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

INTERVIEW - Turkish Oil Firm in talks for Iraq exploration

State-owned Turkish Petroleum Corporation (TPAO) is in talks with some firms for possible cooperation on large-scale oil exploration in Iraq, general manager Mehmet Uysal told Reuters on Monday.

Uysal also said he saw a high chance for TPAO to be listed for exploration in Iraq's medium-sized oilfields.

INTERVIEW-Turkish oil firm in talks for Iraq exploration | Markets | Reuters

Iraq Oil Min: Kurdish Oil Deals Still Invalid, Despite Talks

Iraq's Oil Minister Hussein al-Shahristani said Monday that crude oil contracts signed between the autonomous Northern Iraqi Kurds and foreign companies remain invalid, despite recent amicable talks between the two sides over the country's long-delayed federal hydrocarbons law.

"We do not recognize them," al-Shahristani told reporters on the sidelines of the International Energy Forum here.

Al-Shahristani said discussions between Baghdad and the Kurds would continue but that the Kurds, who have signed around 25 production-sharing contracts with several small and mid-sized oil companies, would have to follow many federal guidelines that they currently don't meet.

These include determining which foreign oil companies are qualified to work in Iraq and holding an open bidding round that attracts many companies, Shahristani said.

"They (the Kurdish contracts) have to meet the conditions of the draft hydrocarbons law from 2007," he said.

The contentious dispute between the two sides has dragged on for many months and delayed agreement on a final oil law that Iraq needs to provide the legal framework critical to attracting foreign investment and ramp-up oil production.

Passage of a draft oil law was expected back in 2005.

Company News Story

Rice in Bahrain to press Arabs on Iraq embassies, debt relief

US Secretary of State Condoleezza Rice is expected to pressure foreign ministers of nine Arab countries meeting in Bahrain Monday to open embassies in Baghdad and offer debt relief to Iraq. Rice, who made a surprise visit to Baghdad Sunday, told reporters travelling with her that Iraq's neighbours "could do more to live up to their obligations because I do believe the Iraqis are beginning to live up to theirs."

Ministers from Gulf Arab countries, Egypt and Jordan meeting in Bahrain were expected to hear Washington warn them once again against a growing Iranian influence in Iraq; hence the need for strengthening the country's Arab identity.

The US has been pressing its Arab allies to open embassies in Baghdad. Saudi Arabia has been mulling the idea since last year but has so far failed to make a move.

Egypt, whose envoy to Iraq was abducted and killed in Baghdad in 2005, said Friday it would not open its embassy unless security improved.

Debt relief is expected to be raised by both Rice and Iraqi Foreign Minister Hoshyar Zebari, both of whom will press Arab countries to write off their debts owed by Iraq.

Rice urged Arabs to "do debt relief" just as other creditors making up the so-called Paris Club did.

Paris Club members have written off the bulk of Iraqi debts of about 66.5 billion dollars, according to US State Department estimates.

The bulk of the remaining debt estimated to be between 56 billion and 80 billion dollars is owed to Gulf Arab countries, according to US government estimates.

Rice in Bahrain to press Arabs on Iraq embassies, debt relief : Asia World

Demand for dollar up as exchange rate goes two ticks down

Demand for the dollar was up in the Iraqi Central Bank's auction on Monday, registering at $129.815 million compared to $83.800 million on Sunday, while the dollar exchange rate went down two ticks against the dollar.

"The demand hit $8.395 million in cash and $121.420 million in money transfers outside the country, all covered by the bank at an exchange rate of 1,202 Iraqi dinars per dollar, two ticks lower than yesterday," 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 1.400 million dollars, which the bank bought all at a rate of 1200 dinars per dollar.

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

Aswat Aliraq

PM flies to Kuwait for Iraq Neighbors Meeting

Iraqi Prime Minister Nouri al-Maliki flew to Kuwait on Monday morning to attend the Iraq neighbors conference, which will start on Tuesday, an official spokesman for the Iraqi government said.

"Maliki will put forth Iraq's vision for relations it seeks with neighboring countries and practical steps for coexistence with the political situation in Iraq and diplomatic relations with Baghdad," Ali al-Dabbagh told Aswat al-Iraq – Voices of Iraq – (VOI).

"The Iraqi premier is scheduled during his two-day visit to meet Emir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to discuss friendly ties to both countries' interests," he said.

