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

Iraq to Open Six Big Fields for Oil, Gas Exploration (Update1)

Iraq will open at least six major oil and natural-gas fields for exploration and production in its first licensing round since the U.S.-led invasion in 2003, as the country seeks to raise output without a national energy law.

Iraq, which pre-qualified international oil companies this week for the bidding round, will open the southern Rumaila, West Qurna and Zubair fields for exploration, Oil Minister Hussain al-Shahristani said in an interview in Brussels today. In the north, international oil companies will be invited to develop the Kirkuk oil field and the Akkaz gas field.

``At least six giant fields will be included, including some gas fields,'' Shahristani said. ``There will be other bid rounds next year and more companies will be qualified as we go along.''

Iraq wants to almost double production to 4 million barrels a day by 2009 with expertise from international companies, many of which have refused to invest in the country because of a lack of security and the government's failure to pass a federal energy law. No legislation has been passed because of disagreements over revenue sharing and oil-field development.

Iraq pre-qualified 35 out of 120 U.S., European and Asian companies that submitted documents between Jan. 9 and Feb 18 to participate in the licensing round, Iraq's Oil Ministry spokesman Asim Jihad said on April 14.

Pre-Qualifiers

Exxon Mobil Corp., the world's largest oil company, and Europe's two biggest, Royal Dutch Shell Plc and BP Plc, were among the 35, as were ConocoPhillips, Chevron Corp. and Total SA. Others were Russia's OAO Gazprom, the world's largest natural-gas producer, and OAO Lukoil, the Russian oil producer with the most overseas assets. Mitsubishi Corp. and Inpex Holding Inc. of Japan and China's Sinochem Corp. were also accepted.

The southern oil fields up for exploration, including Rumaila North, Rumaila South, West Qurna and Zubair, have a current production capacity of 1.71 million barrels a day and as much as 43 billion barrels in estimated reserves, according to the Web site of the U.S. Energy Information Administration. Kirkuk has a current production capacity of 250,000 barrels a day and reserves of 10 billion barrels.

Iraq produced 2.38 million barrels of oil a day in March, according to data compiled by Bloomberg. The nation has an estimated 115 billion barrels of proven oil reserves, lagging behind only Saudi Arabia and Iran, according to BP figures.

Bloomberg.com: Energy

UPDATE 2-DNO lifted by hopes Iraq oil deal close

Shares in Norwegian oil and gas producer DNO soared on Wednesday on hopes Iraq is close to finalising an oil and gas law for Baghdad to back oil contracts signed by Kurdish authorities.

DNO shares initially jumped by as much as 24 percent on media reports -- later denied by Iraq's oil ministry -- of a completed deal for Baghdad to honour oil contracts signed by the Kurdish regional government.

The shares pared gains to trade up 16.8 percent at 10.20 crowns by 0857 GMT, making it the biggest gainer on the Oslo bourse which was up 1.1 percent.

DNO was the first western oil company to sign production sharing contracts with the regional Kurdistan government after the U.S.-led invasion five years ago. But DNO still needs Baghdad's permission to start exporting its oil from north Iraq.

An Iraqi oil ministry official denied a deal was made. He said he was "astonished" at the reports and added that the Iraqi oil ministry continues to view the contracts signed by the Kurdish regional authorities as "illegal and void."

But Iraq's Prime Minister Nuri al-Maliki said in Brussels that the Gulf state was close to agreeing the final version of the long-delayed oil and gas law, giving some hope to investors betting on DNO quickly winning an export license.

"We don't have any other information other than what's been seen in the media," DNO Chief Executive Helge Eide told Reuters.

Iraq's central government in Baghdad and Kurdish officials were due to resume talks soon to iron out disputes holding up the landmark draft oil law, a deputy speaker of the Iraqi parliament told Reuters on Tuesday.
Up to now, Baghdad has considered oil deals signed by the Kurdish authorities as illegal and said it would bar companies with such contracts from oil deals in the rest of Iraq.

"NOT CONCRETE PROGRESS"

DNO has long maintained that its production deals with Kurdistan are legal under the Iraqi constitution. The Kurdish authorities are negotiating the export licence with Baghdad on behalf of DNO.

"Once the oil law is in place, DNO should be able to export oil through the federal oil pipeline," said Eric Nasby, an analyst at Handelsbanken in Oslo.
"We have not seen any concrete progress, but have assumed it's there. Today's reports can be interpreted in a way that things are happening, even though we have to wait for confirmation," Nasby added.

Eide told Reuters on April 3 that he was "quite confident" of gaining a licence to export Iraqi oil in 2008, enabling it to quadruple production to about 30,000 barrels per day.

DNO now produces about 7,000 bpd from its Tawke oilfield in Kurdistan. It has said it will sell its oil on the local market until it can export its output in pipelines to Turkey, Syria or other routes.

