Thread: Archive Latest News - Think Tank - 15/04/08 - 26/08/08

Update........

The oil game gets slippery

Four Western oil companies are poised to return to Iraq, 36 years after being kicked out by Saddam Hussein's nationalisation of the country's oil industry. According to the New York Times, Exxon Mobil, Shell, Total and BP the original partners in the Iraq Petroleum Company -- along with Chevron and a number of smaller oil companies, are in talks with the Iraqi Oil Ministry for no-bid contracts to service Iraq's largest fields.

The deals are expected to be announced on June 30.

No-bid contracts are unusual for the oil industry and the deals being worked out are designed to let the four companies gain a firm foothold in Iraq. Legislation that would open up the country's oil sector to foreign companies remains stalled in the Iraqi parliament because of disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.

The four companies were picked from among more than 40 firms, including several from Russia, China and India, which were denied any contracts despite having signed memorandums of understanding with the Iraqi Oil Ministry.

According to the New York Times, the no-bid contracts are structured as service agreements for one to two years that would see advanced technology and expertise being used to improve Iraq's oil fields and the country's oil production rising by half a million barrels per day. Service agreements do not need legislative approval and, obviously, the deals, which will circumvent the pending legislation, and will allow the four companies to stake an advance claim and gain an advantage in bidding on future contracts.

The Iraqi Oil Ministry describes the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law is pending in parliament.

The oil ministry also says that the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and because these companies had the needed technology.

Why then was the Russian company Lukoil, which signed a contract for the West Qurna field in southern Iraq, outside Basra, with the Saddam government and offering free training to Iraqi engineers, was denied a similar agreement?. A consortium of Chevron and Total, a French company, was given the "service agreement" for West Qurna.

Surely, the other bidders also have advanced technology and expertise to do the job in Iraq, but they lack the most vital qualification -- being closely wired into the American political establishment.

Of course, US Secretary of State Condoleezza Rice has denied that the US government was not involved in the no-bid oil contracts. But then who needs direct US government involvement in the matter American advisers appointed by the US government are determining Iraq's oil policy and their role strengthens the conviction among many in this part of the world that one of the reasons that the US went to war in Iraq was to secure the country's oil wealth for American-led companies which have close links with the Republican camp.

http://www.godubai.com/gulftoday/art...tion=Editorial

The Commission expects oil parliamentary ratification of the oil and gas soon

Vice-Chairman of the expected oil and gas committee in the House of Representatives deputy Iraqi Alliance list common Abdul Hadi ABOLHASSANI Adoption Law of the oil and gas in Parliament during the next few.

Between ABOLHASSANI in an interview with "Uzmatik", today, Thursday, that "the President Nnigervan Barzani's Kurdistan province, will visit the Iraqi capital next week to reach a final agreement with the central government on the adoption of the law of oil and gas in the parliament."

ABOLHASSANI He added that the central government and the Government of the Territory "have decided to return to the original version of the law approved in February in 2007, the Iraqi Council of Ministers to negotiate around them and find agreement on the contentious points in the law, especially regarding the powers of the Territory in signing contracts with oil companies, Without returning to the central government. "

The ABOLHASSANI to resolve differences between the government and the Iraqi Kurdistan region would end any refusal to approve the law in the Iraqi parliament, "because of objections to the rest of the paragraphs of the law by the other political blocs can be easily overcome," as he put it.

Vice Chairman of the Committee on the oil and gas in the Iraqi parliament said that "the law of oil and gas will not pass without reciprocal concessions by the Iraqi government and Kurdistan Regional Government on the condition that these concessions do not affect the interest of Iraq."

He pointed out that ABOLHASSANI Adoption Law of the oil and gas would give "strong impetus to the Iraqi Government to conduct negotiations with global oil companies to bring large investments in Iraq, and at low rate of interest."

It is noteworthy that the law of oil and gas, which gives the regions and governorates the right conclusion of contracts without consulting the Ministry of Oil in the central government, has seen strong opposition from most political bloc consisting of the Iraqi parliament, which said that it paves the way for the partition of Iraq.

Translated version of http://iraqalaan.com/bm/Economy/3013.shtml

Unlimited budget to support the agriculture sector in Iraq

The advisor to the Ministry of Agriculture, Faisal Rashid Nasser would launch agricultural projects for this year by the Ministry of Agriculture according to the Prime Minister's initiative to allocate an unlimited budget to support the agricultural sector in Iraq.

