro.

The Future of Iraq’s Oil Laws

Despite Iraq’s economic reliance on oil, few experts are optimistic a political compromise is forthcoming. U.S. officials have made an oil law one of their main benchmarks to gauge political progress in Iraq. International oil companies, for their part, continue to cheer Iraq’s politicians on from the sidelines. As of February 2008, over 70 firms had registered (Reuters) with the oil ministry to compete for future extraction and service contracts. Yet many observers say they see no indication from parliament that hydrocarbon legislation is forthcoming. “No one has even dared schedule anything,” Younsi of the Eurasia Group says of Iraq’s leaders in Baghdad. “Many [Iraqi politicians] think this is not a priority because of the security situation.” Oil companies, Younsi adds, “are not going to come” if security doesn’t improve.

* A previous version of this Backgrounder incorrectly characterized some aspects of the disagreement between Iraq’s ethnic factions, including how draft legislation before parliament would collect and distribute oil revenues, and reorganize the country’s oil ministry and national oil company.

Why Iraqis Cannot Agree on an Oil Law - Council on Foreign Relations

USA affirms supporting Nabucco pipeline

US Deputy Assistant Secretary of State Matthew Bryza has said that the USA supports the tumbling Nabucco pipeline project.

In fact, Nabucco would help reduce EU dependence on Russian natural-gas supplies by transporting natural gas from the Caucasus area to Europe through Turkey in a 3,300-kilometer-long pipeline. Moreover, Nabucco would be more cost-efficient than South Stream supported by Russian Gasprom.

USA affirms supporting Nabucco pipeline | Economics News | Alsumaria Iraqi Satellite TV Network