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

Iraq's Draft Hydrocarbon Law Recommends PSAs

AMMAN, Dec 06, 2006 (Dow Jones Newswires)

Iraq's first postwar draft hydrocarbon law recommends the government sign production sharing agreements and other service and buyback contracts to upgrade the country's war-ravaged oil industry.

The draft, a copy of which has been obtained by Dow Jones Newswires, states the Oil Ministry should set up a committee consisting of highly qualified experts to speed up the process of issuing tenders and signing contracts with international oil companies to develop Iraq's untapped oil fields.

The draft law states all decisions concerning Iraq's oil and gas exploration, production and transportation should be handled by the federal government in Baghdad, which is likely to anger Kurdish officials in northern Iraq.
The law is necessary for international companies to begin investment in Iraq's oil sector, which needs up to $20 billion to raise crude oil production to 3 million barrels a day from below 2 million b/d at present.

The new law could trigger the start of massive development of the country's oil fields, home to the world's largest reserves after Saudi Arabia and Iran.

"It is possible that the contractual formula is based on service contract, buyback contract or production sharing contract," the draft law states.

"These contractual formulas should be adjusted in a way that should serve the interests of the Republic of Iraq," the draft said.

The draft, which is still under debate by Iraqi officials, said "qualified Iraqi or non-Iraqi oil companies or individuals who possess suitable financial resources" should be allowed to bid for Iraq's oil contracts to carry out exploration or to develop oil fields.

The draft recommends 15 to 20 year contracts to develop Iraqi oil fields, including production sharing contracts. It states the contracts could be extended by five years if the government found it necessary in order to achieve better technical and financial returns.

The draft law also calls for the formation of an Iraqi National Oil Company to handle the country's oil production, exports and exploration.

"The cabinet should submit to the council of deputies (parliament) a draft resolution together with this oil law...that would establish the Iraqi National Oil Company. It should be owned by the government of Iraq," the draft states.

The law also calls for changes to the oil ministry's structure "to a manner that would enable the ministry to shoulder its new responsibilities stated by the law."

An Iraqi oil ministry official told Dow Jones Newswires Wednesday the new law proposes allowing - for the first time - local and international companies to carry out oil exploration in Iraq.

During the rule of ousted president Saddam Hussein exploration activities used to be carried out by the government only, he said.

The draft law is being debated by senior government officials before it is submitted to the parliament for final approval, the official added.

He named the officials discussing the final draft of the law as Deputy Prime Minister and head of the cabinet energy and oil committee Barham Saleh, Oil Minister Hussein al-Shahristani and the prime minister's adviser and former oil minister Thamer al-Ghadhban.

He said some of the articles of the law could be changed either by government officials or lawmakers.

It isn't known yet when exactly the law would be approved by the parliament. Oil Minister Shahristani had said it should be ready by the end of this year, but differences between Baghdad and the Kurdistan Regional Government, or KRG, on who should handle oil operations in Kurdistan could delay acceptance, oil analysts said Wednesday.

The Kurds are pressing for control of oil resources in their territories and a significant share of oil revenue, which has provoked anger in Baghdad.

"The powers of taking decisions on oil and gas exploration, development, production and transportation should be handled on behalf of the Iraqi people by the federal Iraqi government," the draft law stated.

The KRG - which estimates its resources total 45 billion barrels of oil equivalent - has already drafted its own hydrocarbon law that officials there say would trump Baghdad's version should the KRG not win at least the measure of authority over its resources it's seeking.

The Kurdish authority has already signed agreements with several small oil and gas companies, including U.S.-based Calibre Energy Inc. (CBRE), Norway's DetNorske Oljeselskap (DNO.OS) and Turkey's Petoil and has signed memoranda of understanding with Australia's Woodside Petroleum Ltd. (WPL.AU), Canada's Heritage Oil Corp. (HOC.T) and the U.K.'s Sterling Energy PLC (SEY.LN).

But oil officials in Baghdad have declared these agreements null and void and, without the hydrocarbon law, many oil majors have been reluctant to make deals, despite huge prospects and relative security in North Iraq.

However, contracts the Oil Ministry in Baghdad has already signed with international companies will remain valid, although they will need to be reviewed, the draft law stated. This will affect contracts to develop the Khormala Dome, Hemrin and Subba/Luhais medium-sized oil fields.

