Thread: Archive Latest News - Think Tank - 15/04/08 - 26/08/08

Objections in Parliament Session over Iraqi electoral law

Iraqi Parliament session witnessed a series of objections and debates over the electoral law that was subject to discussion after second read out. A number of lawmakers proposed to transfer disputed issues to heads of political blocs to decide about them soon.

Objections in parliament session over Iraqi electoral law | Iraq News | Alsumaria Iraqi Satellite TV Network

No available funds for Iraq reconstruction

Iraqi Ambassador to Washington Samir Al Samid’aie affirmed that Iraq is deploying utmost efforts to bear the state’s financial burdens. In a statement to the CNN, Al Samid’aie noted that the Iraqi Government will regain control as soon as possible and assume the responsibility of security and construction. He stressed however that finances needed in Iraq for reconstruction and restoring stability exceed available funds.

Iraqi Ambassador’s statements came in response to the endeavors of US Democratic Party to reduce allocations of reconstruction in Iraq given that US tax payers pay for Iraq more than Iraqis are supposed to pay.

No available funds for Iraq reconstruction | Iraq News | Alsumaria Iraqi Satellite TV Network

Oil Search signs up for Shakal in Iraq
Oil search is primed to sink two exploration wells later this year in the newly signed production sharing contract for the 632 kilometre Shakal Block with the Kurdistan Regional Government (KRG) in Iraq.

The Shakal Block lies in the southeastern fairway of the prolific Zagros Fold belt of Kurdistan, immediately south east and on trend with the Pulkhana field, which has reported proven and probable reserves of around 300 million barrels of oil. Studies suggest the Pulkhana structure could extend into the Shakal Block.

Oil Search estimates that the block has the potential to contain mean unrisked recoverable reserves of some 250 million barrels, either in a separate structure or as a continuation of the Pulkhana field.

The Shakal PSC fully conforms to the model PSC required under new Iraqi laws and has a seven year exploration period with a 20 year extendable production period, the Australian outfit said in a statement today.

“Kurdistan is one of the few places left in the world where independent oil companies can capture material exploration positions with large reserve potential and on satisfactory commercial terms,” Oil Search’s managing director, Peter Botten, said today.

He added “The region is lightly explored and contains some of the most prospective geology in the world, with relatively low sub-surface risk.”

The latest PSC, combined with Oil Search’s Bina Bawi PSC in Kurdistan, forms the basis of developing a niche position in Iraq’s re-emerging oil and gas industry that has the potential to make material contribution to production prior to the expected start-up of the Papua New Guinea liquefied natural gas project in 2013/2014, said Oil Search.

About 45 discoveries have been made in the Kurdistan region with ten fields currently producing, of which five have reserves greater than one billion barrels. The Zagros Foldbelt in the Kurdistan region has many un-drilled structures and is highly prospective.

Prime will operate the Shakal PSC with a 45% working interest, coupled with Petoil on 11.25% and Oil Search on 18.75%, the remaining 25% stake is still to be advised.

In terms of revenue interest, Prime will take a 36% cut, followed by the KRG on 20%, Oil Search with 15%, Petoil on 9% and the remaining 20% will be attributed to stake still to be advised.

Upstreamonline - Oil Search signs up for Shakal in Iraq

Iraq 1Q '08 Oil Exports +22% On Year At 1.92 Million B/D - SOMO Chief

Iraq's crude oil exports during the first quarter of 2008 rose 22% from the year-earlier period, the head of the state-run oil marketing company, or SOMO, said Monday.

"We have exported an average of 1.92 million barrels a day during the first three months of this year," Falah Alamri told Dow Jones Newswires by telephone from Baghdad.

Some 1.569 million barrels a day were exported from southern Iraq, while the remaining 357,000 barrels a day were exported from northern Iraq, he said.

According to figures published by the oil ministry last year, the average exports in the first 10 months of 2007 were 1.58 million barrels a day.

Company News Story

From the IMF

Regional Economic Outlook: Middle East and Central Asia

The Middle East and Central Asia region grew at 6.5 percent in 2007, marking its best five-year performance over the past 30 years. So far, the turmoil in international financial markets has had a limited impact on the region, and the short-term outlook remains very favorable. The report reviews recent economic developments, assesses the outlook for the coming year, and discusses key policy challenges. In addition, it takes a closer look at both regional topics--such as the rise in inflation in the GCC countries, intraregional capital flows, developments in oil markets, developments in real estate prices, and sovereign wealth funds--and country reviews for Algeria, Georgia, Iraq, and West Bank and Gaza.

