Thread: Archive News - Iraqi Dinar Think Tank - 22/06/2010 - 04/10/2010

Business Deals Despite Political Delays

It was reassuring to read thecomments this week from BP’s Iraq’s President, Michael Townshend, in which he confirmed that the delays in forming a government are not causing problems for the development of the giant Rumaila oilfield.

This is good, and despite the refusal of Iraq’s politicians to resolve the political impasse, we have seen a string of major deals in both the private and public sectors in recent days:

• $66 Billion New Projects from Abu Dhabi Developers
• $10 Billion to be Spent on Oilfield Water Injection
• Iraq’s Transport Ministry leasing 66 ships

But not everyone has the power of BP, and not everyone is dealing in billions of dollars; smaller businesses are less well able to negotiate the complexities of Iraqi business.

Encouraging as Mr Townsend’s comments are, we cannot ignore the fact that Iraq is suffering because of weak government.

Ayad Allawi admitted as much in a flying visit to London last week: “… services are stagnant, the economy is extremely poor, and unemployment is rising”.

Meanwhile, there are signs that progress is being made on the political front, with the Shi’ite-led political blocs reportedly coming closer to agreement on a nominee for the position of Prime Minister.

But let’s not get ahead of ourselves – they’ve only had six months, after all.

http://www.iraq-businessnews.com/201...itical-delays/

Iraq poses investment projects in the Arab Forum - China next week

The Permanent Representative of Iraq in the Arab League, Wednesday, Iraq will take part in the Arab Economic Forum - the Chinese, who held his very 25 to September 30 to put the current investment projects.

"Said Qais al-Azzawi told the Kurdistan News (Akaniwz) that "Iraq is taking part in the Arab Economic Forum of China and intends to propose investment projects to encourage China to take advantage of investment, as a large country with a desire to enter the Iraqi market."

He said al-Azzawi said that "Iraq has a number of important projects in the field of agriculture, industry, oil, construction, tourism, modern technology and information in all provinces." explaining that "Baghdad has allocated a large budget to invest some 20 billion dollars this year, and will increase during the next year, as he has Investment law gives a great opportunity for investors to own land and other concessions."

http://www.aknews.com/ar/aknews/2/183126/

Advisor : economic exchange between Iraq and Jordan is the best since 2003

The adviser in the Iraqi government ended its mandate, Thursday, that economic cooperation between Baghdad and Amman in 2010 is much better than previous years.

Salam al-Quraishi told Kurdistan News (Akaniwz) that "economic cooperation between Iraq and Jordan was the highest level in 2010 compared to past years, which was part of the political differences."

"The President of the Jordan port of Iraq through other countries and had to be organized by the economic relationship with them well, it's the Government has succeeded over the last period."

He pointed out that "many factors have contributed to the be the year of 2010 is better than the rest of the year in the upgrading of the economic situation between Baghdad and Jordan, including encouraging the Iraqi government to investment companies, seven from work in Iraq, and the implementation of investment projects announced in accordance with Iraqi investment law for the world 2006."

Quraishi and demanded "of the next government to develop and consolidate economic relations with regional countries in isolation from the political differences that may arise between now and then."

The Iraqi President Jalal Talabani has urged the middle of this month the Jordanian government during a visit by a delegation of medical to Arbil to promote trade ties between them and Iraq.

http://www.aknews.com/ar/aknews/2/183197/

Economic : Privatization is the only solution to promote the reality and the country's industrial

Iraqi economic expert called on Thursday for the adoption of Iraq to the privatization program for the advancement of industrial reality in the country.

Fadel Al- Moussawi told the Kurdistan News (Akaniwz) announced today that "The Iraqi government was not successful in promoting the fact the country's industrial due to the reluctance happening in the Ministry of Industry and its subsidiaries during the past years for many reasons, including weak financial allocations set by the Ministry of Finance."

He explained that "the majority of companies affiliated to the Ministry of Industry, companies such as natural leather, and cement and steel and other companies did not face a crisis over the past years low prices of products imported from abroad, which requires new monitoring and review."

He said al-Moussawi, saying that "the best solution for the return of Iraq's industrial activity, lies in the privatization of all companies affiliated to the Ministry of Industry, which is required to fit the prices of production with prices product imported from industrial countries."

And "When firms become loss-making companies to Iraq is moving towards the right path and return a producer of the industry."

The other hand, the advisor in the Iraqi government, Ahmed Rashid's (Akaniwz) that "industrial action in Iraq needs a comprehensive plan and integrated truss is essential to provide the necessary funds to companies and the Ministry of Industry and the companies contributing to the mixed government and private funding."