Maliki's delegation comprises Foreign Minister Hoshyar Zibari, Minister of State for Security Affairs Shirwan al-Waeli, the prime minister's political and media advisors and correspondents of satellite TV stations.

Dabbagh pointed out that the even would be attended by member states in addition to Egypt, Gulf Cooperation Council (GCC) members, the G-8 countries, member states of the UN, the Arab League and the Organization of Islamic Conference (OIC).

The conference is the third. The first one was held in the Egyptian Red Sea city of Sharm el-Sheikh in May 2007.

The second meeting, convened in Istanbul, Turkey, in early November 2007, witnessed the participation of Iran, Syria, Saudi Arabia, Jordan, Kuwait, Egypt and Bahrain. The participants called for preventing the use of Iraq as a springboard "for terrorism against neighboring countries," expressing support for the Iraqi government's efforts in the fight against "terrorism."

Kuwait and Iraq announced in August 2004 the resumption of their full diplomatic relations, severed for 14 years since the Iraqi forces' invasion of Kuwait.

The United Nations imposed sanctions on Iraq immediately after its invasion of the oil-rich country. A U.S.-led alliance that included several Arab countries expelled Iraqi forces from Kuwait in the 1991 Gulf war.

Aswat Aliraq

In Baghdad, Rice calls al-Sadr a coward

U.S. Secretary of State Condoleezza Rice arrived in Baghdad on Sunday for an unannounced visit one day after the Shiite cleric Muqtada al-Sadr threatened an all-out war against the Iraqi government.

Rice called al-Sadr a coward hiding in Iran while praising Iraqi Prime Minister Nouri al-Maliki for his recent offensive in the southern port city of Basrah that sparked an uprising by al-Sadr's militia, the Mahdi Army.

Since the March 25 government offensive in Basrah, where the Mahdi Army dominates, the Sadrists and their militia have angrily accused the government of trying to undercut their movement prior to October provincial elections, when they will likely win many of the Shiite southern provinces from their Shiite rivals in the government.

If al-Sadr's militia, conservatively estimated at about 60,000 men, were to rise up, it could mean the end of the drop in violence in Iraq and an inter-sectarian war. Already, thousands of government soldiers have deserted in both Basrah and Sadr City, refusing to fight the Shiite militia. Some deserted because of threats to their families, others from a moral objection by the mostly Shiite Iraqi security forces to fighting their Shiite brothers.

Iraqi government officials have told McClatchy Newspapers that al-Maliki, who gained wide support from Sunni officials for taking on the Mahdi Army, went into the fight with no preparation and now is in a battle that he can't extract himself from. U.S. support for al-Maliki puts U.S. forces on one side of a bloody intra-Shiite showdown.

Rice used her visit to praise al-Maliki's choice to take on the militia. Fighting al-Sadr, who has declared that resistance against U.S. forces is legitimate, is an "internal Iraqi matter," she said.

"But, clearly, the prime minister has laid down some ground rules which any functioning democratic state would insist upon, having to do with, you know, arms belonging to the state, not to -- not in private hands," she said. "The current circumstances come out of what I think is a very important and indeed appropriate action that the Iraqi government has taken."

Al-Sadr has consistently called for peace since he froze his militia Aug. 29 and again in February; his freeze has been a major factor in curbing violence in Iraq. But Sadrists say their movement has come under attack continually since that time, and they feel humiliated because they have been asked to stand down.

The Iraqi government seemed to ignore al-Sadr's "final warning" Saturday of a "war until liberation" if the U.S.-backed Iraqi security forces didn't stop attacking his followers. Iraqi soldiers continued their confiscation of weapons and the evacuation of government buildings in Basrah.


SADRISTS DEFIANT

Followers of hardline cleric Muqtada al-Sadr raised the stakes Sunday in the showdown with Iraq's government, refusing to disband their militia. The U.S. military said 40 Shiite militants were killed in fierce fighting in southern Iraq.

Iraqi soldiers took control Sunday of the last stronghold of al-Sadr's Mahdi Army militia in Basrah.

Prime Minister Nouri Al-Maliki, a Shiite, has demanded that al-Sadr disband his Mahdi Army, the country's biggest Shiite militia, or his followers will not be allowed to run in provincial elections this fall. Al-Sadr's followers, who control 30 of the 275 parliament seats, rejected that demand Sunday and instead called for an end to U.S.-Iraqi military operations in Sadr City, the Baghdad stronghold of the Mahdi Army, and Shula, another Shiite district of the capital.