He explained Nasser, said in an interview with "Uzmatik" that "Prime Minister Nuri al-Maliki announced the allocation of $ 500 million first stage of the agricultural sector," noting that "there are other amounts will monitor the event later completed the first phase."

His adviser to the Ministry of Agriculture, "a fund to lend to farmers and farmers will be opened by the Agricultural Bank, without interest," noting that "the loan's value ranges between five to one hundred million dinars."

The adviser to the Iraqi Ministry of Agriculture, "The loan will be determined by the quality of the project," stressing that "loans will include all sectors of agricultural, animal and fish farming and livestock."

Nasser pointed out that "the objective is to provide what the country needs food, and operating the largest possible number of manpower, in addition to digging wells to provide other sources of water after water scarcity in Iraq."

And advisor to the Ministry of Agriculture, "There are talks with the Centre for Energy and Environmental Research in the Ministry of Industry and the ministry to equip farmers solar pumps, which hopefully enter into force soon."

In the same vein, the Director of Planning and Follow-up in the Ministry of Agriculture Salahuddin Aziz Kadhim told "Uzmatik" that "the Prime Minister's initiative to allocate $ 500 million of which will distribute 186 million dollars for the agriculture sector, in addition to the annual PROFILE of the Ministry of Agriculture and Land Reclamation, Central South, and 220 million dollars For the establishment of four funds will be loaned to farmers through the Agricultural Bank, and $ 70 million for projects of agricultural and livestock production, in addition to allocations of the Ministry of Agriculture. "

Elsewhere Aziz said that "the production of rice to Iraq in 2008 had increased by 40% over the previous years," explaining that "Iraq's production of rice was 200 thousand tons annually before in 2003, while Iraq's production this year 360 thousand tons , "Stressing that" the expansion of cultivation of rice vertically at the expense of horizontal expansion to cope with water shortages and drought. "

It is noteworthy that Prime Minister devoted a few days ago, an unlimited budget to the ministries of agriculture and water resources to cope with the drought crisis and water shortages in Iraq during this year.

Translated version of http://iraqalaan.com/bm/Economy/3018.shtml

US Govt not involved in Iraq no-bid Oil Contracts: Rice

US Secretary of State Condoleezza Rice said yesterday that the US government is not involved in Iraq’s no-bid oil contracts that could see four major western oil firms start their first commercial work there since the war began five years ago.

“The US government has stayed out of the matter of awarding the Iraq oil contracts. It’s a private sector matter,” Rice said in an interview on Fox news network.

But she did stress that the likely awarding of contracts “demonstrates that it’s starting to get interesting in Iraq and recognizes the potential for Iraq to become an even more major oil supplier.”

Earlier this month Iraq’s Oil Minister Hussein Shahristani was cited as saying his country intended to sign technical support agreements with foreign oil majors including ExxonMobil, BP, Shell and Total by the end of June that would help boost output capacity by 500,000 barrels per day.

Citing an improving security situation in the strife-ridden country, Rice said that “the Iraqis, even though they need to pass an oil law, are beginning to attract investment.

“That’s really a good sign. It will be a good sign if Iraq can increase oil production because, of course, the supply and demand of oil is a major concern to all of us.”

Since a US-led coalition invaded Iraq in 2003, suspicion has swirled particularly in the Arab world that Washington pursued a war footing with Iraq in order to gain access to the country’s massive oil reserves.
US President George W Bush has consistently stated that the war was necessary to combat terrorism.

Yesterday, the New York Times reported that ExxonMobil, Shell, Total and BP - the original foreign partners in the Iraq Petroleum Company (IPC) - were in the final stages of negotiations on contracts that would see them return to Iraq 36 years after their oil concessions were lost due to the IPC nationalisation under Saddam Hussain.

The firms’ offers prevailed over those by more than 40 other companies including those from Russia, China and India, the NYT reported.

The Iraqi oil ministry said the contracts were intended to bring modern skills and technology to its oil fields as the country finalized its oil law in parliament, the daily said.

The new no-bid, two-year contracts are relatively small by international standards but open the door to potentially lucrative work for the western firms as they put the companies at an advantage on future contracts, the paper said.

