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

Oil majors vie for Iraqi resources
Saturday, December 9, 2006
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ISTANBUL - Turkish Daily News

“United States invaded Iraq to pillage its oil.” The perception is so pervasive - and not only in the Middle East - that the Iraq Study Group (ISG) had to insert one against it among its now-famous recommendations. “The President should restate that the United States does not seek to control Iraq's oil,” says recommendation number 23.

But the developments on the ground, rather than supporting the recommendation, augment the aforementioned perception.

“Oil groups dream of day they can enter Iraq,” say Carola Hoyos and Roula Khalaf in Thursday's Financial Times, and elaborate on the pressures exerted on Baghdad to open up its oil sector to giant foreign companies. If the US gets what it wants, the law that nationalized the industry in 1972 will be reversed, opening the path for companies like BP and Shell to enter Iraq's lucrative oil fields. Lucratious contracts:

The respected British business daily reports that according to draft, the new law would allow various forms of foreign partnership in the sector; possibly including production-sharing agreements. These agreements are preferential to oil companies, as they allow the companies “to hedge the risk of cost overruns and giving them greater scope for gain if oil prices rise”.

But whatever law passes from the fragmented Iraqi parliament, the security situation in the country seems far away from allowing foreign companies operate in the country. “The whole industry is interested in Iraq, including us,” says a BP official to the FT. “[But] the security situation would have to improve dramatically if oil companies like us were to commit themselves to long-term exploration and production.”Civil war a major problem:

The violence in Iraq, termed by many as a civil war, surpasses all past conflicts that the oil majors had to deal with. “To look into future [Iraqi oil] policy is to look into the unknown,” says Walid Khadduri, an expert on the country's resource sector, at a recent London conference. “You can't discuss future oil policy before knowing what will happen in the south of the country [home to most of Iraq's oil wealth], who will control the south, whether it's one national party or even local Shia parties.”

The ISG report notes that Iraq is at the moment producing 2.2 million barrels of crude oil a day, and exports about 1.5m b/d. The Iraqi government targets 2.5 m b/d, a target which seems impossible to achieve.

Still, Iraq's oil is becoming increasingly important as global demand accelerates. China has become a giant thirsty for oil, meanwhile “output from fields in the US, Europe and parts of Asia slows with their advancing age”, notes the FT.

The International Energy Agency estimates that Iraq would have to increase its oil production by 4.9 per cent each year until 2030 to meet the world's oil demand. This demand is expected to jump to 116m b/d from 85m b/d.Resource nationalism:

The resurgence of “resource nationalism” further complicates the matter. Countries like Russia, Venezuela and Bolivia are demanding back their important fields from foreign companies. “Saudi Arabia, Kuwait and Mexico, which own the world's three biggest individual oilfields, have kept their doors shut,” adds the FT.

Iraq's oilfields are also a source of competition between big oil companies of Europe and the United States. The French giant Total, might have gained access to geological, technical and other data on Iraq's two main oilfields, Kirkuk (north) and Rumalia (south). But the disagreement between Paris and Washington over the invasion changed the equation. Now, BP and Royal Dutch Shell have found ways to catch up with Total on Kirkuk and Rumalia, thanks to the agreement they signed with the Baghdad government. Meanwhile, Chevron “forges relationships and gleans information” by organizing training sessions for Iraqi engineers outside Iraq, reports the FT.

But the security risk gives an advantage to Russian, Chinese and Indian oil groups, as these are apparently more willing to take on the risk. “Unlike western companies, we are willing to work under any circumstances,” says Leonid Fedun, vice-president of Russia's Lukoil. “It looks like Russians have a different definition of risk.”

Over in Northern Iraq, the security risk is much more manageable. But there, aspirations of Kurdish independence come into play. “Groups such as Norway's DNO are drilling for oil in the Kurdish regions. Canada's K Petroleum and the UK's Sterling Energy have signed agreements for field studies,” says the FT. But the Kurdish region asserts the right to develop new fields, meanwhile Shiite and Sunni Arabs are staunchly against this assertion, fearing that such a right might be a strong incentive to the creation of an independent Kurdistan.

