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

Iraq's revival of China deal heartens oil majors


Top oil multinationals expect the revival of a Saddam-era oilfield deal between Iraq and China to pave the way for contracts giving them access to Iraq's vast untapped reserves.

Wednesday's news that Iraq's oil ministry would discuss handing China the first foreign contract to develop oil resources was no surprise to Western oil executives, who say Chinese companies are eager to drill in the field they signed up for in the mid-1990s.

Western oil majors were not competing for the small al-Ahdab field in central-southern Iraq.

But some have taken heart that Baghdad is opening up and looks ready to honour its deal with China rather than hand the field to a company from the United States, which has 142,000 troops in the country.

European firms had criticized the way U.S. rivals won most big infrastructure deals after the U.S.-led invasion in 2003 and feared the same would happen with Iraq's oil wealth.

"It's a good way for Chinese companies to get into Iraq and could be a door opener for the next development deals," a senior executive at a major oil company said.

Iraqi Oil Minister Hussain al-Shahristani is expected to make an official visit to China in late October, then go on to Japan and Australia to discuss oil investment projects.

Finalizing the Ahdab contract, worth some $700 million, could enhance his standing with oil majors keen to tap the country's reserves, the world's third biggest.

The deal, like others signed by former Iraqi president Saddam Hussein, was effectively frozen by international sanctions and then by his overthrow.


"We're reviewing the economics of the Ahdab deal," said a senior Iraqi oil official.

"We need additional crude in central Iraq, but there may also be a political message."

Shahristani, from the dominant Shi'ite Islamic bloc in the national unity government, favours strengthening central control of Iraq's oil -- but a new constitution gives autonomous federal regions a role in developing such resources.

His overture to China may also signal his centralizing goal to Iraq's Kurdish regional government in the north, which has struck oil deals with several independent exploration companies.

"Given the pro-activeness in the northern region and better security, we expected this move on investment and in due course see several other deals," said a senior oil executive.

Industry sources said Chinese firms are now at work in the south of Iraq, which is home to much of its future oil promise yet is unstable because of a struggle for control of the oilfield between Shi'ite factions. There have also been some attacks by al Qaeda-linked Sunni militants.

Re-activating the Ahdab deal, signed with a venture of China National Petroleum Corp and Chinese state arms manufacturer Norinco (000065.SZ: Quote, Profile, Research), is important to energy-hungry Beijing.

"The Chinese don't have the same incentives on profitability as the international oil companies," said a Western executive.
"They don't give a damn whether there's an investment law to protect them."

The four-month-old government has given priority to the Ahdab oilfield because of its proximity to new power stations and refineries.

It expects output to increase from 30,000 barrels per day (bpd) to full capacity of 90,000 over two years.

Analysts say Russia's LUKOIL (LKOH.RTS: Quote, Profile, Research) would also be prepared to start work at the giant West Qurna oilfield if Baghdad were to validate its deal struck under former Iraqi leader Saddam.

Iraq in 2002 ripped up its contract with a Russian consortium led by LUKOIL for the 600,000 bpd oilfield in the south on the grounds of non-performance.
LUKOIL declined comment.

Though manoeuvring for access to Iraq's oilfields, multinationals will not sign multibillion dollar contracts until security improves and an investment law is in place, possibly by the end of the year.

"We have always said we are interested in this country, like everybody. We will try to be there as soon as the security is OK and laws permit us to come back," said a Total (TOTF.PA: Quote, Profile, Research) spokeswoman.

The major oil companies are confident their fields of choice -- such as Bin Umar, Majnoon, Nassiriyah and Ratawi -- will not be assigned to rivals from countries such as China and India.

"The Iraqis know they need the technology and finance the international oil companies can offer," said an oil company source.

"We're meeting them on a regular basis. But we can't sign anything that's not backed by law."
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Morningstar - Dow Jones & Company, Inc.: DoD OKs More Than $1 Billion Defense Sales To Iraq,Saudi Arabia

DoD OKs More Than $1 Billion Defense Sales To Iraq,Saudi Arabia




09-28-06 11:30 AM EST
WASHINGTON -(Dow Jones)- The Pentagon has signed off on proposed sales of military equipment to Iraq and Saudi Arabia, part of ongoing efforts to help those nations modernize their forces.

The Defense Security Cooperation Agency late Wednesday notified Congress of the proposed sales, which are not yet final. Congress has the power to block such sales but rarely steps in.

Iraq was approved for a $900 million aircraft package and a $142 million air- traffic-control system. Lockheed Martin Corp. (LMT), Raytheon Co. (RTN), BAE Systems PLC (BA.LN) and Honeywell International Inc. (HON) are the main contractors involved in the deals.

The aircraft sale includes 24 King Air 350ER planes for intelligence, surveillance and reconnaissance missions. It also includes 24 other aircraft for transport missions, along with a range of radar and missile warning defense systems.

"This proposed sale will enhance the foreign policy and national security objectives of the United States by enhancing Iraq's capacity to support U.S. Government efforts in Operation Iraqi Freedom, as well as supporting Iraq's legitimate need for military independence," the U.S. defense agency said.

The Pentagon also approved an $84 million sale to Saudi Arabia of a range of radio systems.

This sale is part of a multibillion-dollar effort to upgrade the Saudi Arabian National Guard. Northrop Grumman Corp. (NOC), ITT Inc. (ITT) and Harris Corp. ( HRS) were listed as the main contractors involved in the radio deal.

