Thread: Iraq/Dinar News. 09/05 to 01/14/07

Interestin article...sorry if posted before

07 November 2006 (Niqash)

Oil Minister Hussein Shahristani announced last week that he aimed to sign oil production contracts with foreign companies by the end of next year. Notably, the announcement was made in Australia - like most of the significant statements of Iraqi oil policy, it was made to non-Iraqi ears.

The same was true of the confirmation last month of the form of such contracts. Speaking to the conference of the International Compact for Iraq, a meeting of international donors in Abu Dhabi, Deputy Prime Minister Barham Salih, who heads the committee drafting a new oil law, announced that production sharing agreements (PSA) would be used - the type of contract favoured by the companies themselves.

Putting Mr Salih's comments into context, the US government representative to those talks threatened that any future economic assistance to Iraq would be conditional on economic reforms - the priority among which was the passing of an acceptable oil law.

But this announcement was made with unfortunate timing. Just a week later exactly that same structure came under renewed fire in Russia for the unfair deal it gave the state.

A dispute flared up when the Russian government announced that it was suspending an environmental permit for the Sakhalin-2 oil and gas project, which is currently under construction. While the Sakhalin-2 project does indeed suffer from serious environmental problems, most analysts believed that Russia's real motivation was to change the unfavourable economic terms.

As Jarmo Kotilaine, a Russia expert for the Control Risks consultancy commented, "In Russia, environmental audits are often politically motivated. What the Russian government wants is a renegotiation of the PSA." This was echoed by Adam Landes, an oil and gas analyst at Moscow-based Renaissance Capital, who said, "It seems to be a brutal way of renegotiating previous deals that were quite humiliating for Russia."

The Sakhalin-2 contract was signed in 1994, while Russia was undergoing rapid economic liberalisation, following the collapse of the Soviet Union. Ever since then, the contract has been criticised for its economic terms. In January 2005, the Russian audit chamber warned that, "We have drawn a conclusion that PSA terms for Sakhalin-2 are decidedly not beneficial for Russia." Indeed, so unfair were the terms that leading energy economist Ian Rutledge called it a "production non-sharing agreement".

But it was in July 2005, when the costs of the project nearly doubled from $12 billion to $22 billion, that the dispute really intensified. The Sakhalin-2 PSA is structured in such a way that the Russian state receives nothing (apart from a small royalty) until both the costs and a specified profit for Shell have been deducted. The result is that Shell's profits are guaranteed, while the state effectively carries all of the risk of cost over-runs.

Ironically, two of the main arguments commonly given for oil to be developed by foreign companies are that it reduces the state's risk and that only multinational companies have the capacity to manage major projects - something Shell proved by both the cost over-runs and the environmental damage that it was not up to.

However, despite all these problems with the contract Russia does not have the right to revoke, amend or renegotiate it. Even worse, the contract effectively lasts for an indefinite period of time, with an initial period of 25 years, followed by a right for the company to renew it (without consent required by the Russian state) for further periods of five years in perpetuity.

It is for these reasons that Russia was forced to revoke the environmental permit in order to halt the project.

Russia has only signed three production sharing agreements, all in the early to mid-1990s. All three were controversial and no more have been signed since. In fact, the other two have also both come under pressure following the Sakhalin-2 dispute.

The parallels with Iraq are striking. All three of Russia’s PSA contracts were signed while the country was in a weak position and going through rapid change. It was only later that it became clear what the country had given up.

But Russia is not the only country that is reconsidering the terms of foreign investment. Bolivia famously nationalised its gas production earlier this year. Algeria and Indonesia have both revised the terms of future oil contracts, and Venezuela has done so for its existing contracts. Thus Iraq - despite being a founder of OPEC, and a leader in taking national control of its oil industry through Law 80 of 1961 - seems to now be bucking the international trend.

So why would Iraq pursue such a policy?

A clue lies in the fact that both the deputy prime minister's announcement that PSAs would be used and the oil minister's statement that they could be signed by the end of next year were made to foreign audiences, not within Iraq. It seems it is outside interests that are driving Iraqi oil policy.

During the drafting of the oil law over the last five months, three consultations have taken place - none of them with Iraqis. The US government and the multinational oil companies were presented the draft law for their comments in July. Last month, the International Monetary Fund joined this list, examining the draft oil law in its quarterly review of the Iraqi government's compliance with its economic conditions.

But the Iraqi people have not been consulted, nor even has the Iraqi parliament. Indeed, Iraqi civil society groups and parliamentarians who have asked to see the draft have been told that it does not exist. Instead it will be presented to the parliament in December, to be pushed through (the government intends) as a fait accompli.

Russia realised the mistakes it made by signing PSA contracts only when it was too late. It remains to be seen whether Iraq follows the same course.

Is Iraq pressured to sign unfair oil contracts? | Iraq Updates

Cheers!
DayDream

Originally Posted by texaslonghorns

Hey Dan (APOLLO) , what is the lastest? Can you still get dinar from your source in Jordan? What's your take on these rumors about no longer being able to buy dinar from Iraqi banks?

Also Dan, I have been wondering, why isn't freedinar updated with audiofiles of the calls any longer? You say you stay up late to check the cbi auctions, why not stop by and post with us sometimes while your waiting, we'd like to hear from you more.

Erbil, Kurdistan-Iraq, 07 November 2006 (KRG)

Austrian Airlines announced on Monday that it will start scheduled flights to Erbil International Airport on 11 December.