Forecast
Dec 6th 2006
From the Economist Intelligence Unit
Source: Country Forecast


Country Forecast Iraq

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The Iraqi government will struggle to make much impact on the sectarian conflict being waged by Iraqi militias for political and territorial advantage. The coalition presence is increasingly irrelevant, as the struggle between these forces for control on the ground takes centre stage. Furthermore, the interest of different Shia parties in the south in gaining control over the oil sector will make substantive constitutional compromise difficult. Some points of agreement exist between parts of the Shia coalition and the Sunni Arab and Kurdish politicians represented in parliament. However, sectarian considerations are likely to prevent a realignment leading to a new government. The increasing prospect is that Iraq will not see a marked reduction of violence over the outlook period. Local territorial conflicts are likely, as opposed to larger-scale secessionist moves, although such a scenario is possible in the case of Iraqi Kurdistan, unless a compromise is reached over the final status of Kirkuk. As long as there is sufficient commitment to a national political process, though, the complete collapse of the country is unlikely. Oil production growth will be constrained by security problems and persistent underinvestment, but modest increases in output will occur.

Key changes from last update

Political outlook

The political outlook is unchanged.


Economic policy outlook

The Economist Intelligence Unit has made no changes to its economic policy assumptions. We forecast that the fiscal deficit will widen to around US$3.7bn in 2007 and around US$5bn in 2008.


Economic forecast

We continue to expect that Iraq's current account will retain a healthy surplus over the outlook period, representing an average of 18% of GDP.

Herald News Daily

Iraq oil wealth distribution planned
2006/12


By BUSHRA JUHI, Associated Press Writer 13 minutes ago

BAGHDAD, Iraq - Iraqi legislation intended to resolve the politically charged question of distributing the country‘s oil wealth is nearing completion, the chairman of a panel drafting the law said Saturday.

The distribution of oil revenues, the mainstay of Iraq ‘s economy, is at the heart of some of Iraq‘s most contentious political issues, including the push by Shiite leaders to allow the oil-rich south of Iraq to set up a self-rule region a similar to a Kurdish one in the north.

He said, however, that key issues still need to be resolved, including "the administration of the oil sector, deals and contracts."

"We demand that the signing of contracts to develop oil fields in Kurdistan should be handled by the Kurdistan region," he said, according to Dow Jones Newswires.

The Iraq Study Group recommended that the U.S. government work with Iraqis to come up with a clear, legal framework for oil investment. It also suggested that the U.S. military work with Iraqi and private security forces to protect oil facilities.

Scotsman.com News - International - Iraqis near to a deal on sharing oil wealth

Scotsman, United Kingdom - 1 hour ago

Iraqis near to a deal on sharing oil wealth

IN BAGHDAD

IRAQI officials are near agreement on a national oil law that would give the central government the power to distribute current and future oil revenues to the provinces or regions, based on their population.

If enacted, the measure could help resolve a highly divisive issue that has consistently blocked efforts to reconcile feuding ethnic and sectarian factions. Sunni Arabs, who lead the insurgency, have opposed the idea of regional autonomy for fear that they would be deprived of a fair share of the country's oil wealth, which is concentrated in the Shi'ite south and Kurdish north.

The Iraq Study Group report stressed that an oil law guaranteeing an equitable distribution of revenues was crucial to the process of national reconciliation, and thus to ending the war. Without such a law, it would also be impossible for Iraq to attract the foreign investment it desperately needs to bolster its war-ravaged oil industry.

A deal could be reached within days, according to officials. The major remaining stumbling block concerns the issuing of contracts for developing future oilfields. The Kurds are insisting that the regions reserve final approval over the contracts, fearing that if that power were given to a Shi'ite-dominated central government, it could ignore proposed contracts in the Kurdish north while permitting them in the Shi'ite south.

The national oil law lies at the heart of debates about the future of Iraq, particularly the issue of a strong central government versus robust regional governments.

On the drafting committee, Sunni Arabs have allied with the Shi'ites against the Kurds, who have sought to maintain as much regional control as possible over the oil industry in their autonomous northern enclave. Iraqi Kurdistan has enjoyed de facto independence since 1991, when the American military established a no-flight zone above the region to prevent raids by Saddam Hussein.