Middle East oil expert Leila Benali of Cambridge Energy Research Associates said the current contracts are a “foothold” in Iraq for firms eyeing long-term contracts.

“The bigger prize everybody is waiting for is development of the giant new fields,” Benali was quoted as saying.

Gulf Times – Qatar’s top-selling English daily newspaper - Gulf/Arab World

US welcomes effort to increase Iraq's oil production

The United States would welcome increases in Iraq's oil production to help alleviate the crunch in the world's energy market, US Secretary of State Condoleezza Rice said Thursday. "It will be a good sign if Iraq can increase its oil production, because, of course, the supply and demand of oil is a major concern to all of us," Rice said on FOX News.

Rice was commenting on a report in The New York Times about four large Western oil companies being in the final stages of negotiations with the Iraqi government to service the country's oil fields.

Exxon Mobil, Shell, Total and BP - the four largest companies - and Chevron and were in talks with the Iraqi Oil Ministry for non- competitive bids to begin work, the newspaper reported.

Rice said the US government was not involved in the process but said the development shows "the Iraqis are beginning to make a good case for foreign investment."

"The United States government has stayed absolutely out of the matter of the awarding the Iraq oil contracts," she said. "It's a private-sector matter."

Any deal would bring the four big companies back to Iraq for the first time in 36 years. The Iraqi Oil Ministry is seeking help from the firms to modernize the government's ability to harness oil, The Times said.

The Oil Ministry is pursing deals despite the lack of an oil law that would be designed to ensure oil profits are shared fairly among Iraq's ethnic and religious groups.

Completing the law has been a difficult challenge for Prime Minister Nuri al-Maliki's government but is seen as a key objective toward fostering political reconciliation between Shiites, Sunnis and Kurds.

US welcomes effort to increase Iraq's oil production : US World

What Oil Companies Will Get in Iraq

After five grueling years of war, Iraq's most cherished prize — its mammoth hydrocarbon reserves — might finally be within reach of Western oil companies. Exxon Mobil, Shell, Total and BP appear set to win no-bid contracts allowing them to work in some of Iraq's rich oil fields. The negotiations between Iraqi officials and those companies, first reported in Thursday's New York Times, are for "technical support agreements" for two years and renewable for a third, rather than for lucrative contracts to pump oil out of the ground. Under the envisaged deals, the companies would help Iraqi oil managers overhaul decrepit operations and modernize their equipment in the hope of boosting Iraq's output by about 500,000 barrels a day — an increase of nearly 20% over the best days the Iraqi industry has had since the U.S.-led invasion in March 2003. At the current sky-high oil prices, that could bring in billions more every week for the Iraq government, which sorely needs funds to rebuild the country. And the companies, which had for decades been partners in the Iraq Petroleum Corporation before Saddam Hussein nationalized the industry, would tentatively return to some of the biggest oil fields on the planet. Such arrangements, the corporations hope, will position them to seek long-term access to proven reserves that are second only to Saudi Arabia's.

But plenty of obstacles lie between the Western oil giants and an Iraq bonanza. The contracts are not yet inked, and analysts suspect the deals may be driven more by Iraq's precarious politics rather than by its ability to pump more oil. "It is not too clear to me how they will accomplish an increase in production," says Tariq Shafik, a London-based consultant who helped draft the U.S.-backed oil law that remains stalled in Iraq's parliament. "Production does not happen magically." Shafik believes the government's main motivation for the proposed deals is to attempt to break the two-year deadlock over the new law.

Iraqi politicians have been locked in a bitter dispute over how much control the federal government in Baghdad should have over regional oil operations, and how revenues would be shared among different communities. The technical agreements with the four Western companies would bypass the stalled law, offering oil companies payment for their services rather than a share of the oil. Such production agreements also circumvent the resistance among many Iraqi politicians to selling the rights to Iraqi oil directly to foreign companies, while making use of their technical skills.