Regional Economic Outlook: Middle East and Central Asia, May 2008 -- Table of Contents

Update

Iraqi government, al-Sadr group sign cease-fire

Radical Shiite cleric Muqtada al-Sadr's movement has agreed to end its "armed presence" in Sadr City under an agreement reached with Iraq's government, Iraqi officials said Monday.

Both sides signed the agreement Monday, which was reached in principle on Saturday, fine-tuned on Sunday, and then approved by Prime Minister Nuri al-Maliki.

It calls for a four-day cease-fire to have begun Sunday, a day before it was formally approved. The agreement is an attempt to end the bloodshed in Baghdad's Sadr City neighborhood, a government official said Monday.

Despite the agreement, the U.S. military -- which was not part of the discussions -- continued to battle militants Sunday night into Monday morning in Sadr City, a stronghold of the radical Shiite cleric.

The U.S. military said three armed people were killed in the fighting. Violence between U.S. forces and militia members in Sadr City flared hours after the cease-fire was supposed to go into effect.

Iraq's deputy parliament speaker and a spokesman for al-Sadr's movement praised the agreement Monday during a joint news conference in Baghdad.

"Thanks to God for the agreement that we reached ... to end the crisis in Sadr City which left hundreds of martyrs and more than this number of wounded," said al-Sadr spokesman Sheikh Salah al-Obeidi.

It will end the militias' armed presence in the sprawling eastern Baghdad slum, he said, and clear the district of roadside bombs and mines that the United Nations Children's Fund says has rendered many roads inaccessible.

"The Sadr bloc expressed readiness to allow the government to search Sad City and other suspected places for weapons," Deputy Parliament Speaker Sheikh Khalid al-Attia. "The government has right to confiscate all weapons of that type (medium and heavy) according to the agreement."

He added that people "harmed" by the military operation in Sadr City will be compensated by the government.

A U.S. military official voiced his support of a cease-fire agreement on Sunday.

"We welcome an end to violence and putting an end to the criminal activity, so we are obviously in support of the government of Iraq as they move forward in a dialogue with elements of the Sad trend," said Rear Adm. Patrick Driscoll, a spokesman for the U.S.-led multinational forces.

Not all Shiite militants involved in the Sadr City fighting are members of al-Sadr's Mehdi army. The U.S. military has said the Shiite militias in Sadr City are Iranian-backed cells who have not obeyed al-Sadr's freeze of Mehdi army military activities. The cleric put the freeze in place in August and renewed it in February.

Iran denies backing violent groups in Iraq.

Iraqi and U.S. forces have battled Shiite militants in Sadr City since the end of March. About about 1,000 militants and civilians have been killed in fighting, and more than 2,000 have been wounded.

In a statement posted on an al-Sadr loyalist Web site, the cleric announced a five-member committee "with full authority to end the crisis in peaceful means and in a way they see as being in the interest of Iraq and the Iraqis."

During the four-day cease-fire, the government will reopen all entrances to Sadr City, allowing necessary aid to flow in and the wounded to be evacuated, al-Obeidi said. There are shortages of water, food and medical supplies there, according to UNICEF.

Iraqi security forces will maintain checkpoints at the entrances of Sadr City to prevent any infiltration.

Iraqi forces will also be on the district's streets, conducting searches and raids to detain wanted individuals, according to al-Obeidi, and he warned that according to the agreement, the government will punish the security forces if they violate residents' rights in the process.

Disbanding al-Sadr's Mehdi army was not even discussed, al-Obeidi said.

According to the spokesman, al-Sadr has reviewed the deal and agreed to it, issuing a statement on Monday authorizing a five-member delegation to sign the agreement.

Iraqi government, al-Sadr group sign cease-fire - CNN.com

Kurdish leaders underscore settling pending issues with central govt.

Iraqi President Jalal Talabani and Iraqi Kurdistan Region President Massoud Barazani underlined the importance of settling outstanding issues between the central and regional governments, according to a presidential statement.

"Talabani and Barazani met in the Salah al-Din summer resort in the city of Arbil, capital of the autonomous Kurdistan Regional Government (KRG) to discuss relations with the Baghdad's central government and pending issues between the two sides," read the statement as received by Aswat al-Iraq – Voices of Iraq – (VOI).

