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

Iraq draft oil law becoming irrelevant

Iraq's Kurds want to focus on reviving the country's oil law, but high-profile talks during a U.S. visit haven't forced progress as they hoped.

Contention between Baghdad and the Kurdish region over the draft oil law has led to a split between Iraq's leaders. Now both sides are condemning each other as they move forward on oil developments unilaterally, pushing aside any relevance to the oil law.

U.S. Vice President Dick Cheney met with KRG Oil Minister Ashti Hawrami and Deputy Prime Minister Omer Fattah Hussain during their Washington visit in November. The United States has designated Undersecretary of State Reuben Jeffrey a top political envoy to focus on the oil law.

But the oil law appears as stuck as before as a power struggle continues over Iraq's political process and the oil sector.

Weekly Petroleum Argus reports the Kurds are asking Prime Minister Nouri al-Maliki to delegate his energy adviser, Thamir Ghadhban, instead of Oil Minister Hussain al-Shahristani in new oil law talks in Parliament's Energy Committee.

The KRG wants decentralized oil governance, allowing more rights for producing regions and provinces to develop their respective oil sectors. Others in Iraq believe the central government should keep control over the oil sector strategy. Leaders of political parties representing near 150 parliamentarians signed a pact recently declaring opposition to the KRG oil policy.

The KRG has signed dozens of production-sharing contracts with international oil firms and passed a regional oil law, which has not settled well elsewhere in Iraq.

Meanwhile, Shahristani is starting a process to sign deals for developing Iraq's oil sector. The Oil Ministry has given interested companies until Jan. 31 to submit prequalifying applications. The ministry said companies that have signed deals with the Kurds will not be chosen.

Iraq draft oil law becoming irrelevant : World

Update......
Iraq makes good on Kurd oil blacklist

Iraq's Oil Ministry has reportedly cut current and will block future deals as part of a blacklist of firms that have signed oil contracts with the Kurd region.

Companies will not be able to purchase Iraqi oil or bid on upcoming projects in Iraq's oil and gas sector if they have signed any deals with the Kurdistan Regional Government since February 2007. That's when a deal was reached -- and a few months later rejected -- by the KRG and Baghdad on the oil law.

The KRG has signed dozens of production-sharing contracts since it passed its own regional oil law in August, blaming Baghdad for taking too long and violating the deal.

Oil Minister Hussain al-Shahristani has called the Kurd contracts illegal and the KRG moves unconstitutional. While inter-Iraqi politics has not dealt with the KRG-Baghdad dispute -- whose power struggle has derailed a draft oil law -- the ministry is.

Shahristani has sent letters to companies that have signed contracts to explore and develop the Kurd region's prospective oil sector, canceling deals the companies have with Baghdad. Weekly Petroleum Argus reports letters have been sent to SK Energy in South Korea, OMV in Austria and Reliance Industries in India, among others.

Later this year the ministry will start bidding rounds for service contracts on producing oil fields, and companies that want in must register by Jan. 31. The ministry is also conducting direct negotiations with select super major oil companies for contracts on Iraq's largest fields.

The ministry will prequalify companies that will be able to bid.

SK Energy, a South Korean refiner that is part of a consortium in a KRG deal, has had its Iraqi crude shipments cut.

International Oil Daily reports the country's largest refiner is trying to balance its desires for Iraq oil and the KRG deal, with Seoul attempting to broke a political deal. SK, which imported 90,000 barrels per day from January through November 2007, will likely just increase imports from Iraq's neighbors.

South Korea in total imported about 125,000 bpd during that timeframe, a major increase since 2006.

Shahristani has also reportedly cut all memorandums of understanding with oil firms that have signed with the KRG. The annual memorandums allow an exchange of information, technology and training between the ministry and companies.

Iraq makes good on Kurd oil blacklist : World

Demand for dollar up as market revives from curfew

Demand for the dollar was higher in the Iraqi Central Bank’s auction on Monday, reaching $75.850 million compared to $23.460 million on Sunday, after the local market restored transactions after the end of the curfew imposed for a religious occasion.

"The demand hit $4.930 million in cash and $70.920 million in money transfers outside the country, all covered by the bank at an exchange rate of 1,213 Iraqi dinars per dollar, a tick lower than yesterday's session," according to the central bank's daily bulletin which was received by Aswat al-Iraq - Voices of Iraq - (VOI).