"The Ministry of Oil has been accused of being too incompetent to do anything, so they came up with this gimmick," says Shafik. "It is a haphazard, piecemeal approach." But the pressure in Baghdad is intense. Spooked by insurgent attacks and the political infighting, oil companies have stayed out of the country's biggest oil fields near Basra and around Kirkuk. But several smaller companies, including Norway's DNO and the Dallas company Hunt Oil, have cut deals with the Kurdistan Regional Government without bothering to wait for the new federal law to pass. So far, their oil finds in Kurdistan are tiny compared with the known reserves in Kirkuk and Basra. But officials in Baghdad dread that even these could encourage a belief that Kurdistan could survive if it broke away from Iraq. Before 2003, Saddam Hussein had effectively blocked Kurdistan from producing oil, while the rest of the country pumped about 2.5 million barrels a day.

U.S. officials had assumed — and promised as much to Congress — that Saddam's downfall would open the way for oil companies to return to Iraq, overhaul the oil facilities and hugely increase output. Instead, insurgent attacks have bedeviled output and raised security costs by billions of dollars. And a massive smuggling operation has s.i.p.h.o.n.e.d hundreds of thousands of barrels a day on to the black market. Another reason for seeking foreign help is the soaring production costs that affect Iraq as much as they affect the wider world oil industry. Shortly after the war began, Shafik estimated that the capital outlay required for Iraq to pump an extra 500,000 barrels a day would be between $15 billion and $20 billion. But, he says, that figure could be about 70% higher now. "[Iraq's oil fields] were not maintained, they were lacking spare parts," says Leila Benali, an analyst on Middle East oil for the Cambridge Energy Research Associates. "They used patchy solutions over decades." The new deals may be just one more patchy solution, while the country's future political and security arrangements remain unsettled.

What Oil Companies Will Get in Iraq - TIME

This is a few days old but I haven't seen it yet

Iraqi Oil Minister Discusses Production, Contracts, Iran Role

Posted on: Wednesday, 18 June 2008, 06:00 CDT

Text of report by London-based newspaper Al-Hayat website on 15 June

[Report on an interview with Iraqi Oil Minister Husayn al- Shahristani by Jawdat Kazim in Baghdad: "Stressing Intention To Form International Partnership To Exploit Natural Gas and.Denying US Companies' Monopoly of Investment Contracts, Iraqi Oil Minister tells Al-Hayat: Iran Prevents us From Exploiting Al-Fakkah Field; Iraq's Revenue From Crude Will Rise to 70 Billion Dollars by Year End"]

Iranian border guards continued to prevent Iraq from exploiting the 'Al-Fakkah' oilfield in southern Iraq. Iraqi Oil Minister Husayn al-Shahristani regarded this unacceptable because, he said, the oilfield in its entirety belongs to Iraq. The minister blamed the hike in oil prices on speculators in the international oil market, and expected Iraq's revenue from crude oil to reach 70 billion dollars by the end of the current year.

Talking exclusively to Al-Hayat, the Iraqi oil minister confirmed that political motives stand behind accusations made against his ministry by some US parties, pointing out that Iraq is endeavouring to make a partnership agreement with a major international company to exploit natural gas.

Of the joint oilfields with neighbouring countries, the oil minister said: "We have joint oilfields with Iran and Kuwait. It is expected that some joint oilfields with Syria will be discovered, in addition to Turkey. The international custom in such a case is for the parties to enter into agreement with a third party, such as an international oil company that would agree to exploit the joint field and divide the revenue between the parties, each according to its share in the oilfield."

Adding: 'We have talked to the Iranians about joint oilfields that we have with them. We agreed in principle to adopt the formula treating the joint oilfields as one because it is beneficial to both parties. We set up technical committees to study and follow up the provisions of the agreement, but long intervals between the meetings of the committees have delayed the signing of the agreement. The delay is usually caused by the Iranians, because, on our part, we are careful to expedite the settlement of such issues. However, pending such an agreement, each party is producing oil depending on its own resources and according to its borders."

"We have a joint oilfield with Kuwait," he continued, "most of which is in Iraqi territory, with slight extension into Kuwaiti territory. We are producing large quantities of oil from it. Our problem with Iran is that the 'Al-Fakkah' oilfield is in the Maysan region in southern Iraq. There are no border posts there at present and the Iranian border guards are preventing the Iraqis from exploiting the oilfield on the pretext that they do not know exactly where the actual borders are. This logic is unacceptable to us because these fields are basically in Iraqi territory and everybody knows that the oilfields were dug by the Iraqis. Hence we cannot accept the intervention by Iranian border guards."

