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

First load of gas oil (solar) to arrive to Iraq

An official source in electricity Ministry announced that 36 trucks loaded with gas oil (solar) will arrive to Iraq coming from Kuwait, the source added that electricity Ministry hopes that other quantities will arrive in the few coming days and that in order to operate production units which are stopped because the lack of solar oil in Iraq.

On another hand, Electricity Ministry Spokesman Aziz Sultan said that since Turkey stopped providing Iraq with electricity and the lack of refined oil in the refineries caused electricity cut off that harmed the production of oil fields in North of Iraq. The spokesman added that the ministry cannot provide regular electricity flow to oil plants if Oil Ministry doesn’t provide it with necessary oil quantities.

Alsumaria Iraqi Satellite TV Network | Economics News | First load of gas oil (solar) to arrive to Iraq

Update.......

Iraq's economic future looks bright, says IMF

Prospects for the Iraqi economy look promising for this year, the International Monetary Fund said yesterday, but warned that growth depended on political progress.

The IMF said the economy would grow at a healthy rate - if security improved enough to boost oil production and investment.

Meanwhile, Ban Ki-moon, the UN secretary general, called for speedier progress towards political reconciliation following a reduction in violence attributed to the US troop "surge" strategy and mounting Sunni opposition to insurgents.

"In order to sustain recent improvements in the security situation, similar improvements in the political arena are needed," Ban said in a report to the security council. "To date, the political process has not shown the degree of progress that many had hoped for."

Ban's report to the council echoed the message the US secretary of state, Condoleezza Rice, gave during her visit to Baghdad this week.

Mohsin Khan, the IMF director for the Middle East, said Iraqi oil production was forecast to climb by 200,000 barrels a day to 2.2m barrels a day in 2008.

Higher oil output would push growth up to 7% or higher in 2008 and 2009, from 1.3% in 2007.

High oil prices, which hit $100 (£51) a barrel recently, have offset production shortfalls and boosted currency reserves by nearly $7 billion. By the end of 2007, reserves were $27 billion, $6 billion higher than projected. Last December, the IMF approved a 15-month $744 million loan agreement for Iraq, to help maintain economic and financial stability, and facilitate higher investment and production in the oil sector.

Iraq Development Program - Iraq's economic future looks bright, says IMF

Update......

Iraq stops cooperation with oil firms that signed deals with Kurds

The Iraqi Oil Ministry has decided to stop cooperating with international oil companies participating in production-sharing contracts with the Kurdish regional administration in northern Iraq, an official said Thursday.

The decision is considered a first step toward implementing the ministry's threats to The decision is considered a first step toward implementing the ministry's threats to blacklist and exclude these companies from any future deals with Baghdad if they refuse to abandon their oil deals with the self-ruling Kurdish government.

Four companies are thought to have agreements with both Oil Ministry and with Kurdistan: the United Arab Emirates' Crescent, Canada's Western Oil Sands and Heritage Oil, India's Reliance Industries and Austria's OMV.

The Kurds are a key group within the national governing coalition and have been Washington's most reliable allies in Iraq. Since the ouster of Saddam Hussein they have forged a close relationship with the majority Shiites.

But assertive acts by the Kurds, such as the refusal to fly the Iraqi national flag in the region, have irritated the Shiite-dominated government in Baghdad as well as Sunni Arabs. Many see such gestures and the recent oil deals as a threat to the country's national unity.

The Oil Ministry's decision came days after 145 Iraqi Arab lawmakers from rival sects joined forces to criticize what they claim is overreaching by the Kurds, alleging the powerful U.S.-backed minority's go-it-alone style threatens national unity. They took issue with Kurdish ambitions in the disputed northern city of Kirkuk and in negotiating deals with foreign oil companies without involving the central government.

With the national oil and gas law stuck in dispute between the Kurds and Arab leaders over who has the final say in managing oil and gas fields, the Kurds have signed 15 production-sharing contracts with 20 international oil companies. The Oil Ministry considers those contracts illegal.

As of Dec. 31, the Oil Ministry ended South Korea's SK Energy's term contract to import Basra crude oil because it refused to abandon its exploration project in Kurdistan as part of a consortium led by the state-run Korea National Oil Corp.

Another aspect of cooperation being halted is the one-year memorandums of understanding the ministry has signed with about 40 international oil companies since 2004, including the four believed to have signed oil deals with the Kurdish regional administration.

Under these memorandums, which are up for renewal every year, companies offer the Oil Ministry free technical support for specific oil and gas fields and some provide training for ministry staff.