Peter Katzlberger, the company's representative in the Kurdistan Region, said, "Austrian Airlines is proud to announce that it is the first western regular scheduled carrier operating in the Kurdistan Region in Iraq." The airline said that it will operate two scheduled flights a week between Vienna and Erbil, and tickets can be booked at any Austrian Airlines office around the world or in Erbil, or through an IATA (International Air Transport Association) member travel agent.

Falah Mustafa Bakir, the minister in charge of the KRG's Office of Foreign Relations, said, "We are pleased that the Austrian foreign ministry amended its Iraq travel advice to show the true picture that the Kurdistan Region is safer." He added, "I hope that other scheduled carriers will start to recognise that Kurdistan's air travel market is growing and ripe for investment."

Charter carriers have been operating direct flights to the Kurdistan Region since July 2005, with routes including Frankfurt, Stockholm, Istanbul, Dubai and Amman. Austrian Airlines is the first western scheduled carrier. The Kurdistan Regional Government is improving aviation infrastructure by expanding the airport to accommodate 1.5 million passengers and 35,000 tonnes of freight a year. The new airport is due to be completed in 2007.

Contact details for Austrian Airlines and other carriers and agents are available on the travel information page.

Austrian Airlines to start scheduled flights to Kurdistan | Iraq Updates

Originally Posted by DayDream

07 November 2006 (Aljazeera) BTW: DID YOU SEE THAT Aljazerra IS GETTING ITS OWN STATION IN THE U.S.??? SAW THAT LAST WEEK IN USA TODAY!

A new audit examining 15 contracts signed in Iraq has found new evidence of massive corruption and mismanagement by the US government.

The audit of 15 noncompetitive contracts paid for by US government agencies with Iraqi oil money was unable to account for $22.4 million in funds, a UN-led watchdog said on Monday.

The audit by KPMG, ordered by the International Advisory and Monitoring Board (IAMB), said that in some cases Iraq did not receive goods and there were "unreconciled payments".

The report also said there was no evidence that steps were taken to fix previously reported problems with corruption.

The contracts varied from paying for guards for oil pipelines to training Iraqi police and military to the purchase of vehicles and food.

"In view of these findings, the IAMB recommends that the Iraqi government seek resolution with the US government concerning the use of resources of the [Development Fund for Iraq], which might be in contradiction with the UN Security Council Resolution 1483," the board said in a statement posted on its website.

The IAMB, which also includes officials from the World Bank and International Monetary Fund, was created by the UN Security Council in 2003 to oversee the use of Iraqi oil money while the country was under an interim US administration.

The watchdog's mandate expires at the end of December.

Missing millions

In 2004 an audit, ordered by the Coalition Provisional Authority (CPA) which governed Iraq after the US-led invasion, found that more than $8.8bn of Iraqi money was missing.

The CPA found that the money had been paid for goods and services that were never provided.


The US hoped Iraq would become a model for the Arab world


In other cases, millions of dollars were paid by the CPA in salaries for thousands of security guards who did not exist.

In other cases the money simply vanished.

Since the CPA handed over the power to Iraqis, corruption has become even worse.

A new survey released yesterday by Transparency International, an anti-corruption watchdog, ranked Iraq as the second most corrupt country in the world.

The 2006, Corruption Perception Index placed Iraq in joint 162nd place - tied with Myanmar and Guinea - but marginally ahead of Haiti, the world's most corrupt nation.

Cheers!
DayDream

They already have a station in the US. It's called CNN.

Originally Posted by CharmedPiper

Yes I know this is not dinar-related but just to update everybody and hopefully Iraq will be #151.

Vietnam officially joins the World Trade Organization

(Voice of Iraq) - 07-11-2006
This issue was sent to a friend

Geneva (Reuters) - The World Trade Organization formally on Tuesday to Vietnam's accession to membership, thereby becoming a member No. 150.

Vietnam officially join the Organization after 30 days of the adoption of the National Assembly of the membership.

The WTO General Council decision adopting the deal reached by the working group for consideration of the membership of Vietnam late last month as a formality.

Seeking Vietnam, which has a population of 82 million people and its economy is growing rapidly to join the organization for 12 years.

Am I missing something here? Isn't the Dong many times more worthless than the worthless Dinar? Iraq has all this oil that they don"t have -Yet Vietnam is in the WTO and Iraq is not???

Originally Posted by Mike5200

Am I missing something here? Isn't the Dong many times more worthless than the worthless Dinar? Iraq has all this oil that they don"t have -Yet Vietnam is in the WTO and Iraq is not???

please note it took them 12 years to do it


and i may be off but i think 12 years ago we had the gulf war ( with iraq )

Vietnam Has The Market Cornered On Coolie Hats

Originally Posted by elgordo

For What It's Worth, The Order Section At Free Dinar Website Does Not Come Up. Looks Like They Are Not Taking Orders.

I listen to each of their weekly conferences and take about 3 typed pages of notes.
They have not taken any orders or sold any Dinar for about 3 weeks now. Not sure of the exact date. I was on vacation during one of the calls in early October and don't have notes, but I think it was about 3 weeks now.
fyi

Originally Posted by phiberoptik

please note it took them 12 years to do it


and i may be off but i think 12 years ago we had the gulf war ( with iraq )

Actually Desert Shield started in Aug of 1990 and Desert Storm started in Jan 1991, or maybe Feb. I keep trying to forget.

Originally Posted by Treater

I remember reading months ago that the last 8 revals around the world occured on Wednesdays.

Also, if you look at the history of the iraqi dinar on Oanda, you will see that
that every big change happened on a Wednesday. This fact is often overlooked, and almost never mentioned on any of the forums.

People are in love with Thursdays, and Sundays for some reason though, although I have yet to see why.

Hey treat I am with you and SGS for tomorrow, WEDNESDAY...sounds like a winner.