UPDATE 2-DNO lifted by hopes Iraq oil deal close | Markets | Reuters

UPDATE 1 - No deal on Kurdish contracts-Iraq Oil Min Official

Iraq's central government has not reached a deal with the Kurdish regional authorities to recognise contracts the Kurds signed with foreign oil companies, a senior Iraqi Oil Ministry official said on Wednesday.
"The Iraqi Oil Ministry considers the contracts signed by the Kurdish regional authorities as illegal and void," the senior official said, adding he was "astonished" by reports that suggested otherwise.

Unconfirmed media reports that Baghdad had agreed to accept the contracts signed by the Kurds had caused share prices in Norwegian oil firm DNO to soar earlier on Wednesday. The firm has signed such contracts with the Kurdish authorities.

The official said the Kurdish contracts are the main stumbling block to agreeing a draft national oil law that will open up the country's energy sector to foreign investment.

"The main reason for not reaching an agreement on the draft oil law is the Kurdish contracts."

UPDATE 1-No deal on Kurdish contracts-Iraq oil min official | Industries | Energy | Reuters&

Iraq Navy tests sea legs, but Trainers predict shaky times

ABOARD AN IRAQI PATROL BOAT (AP) -- The unidentified speedboat fails to respond to warnings as it races toward Iraq's vital oil terminal in the Persian Gulf. A young Iraqi marine radios to the vessel, warning it to turn away: "I will be required to use deadly force."

This confrontation is just a drill - an effort by American, British and Australian officers to prepare Iraq's tiny navy to defend its waters and the country's major oil exporting facilities.

But the day when Iraq alone can defend its shores - and protect its critical offshore oil installations - seems remote.

Iraq's navy now has five Chinese-made patrol boats and 26 fast-attack aluminum vessels - fewer than half of which are operational. Its personnel number about 1,350, including 350 marines.

"They think they are an elite unit, but they are not," said Capt. Jock Alexander of the British Royal Marines, who is in charge of training Iraqi marines to guard the 1.8-mile exclusion zone around each of the country's two oil platforms.

The struggle to build a credible Iraqi navy is mirrored - on larger scales - by the mounting delays and costs to form a new Iraqi army and air force after Washington disbanded Saddam Hussein's military.

The shortcomings within the security forces were exposed during recent battles against Shiite militias in southern Iraq, where some units were wracked by dissent and outfoxed by guerrilla fighters. On Sunday, the Iraqi government fired more than 1,300 soldiers and policemen who deserted during the clashes in Basra.

In the Gulf, Iraqi marines have only two weeks basic infantry training. They are not yet prepared for full combat missions and will be incapable of an amphibious assault any time soon, instructors say.

"The challenge is to get them to be comfortable in what they do," Captain Alex Pounds of Royal Marines said.

But the Iraq recruits are still not quite sure what that role is. The Iraqi command in Baghdad had not given the navy a clear statement of its mission in the northern Gulf. Watching over the country's oil lifeline is simply a natural inclination.

"The oil terminals are the main artery for our economy, so it's crucial to be able to defend them," said Navy Lt. Sinan, the commander of the Iraqi 103 Predator patrol boat. He asked that only his first name be used because of security reasons.

But the men on the Predator do not agree with their Western trainers about who represents the greatest threats. Most Iraqi recruits do not perceive Iran as a foe.

"Iran is our friend," said Sinan, who is from the southern city of Basra. "The enemy is terrorism. It has many faces and many names."

The Iraqi marines' commander, Lt. Dhyaa, said those who want to harm Iraq come from all neighboring states, not just Iran.

"The problem are terrorists, hiding among ordinary people," said Dhyaa.
Like the Predator's commander, he did not want to be identified with his full name for fear of being associated with the coalition forces.

Dhyaa said he feared no one when conducting security sweeps on oil tankers and dhows, the traditional sailing vessels in the Gulf. Unlike most men under his command, Dhyaa boards vessels carrying local and foreign flags without covering his face.

"I am the new law, not a criminal," Dhyaa said.

His Western trainer said Iraqi recruits worry most for the safety of their families. "Their major fear is retribution for helping coalition forces," said Petty Officer Aivaro Vasquez of the U.S. Coast Guard.

Four years after coalition troops started to assemble Iraq's navy, the country remains entirely dependent on U.S. warships for defense of its territorial waters.

The U.S. Navy has one aircraft carrier operating in the region. American and British cruisers and destroyers are also deployed. So is an Australian frigate.

Along with these warships, the U.S. Coast Guard and Navy Patrol vessels are on guard against pirates, explosive devices at sea and any other threats coming too close to the ships or the two oil terminals.