In return, the ministry provides data on the fields for which it was seeking help, though these memorandums are not considered a commitment to awarding these fields to the companies in the future.

«They will be canceled as well,» added the official, who spoke on condition of anonymity because he was not authorized to release information to media.

Last year, the Iraqi-owned, UAE-based Crescent signed a series of deals with Kurdistan through subsidiary Dana Gas.

Canada's Heritage Oil signed a deal with Kurdistan last October for the Miran Block in Sulaimaniyah province. Western Oil Sands is working on three structures in Kurdistan's Zagros Fold Belt, under an agreement signed in mid-2006 and ratified in March.

Another production-sharing contract was signed last November between Reliance and the Kurdish regional government for the Rovi and Sarta Blocks through Dubai-based subsidiary Reliance Exploration and Production.

Also in November, Austria's OMV signed similar contracts for the Mala Omar and Shorish Blocks in the Irbil area.

Iraq stops cooperation with oil firms that signed deals with Kurds

Ministry of Oil meeting in Dubai
The Iraqi Government and Ministry of Oil will once again be meeting in Dubai, this time to discuss Iraq's Downstream sector with particular interest to Iraq's refining and petrochemical industry along with New Legislations and the Potentials of Iraq's Downstream Oil and Gas Activities

As well as addresses from the Iraqi delegation, the programme includes high-level, respected speakers from the international community who will address legal, technical, financial and marketing issues and the law privatizing the country's oil refining sector, the crude oil sector and market demand.

The conference will include a number of excellent networking functions. With approximately 300 delegates expected to participate the conference provides participants with invaluable opportunities to network, build relationships and generate new business.

The theme of the conference is focused on the huge incentives to improve the investment climate in Iraq's downstream sector and across the two days the conference will identify and explore the challenges facing the Iraqi oil industry.

TOPICS OF DISCUSSION:

· The potential for international investment in Iraq's refining and petrochemical industry

· The new legislations and the potentials of Iraq's downstream oil and gas activities

· The present state of Iraq's oil refining and the rise of crude oil prices

· Potentials For The Expansion In Iraq's Refining Industry and the New Structure Of Iraq's Downstream Oil and Petrochemical Industry

· Government ownership

· Government regulation and subsidies

· Investment requirements for refining projects and the legal environment
· The need for foreign investment

· Are the incentives sufficient?

· The need to create a conducive legal, economic and financial environment to encourage international investment

· Foreign partnership and participation

· The need to liberalize local oil product market

· The need for new pipelines and associated pipelines facilities

· New solutions for pipelines operational system , safety and reliability

· The utilization of gas resources in iraq

· Gas and gas treatment projects

· Natural gas processing plants

· Investment requirements for oil products , transportation and distribution projects

· Labour and managerial requirements for the development of iraq's downstream oil industry, local content and expertise.

Ministry of Oil meeting in Dubai

From Wall Street To Main Street — Then To The Streets Of Baghdad

Wall Street woes giving you the blues?

Why not put your money elsewhere — like, the Iraq stock exchange?

Here’s Securities and Exchange Commission chairman Chris Cox last week:

… the nations of the world have increasingly embraced capitalism over the past decade and a half. Securities exchanges, which used to be restricted to countries with golf courses, have proliferated around the world so that today more than 112 nations have active securities markets.

Even in Baghdad, the Iraq Stock Exchange now operates under the oversight of the Iraq Securities Commission, an independent agency modeled after the U.S. Securities and Exchange Commission. And the Iraq exchange was just recently opened to foreign investors this past summer. So today, you can diversify your portfolio to include issues such as the Bank of Baghdad, or the Baghdad Soft Drinks Company, or the Iraqi Tufted Carpets Company.

Politicians and activists talk about the need for shared sacrifice. How about the need for shared investment? The Iraq stock market can only go up.





Extreme Mortman From Wall Street To Main Street — Then To The Streets Of Baghdad - Just When You Thought it Was Safe to Take Politics Seriously Again

Power cuts plague Iraq, hurt oil production

Electricity cuts that blacked out Iraq's northern oilfields and main refinery this week were a timely reminder that its hopes of boosting oil production rest on something it does not have -- a dependable power supply.

Iraq has managed to sustain production of around 2.2 million barrels per day (bpd), but levels were close to 3 million bpd before the U.S.-led war on Iraq in March 2003.

While sabotage attacks have constantly interrupted the country's attempts to increase oil production, power cuts are nearly as detrimental.

