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

DNO CEO Refutes Claims of Clash with Iraq Government
by Elizabeth Cowley
Dow Jones Newswires
Friday, December 15, 2006


OSLO, Dec 15, 2006 (Dow Jones Newswires)
Norway's largest independent oil company, Det Norske Oljeselskap (DNO.OS) has refuted fresh reports of conflict with the Iraqi central government and says it is on target to produce oil there unimpeded in the first quarter of 2007.

"Several articles in the press stating that there are poor relations between the company and the central government are incorrect," said DNO's chief executive Helge Eide in an interview with Dow Jones Newswires.


"The political and security situation in Iraq has not affected our operations there," he said. "We have been in close communication with the oil ministry in Baghdad through our memorandum of understanding, MOU, signed in April 2005, and have got positive feedback from representatives from the oil ministry in Baghdad, also related to our (oil) project in the Kurdish region," Eide added.
DNO's share price fell around 4% as recently as last week on reports of a purported breakdown in relations threatening its progress in Iraq's Kurdish region. Earlier this year stock fell as much as 10% on similar speculation.

DNO maintains that the production sharing agreement signed with the KRG for acreage in the Kurdish region in June 2004, including the Tawke area from which first oil is expected next quarter, will shortly come to fruition and is not being undermined.

"The validity of these agreements is confirmed by several articles in the new constitution of Iraq," Eide said. "One of these articles says that all commercial agreements signed between 1992 and 2004, before the interim government took control are to be honored," he said.

Market participants have suggested that DNO is being unfairly singled out as a relatively small part of a bigger debate, namely the tensions between governing bodies in Iraq over the drafting of a new national petroleum law.

They have said that a lack of transparency over the wider oil asset debate in Iraq and wide-ranging opinions on the matter have muddied the waters.

The company has a high profile as the first of the few western oil companies to have ventured into the politically and security unstable country. "We can be considered as a pioneer in Iraq. When we started the first well in November last year we were the first in that region for decades," Eide noted.

Despite its relative exposure to a potentially volatile political landscape, he said DNO's decision to invest there remains sound, although acknowledging that it still awaits the necessary permit from the central government to export oil from Tawke.

"This process is handled by our partner, KRG. Our job is to develop the Tawke oil discovery and we feel confident that the KRG will resolve these issues when we're ready to export oil," Eide said.

He added: "The cooperation with the Kurdish regional government (KRG) has been excellent and their contribution to the success of our project has been substantial."

Tawke oil will be processed at DNO's adapted offshore central processing facility before being shipped through an existing but near-empty pipeline in the north of the country via Turkey to the Mediterranean.

Precise volumes haven't been divulged, but the development has tested at a flow rate of 5,000 barrels of oil a day. The processing facility has a capacity of 50,000 barrels of oil a day and DNO expects to ramp up to that level by bringing other assets in the surrounding area into production.

Its growth plans in Iraq are centered on the Tawke area and a second called Khanke where drilling has already commenced. "We have a rather large area covered by our agreements. In addition to the high activity level both within exploration and development we will focus primarily on what we have got in the short- to medium-term," Eide said. Longer-term, the high profile position of DNO in Iraq which is currently viewed as unfavorable by some could facilitate growth, Eide said.

"Given our early presence in the area together with our success to date, DNO would probably be seen as a very attractive partner for new companies that will enter the area," he concluded.

DNO has an aggressive drilling program going forward outside Iraq; in Yemen where it plans 30 wells in the next 18 months and the Norwegian and U.K. North Sea.

"We have a very exciting exploration portfolio, with strong upside. Rig capacity is secured...for the next couple of years," Eide said. The focus on drilling leaves DNO little desire to grow through merger and acquisition but its size could leave it open to offers, a possibility for case-by-case assessment, he admitted. "Large oil companies are struggling to replace their reserves through exploration, so they may have to acquire to meet their reserve replacement target," he said.

DNO's own reserves have fluctuated in recent years. Following divestment of many of its Norwegian oil assets in 2003, its reserves tumbled to 28 million barrels of oil equivalent from 144 boe in the previous year. In the year to date, its reserves have lifted back to 138 million boe.