Separately, the U.S. also approved a pair of proposed deals for Finland and Greece. Greece seeks to buy a $66 million package of Hellfire missiles, made by Lockheed Martin, and related equipment.

Finland seeks a $300 million upgrade of its F/A-18 fighter jets, made by Boeing Co. (BA).

-By Rebecca Christie, Dow Jones Newswires; 202-862-9243; rebecca.christie@ dowjones.com

Rising prices, the unbearable burden for Iraqis
Muslim World News
Baghdad, Sep 29 (Xinhua) After three years of the US-led invasion, terrorism is not the Iraqis' only problem. Rising prices is a major headache.

Um Muhammed, a mother of four here, says she buys only vegetables for her family because she can't afford the meat.

"Even the prices of vegetables are quite high. I sometimes buy onion or potatoes but nothing in the market is less than 1,000 Iraqi Dinars ($0.7) a kilo, three or four times more than the prices six months ago," the 45-year-old complained as she headed home from a market with three small bags.

Like Um Muhammed, many Iraqis find that besides the upsurge in violence, they have a new foe: inflation spiralling out of control.

Fuel and electricity prices are up more than 270 percent from last year's, according to Iraqi government statistics. Tea prices in some markets have quadrupled, while egg prices have doubled.

"The price of nearly everything in my shop has increased dramatically during the past several months. Beef now runs as high as 9,000 IDs ($6.2) a kilo, up from 5,000 IDs ($3.4) last year," said Allaa Hamid, a shop owner in western Baghdad.

The price spiral has come as a shock to many Iraqis, who make about 150 dollars to 200 dollars per month on average even if they have jobs.

Estimates of unemployment range from 40 to 60 percent. Many Iraqi families have no other choice but to struggle to make ends meet.

"We are buying according to priorities, I mean we buy the minimum of the most needed things," Um Muhammed said with a sigh.

"Markets are filled with fresh fruit, vegetables and meat but they are very expensive. We even can't afford to buy the most basic items," said Mustafa Kamil, 56, a former government employee who drives a taxi here to make a living.

"I used to entirely depend on the ration card which distributed by the government, but now we can't get it regularly and several items were omitted from the ration cards," he said.

Though more than three years after the collapse of Saddam regime, the Iraqis still face a severe shortage of electricity.

The government provides electricity only for four to six hours each day, nearly every family turns to substantial power sources, which cost an average of 35 dollars per month.

"I pay about 40 dollars per month to buy electricity from private generators to gain additional 10-hour electricity supply. The rest of the day I use my small generator," said Adnan al-Sarraf, 43, a government employee.

"This cost most of my salary because I also have to buy fuel for my generator," he said, adding the current fuel price was beyond his imagination.

The war-torn country is sporadically facing a ridiculous oil crisis. Gasoline in state-run gas stations is sold at 350 IDs ($0.24) a liter, but in short supply. Many people have to purchase gasoline in black markets.

Though wild inflation has become the unbearable heavy for Iraqis, some still do not think it is their major problem.

"You see inflation could destroy our life but it can not kill us, so the daily killings and blasts are till our arch foe," remarked Raad Manie, 49, an engineer.

"During the sanctions on Iraq before 2003, we were eager to see the light at the end of the tunnel. Now we are looking for tunnels to hide from blasts and death squads," Manie added.

Rising prices, the unbearable burden for Iraqis | IndianMuslims.info

Talking about having to do something right away, how do these people survive in these conditions.

Proof is in the pudding, come on guys, give something back to your people now....

Rumor posted on IIF

"went out for a drink with a mate i haven't seen in years who works for barclays. i mentioned the nid to him and he told me it was a good investment and that he has a few mil himself. he also told me that he had a meeting with some managers last month in london and one mentioned that the cbi will raise the nid to between 1135-1350 nid, this is to try and stop inflation rising. no info on sources etc but i'd just thought i'd pass it on. this being done by the end of the year."

Not the one we would like to hear but maybe true!!

Originally Posted by opps50

Rumor posted on IIF

"went out for a drink with a mate i haven't seen in years who works for barclays. i mentioned the nid to him and he told me it was a good investment and that he has a few mil himself. he also told me that he had a meeting with some managers last month in london and one mentioned that the cbi will raise the nid to between 1135-1350 nid, this is to try and stop inflation rising. no info on sources etc but i'd just thought i'd pass it on. this being done by the end of the year."

Not the one we would like to hear but maybe true!!

This was posted on IIF 08-17-2006

Nought going on bout last night, had a good look round, strange.......

Not quite time to give up yet - SGS has not yet changed her signature -SEPTEMBER TO REMEMBER

It´s easy to change

"October to remember" but that doesn´t sound that good as "september to remember"

Originally Posted by NotSoFast

Folks,

I believe there will be an RV... but I believe a good reason for the delay is because they will reprint dinars.... sorry!

A reprint is unlikely IMO. It's possible yes, but it definitely wouldn't be in Iraqs best interest. If you look at the latest transactions between the Iraqi government and a few of the companies contracted to work there you'll find some of the transactions are now being done in Dinar (I know one case is well documented concerning a German company....). Add in the fact that parliament just got a 20 million Dinar bonus, and the situation seems all the more unlikely.

If they had a good network of electronic banking I'd hesitate on being so sure. Fact is, everyone runs around with physical currency over there. Changing in midstream not only causes more chaos in a land already plagued with plenty, it would also substantially lower investor confidence for future endeavours.

With the FIL and Hydrocarbon Laws coming soon, I see a reprint as being counterproductive for a country that wants and needs substantial foreign investment.