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Eni sees Iraq as an "opportunity" - CEO in paper

Italian oil company Eni is looking at Iraq as "an opportunity", Chief Executive Paolo Scaroni was quoted as saying on Monday.

"There are now possibilities to write up contracts in a new legislative framework," Scaroni told Italian newspaper Corriere della Sera, which said the oil company would look to engage itself in engineering first.

Iraq holds the world's third largest oil reserves, a resource key to meeting future global energy demand and to funding the reconstruction of the country's shattered economy.

Baghdad's oil minister told Reuters in February more than 100 companies including foreign major oil companies were vying for deals to tap Iraq's vast oilfields, but a vital oil law is stalled by tension involving the Kurdish region.

"We are looking at Iraq as an opportunity," Corriere quoted Sacroni as saying after signing a memorandum of understanding on oil and gas cooperation with Qatar on Sunday.

Eni sees Iraq as an opportunity - CEO in paper | Industries | Energy | Reuters&

UPDATE 1-June Signings for first Iraq service deals - Minister

Iraq will sign the first contracts with oil majors to boost its vital oil output in June, Iraqi Oil Minister Hussain al-Shahristani said on Monday.

The short term service contracts, which the companies hope will give them longer-term access to Iraq's reserves, the world's third largest, have been delayed from Baghdad's original target of March.

"It's taken us a bit longer than we have been planning for, we think it's going to be about June," the minister told reporters.

"Some of them will be signed in June, others will be delayed by a few months," he added, speaking on the sidelines of the International Energy Forum.

Shahristani confirmed that Royal Dutch Shell was negotiating for the Kirkuk and Maysan field contracts, Exxon Mobil XON.M for Zubair, Chevron and Total for West Qurna and BP for Rumaila.

The five two-year service contracts are intended to boost Iraqi output by some 500,000 barrels per day from 2.27 million bpd, and bridge the gap before a comprehensive oil law is passed to set up the framework for longer term investment.

A separate round of bidding for fields across Iraq will involve 35 companies, whittled down from 120 applicants.

Shahristani said he will invite bids this summer for service contracts for giant oilfields already pumping in the south and in the north around Kirkuk.

The Akas gas field in the western desert will also be included in the first bidding round this summer, he added.

Large oilfields that have been discovered and are not yet producing, such as Majnoon and Bin Umar, would not be included in the first round, the minister said.

UPDATE 1-June signings for first Iraq service deals-minister | Markets | Markets News | Reuters

Report from the Iraq Commercial Investment Summit

IRAQ. Multinationals and Arab companies from wide-ranging fields including engineering, cement, construction, project management services and manufacturing had the opportunity to meet with senior officials from the Iraqi Ministry of Industry & Minerals and director generals of over 45 state-owned enterprises in Dubai this week. The development of Iraq’s all-important engineering and oil services industry as well as overcoming the media stereotypes of the country were among the main themes.

Iraq’s revitalization of its formerly prized industrial sectors took a leap forward this week with behind the scenes negotiations as well as presentations from the conference floor at the Investing in Iraq’s Industry Sectors Summit held in Dubai on 19-20 April 2008.

Speaking to BI-ME on the sidelines of the meeting, Iraq’s Minister of Industry & Minerals HE Fawzi Hariri, said that the country’s programme to rebuild the state manufacturing sector had gathered significant momentum since last August.

At the close of the conference, Hariri was a signatory to two contracts for new private-public partnerships in the cement sector, for Al Kirkuk Cement Company and Al Qaim Cement, both plants within the Iraqi Cement Company. These are the first two companies to move ahead with such production sharing agreements that will eventually see all of Iraq’s 45 SOEs (state-owned enterprises) taking onboard new private partners.

The Industry Ministry owns 60 companies with 240 factories in sectors ranging from construction to pharmaceuticals and textiles. It is hoping to attract as much as US$2 billion of private investment into Iraq's cement, iron, steel and fertiliser industries this year. In just one example, leading players such as Egypt’s Orascom, France's Lafarge and engineering group FLSmidth are among at least five companies vying to renovate cement plants in Iraq at a cost of US$500 million.