On the production front it has maintained a steadier profile at around 15,000 barrels of oil a day, although that is set to climb as assets in its Yemen and Iraq portfolio come onstream. It hasn't been all plain sailing in Yemen, with a setback at the Nabrajah field earlier this year as several new wells failed to add new production, but drilling will resume at the beginning of next year.

"We have an exciting portfolio there and we continue to have great hopes for Yemen," Eide said.

Copyright (c) 2006 Dow Jones & Company, Inc.

RIGZONE - DNO CEO Refutes Claims of Clash with Iraq Government

Sounds like PR damage control...looks good, but take it for what it's worth...





RIGZONE - DNO CEO Refutes Claims of Clash with Iraq Government

Originally Posted by TerryTate

So, danny how did it feel after you got this 30 minute pitch? Were you dazed or did it even faze you that this manager thinks you are about to become very wealthy?

As, for myself, being treated well by any bank manager would definitely be a change of pace....

I was just surprised at how upbeat he had become since the last time I talked to him as far as the dinars are concerned. He was interested before but now it was more like excitement!! I must admit that all along I have pretty much expected a reasonable return but not millions and not right away either...BUT...after my encounter today I am singing a different tune!! The only thing that holds me back just a little now are the violence and security issues that a lot of folks think will disappear as soon as the reval takes place and the Iraqi people have some money to spend. It will be very interesting to see how this all unfolds during the next 2 weeks or so. The next time that I set foot in my local Bank of America branch I hope to have dinars in hand for exchange!! I have also decided not to dump them all at once thanks to all of the informative posts concerning the weakening USD. Plenty of good info and advice to be gleaned from these threads. Heck, I don't even have anybody on IGNORE because I don't want to miss anything good!! LOL

Originally Posted by Ranger III

Adster - You British have been underestimating us Americans for the last
230 years.

Our GDP is $12,300,000,000,000 - one-fifth of the entire world. Our unemployment rate is about 4.7%. Our stock markets are booming.
Our currency is and will continue to be the envy of the world. We make
more charitable donations than any other country in the world.

Iran by contrast has a GDP that is one-twenty-first (1/21) of the U.S.'s
GDP. Iran, despite is vast oil reserves, is nineteenth in GDP, sandwiched between Turkey and Thailand.

Are you really trying to tell us that what Iran does or does not do vis-a-vis its business relationships and/or currency will have a serious effect upon the economy of the United States? We don't do business with them as it is.

During the depths of the Great Depression, our unemployment rate was 25%.
Are you seriously suggesting that the U.S. is headed for a deep depression?

You might want to pay attention to what your Prime Minister,Tony Blair, is
reported to have said in the House of Commons recently when pressed for the umpteenth time about why he stands up for America the way he does.

His paraphrased response was close to the following:

"When it comes down to it, a simple way to judge the worth of a country
is to look at how many people are trying to get in and how many people
are trying to leave. [In basic reference to the hoards of people who
constantly clamor to get into the United States.]

In our [the British] history there have been two persons who have been
willing to die for you: (1) Jesus Christ, and (2) the American G.I.
Jesus Christ died for your souls, and the American G.I. died for your
freedom."

While we appreciate your sympathetic and empathetic words, Adster, I think we Americans will muddle threw just fine.

Interesting,

And none of this has anything to do with the dollars free fall. We are in a place we have never been before, so no history lesson is going to cure the fact that the dollar is not as all mighty as it was, nor will it ever be again.

Happy Holiday Season to all, Mike

Originally Posted by shotgunsusie

that would be blatant insider trading and i suspect bank personnel would be busted in big ways over that sort of stuff...

Fotunately, insider trading only applies to stock instruments, so currencies are not under the same rules and regulations of SEC, thankfully, we can do what we want when we want with currency information, no matter where it comes from.

Happy Holiday Season to all, MIke

QUOTE: A Crude Peg for the Iraqi Dinar


Frankel, Jeffrey. "A Crude Peg for the Iraqi Dinar." Financial Times (13 June 2003).