He said the "transformation institutions and the Ministry of Industry to the self-financing companies at the moment is appropriate at all, and will disrupt the Iraqi market, but we aspire in the future to convert them to profitable company."

"It makes no sense to convert all state-owned companies to industrial companies with self-financing and privatization at the present time for many reasons."

The industry experienced many failures in Iraq against the background of marginalization from the successive governments to govern Iraq after April 2003 and to rely entirely on the product importer.

Iraq relies to support its economy on the export of crude oil, as it took time being approximately two million barrels a day.

http://www.aknews.com/ar/aknews/2/183223/

State law: "mechanisms" will be a substitute for "compatibility" if it failed to choose a candidate

A member of the coalition of the state of law which is headed by Prime Minister outgoing Nuri al-Maliki on Thursday , the National Alliance will come out of a single candidate for the post.

Prime Minister based on the principle of "compatibility" or resort to the "mechanisms" that Issar agreed upon later.

Abdul-Hadi al-Hassani, in a press statement that "the National Alliance will come out of a single candidate for prime minister in the next stage".. pointing out that "the mechanism to be adopted is the 'consensus' on one of the candidates instead of the previous ones."

He said the "components of the National Alliance if it fails in the political consensus on the candidate for the post of prime minister, will resort to other mechanisms to resolve the matter."

And Hassani, "The alliance has earlier mechanisms were agreed upon, but he was suspended by".. stating that he "will discuss the mechanism through which to resolve a choice of one candidate, and quickly submitting it to the prime ministerial candidate of the largest cluster."

http://www.alseyasa-iq.com/news.php?action=view&id=2156

86.4 billion dollars of Iraq's budget in 2011 at 70 dollars for oil

U.S. Undersecretary of the Ministry of Finance Fadel Prophet said Thursday that the initial draft budget for Iraq in 2011 is 102 trillion dinars (86.4 billion dollars), assuming the global price of oil at 70 dollars per barrel.

The prophet said in remarks today to the Prime Minister said the budget now and it will be presented to the Council of Ministers next week.

According to statements made by the Prophet, the draft budget for this year more than offset in 2010 by about 14 billion dollars.

http://www.radiodijla.com/cgi-bin/ne...?id=2010-09-23

Iraq Government Allows Kuwaitis to Recover Real Estate Seized by Saddam

Iraq will allow Kuwaitis who owned Iraqi real estate to recover property seized by the regime of Saddam Hussein after his invasion of Kuwait 20 years ago, the government in Baghdad said.

Kuwaitis can recover their Iraqi property provided there is no legal decision prohibiting it, Iraq’s government spokesman, Ali al-Dabbagh, said in an e-mailed statement after a cabinet decision on the issue today.

The government also formed a ministerial committee “to study the cases of citizens displaced from Kuwait, in order to help them regain their rights and money,” he said.

Iraq invaded its southern neighbor in August 1990 before being forced to pull out by a U.S.-led international coalition seven months later. During the invasion, Hussein’s regime confiscated Kuwaiti property in Iraq and plundered airplanes and other equipment from Kuwait. Hussein was toppled in the 2003 U.S.-led invasion of Iraq.

Iraq, holder of the world’s fourth-largest oil reserves, allocates 5 percent of its annual oil revenue to pay Kuwait compensation for the 1990 invasion.

Tensions between the two states have lingered since the war. Iraq dissolved its national airline in May in response to legal action against the company by Kuwait, which sought $1.2 billion in compensation for aircraft seized by the Iraqi regime in 1990.

Dabbagh said two days ago that Iraq is intent on improving relations with Kuwait. He said the two countries will start demarcating their common border before investing jointly in oil fields in the area.

Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said on Aug. 25 that his country and Iraq had agreed in principle to share oil fields straddling their border to avoid any future accusations that either side is “over-utilizing” the fields.

http://www.bloomberg.com/news/2010-0...y-hussein.html

Baghdad and Kurds battle over oil

Baghdad is again locked in a dispute with Iraq's independence-minded Kurds over ownership of the oil in their semi-autonomous enclave and the Kurds, their political clout waning, look like they are losing. The confrontation has inflamed sectarian and political tensions as U.S. forces withdraw and the country struggles to cobble together a government six months after stalemated parliamentary elections. That in turn threatens to seriously undermine Iraqi efforts to build up the long-neglected oil and gas industry, which will pay for the massive reconstruction needed to restore the country as a key energy producer.

"So long as the Kurdistan Regional Government and the national government are conflicting, both sides will lose out -- and the KRG stands to lose out the most," the Middle East Economic Digest cautioned.