"In a joint press conference after the meeting, President Talabani said he discussed with Barazani the situation in Iraq in general and the Iraqi Kurdistan in particular," it noted.

The statement quoted Barazani as saying that views were "identical" on all the topics discussed.

Aswat Aliraq

Update

Parliament refers Maliki’s proposal to financial, economic committees

The parliament’s chairmanship referred the proposal presented by Iraqi Prime Minister Nouri al-Maliki on allocating $5 billion to implement strategic projects in Iraq to the financial and economic committees in Parliament to study the projects and present its recommendations.

The Parliament’s session witnessed a long debate over al-Maliki’s proposal on allocating the amount out of the 2008 general budget to revive the reconstruction operations in Iraq and to implement strategic projects throughout the country.

Earlier, Iraq's Prime Minister Nouri al-Maliki urged the Parliament to allocate $5 billion for reconstruction and strategic projects in the country.

"We have a responsibility to rebuild what has been destroyed by terrorist operations and to compensate the aggrieved persons," al-Maliki said in his speech before the Parliament.

"We need $5 billion (1 U.S. dollar= 1,221 Iraqi dinars) to finance strategic projects in the country and to achieve progress in reconstruction operations, particularly in the field of education, which was harmed by the former regime's policies," the premier told the Parliament, which held its regular session on Monday under the chairmanship of Speaker Mahmoud al-Mashhadani.

A number of lawmakers voiced reservation over the premier’s proposal; the MP from the Unified Iraqi Coalition (UIC) Jalal al-Din al-Saghier said “Iraqi people need the money, but we need to be sure that this amount will be spent in the right direction.”

In his speech, al-Maliki stressed the importance of building Iraq on "constitutional and legal pillars," highlighting the respect for the state's authority and law.

Aswat Aliraq

WesternZagros Commences Drilling in Kurdistan

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros") is pleased to announce today that it has commenced drilling at Sarqala-1. The well is planned to target four potential reservoirs zones, reaching a total depth of approximately 4,800 metres. Sarqala-1 is expected to take between 120 and 130 days to drill.

"We are very excited about spudding our first well in Kurdistan," said Simon Hatfield, President of WesternZagros. "This is a momentous achievement for the Company and it is a result of the spirit of cooperation between the Kurdistan Regional Government and WesternZagros. Sarqala-1 is the first well of a multi-well drilling exploration program planned over the next three years."

In addition to commencing drilling operations, WesternZagros continues to actively acquire seismic over the Kalar-Bawanoor Block. WesternZagros is pleased to report that it has exceeded its seismic commitment under its Production Sharing Contract ("PSC") with the acquisition of over 1,265 kilometres to date.

WesternZagros is the operator under the PSC with a 40 per cent working interest.

About WesternZagros Resources Ltd.

WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a Production Sharing Contract with the Kurdistan Regional Government in the Kurdistan Region of Iraq. The Company's shares trade on the TSX Venture Exchange under the symbol "WZR".

This news release may contain forward-looking information based on assumptions that are subject to a wide range of business risks. WesternZagros' operations are subject to all risks normally incident to the exploration, development and operation of crude oil and natural gas properties and the drilling of crude oil and natural gas wells, including geological risk, encountering unexpected formations or pressures, premature declines of reservoirs, potential environment damage, blow-outs, fires and spills, all of which could result in personal injuries, loss of life and damage to property of WesternZagros and others; environment risks; delay or changes in plans with respect to exploration or development projects or capital expenditures; the ability to attract key personnel; the risk of commodity price and foreign exchange rate fluctuations.

All of WesternZagros' assets are located in Kurdistan. As such, WesternZagros is subject to political, economic, and other uncertainties of that region as well as risks of loss due to civil strife, acts of war, guerrilla activities and insurrections. WesternZagros' operations may be materially adversely affected by changes in government policies and legislation or social instability and other factors which are not within its control. Risks also include the uncertainty involved in the estimation of undiscovered resources. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form which is filed at www.sedar.com.

Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. We caution readers and prospective investors of the Company's securities not to place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros.

WesternZagros

A Road Map For Vitalizing The Iraqi Oil Industry

By Hussain Rabia

Dr Rabia is the Managing Director of Entrac Petroleum Ltd, a specialist company concentrating on providing consulting and training services for the Iraqi and international oil industry. The author has over 28 years of experience mainly with large international oil companies including BG and ADCO. Dr Rabia can be contacted at: [email protected].