General George W Casey, the senior US commander in Baghdad, and Zalmay Khalilzad, the US ambassador, have urged Iraqi politicians to put the oil law at the top of their agenda, saying it must be passed before the end of the year.
The drafting committee is made up of politicians from the main Shi'ite, Sunni and Kurdish blocs in government. They began talks months ago, but the pace picked up recently.
At the start, the Kurds fought to ensure that regional governments had the power to collect and distribute revenues from future fields. They also proposed that revenues be shared among the regions based on both population and crimes committed against the people under Saddam's rule. That would have given the Kurds and Shi'ites a share of the oil wealth larger than the proportions of their populations.

But those demands have now been dropped, said Barham Salih, the Kurdish chairman of the drafting committee. "Revenue sharing is an accepted principle by all the constituent elements of the Iraqi government, including the Kurds, and that is the unifying element that we're all hoping for in the oil law."
The Kurds are willing to make concessions because a national oil law could attract more foreign oil companies to exploration and development in Kurdistan.

Some Kurdish leaders also believe that the concessions are a worthwhile price to pay for having a stake in the much larger revenue pool of the country's oil industry. The southern fields accounted for 85% of Iraqi crude production last year, partly because northern production was hampered by insurgent sabotage. The south has an estimated 65% of the country's 115 billion barrels of proven reserves.

The working draft of the oil law re-establishes the state-run Iraq National Oil Company - founded in 1964 to oversee oil production but shut down by Saddam in 1987 - and sets production thresholds for creating new regional companies.

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Originally Posted by CharmedPiper

WHERE'S THE WOOOOOOTS!!!!! COME ON PEOPLE.......OUR DINAR ARE ABOUT TO BE SWIMMING IN OIL!!!!!

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Originally Posted by CharmedPiper

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Originally Posted by CharmedPiper

The working draft of the oil law re-establishes the state-run Iraq National Oil Company - founded in 1964 to oversee oil production but shut down by Saddam in 1987 - and sets production thresholds for creating new regional companies.

And what was the exchange rate during that time????

By Bushra Juhi
ASSOCIATED PRESS

5:31 a.m. December 9, 2006

BAGHDAD, Iraq – Iraqi legislation intended to resolve the politically charged question of distributing the country's oil wealth is nearing completion, the chairman of a panel drafting the law said Saturday.
The distribution of oil revenues, the mainstay of Iraq's economy, is at the heart of some of Iraq's most contentious political issues, including the push by Shiite leaders to allow the oil-rich south of Iraq to set up a self-rule region a similar to a Kurdish one in the north.



“We have reached important agreements. I cannot put a timeframe on when it will be ready, but we are very keen on achieving that as soon as possible,” Deputy Prime Minister Barham Saleh, a Kurd who chairs the committee, said. “We hope that we will reach a comprehensive agreement that will enhance the oil sector and make oil a unifying factor to all Iraqis.”
He said, however, that key issues still need to be resolved, including “the administration of the oil sector, deals and contracts.”

Underlining the sensitivities involved, Nechirvan Barzani, the Kurdish region's prime minister, said Thursday that talks he held with the Baghdad government this month failed to produce an agreement on his demands for control of oil resources in the region.

“We demand that the signing of contracts to develop oil fields in Kurdistan should be handled by the Kurdistan region,” he said, according to Dow Jones Newswires.

Iraq is believed to produce around 2.2 million barrels of oil a day and exports about 1.5 million, well below prewar levels. Insurgent attacks have frequently targeted oil facilities and pipelines, disrupting exports and disrupting efforts to modernize the industry.

The Iraq Study Group recommended that the U.S. government work with Iraqis to come up with a clear, legal framework for oil investment. It also suggested that the U.S. military work with Iraqi and private security forces to protect oil facilities.

Oil Ministry Spokesman Assem Jihad said the government hoped that the oil legislation would encourage foreign investment in the oil sector, which has struggled since the imposition of sweeping U.N. sanctions on Iraq following its 1990 invasion of Kuwait. The measure must be approved by the Cabinet and parliament.

Originally Posted by H2O_Lover

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That's not a woot. This is a

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