Belfer Center for Science and International Affairs.


Rebuilding Iraq involves many difficult problems. It may seem that the question of the exchange rate should be one of the easier ones to solve. The choice of currency regime - particularly what to anchor the currency to -is perhaps the most widely studied topic in international monetary economics. Yet this question too turns out to be difficult; none of the traditional solutions will quite fit.

Given instability in the region and the absence of credible institutions, the Iraqi dinar requires an anchor of considerable credibility. Some have proposed a rigid peg to the dollar, as through a currency board. But this idea has significant drawbacks. That it would mean giving up the ability to set monetary policy independently is not such a big cost, as few governments have been able to use such discretionary policy well anyway. But there are other serious disadvantages.

One big drawback of a fixed exchange rate is that it means giving up the automatic depreciation that a floating currency would experience at times when the world market for the country's exports were weak. In the case of Iraq, the most important export is of course oil. Large fluctuations in the world price of oil have wrought havoc on the economies of other big oil-producing debtor nations such as Indonesia and Venezuela, often entailing a serious currency crisis before a change in the terms of trade is accommodated.

A second big drawback of fixing the dinar to the dollar would be the introduction of gratuitous volatility when the dollar fluctuates against other leading currencies. Argentina's currency board collapsed two years ago, not just because the straitjacket was so rigid but also because the rigid link was to a currency, the dollar, that had appreciated strongly against the euro and other trading partner currencies during the second half of the 1990s. That meant Argentine exports suffered a huge loss in competitiveness at a time when world market conditions were already weak.

Finally, imposing the dollar on Iraq could also feed widespread fears of US imperialism. The politics would get even trickier if, as in Argentina, the arrangement hit a crisis - for example, as a consequence of an increase in US interest rates.

An alternative would be to peg the dinar to the euro. But this idea has big drawbacks as well. The euro has been appreciating against the dollar and might continue to do so as a result of ever-widening US trade deficits. A peg to the euro would thus risk a future loss of competitiveness against non-euro trading partners. The problem is that, as Iraq's trade returns to normal, its trading partners will be so dispersed geographically that a peg to either currency alone - the dollar or the euro - would introduce unwanted volatility with respect to the other. Like other countries with geographically diverse trading partners, Iraq may thus be headed for a basket peg, with equal weight given to the dollar and euro.

But a basket peg does not solve the problem that, in the event of large future declines in the world price of oil, the currency of an oil exporter must be able to depreciate in order to accommodate the adverse shift in the terms of trade and help stabilise export earnings. Fortunately a proposal designed for small commodity-exporters, which I have called "peg the export price", addresses precisely this issue.

The proposal is for a country to peg its currency to the export commodity. It could be implemented as follows. The central bank would set the daily price of dinars in terms of dollars in direct proportion to the daily price of a barrel of oil in terms of dollars. The result would be to stabilise the price of oil in domestic terms. This approach combines the best features of both fixed and floating exchange rates. Like fixed exchange rates, it constitutes a transparent nominal anchor and also helps promote integration into world markets. And yet, at the same time, it retains a crucial advantage claimed by floating exchange rates: automatic accommodation of fluctuations in world markets for the export commodity. In short, it offers the best of both worlds.

To fix the dinar simply to oil alone may be too radical a proposal. While it would facilitate the recovery and expansion of the oil sector, it might at the same time discourage production of other internationally tradeable goods by shifting the entire burden of price uncertainty on to them. My proposal for Iraq, therefore, is to add oil to the basket of currencies to which the dinar is pegged. For simplicity, give equal weight to all three units. Or, what is almost equivalent, define the value of the dinar as one-third of a dollar plus one-third of a euro, plus one-hundredth of a barrel of oil.

Unlike other proposals for nominal anchors, this is one that Iraq could live with even if there are big swings in world exchange rates or oil prices in the future. The country faces enough challenges without worrying about the risks of a future currency crash.

Reprinted with permission of Financial Times.