Kurdistan, which extends across three provinces in northeastern Iraq, contains an estimated 45 billion barrels of oil. The 4 million Kurds say they have no separatist ambitions but they clearly see these reserves as the economic core of an independent state that has been their dream for decades. The central government considers that oil, and most of the revenue it generates, as belonging to the state.

The problem is that a national oil law that would regulate the energy industry and how revenues are shared among Iraq's regions has been hung up in the fractious parliament since it was presented in 2007. Political insiders say that given the deep divisions plaguing Iraqi society it looks like staying that way even if a new governing coalition does emerge.

"As the stalemate drags on, both the federal government and the KRG appear to have lost interest in getting the hydrocarbons law passed and have pursued their own unilateral development plans. Despite numerous public statements saying otherwise," MEED reported.

But the KRG has shunned Baghdad and signed production-sharing contracts with foreign oil companies, without obtaining approval from the federal parliament. Iraqi Oil Minister Hussein al-Shahristani has branded those contracts illegal and blacklisted the companies concerned. In August, the Kurds' Natural Resources Minister Ashti Hawrami acknowledged the KRG was selling surplus oil products to private companies, who then exported the products to neighboring Iran. Baghdad says that the State Oil Marketing Organization is the only authority with the right to export crude oil and its derivatives. Earlier this month, al-Shahristani cut supplies of some refined products such as kerosene and diesel fuel to Kurdistan by 50 percent. Under the postwar constitution, the KRG receives 17 percent of all Iraqi oil revenues.

"As a country with 115 billion barrels of proven reserves, the region's share of the profits could be considered more than sufficient," MEED commented. "But the KRG is keen to avoid conceding too much power to the capital."

It may find its problems are about to get worse. As the key U.S. ally in Iraq, the Kurds, who joined the Americans in fighting Saddam Hussein, had considerable political clout in the new Iraq. But their influence as kingmakers between the competing political bloc dominated by the Shiite majority has waned. After the March 7election, it was believed the Kurds would play a kingmaker role. But six months later and still no government, that's clearly not the case.

"All of a sudden, Baghdad's hand has been strengthened and it is now in a position where it can toughen its rhetoric toward the region, without fear of losing power," MEED observed.

The current prime minister, Nouri al-Maliki, a Shiite who appears to have the backing of both the United States and Iran to head the new government, backs al-Shahristani all the way in seeking to curb the Kurds. Maliki's principal rival, former premier Iyad Allawi, hasn't taken a public position on the issue, presumably to avoid alienating the Kurds whose support he may need. But political insiders say he opposes allowing the Kurds' oil deals.

And the landlocked Kurds have another big problem: No export outlet. They don't have access to the 500-mile pipelines that carry crude from the northern Kirkuk oilfields -- which they claim as their own -- to the Ceyhan terminal on Turkey's Mediterranean coast. Although the Kurds had little choice but to agree to hand over oil revenues to the state, not one barrel of Kurdish oil has yet gone to Ceyhan.

http://www.upi.com/Science_News/Reso...5261285180529/

Iraq's oil: a lesson in transparency
For the first time in Iraq's history, its people can monitor oil revenues and hold the government to account

Oil is the lifeblood of the Iraqi economy, accounting for nearly 90% of government revenues and about two-thirds of GDP in 2009. Such dependence often opens the door to abuse of revenues by those in power and few would have predicted, amid that turmoil following the overthrow of Saddam Hussein, that Iraq's oil industry would one day be among the most transparent in the region.

The so-called resource curse afflicting many developing countries that are rich in natural resources can be avoided by instituting good governance measures based on transparency and accountability.

Since May 2003, proceeds from export sales of petroleum, petroleum products and natural gas have been deposited in accounts held at the Federal Reserve Bank of New York, known as the Development Fund for Iraq (DFI). The fund was established and administered by the Coalition Provisional Authority (CPA) and recognised by UN security council resolution 1483.

Surplus funds from the Oil-for-Food programme and frozen assets in foreign countries were also transferred to the DFI. The International Advisory and Monitoring Board was established by the UN to audit the DFI funds and to ensure that the CPA used revenues for the benefit of the Iraqi people.

After the CPA was dissolved in June 2004, the interim Iraqi government authorised the US defence department to continue to manage DFI funds allocated for reconstruction projects that were held in a sub-account until the end of 2007. Management of the main account was assumed by the Central Bank of Iraq and funds are transferred to the Ministry of Finance for federal budget execution.

For the first time in the country's history, Iraqis have the opportunity to monitor the bulk of their oil revenues and to hold the government to account. The DFI has not stopped abuses but it has made it possible to identify sources of abuse.