The latest major disruption was on Wednesday, when Iraq's largest refinery at Baiji, 180 km (110 miles) north of Baghdad, was shut down by a power cut.

Iraq has also stopped pumping crude oil from its northern Kirkuk oilfields to the Turkish port of Ceyhan after the main power station feeding the fields ran out of refined fuel.

Baiji resumed operations on Thursday evening, but the Kirkuk oilfields were still idle on Friday, according to an engineer in Kirkuk, speaking to Reuters on condition of anonymity.

Iraq's Oil Ministry has blamed the Electricity Ministry for failing to provide its refineries with an uninterrupted power supply. The Electricity Ministry in turn has said the Oil Ministry is not providing sufficient fuel to run its plants.

"It's a vicious circle," observed a U.S. government official, who said U.S. officials were working hard to improve cooperation between the two ministries to improve the stability and capacity of the fragile, war-damaged national power grid.

The pressure on the country's fragile grid has been increased by an exceptionally cold winter that has left many Iraqis with less than an hour of electricity a day.

The Electricity Ministry has also blamed a decision by Turkish power provider Kartet on Jan. 4 to stop exporting electricity to Iraq. Kartet said Iraq had stopped supplying it with refined fuel for its power station near the border.

"We are going to see blips like this," said the U.S. official, who spoke on condition of anonymity. "We are fully engaged with them (the ministries) to resolve this issue, and it is our belief that this will be resolved soon."

KEEPING LIGHTS SWITCHED ON

Washington has pumped $4 billion into reconstructing the national grid, and the U.S. Army Corps of Engineers has completed more than 500 projects to improve the generation, transmission and distribution of electricity in Iraq.

Iraq needs about 9,500 megawatts a day but Iraqis receive around only 5,000 MW. A 10-year plan announced by Electricity Minister Karim Waheed envisages adding 1,000-1,500 MW, but attracting the necessary investment has not been easy.

"The technical issues involved in re-establishing national grids are extremely complex," said Steve Wardlaw of Baker Botts law firm, which has great expertise in energy.

"Add into that a volatile political situation and a lack of interest from lenders or international power companies ... and it is no surprise that the initially hot topic of the challenge of upgrading the Iraqi power system very quickly fell away through almost complete lack of interest," Wardlaw said.

The U.S. official said giving Iraq a reliable electricity supply was vital for political stability and economic growth. "Who is going to invest if there is no power?" he said.

But Wardlaw said oil companies were used to building their own power stations, particularly in regions like Africa.

As long as they were able to import the equipment and expertise and were comfortable with the security situation in Iraq, "then I think the self-generation of power must be their preferred operation".

Iraq's grid sustained significant damage during the 1991 Gulf War, and the decade of sanctions that followed made repairs next to impossible. In the aftermath of the 2003 invasion of Iraq, saboteurs blew up power lines and oil pipelines.

And trying to keep the lights switched on in Iraq today is a dangerous business. Last August, minister Waheed estimated that 1,100 ministry employees had been killed, kidnapped or wounded.

Rebuilding the grid has also been complicated by a 70 percent increase in demand for electricity from Iraqis, who since 2004, have bought more energy-intensive products like air conditioners, refrigerators and computers.

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URGENT - Iraqi troops clash with members of messianic Shiite cult in southern Iraq

Gunmen from a messianic Shiite cult attacked police and worshippers preparing Friday for a major Shiite holiday, prompting fierce clashes that left nearly 50 people dead in a major test for Iraqi security forces in oil-rich southern Iraq.

Carrying yellow flags or wearing yellow headbands to show their allegiance to the Soldiers of Heaven cult, the gunmen attacked police stations and opened fire randomly on civilians in Basra and Nasiriyah.

Last year, U.S. and Iraqi troops battled cult followers in fields outside the holy city of Najaf after determining that its members planned to disguise themselves as pilgrims and kill leading clerics.

Basra police chief Maj. Gen. Abdul-Jalil Khalaf said 30 militants and six security forces were killed, more than doubling the early toll. A police officer in Nasiriyah said at least 10 people were killed there.

Santa Barbara News-Press

Analysis: Iraq oil, other projects unclear

Iraq's Oil Ministry spent $558 million on capital projects in 2007 to improve its struggling oil sector. Or $500 million. Or only $270,000.

A new report by the U.S. Government Accountability Office isn't sure. Its attempt to measure the Iraqi government's ability to put its capital budget into motion was frustrated by "widely disparate" numbers from the U.S. State and Treasury departments and the Iraq Ministry of Finance.