The 14 banks participating in the auction offered to sell one million dollars, which the bank bought at an exchange rate of 1,211 Iraqi dinars per dollar.

In statements to VOI, Ali al-Yasseri, a trader, said, "Foreign transfers increased as the exchange rate went down and the local market revived following a ban on vehicles in Baghdad as Shiite Muslim pilgrims observed a religious occasion on Thursday through Saturday."

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

Aswat Aliraq

Update......

Iraqi economic growth to hit 7 pct

Iraq’s economy is on track to reach GDP growth rates in 2008 of 7 per cent, driven by oil price movements, economic reforms and surging foreign exchange reserves, said the International Monetary Fund (IMF) last week.

The upbeat assessment is based on a meeting convened in Washington between the IMF and the Iraqi Minister of Finance Jabr Al-Zubaydi, Governor of the Central Bank of Iraq (CBI) Al-Shabibi, Minister of Oil Al-Shahristani and other senior officials from their banking community.

According to the IMF, “The fiscal stance [in Iraq] was successful in containing current spending, but fell short in the implementation of the ambitious investment program, which, combined with the difficult security situation, prevented the envisaged expansion of oil output.

“Rising oil prices, however, more than offset the production shortfall, thus helping to preserve fiscal sustainability. High inflation was sharply reduced by appreciating the exchange rate, tightening monetary policy, and controlling current government spending.”

An unexpected bonus was the rapid jump in net international reserves to A$23 billion, which are expected to climb even further during the year as Iraqi authorities make provision for massive inward investment flows in this year’s budget.

Offsetting the 7 per cent GDP growth is inflation which is in two-digits. But it’s now falling due to improved capacity. Meanwhile their currency is currently loosely pegged to the greenback on a “crawling” basis, meaning that even in Iraq you are not safe from sub-prime contagion.

On the governance front, the Iraqi authorities are aiming to strengthen public financial management and central bank accounting frameworks while also restructuring two of largest public banks. Meanwhile improving oil sector oversight arrangements are also on the agenda, especially with oil production expected to jump to 2.2 million barrels per day. These governance reforms include re-establishing the Iraq National Oil Company and reorganising the Ministry of Oil.

But in one of the IMF’s more bizarre statements, they complained that, “there are some delays in data provision and weaknesses that hamper economic analysis.”

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Iraqi inflation falls to lowest in over 17 years

Annual inflation in Iraq has fallen dramatically, hitting 12 percent in December 2007, compared with 65 percent a year earlier, the central bank said in a statement seen on Monday.

"This positive and encouraging trend in the annual inflation levels has not been achieved in the country for more than 17 years," the bank said.

"This improvement ... if it continues, indicates a new course for monetary policy, a less strict one, in the coming period, but on condition that state expenditure maintains a high level of discipline," it said.

The central bank has pursued a policy of raising the value of the dinar against the dollar, helping to lower monthly inflation.

The dominance of the dollar has been a problem for the bank, which cannot curb inflation with traditional tools to control the domestic money supply as most of the country's commerce is handled in dollars.

In December it was forced to issue a statement denying it planned to revalue the dinar quickly after rumors of such a move sparked buying of the currency.

The International Monetary Fund forecast last week that high oil production would push Iraq's gross domestic product growth to over 7 percent in 2008 and 2009, from just 1.3 percent in 2007.

Iraq's economy has been battered by decades of war and sanctions that have fuelled high unemployment and low growth. But along with higher oil prices, business is booming in the country's more stable northern Kurdistan region.

Iraqi inflation falls to lowest in over 17 years | International | Reuters

Iraq extends oil contracts deadline to Feb 18

Iraq has extended until Feb 18 the deadline for foreign oil companies to apply for service contracts linked to exploitation of its vast crude reserves, the oil ministry said.

"The deadline was extended from Jan 31 to Feb 18," ministry spokesman Asim Jihad told Agence France-Presse.

"A ministry committee has invited international companies to apply for service licences related to the extraction of oil, the development of oil fields and the deployment of expertise, equipment and training for projects that will be implemented by Iraqis," Jihad said.

"These licences are not investment contracts, but service contracts that will last for two years."

After then, companies will be allowed to bid for lucrative long-term exploitation contracts, he added.