This was illustrated in a damning report released by the US's Special Inspector General for Iraq Reconstruction in July, which said that the US defence department was unable to account for $8.7bn (£5.6bn) of the $9.1bn in DFI funds it received for reconstruction activities in Iraq, blaming weaknesses in the defence department's financial and management controls as the primary cause.

Nearly three years after the Iraqi government directed the return of remaining funds, the defence department has yet to order their return. At least two US organisations and one contractor are holding up to $34.3m in DFI funds, although the exact amount cannot be ascertained due to poor accounting procedures.

This is obviously worrying, but in many oil-producing countries such problems would never have come to light in the first place.

Tighter mechanisms are needed to root out potential sources of corruption. One such mechanism is a global standard known as the Extractive Industries Transparency Initiative (EITI). It requires the government to provide audited and accessible information on all payments received from international oil companies, including royalties and export revenues. An independent validation process is overseen by a multi-stakeholder group comprising government, private sector and civil society representatives.

Iraq was officially accepted by the EITI as a candidate country in February after prime minister Nouri al-Maliki expressed the government's interest in joining the process. With Yemen being the only other country in the Middle East to gain candidacy, Iraq is set to become the largest oil producing country to implement the EITI.

The fate of Iraq's oil wealth was effectively determined in 2009, when major international companies were invited to bid for service contracts at two licensing rounds broadcast live on state television. As per the terms of the deals, companies would raise production in the oilfields they were bidding on to agreed levels in return for a remuneration fee calculated per barrel of oil produced. Crucially, ownership of the oilfields would remain in Iraq's hands.

The first round was considered a failure by many observers after only one deal on offer was agreed. Iraq's hard bargaining tactics left few companies willing to commit for such low returns. By the second round, the companies caved in, and a further nine deals were struck with 15 international oil companies from 13 countries including China, Turkey, Malaysia, Angola, Britain and the United States.

Clauses in the contracts stipulated that management of projects would have to be undertaken in partnership with Iraqi state-owned companies who were also given first preference in subcontracting awards, and guarantees were made to protect the local environment.

Iraq's tough line had paid off. The best offer for the West Qurna oilfield during the first round came from Russia's Lukoil who were prepared to raise production to 1.8m barrels per day in return for $6.49 for each barrel of oil extracted. This bid was rejected, and subsequently awarded for only $1.15 per barrel at the second round. Overall, oil companies will take home a weighted average of $0.89 per barrel of oil extracted through their services.

With oil production volumes expected to compete with the likes of Saudi Arabia, it is vital that a comprehensive metering system is completed to prevent illegal siphoning of petroleum through unmetered depots. In addition, monthly production and export figures are released by the Ministry of Oil, auditors' reports are provided by the Central Bank, and the Ministry of Finance has a detailed breakdown of federal budget allocations on its website.

But Iraq cannot take a big leap in good governance without passing a freedom of information law, thereby guaranteeing civil society access to key documents and statistics.

That Iraq's oil assets have remained under the control of Iraqis and are open to public scrutiny is a testament to the will of Iraq's leaders and policymakers – a factor often overlooked by analysts. Seven-and-a-half years on, the constitutional guarantee that ownership of Iraq's oil and gas belongs to "all the people of Iraq" still holds true.

http://www.guardian.co.uk/commentisf...l-transparency

The Convention on the common fields between Iraq and Kuwait under the signature
Announced that the Iraqi oil ministry that the agreement to joint oil fields with Kuwait and in the final stages had expected next month

spokesman for the Ministry of the negotiating team of the Ministry of oil reached the semi-final stages on joint oil fields with Kuwait, which constituted the basis points, the outstanding files between the two countries.

"The negotiations were successful and will soon announce the signing of the Convention in its entirety after it has been agreement on all joints Home," likely to be early next month is the deadline to sign the agreement in the presence of number of members of OPEC such as Saudi Arabia, Iran and other founders of the members.

He said the "Negotiating Committee of Iraq and put the main obstacles impeding the signing of a treaty to regulate the process of extracting oil from oil fields in common." He said the Iraqi government is working to activate the Convention on the Unification of fields, joint oil, which could be where a joint investment between the two audit third party.

Kuwait has announced the United Nations headquarters in New York, ending the outstanding problems with Iraq, including the approval of the out of Baghdad the wrath of the seventh item on the agreement with Secretary United Nations, Ban Ki -moon, after realizing for Iraq to complete implementation of resolutions and international obligations relevant to them.

http://www.oil.iraqiamedia.com/index...atest&Itemid=1