1.Introduction

The minimum oil reserves in Iraq are estimated at 110bn barrels with a possible upward figure of 324bn barrels.1 The exploitation of these vast reserves is currently at 2mn b/d, well below the production capability of 8-10mn b/d. Oil exports from Iraq average around 1.8mn b/d. To increase oil production from 2mn to 8mn b/d requires a great deal of planning, expenditure and provision of expertise. I will highlight here the roadmap for vitalizing the Iraqi oil industry. Its main elements are:

• Oil Law
• External Investment
• Creation Of A National Oil Company

2.Oil Law

A prerequisite for the future development of the Iraqi oil industry is the establishment of an oil law that protects the interests of the nation and foreign investors. To a layman, the establishment of such a law may be straightforward. To the oil experts, the preparation and drafting of such a law is a technical challenge. It has to contain all the technical details relating to oil exploration, development and production. Issues relating to the type of contract (PSA, short-term, service etc), its duration and the maximum allowable return on investment must be addressed correctly. I shall leave discussion on contracts to a future article.

The released draft of the new Iraqi oil law contains very basic ideas and does not elaborate on many of the difficult issues relating to contracts and duration, return on investment, conflicts with foreign companies etc. It is hoped that at some stage the Iraqi legislators will produce a more detailed oil law document similar to those in many oil producing countries. The oil law must also encompass many of the hidden details, such as the development of the local workforce, technology and knowledge transfer, protection of the environment, and, most importantly, contribution to the development of local economies which are and will be entirely dependent on the oil industry.

Elaboration on each of the above is beyond the scope of this paper, but I shall provide two basic examples to illustrate the challenges.

1.Local Expertise: Iraq has been isolated from the outside world since 1991. Huge technological developments occurred in the oil industry in the last 18 years which Iraqi engineers were not aware of or were prevented from having access to. Hence a foreign investor has to educate the local force. This does not mean running a five-day course on a subject which the investor likes, but actually providing long-term training lasting from one-to-three years.

2.Infrastructure: If an investor were to bring in, say, two drilling rigs (not a large number) with 100 people for both rigs and if you add to this the number of supporting and technical staff to run an initial exploration phase, then the total number would be around 200 people. These require accommodation, recreation facilities and, most importantly, medical care. Most local towns in Iraq have very basic medical facilities which cannot cope with major disasters such as workers’ exposure to gas or, worse still, a blow-out disaster with major casualties. I happen to know this better than most people as my family comes from one of those small towns.

The foreign investor must then contribute to the building of the local economy by either improving existing
facilities or indeed build new ones.

3.Status Of The New Iraqi Oil

At present, the new Iraqi oil law is being discussed in the elected Iraqi parliament. There is also intense and continued pressure from the US (either directly or indirectly through its occupying army) to expedite the passing of such a law. The Iraqi nation is also divided on the new law. There has been no local debate on the need for such a law or indeed the problems of not having one. Add to this, the Northern Province of Iraqi Kurdistan has unilaterally issued contracts and exploration rights to foreign companies without consultation with the central government. Several foreign companies have already started drilling with remarkable success in the very few wells they drilled to date; some individual wells are producing 23,000 b/d.

The current elected Iraqi government is going through a learning curve and it needs all the help it can get from all parties, but it certainly does not need external pressure from parties who have little or no knowledge of Iraqi culture.

4.External Investment

The Iraqi economy is totally dependent on oil revenues. A large part of them is used to subsidize almost every Iraqi citizen with basic food rations; the other part is used to build the battered and almost non-existent economy. With such a huge demand on oil revenues, there is little money left from the sale of 1.8mn b/d to reinvest and rebuild the oil industry in Iraq.

Indeed, if one were to depend solely on internal investment, as some Iraqis advocate, then the Iraqi oil industry would need 30-50 years to reach production rates of just 8mn b/d. In 50 years from now, alternative sources of energy, cheaper and cleaner than oil, would certainly be reaching very advanced stages of development rendering oil as an expensive or indeed an unacceptable source of energy. The major loser in this scenario would be the Iraqi people. One only has to look at Hubbert’s Peak scenarios to realize that this date may be coming sooner than 30 years

The development of the Iraqi oil industry needs external investment, right now. Therefore, it is imperative that the Iraqi government embarks on a national education program to explain the merits of foreign investments and the new Iraqi oil law. Only then can those external investors enter Iraq, confident that the nation is in full support of their efforts.

A Road Map For Vitalizing The Iraqi Oil Industry