The Iraqi oil minister added: "We have agreed with the Iranians via the Iraqi Foreign Ministry to begin marking the borders, but the Iranians are vacillating on the grounds that there are mines in the region that need to be removed before marking the borders."

With regard to the accusations directed at the Ministry of Oil, some of which are from official US circles, the oil minister said: "Some people are feeding the US media and Congress wrong information with a view to distorting the reputation of the oil sector for political ends."

Regarding the announcement by the Ministry of Oil of its first batch of 'permits' to international investment companies, the minister said; "we shall endeavour to announce the first batch during this summer." He denied that US companies are given a high proportion of these permits and affirmed that "international standards are being adopted in this respect, with a view to serving the interests of the Iraqi oil sector and the interests of the country."

On the impact of military operations in Basra on the oil sector, the minister said: "I cannot definitively say that operation 'Charge of the Knights' in Basra has put an end to oil smuggling, because the smugglers buy their petrol from private gas stations and then sell it for double the price to some other parties using fishing boats for transport. Accordingly, the quantities smuggled would appear on the ministry's records as having been already bought and officially paid for."

On the spiraling oil prices, the minister said that "market forces, supply and demand, are not really behind the increase in oil prices in international markets." He explained that "international companies, particularly those with huge capital to invest, which normally invest in real equity or other fields, but are not assured by the US real equity market, which is expected to crumble, have diverted their investment from real equity to oil. They are buying with contracts that are sometimes ten years ahead. In other words, these companies are trading with 'paper oil' in the futures market.

On the contracts previously announced by the Ministry of Oil concerning exploitation of gas that accompanies oil production, the oil minister said: "Iraq is negotiating with more than one company with a view to setting up partnerships with some of the well-known companies in the field of gas production, where Iraq would have the bigger share." He pointed out that this company would be responsible for collecting all the gas in the southern region and processing it. It will be used later to supply domestic demands of solid gas, usually used in electricity generators, petrochemical industries, fertilizer industry, in addition to supplying Iraq with its needs of liquid gas. Surplus gas would be exported to international markets either as solid or liquid gas".

Regarding the Iraqi Government's plan to build and refurbish refineries and other petroleum services, the minister of oil said: "With regard to the refining industry we are working on three lines. The first is to build new advanced state-of-the-art refineries. Such refineries are huge and take about five years to build. Among these refineries is one with a refining capacity of 300,000 barrels a day. It will be built in the Al-Nasiriyah region. Another refinery with a production capacity of 150,000 barrels a day, will be built in Karbala, in addition to one in the Maysan region and one in Kirkuk.

The minister added: "Refurbishing the refineries we have and building new refineries would raise the production and refining capacity of our refineries to 1.5 million barrels a day, but the plan of the present ministry is aiming at 2.5 million barrels a day." He pointed out that "our aim is to raise production to 4.5 million barrels a day within four years and then to 6 million barrels a day in ten years time."

Of the revenue achieved by his ministry, the oil minister said: "last year, the ministry's income was 40 billion dollars, while the budget plan aimed at 30 billion dollars. During the past five months of this fiscal year, the ministry achieved revenue of approximately 28.5 billion dollars, while it was expected to achieve only 14.5 billion dollars." He added: "We hope to achieve oil revenue of about 70 billion dollars by the end of this year."

The Iraqi oil minister affirmed that "the delay in adopting the petroleum and gas law has to do with political concordance that has not yet been achieved." He explained that "the majority of political blocs in the government have in the past expressed their approval of the first draft of the law laid down in February 2007, but the withdrawal of some blocs from the government and their change of mind on this matter have delayed the adoption of this law."

He continued: "We call upon all political blocs to revert to the original draft, vote on it, and then adopt it." He added: "the draft has four annexes focusing on defining the oilfields that belong to the National Oil Company, and the oilfields that will be open to competition by international companies, including the Iraqi National Oil Company. In addition, the annexes define the area for new exploration."

The minister pointed out that "the position of the federal government regarding the issue of regional governments concluding oil contracts with international companies without the federal government's knowledge, remains unchanged. Contracts concluded by the government of the Kurdistan region, unless final agreement is reached on the petroleum and gas law, remain void and contrary to Iraqi law and the Iraqi Constitution."