The State Department said Iraq's central government spent 24 percent of its capital budget through July 15, 2007. The Treasury Department pegs it at 4.4 percent through August.

"The disparity between the different sets of data calls into question their reliability and whether they can be used to draw firm conclusions about the extent to which the Iraqi government has increased its spending on capital projects in 2007, compared with 2006."

The Treasury Department told GAO delays due to violence and sectarianism and increases in the cost of executing the capital budget turns off prospective contractors. And there are fewer available workers because the war has created a massive refugee crisis; those who worked under the Saddam Hussein regime were blacklisted. And, the GAO is told by U.S. and foreign officials, Iraq's institutional capacity to execute the budget is weak.

Iraq's Oil Ministry spent less than 3 percent of its $3.5 billion capital budget in 2006; the entire government that year spent only 22 percent. This prompted President Bush to direct U.S. efforts at increasing such capacity as part of the famed "benchmarks."

Iraq has the third-largest proven oil reserves in the world and, according to the State Department's Iraq Weekly Status Report, oil exports brought in $41 billion in 2007 -- funding the entire year's budget.

Oil production has averaged 2 million barrels per day since the war began, and has recently been increasing, though far below what the reserves can handle. It needs tens of billions of dollars of investment to fix the harm done by Saddam, U.N. sanctions and three decades of war and move the sector forward.

The Oil Ministry received nearly $2.4 billion in for 2007 capital spending, the largest share.

"According to the unofficial data reported by the U.S. administration, as of July 15, 2007, the Ministry of Oil spent $500 million on capital projects, which is 21 percent of the ministry's $2.4 billion capital projects budget. This reported level of spending has already surpassed the ministry's total for 2006," the report said. The "official data," however, says the Oil Ministry only spent $270,000, or .01 percent, of its capital budget through August.

The Oil Ministry's expenditure data may also include funds in its capital budget it didn't spend, but rather redirected to subsidiaries in charge of spending it, according to the U.S. Special Inspector General for Iraq Reconstruction.

"What makes it even more elusive," Joseph Christoff, director of international affairs and trade at GAO, told United Press International, "is that in the most critical sector in Iraq we're not sure how much money is being reinvested into that sector by the government."

The Iraq Oil Ministry said it signed $558.3 million in contracts in 2007 to fix and enhance oil and gas fields and refineries and, between January and October, spent 18.5 percent of its capital budget, Dow Jones Newswires reports. It noted, however, that the Ministry wouldn't divulge any details on the contracts.

Christoff said a draft GAO report, using data through June 30, 2007, was given to the State and Treasury departments for review. State responded with the July 15 data -- used in the September "benchmarks" report -- showing much improved spending. Treasury's response, however, showed data through August that contradicted it.

"The unofficial data that the administration used in the report to Congress do not portray a full and accurate picture of the situation," the GAO report said. "We compared these data with official Ministry of Finance data to assess the extent to which the Iraqis had spent their capital projects budget. Since the spending gap between the administration's unofficial data and the Ministry of Finance's official data is strikingly large, we recommend that the Department of Treasury work with the Ministry of Finance to reconcile these differences."

Christoff said Treasury agrees with its recommendations.

"Official" data is the 2007 capital budget that the Ministry of Finance could verify was spent, Christoff said. The "unofficial" data, which is used by the Bush administration to further claim of progress, combines capital budget spending with money allocated in 2006 but spent in 2007 and money that is expected to be spent.

"I can understand why they went to this unofficial data … it was not caveated at all," Christoff said. "It should not have been presented as expenditures spent."

"The assessment of Iraqi budget execution in the September benchmarks report was based on the most recent Finance Ministry data available. Our embassy in Baghdad is working closely with the Ministry to improve data on budget expenditures," a White House official told UPI. "Iraq has made steady progress in executing its capital budget, and we continue to support its efforts to spend more on economic reconstruction needs. It spent more in capital expenditures in the first nine months of 2007 than it did in all of 2006, and its draft budget for 2008 allots more than $13 billion for capital expenditures, 30 percent more than 2007."

Joanne Moore, a spokeswoman for the State Department, told UPI capital spending is "crucial for improving the provision of the central services to the Iraqi people, and we welcome GAO's attention to this critical issue."

"However, we believe GAO did not adequately report the significant progress Iraq has made on executing its budget over the previous year. We expect continued, sustained improvement in 2008."