Iraq has a 35-mile coastline, and shares its passages to the sea - the Shatt al Arab and the Khor Abdulla - with two neighbors it previously fought: Iran and Kuwait.

Most of Iraq's Navy's combat ships were destroyed by the United States in the 1991 Gulf War and the surviving vessels rusted during the 12 years of sanctions that followed. There was no marine corps in Iraq before the U.S.-led invasion in 2003.

"Iraq is an emerging nation," Alexander of Royal Marines said. "It will take some time for the Navy to gain confidence and for the marines to develop core values."

Alexander said Iraq's navy is expected to grow to 2,500 sailors and marines in the next two years. By the end of 2010, its fleet should include four new Italian-made patrol ships, 15 Malaysian-made patrol boats and two offshore support vessels.

News from The Associated Press

Oil and Gas Law Expected to be Seriously Discussed between KRG and Federal Gov't

Today the Iraqi lawmaker, Ali Hassan Balu, said if the KRG and federal government fail to reach an agreement on the oil and gas law, the disputed issue will be referred to the Iraqi Council of Representatives.

As he said, serious meeting is expected to be held in the next two days between the KRG delegation, which is currently in Baghdad, and the Iraqi relevant officials regarding the controversies of the oil and gas law.

PUKmedia :: English - Oil and Gas Law Expected to be Seriously Discussed between KRG and Federal Gov't

Massum: Amendment on Oil-Gas Draft done without our Knowledge

During an interview with Radio Sawa, Dr. Fuad Massum the head of Kurdistan Parliamentary Faction said ”Kurdistan Parliamentary Faction refuses the amended Oil-Gas draft because it was done without our knowledge."

He clarified that the political factions agreed last year on the original draft.

Massum added the KRG’s Delegation is visiting Baghdad to discuss and find solutions to the forementioned issue and the unresolved issues with Federal Government in Baghdad.

PUKmedia :: English - Massum: Amendment on Oil-Gas Draft done without our Knowledge

Raed Fahmi: We Accomplished Crucial Steps in Implementation of Article 140

Mr. Raed Fahmi the head Committee of implementing Article 140 of the Iraqi Constitution said that the Iraqi Parliament did not dispatch Article 140 to the Constitutional Court for illustration.

Fahmi added that except for the statistics, the Committee continued implementing the measures concerning the normalization of the situation in Kirkuk.

It’s worth mentioning that the heads of the political Parliamentary Faction reached, during a meeting with the committee of reviewing the constitution and the Parliament presidency, a decision which rules to dispatch article 140 to the Constitutional Court to be explained before voting on continuing the normalization measures or making an amendment.

PUKmedia :: English - Raed Fahmi: We Accomplished Crucial Steps in Implementation of Article 140

Demand for dollar higher at daily auction

Demand for the dollar was up in the Iraqi Central Bank's auction on Wednesday, registering at $123.650 million compared to $87.240 million on Tuesday.

"The demand hit $8.560 million in cash and $115.090 million in money transfers outside the country, all covered by the bank at an exchange rate of 1,204 Iraqi dinars per dollar, unchanged for the 8th session in a row," according to the central bank's daily bulletin which was received by Aswat al-Iraq- Voices of Iraq- (VOI).

The 16 banks that participated in the auction offered to sell 1.220 million dollars, which the bank bought all at a rate of 1202 dinars per dollar.

Speaking to VOI, Ali al-Yasseri, a trader, said that banks expect a change in exchange rate on Wednesdays which led to the increase in remittances and bids in cash in toady’s session, raising the overall demand for the dollar.

Aswat Aliraq

EU says close to Iraq energy pact as wins gas pledge

The European Union said on Wednesday it was close to clinching a preliminary energy pact with Iraq as part of the bloc's efforts to reduce its heavy dependence on Russian oil and gas.

European Commission President Jose Manuel Barroso said after talks with Iraqi Prime Minister Nuri al-Maliki he hoped a memorandum of understanding could be signed within weeks, and that the country's oil minister had been invited back to Brussels in May with the aim of concluding negotiations.

"There is very good news of progress in talks, so we can very soon establish a memorandum of understanding on energy cooperation," Barroso told a joint news briefing with al-Maliki.

Separately, a Commission statement issued after talks between European Energy Commissioner Andris Piebalgs and Oil Minister Hussain al-Shahristani in Brussels said Iraq had pledged an initial 5 billion cubic meters (bcm) of gas to the EU per year, with the likelihood of more in the future.

Earlier, the Iraqi prime minister said the two-day visit by an Iraqi delegation to the headquarters of the EU and NATO was aimed at deepening ties, and held out the prospect of enhanced energy cooperation and business openings for European companies.

"We do hope this meeting will result in new steps of cooperation between Iraq and EU countries, especially regarding contributing to developing our oil and gas sectors," he said.