Iraqi Oil Minister Discusses Production, Contracts, Iran Role - Business - redOrbit

Zebari: Washington accepted Accounting Security Companies in Iraq

The Iraqi foreign minister that Washington agreed to allow foreign security companies subjected to Iraqi law as part of new security agreement is being negotiated between the two countries, while another Iraqi official confirmed that the duration of the said Convention will be two years Proximity.

Had an accident like the one in which the company killed 17 Iraqi security Blakootr last September signed now, the arrested Iraqi security contractors responsible for a ruling, according to Hoshyar Zebari, who was speaking in an interview with The Independent In Washington.

British newspaper expected that this will have serious repercussions waiver American in Iraq, which has a 160 thousand foreigners, mostly Bahraini security Armed to the Teeth, has become represent an important part of the machine of war in Iraq.

According to The Independent that the statements Zebari This came in his endeavours to defend the security of the deal being negotiated with the Americans, as it confirms that they did not reach a dead end but 'that Americans show greater flexibility'.

Iraqi minister added that security companies cited an example to demonstrate that the talks with the Americans Did not reach a dead end.

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Update.......

Rice: Iraq becoming a good investment bet

Oil contract negotiation between four firms and Iraq shows the private sector is interested in the country, U.S. Secretary of State Condoleezza Rice said.

The contracts, reportedly on the brink of being signed, recognize "the tremendous potential for Iraq to become an even more major oil supplier," Rice said Thursday on "Fox and Friends With Steve Doocy."

The group of Western firms include ExxonMobil, British Petroleum, Royal Dutch, and Total.

Even though lawmakers need to pass an oil revenue sharing law, Iraqis "are beginning to attract investment." she said.

"And that's really a good sign and it will be a good sign if Iraq can increase its oil production," she added, "because of course, the supply and demand of oil is a major concern to all of us."

Noting that the U.S. government isn't involved in the oil contracts and any other investments, Rice predicted a lot of investment would flow into Iraq.

"Iraq is certainly a place to look at now," she said.

Rice: Iraq becoming a good investment bet - UPI.com

Iraq to exclude Russia from oil deals

The Iraqi government is to sign over 30 contracts for lucrative oil deals with major Western oil companies before the end of June, leaving Russian companies out in the cold, a U.S. daily has cited a spokesman for the Iraqi Oil Ministry as saying.

The two-year, no-bid contracts will be awarded to companies that have been acting in advisory roles to the Iraqi Oil Ministry in recent years. Five oil companies- the U.S.-based Exxon Mobil and Chevron, Royal Dutch Shell, France's Total and the British oil company BP- are expected to secure the biggest contracts to develop Iraq's vast oil resources.

Their offers defeated offers from companies based in Russia, China and India.

"We have had discussions since last year. The discussions have now ended," Asim Jihad told the Washington Post.

He also revealed that the contracts would be presented to Prime Minister Nouri al-Maliki's cabinet in the next few days and that the contracts may be announced by June 30. He declined however to provide further details on the nature of the deals.

In mid-February, Russia wrote off $12 billion, or 93%, of Iraq's debt to Russia, a move widely rumored to be aimed at securing lucrative oil contracts. Shortly after the announcement, Russia's largest independent crude producer LUKoil said it hoped to regain the right to develop Iraq's giant West Qurna-2 oil field.

However, Iraq's Foreign Minister Hoshyar Zebari said that Baghdad welcomed Russian companies interested in doing business in the country, but would not offer them special privileges.

The New York Times reported on Thursday that the Iraqi government hoped to increase oil production "by half a million barrels per day by attracting modern technology and expertise to oil fields desperately short of both."

Iraq has oil reserves of an estimated 115 billion barrels and it also has an estimated 112 trillion cubic feet of natural gas reserves, according to the Oil Ministry.

U.S. Secretary of State Condoleezza Rice said on Thursday that Washington was not involved in negotiations to secure the deals. Opponents of the U.S.-led invasion of Iraq in 2003 have long claimed that the war was about securing access to Iraqi oil rather than any attempt to destroy the 'weapons of mass destruction' allegedly possessed by the regime of the late Saddam Hussein.

RIA Novosti - World - Iraq to exclude Russia from oil deals