The GAO report acknowledged the new programs instituted by the State and Treasury departments but said they haven't been active long enough to qualify success.

Both State and Treasury said the new International Monetary Fund-mandated accounting procedures led to capital spending being spread throughout the budget, which isn't reflected in the 4.4 percent. The GAO report said neither provided "evidence" to back that assertion.

A congressionally mandated Defense Department report released last month said the Iraq Oil Ministry spent $727 million of its capital budget through Nov. 1, 2007, and overall Iraq's central government spent 36 percent.

"We are predicting that when the final tallies are done in a month or two from 2007, we will have hit and may have exceeded 60 percent of the capital budget," a senior State Department official told The Washington Post.

"We just don't understand how State could be projecting 60 percent for 2007," Christoff said. "I don't know, I can't figure out where that 60 percent could come from."

International Security - Energy - Analysis - UPI.com

Iraq Tries To Convince IOCs That Less Is More

Four international oil companies (IOC) are gearing up for another round of negotiations with Iraqi oil ministry officials later this month, following initial meetings late last year on technical support contracts for producing fields. The proposed two-year contracts are viewed by Iraqi oil officials as an interim solution to help arrest accelerating decline rates and raise output marginally until Iraq is in a position to sign long-term agreements. BP, Chevron, Exxon Mobil and Royal Dutch Shell submitted technical and financial proposals in December for five producing fields and have already received counterproposals from the Iraqi side, industry and Iraqi sources tell PIW (PIW Dec.10,p7). The ministry is aiming to raise output by 100,000 barrels per day from each of the Rumaila, West Qurna Stage 1, Zubair and Missan developments in southern Iraq and the Kirkuk field in the north, within one year of contracts being signed. The five fields are currently producing just over 2 million b/d, but almost all urgently need technical support to help stem decline rates, particularly the older Rumaila and Kirkuk fields. Iraqi officials also need the majors' support in defining their precise technical requirements, as well as help in sourcing equipment and materials, as 13 years of sanctions followed by four years of war and instability have deprived the Iraqi oil sector of any new technology since the 1980s.

The gap between the Iraqi and IOC proposals is still wide at this stage, industry sources say. Most of the firms have laid out ambitious plans for the fields assigned to them, while Baghdad is talking about a limited scope of work that the companies can execute remotely. What the majors ultimately want from this exercise is a commitment that, in exchange for agreeing to short-term technical contracts, they will be awarded those fields longer term without having to fight for them through a competitive bidding process. The ministry's immediate objective, however, is to deliver a quick fix that can raise Iraq's output from the current 2.2 million-2.3 million barrels per day to close to 2.8 million b/d, and provide a visible achievement that can be exploited politically. Without the promise of long-term involvement in Iraq's most prized oil fields, the IOCs are having trouble reconciling themselves to what they describe as working as contractors, especially since Iraq is proposing to provide the short-term investment itself and reward companies in cash or in kind for their endeavors. Iraqi officials argue companies participating in the current process will stand a better chance of securing long-term deals when they become available. But the IOCs beg to differ; even though none would be willing to walk away from an Iraq deal, no matter how limited, smaller incentives from the Iraqi side could result in smaller commitments from the IOC side, particularly given the existing strains on the companies' own staffing and technical resources.

In the absence of a comprehensive federal hydrocarbon law that regulates international companies' involvement in developing Iraq's fields, the oil ministry is also planning to tender new fields for competition. Ministry officials say agreements based on development and production contracts -- the last model contract developed before the fall of the previous regime -- could be signed with the cabinet and parliament providing guarantees by voting each contract individually as law. A tender is currently being prepared and the ministry has invited international companies to register for prequalification. The objective of the exercise is to determine "which companies could be called on to participate in which fields," based on their technical and financial capabilities, a ministry official told PIW.

Iraq Tries To Convince IOCs That Less Is More

Prime Ministry Issues a Statement

Iraqi Prime Ministry Issued the following Statement:

Iraqi Security forces were able to impose a full control and stability in Basra and Nasiriyah.Special Missions Commander and a number of his assistants were attacked by a few out low elements. A number of wayward individuals who tried to oppose Hosseini convoys and control a governmental foundation were arrested in Basra. Our security forces arrested a gang members who were planning to assassinate religious men in Najaf and Karbala, this errant group which tries to take religion as a disguise, are now uncovered to our people who cooperated with the armed forces to frustrate this gang’s evil planes to disturb the security and stability in the southern provinces.

PUKmedia :: English - Prime Ministry Issues a Statement