EU officials said ahead of al-Maliki's visit they hoped to reach an outline agreement with Iraq to import Iraqi gas via the planned Nabucco pipeline across Turkey to central Europe.

The EU wants to diversify gas supplies away from Russia, which provides a quarter of its needs. Connecting fields in western Iraq to a planned Arab Gas Pipeline would enable Baghdad to supply gas to Nabucco, which is due to come on line in 2013.

"Iraq made a political gesture of goodwill from Iraq to the EU and promised at least 5 bcm of gas in a first stage from the Akkas field, and indicated that probably there would be more in the future for the European Union," the Commission said.

"Iraq confirmed that part of their gas will flow to Europe through various routes and potentially from various fields."

A Commission official said that of the 35 companies granted access to the Akkas field near the Syrian border, 11 were from the EU. Gas was due to flow from the field in two to three years, the official added.

The European Commission said on Monday it had secured a guarantee last week of 10 billion cubic meters a year of natural gas from Turkmenistan from 2009 as part of the drive to ensure sufficient supplies to make Nabucco commercially viable.

The pipeline is seen as a rival to the Kremlin-backed South Stream project due eventually to take some 30 billion cubic meters of Russian gas a year to southern Europe.

Ties between the 27-member EU and Iraq have been gradually deepened since the U.S.-led 2003 war vehemently opposed by countries such as France and Germany.

The bloc is a substantial donor to the country and in 2005 launched a rule-of-law mission that has so far trained 1,450 judges, investigators and top police and penitentiary officials.

Earlier, al-Maliki gave a European Parliament committee an upbeat assessment of Iraq's efforts to get its war-ravaged society and economy back on track.

He said Iraq was "close to agreeing a final version" of a long-awaited oil and gas law, delay over which has held back investment in the sector.

EU says close to Iraq energy pact as wins gas pledge | Markets | Markets News | Reuters

Iraqi leader in Brussels to drum up support and oil sales
Iraq's Prime Minister is in Brussels in a bid to forge closer economic and political ties with the European Union. Nouri al-Maliki said the reconstruction of his country depended on much more than troops and he called on the EU to boost its investment to help Iraq get back on its feet.

Mr Al-Maliki told European Parliamentarians that he was seeking to encourage more oil exports to the EU:

"We've come here to look for a new relationship. We don't want the EU to be the donor and we the recipient. Iraq is a major oil producer and we want to exploit that potential. We think there's a desire on the part of the EU to our oil and gas. That's why we have to start working on a new type of cooperation."

The EU is a huge potential partner for Iraq resources as it tries to reduce its dependence on Russian oil and gas. Already there are projects in the pipeline: the EU is hoping to soon clinch a deal to import Iraqi gas via a planned pipeline across Turkey.

On the road to peace?

But Mr Al Maliki is clearly thirsty for more. He is pushing through new laws to facilitate EU investment in his country and he sought to back that up by drumming home the message that Iraq was well on its way to peace:

"We have now emerged from the horrors of dictatorship. I am confident that we can defeat al-Qaida and we are determined to beat militia fighters in order to help achieve political stability."

But there was a sceptical reaction from many at the European Parliament. Mr Al Maliki came to Brussels just a day after nearly 60 people were killed in bombings blamed on al-Qaida in Iraq.

Evasive

Geoffrey van Orden, a British Conservative MEP, said he was disappointed that Mr Al Maliki had dodged questions about how to guarantee future stability, particularly given the possibility of a pull-out of US troops:

"He didn't answer many questions directly, which is perhaps understandable. His remarks were very polite but all he said was he didn't think it would be sensible to have a premature withdrawal of coalition forces. But he didn't say much [about their future role] at all. So I think a lot will depend on the security situation, which is still very bad indeed."

There are also concerns about Iraq's efforts to protect ethnic and religious minorities. German MEP Cem Ozdemir argues that the much-hyped Constitution does not go far enough to give the same rights. He also pointed to corruption and uneven wealth distribution:

"Iraq is not a poor country, we shouldn't get confused about that. But the distribution of money from oil is not being shared out. That's why we are trying to getting them to see that the weak, like the refugees and the war widows, should be part of the aid programmes."

The President of the European Parliament, Hans-Gert Pottering, however sounded a more optimistic note and assured his Iraqi guest said the EU was now ready to 'move on' from the split caused by 2003 US-led invasion of Iraq and renew efforts in the country.

"Our efforts have to become more concrete. It's our common obligation to help Iraq make the transition to a peaceful democracy and we will do everything we can to help."

Brussels has hundreds of millions of euros in aid to help rebuild the country and it will send some Euro 76 million in 2008.

Iraqi leader in Brussels to drum up support and oil sales - Radio Netherlands ********* - English