Belfer Center - Publication - A Crude Peg for the Iraqi Dinar

Dinar-Excited

QUOTE: lndmn_01

EUR = 1.32 USD/3 = 0.44 USD

USD= 1.00 USD/3 = 0.33 USD

Oil(barrel) = 61.00 USD/100 = 0.61 USD
0.44 + 0.33 + 0.61= $1.38

works for me!!!

Originally Posted by Mike5200

Unemployment at 50%, says minister

By Ikhlas Majeed

Azzaman, December 14, 2006

Nearly half of Iraqis able to work are idle, said Minister of Labor and Social Affairs.

Mohamed Radhi said the high jobless rate was devastating to a country torn by sectarian strife and violence.

He said combating unemployment was as important as the fight against ‘terror’. Joblessness plays into the hands of ‘terrorists’, he said.

He said he had drawn a plan to provide short-term loans to families willing to start up their own businesses particularly those who depend on social benefits for a living.

“This project will contribute to defeating terror and terrorists who target sources of energy and labor. As a result unemployment has reached more than 50 per cent in some provinces,” he said.

He said he had 100,000 small-sized projects in mind and has urged the government set aside enough allocations to have the scheme in place in 2007.

Each family will be given a loan of 10,000 dinars (approx. $6,600) to start the project, he said.

Maybe to start they are just pegging to Crude Oil .66 and then peg to a basket.

Dinar-Excited

Were'nt we suppose to have a major event within six weeks from the ICI prep meetings date of late October?

Just posted on another forum that a guy ( or gal ) has a friend that works for the Iraqi Gov. He/She said that they used to talk about the dinar but for the last month when the dinar was mentioned the iraq gov. employee would change the subject. hmmmmmm.........

Originally Posted by danny51

I stopped in my local Bank of America branch today to make a credit card payment and when I was finished with the teller the manager flagged me down on my way out the door. He invited me into his office and he closed the door. I have discussed the dinars with him and have looked them up in his currency exchange book more than once over the last few months. He said to me "Assuming you will be exchanging your dinars with us soon, I would like to review some of our financial services that are available in addition to the savings and checking accounts you already have with us"!! I about fell out of the chair!! He disclosed to me that the extent of his knowledge was that Bank of America was "gearing up" to exchange the dinars both ways and SOON. He also told me that he had purchased dinars from SafeD after I had given him the website URL during one of our discussions in the past. According to the manager, I am the only person in town that has approached him on the subject of dinars and that he had never even heard of buying them before talking to me. Previously there was a female assistant manager that I had looked up the dinars with in their currency book but she is gone now. This is really good news coming from Bank of America in my view. Wells Fargo has been more elusive with me and only states that they will exchange when it is traded on the 4x. Anyway, the manager had a big shiite eating grin on his face when I left after he peddled his financial wares to me for 30 minutes or so. I have never felt better about dinars than I do at this very moment in time!!

Hey danny now i know how these bank managers want to kiss your ass and everything cause its happen to me but i must ask.. if he him self is invested in the dinars then why the hell would he want to sell him self to you on all these bank features about opening this and that cause if he is so gun ho about the dinar then the day it rvs wouldnt he be walking out that door being free to say FACK this place or is he the type of guy that loves his job and becomes wealthy will still work??? some people are like that they have all the money in the world and continue to work..just to keep busy or for the pure greed for the people in high money positions

Originally Posted by dinartank

Hey danny now i know how these bank managers want to kiss your ass and everything cause its happen to me but i must ask.. if he him self is invested in the dinars then why the hell would he want to sell him self to you on all these bank features about opening this and that cause if he is so gun ho about the dinar then the day it rvs wouldnt he be walking out that door being free to say FACK this place or is he the type of guy that loves his job and becomes wealthy will still work??? some people are like that they have all the money in the world and continue to work..just to keep busy or for the pure greed for the people in high money positions

This is something I've thought about alot.

If the bank managers around the world know about the Dinar & hear about
when it's about to R/V first.......... won't they all just buy some, cash
them in, then sit on the beach in the Caymens with the rest of us ?

Well, I'm not a bank manager but I still plan on working when this is done. Yes, it will be nice to be debt free and enjoy life's goodness more often, but the body and mind go real fast when not challenged.