The draft law didn't spell out clearly if this article also covers contracts signed during Saddam Hussein's regime such as Lukoil's (LKOH.RS) deal to develop the giant West Qurna-2 oil field.

RIGZONE - Middle East

with the US dollar dropping in value, and Iran now taking the Euro for oil, we could see Iraq pegging closer to the Euro. This would work well wiyh the recent news of de-dollarization and making the Dinar the currency of choice over the US dollar....hmmmmmm

Originally Posted by Frank Rizzo

SHE'S WARMING UP BACKSTAGE...

Originally Posted by Lakeway

Originally Posted by cigarman
Here's one for you, Next years budget is 42 billion dollars ( 59 trillion dinars ), how can they do that with only 20 trillion dinars printed? Answer, they can't!!!
THIS BABY IS GOING TO HIT BIG!!!!

Are we sure on this budget amount??

Is there a link?

Can we get some of you mathematicians to verify??

Great find Cigar!

This could be HUGE IMO!!

[QUOTE=boomcreek;145981]

Originally Posted by shotgunsusie

The panel said the Central Bank of Iraq should raise interest rates to 20 percent from the current benchmark of 16 percent and strengthen the dinar 10 percent to stem the rise in prices. The report recommended central control and distribution of oil revenue and suggested the Iraqi government allow domestic prices for refined petroleum products to rise.

Let's see, if my math is correct 10% of 1426 is 142.6 dinars per dollar improvement. Now we're talking about significant leaps in value.

Originally Posted by jedi17

with the US dollar dropping in value, and Iran now taking the Euro for oil, we could see Iraq pegging closer to the Euro. This would work well wiyh the recent news of de-dollarization and making the Dinar the currency of choice over the US dollar....hmmmmmm

We have two quotes; one might need some verification and it appears that both appear to be guessing as no one really knows! However, we do have a volunteer, a "Virginia Slim Lady" ready to sing our "RV Greens"! I think that is her name, she is kinda cute!

Now; we have a partial QUOTE from the above that I agree with 100% and for those that cannot figure it out; 100% is all I can handle! The Quote: "THIS BABY IS GOING TO HIT BIG!!!!" Now logically, this cannot be, if the second quote above comes into the picture even though the increase is more then a thousand percent, lots more!

Therefore, I go to my first theory, just move that decimal so we have a One for One exchange, 100% ONE IQD = 100% ONE USD or for those in the European Theater, 100% ONE IQD = 100% ONE EURO Dollar, I like that even better!

What do you say and think about this Illogical Hawaiian Thinking?

RV BIG

Originally Posted by Treater

so roughly if this kept up at this rate for a while heres how it might look like over time, if the don't RV it before.

12/06 1430
01/07 1400
02/07 1370
03/07 1340
04/07 1310
05/07 1280
06/07 1250
07/07 1230
08/07 1200
09/07 1170
10/07 1140
11/07 1110
12/07 0980
01/08 0950

This is a good example of logical; appears that way, does it? Comments?

Originally Posted by noodlesdad

This is their character. They've proven themselves to be very sensitive about their independence and anyone that will even remotely hint that they can't "DO IT MY WAY". They are saying, in effect, "DON"T EVEN TRY TO TELL US WHAT TO DO". We are witnessing the beginnings of a rock solid Nationalism for Iraq. This is the stuff that will be taught in their Iraqi History classes in schools for decades to come and beyond. (Should the Lord tarry)

-Remember Malaki's response when he found out the meeting with Bush in Jordan would include --surprise-- the King of Jordan.. He didn't show.

-Remember Talabani's remarks rebuking Kofi Annan's Idea of an International Conference to solve the problems in Iraq. Told him to go fly a kite.

If they can just get all those strong willed coconut heads on the same page Iraq will be a mighty powerhouse.

ND

Someone should tell Dr. Sinan Al-Shibibi that the best thing for Iraqs economy is to keep the exchange rate where it is... maybe he'd RV it tomorrow!

Originally Posted by motomachi

This is a good example of logical; appears that way, does it? Comments?

I think Adster has already addressed this issue today, I for one agree with him, as i am sure many more here do.