The ministry has previously said that companies which have signed deals with Iraq's autonomous northern Kurdish region will be excluded from national contracts.

The Kurdish regional government has signed 15 oil contracts with 20 foreign companies to explore and export oil discovered in the northern region.

Oil Minister Hussein Shahristani said in November that all such deals signed by the regional government with foreign companies stand cancelled as the Iraqi parliament has yet to pass a draft oil law.

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Pentagon mulls moving Patraeus out of Iraq
US Department considers giving 'surge' architect top NATO command job, decision not finalized yet

The US Department of Defense is considering moving the main architect of a troop "surge" strategy, General David Petraeus, out of Iraq and giving him a top NATO command job, The New York Times reported on its website late Sunday.

Citing an unnamed senior Pentagon official, the newspaper said the department was weighing "a next assignment for Petraeus," now the top US military commander in Iraq, and that the job of NATO supreme commander was a possibility.

"He deserves one and that has also always been a highly prestigious position," the report quotes the official as saying. "So he is a candidate for that job, but there have been no final decisions and nothing on the timing."

One of the proposed scenarios calls for nominating Petraeus for the NATO post before the end of September, when Congress goes into recess for elections, the paper said.
If everything goes as planned, Petraeus might stay in Iraq for some time after that before moving to the alliance's headquarters in Brussels, The Times said.

The leading candidates to replace him are Lieutenant General Stanley McChrystal, head of special operations in Iraq, and Lieutenant General Peter Chiarelli, a senior military assistant to Defense Secretary Robert Gates, according to the report.

Under the "surge" strategy advocated by Petraeus and fully espoused by President George W. Bush, about 30,000 extra troops were sent to Iraq early last year in a bid to quell violence.

According to a Pentagon report released last month, the surge has been working, with US forces achieving "significant security progress" in Iraq over the past three months with the number of attacks down 62 percent.
Petraeus has been repeatedly praised by leading Republicans as the man who can get the job done in Iraq.

Pentagon mulls moving Patraeus out of Iraq | Iraq Updates

Update.......

Kurdistan's minister discusses oil contracts in Baghdad

The minister of natural resources in Iraq's Kurdistan region arrived in Baghdad to discuss with central government officials the controversial oil contracts and the oil and gas law, a senior source said on Monday.

"Minister of Natural Resources Ashti Hourani arrived on Monday morning in the Iraqi capital Baghdad to discuss with officials there the issue of oil contracts signed between the region and several foreign companies, in addition to the draft oil and gas law," an official spokesman for the Kurdistan Regional Government (KRG), Jamal Abdullah, told Aswat al-Iraq, Voices of Iraq, (VOI).

The region had signed 15 contracts with 20 foreign oil corporations despite the central government's objection and ahead of the Iraqi parliament's final endorsement of a new draft law on oil.

Parliamentary debates on the draft oil and gas law were postponed more than once despite strong pressure from the United States on Iraqi parliamentary bloc leaders to accelerate a new law.

The Iraqi Ministry of Oil invited foreign corporations to invest in the oil field in all Iraqi provinces, including those in the Kurdistan region and in Kirkuk, but excluded the companies that have signed contracts with the region without a prior approval from the ministry.

Kurdistan's minister discusses oil contracts in Baghdad | Iraq Updates

Advanced steps in rehabilitating Bazergan oil field

Technical and engineering staffs of Meesan oil fields' committee, have achieved advanced rates in rehabilitating Pazergan oil compound after the formation of an executive committee for this purpose.

A source within the ministry said that this project is aiming to increase production capacity of this vital compound and included the rehabilitation of oil and gas pipes which suffers from the gathering of layer of dust and dirt led to the decay of some parts, and to build trenches and to prevent dust and mud drifting during rain.

Advanced steps in rehabilitating Bazergan oil field | Iraq Updates

121 projects referred into companies in Dhi Qar

Process of opening tenders of regions developing plan's projects for 2008 which included in its first phase 121 service and developing projects out off 400 projects included within current year plan have been conducted in Naseryha city.

Opening process conducted in front of mass media and number of province's council, integrity body, general inspector directorate, representatives of engineers union and bar association, Thee Qaar commerce chamber and a gathering of contractors company's owners.

121 projects referred into companies in Dhi Qar | Iraq Updates