Originally Posted by readytogo

If I am not mistaken, I believe the rate was not 1IQD=.33, but .33IQD=$1 which means that 1IQD=$3.33. If we are on different pages, overlook me, but if not WOOT!

Originally Posted by Socata 850

No, at the time Saddam was found in the hole, one dinar was worth 33 cents. They had an official rate of approximately $3 but the dinar had not been traded at that level for years.

Originally Posted by Wm.Knowles

Thank you for posting these numbers. However, I think we can expect a dramatic acceleration of the exchange rates. If the world remained constant, then these number would reflect a very good return on dollars invested and would exceed what could be obtained in any other investment. But some real factors have to be taken into account. These will effect an increasing acceleration of the exchange rate. Factors such as:

The increasing removal of the dinar will have an increasing acceleration of the rate of exchange. Increased demand for the dinar will be generated from speculators, banks, corporations etc. The higher the rate goes, the more others will want to invest. Already we have seen the dinar go from pretty paper in a box to an exchangeable currency at several international banks.

An increasing rise in GNP. This increases demand as a result of internal investment and foreign investment. Which, when increasing oil production is included, the demand for the dinar and increased GNP could be huge. Recent laws such as the FIL and HCL when passed and enacted reflects a plan for this to happen. When you include the advances in the agri sector, the GNP is expected to grow. (a big bunch).

Increases in currency reserves from oil and accountability of GOLD reserves provides a financial base that allows for removal of more currency and further investment, and a rise in the Iraqis disposable income, creating jobs, income and a decrease in unemployment. (Hopefully a decrease in violence).

So, to expect the currency to continue to rise in a 2 to 3 dinar rate over time is unrealistic. Expect the currency to RV at a faster rate if not with a "bold adjust". It still remains grossly undervalued when compared to the assets of Iraq and and their potential for incredible growth in a short period of time. Also, I still maintain they need to increase the purchasing power of the dinar to stimulate the economy and increase confidence in the GOI with the Iraqi people. Thank You.

Originally Posted by CharmedPiper

It was just announced on CNBC Squawk on the Streets that Iran has just announced that they will be dealing oil in EUROS now and not the dollar.....seems to be a trend.

Originally Posted by MrsCK

Posted on Iraq president's website of Press Monitoring these are the lights:

4. Long
The inner pages
7 - The direction of Iraq towards the lifting of the exchange rate of the local currency.
Financial : disbursement 2007 budget will be in the first month of the new year


10. The new evidence
4-Minister of Finance : the Iraqi dinar will be strong and contribute to the service of the State and people


11. Baghdad
Two-banking sector due to rise again in the Iraq market for securities.

Originally Posted by webinvestor

Someone should tell Dr. Sinan Al-Shibibi that the best thing for Iraq's economy is to keep the exchange rate where it is... maybe he'd RV it tomorrow!

The above are great reads, maybe they can use these in a "book" someday! Rich Man, Poor Man, eat your heart out! This news stuff is getting better and better! After reading the news, you start writing the positive side of what you read; read doom and gloom, you might start emulating the same!

You have a choice; logical or otherwise! I am not believing a "lie", some exaggerating, maybe! Some history and it will repeat itself!

RV RV RV

RV

Originally Posted by cigarman

And your point?

well i am not 100% sure about much of anything but i think they ( IRAQ ) use a bunch of those dollars in their reconstruction not all of them i am sure.

I just do not think that things are as simple as looking at 2007 budget in USD and coverting it to dinar.

I am not trying to pick a fight or even say you are wrong just food for thought is all.

Originally Posted by DayDream

Economic : action Central Bank to raise the value of the dinar against the dollar convergence welcome economists

Some considered an important step towards reducing inflation

Baghdad Haider spring

Many economists specializing in finance and monetary actions the Iraqi Central Bank to lower the rate of the dinar against the dollar sale an important step on the road to control the volume of inflation.

They emphasized the importance of raising the interest rate of up to 12% in achieving the goal of curbing inflation would in the short term to stabilize the acceptable price prevailing in the Iraqi market.

It noted that the (morning) depression, and the upheaval of this action on the stock sale and purchase rates in most of the stores are banking Baghdad must follow this dangerous turn in the capital market in the Iraqi press statements, a number of different Concerned importance of the matter and the enemy of a remarkable step towards reducing inflation and raise the value of Iraqi dinar and reduce prices Els Alaa and services.

.When he said Ghalib Baban, Minister of Planning of the benefits of this procedure in Deflator, , which he also : The decision of the Central Bank, which came after extensive study by the stakeholders also aims to encourage holders of capital in addition to citizens in general on saving.
For his part, Governor of the Central Bank Sinan Shabibi : The aim of the Central Bank is currently limited in the fight against inflation, which reached about 76% and reduce the height by providing better conditions for economic development and improving the performance of the banking sector and provide stability.

The Shabibi said that among the reasons inflation is increasing cash in circulation, what required a new monetary policy aimed at improving the dollar's exchange rate towards reducing its price several points in the auction, organized by the Central Bank every day to sell the dollar to withdraw currency from circulation. With the general director of research at the Central Bank of Iraq, Dr Mohamed Saleh appearance that the Central Bank is responsible by virtue of Law No. 56 of 2004 to cope with inflation and reducing levels as a basis of this principle adopted by the monetary policy in the performance of their duties, On this basis, he has the Central Bank to establish policy priorities, We are speaking here of monetary policy to combat inflationary activities using the tools available.

He adds : Saleh located in front of monetary policy variables and intermediate or intermediate objectives reflect on the relationship between the impact of these variables to reduce the general level of prices and contain inflation. Among these variables of interest rates stabilizing "long-term" and stabilizing the exchange rate, or investigative, and the levels prevailing exchange, Noting that these variables can control directly unless they are being singled through similar variables and the variables or operational objectives are references or means Acharateh or information be used to influence stability in the cash market.

Among these references technique interest rate, the Central Bank of Iraq, a price indication would be tantamount compass navigation to influence the behavior of interest rates, as determined by which the Central Bank lends Why? What banks deposited in the Central Bank? Under the control of the volume of cash as it is believed that whatever the confiscation of inflation, he eventually monetary phenomenon, Accordingly, the priorities are stability to the crisis logical to build and stimulate the economy.

Shows favor on this basis the inflation mainly to increase speed of money circulation and to abandon what leads to weak demand cash and the growing demand for goods and services as counterproductive, In order to maintain the cohesion of demand and maximize cash levels in order not to turn into strong spending on goods and services to the Central Bank, the use of tools in raising the interest rate has to stimulate the interest rate structure and maintaining the coherence of savings and maximize their purchasing power helps monetary policy to address the levels of flooding e high, contained within the monetary market "bank" without becoming bloc cash adrift direction of goods and services.

In the light of Matqdm highlights many of the questions in the forefront Can a Central Bank unit of curbing inflation and control the volume of cash and Majdoi raise the level of interest at the high prices?

Economists stressed the importance of the oldest in the Iraqi Central Bank of procedures to control the volume of inflation, which reached the high figures exceeded 70% through the reduction of dollar selling prices against the Iraqi dinar and raising the interest rate up to 12% from 10%, which generated a remarkable stability in prices in all the markets Iraqi recession in the selling and buying of the dollar in the banking most of the stores in Baghdad.

The economists also stressed the importance that the Central Bank will continue this approach, which would curb inflation, which now threatens the stability of all the situation in Iraq, including security and social addition to the economic situation.

The observers speculate that the rise in the value of the Iraqi dinar against the dollar would reduce inflation and revive the economic situation of Iraqi families, which has suffered greatly because of the high rate of inflation, which was born the burden of large households now borne citizen addition to the deterioration of the level of savings is clear Which prompted the Central Bank to take this action, which many observers several step towards a comprehensive reform of the Iraqi economy.

Translated version of http://www.alsabaah.com/

Cheers!
DayDream

This should now end the discussion of the past few days regarding whether or not the CBI was pulling dinars out of circulation. Shabibi himself says YES, they are.

All I want for Christmas (besides peace and safety for all our troops and their families) is for every little Iraqi boy and girl to be able to afford their own Playstation 3 with a ton of games and a 42" HD LCD for them to play it on . . .and of course the constant electricity to power a billion new TVs and PS3s . . .then you'll need 100 C-130s of Cheetos for these kids to munch on . .

So you see, they really dont have a choice but to reval otherwise I am sending a boat load of coal!