"We are making all of Iraq's state-owned enterprises available for partnerships with the private sector," Hariri said. Asked about whether the security situation was still at the early stages to enable the flow of investment to go ahead, the Minister said that the challenges within Iraq were still considerable, but on the other hand the rewards were sufficiently high to attract international companies.

“For the last three to four years, there has already been a stable market in the North, and recently we have had a positive indication that these Northern business ventures are moving into Baghdad,” Hariri said.

“We have signed two very important contracts today for the cement industry, whereas in fact following the meetings of the past two days, I could have signed ten other similar deals,” he said. “But as a government body the rule is that the minister cannot just come and sign a contract. It has to follow due process in Iraq. But we have signed these cement contracts within ten months, which is fast for Iraq.”

The minister said that other contracts for a range of sectors will be signed in the next 90 days for “hundreds of millions of dollars” which will be part of a process of transition and modernisation for these important industries, up to the year 2012. Importantly he confirmed that the companies taking up these early partnership or revenue sharing agreements, will have first right of refusal on eventual privatisation.

Al-Hariri added that the Iraqi government is serious about providing incentives to investors to operate across Iraq, and that a great deal of interest has been expressed by foreign companies, particularly from Iran and Turkey.

Regarding investment in Iraq, the minister said that an investment board had been established to oversee foreign direct investment into Iraq and the development of the SOEs. He said that this board represents a “real and new change in the Iraqi economy,” and that it would work to streamline decision making by ministries and the granting of permits.

"The ministry has activated the Companies Law No 22 for the Year 1997 which permits the Iraqi companies to enter into partnerships with foreign counterparts according to the principle of participation in production, as has happened with the cement plants of Al Qaim and Kirkuk where foreign firms were allowed the opportunity to rehabilitate and develop the plants to work maximum capacity”, he said.

With no privatisation law at present and seeking to avoid the short-sharp shock (and resulting unemployment) of full privatisation, the government of Iraq has drawn up a solution to the problem of attracting foreign investment by offering foreign firms production sharing agreements. Foreign companies invest in industrial infrastructure in return for a share of the profits from the goods sold, in theory raising productivity, bringing in new technology and international standards.

“We are in talks with everyone, with companies from many countries,” Hariri said. “But most people are waiting for oil and gas.” As an example of an international company partnering with an Iraqi company, with the essential components of training and helping to raise the capability of the Iraqi workforce, Hariri mentioned that Shell is in talks with Iraqi state companies to use their oilfield services and project management expertise in the bidding for oil contracts.

In the oil & gas area, he said that three bids had been submitted for regeneration of the important Basra Refinery. One of these he said was for a phase two development of the existing refinery at a cost of US$100 million to US$150 million. But another proposal involves upgrading the whole site with a capacity of 1 million tonnes of oil derivatives per year.

Business Intelligence Middle East - bi-me.com - Report from the Iraq Commercial Investment Summit - News, analysis, reports

Continued.........

Concrete Plans

The constant flow of trucks and building materials into Iraq at the moment, from Turkey in the North and from Basra port in the South, illustrate the increasing hunger for all kinds of industrial products. The country is undergoing a construction boom, fueled in part by more than US$20 billion in reconstruction money that has poured in since 2003.

Cement is in extremely short supply because it's required in nearly everything being built in Iraq, including roads, houses and apartment complexes.

Most of Iraq's 13 state-owned cement plants creep along at about 25% of design capacity, or they're not operating at all. The industry suffers from the same problems that plague the rest of the country's aging infrastructure. The shortage has sent cement prices skyrocketing. Since 2003, the cost of 1 ton of cement has zoomed from about US$20 to about US$125. That's a stunning rise in a country that once had such an abundance of raw materials to make cement that it exported it.

Salah Kambour, Director General at the Iraqi Ministry of Industry, doesn't have a precise handle on the level of demand because he doesn't have any “real figures or statistics.”

“We are importing cement from everywhere,” said Kambour. “We are bringing it from Turkey, Lebanon, Egypt, Persia, from Kuwait and from China. So from everywhere cement is coming to Iraq.”

Kambour said that if the security situation improves, demand could rise to 30 million tons per year. By contrast, the most Iraq's cement plants can produce by operating at 100% capacity is 15 million tons per year.

The involvement of new partners could be a key to turning the situation around. Kambour said the investors will receive 45% ‘ownership’ in the two cement plants in exchange for capital, expertise and equipment. The remainder will be owned by the government, stock market, workers and state-run companies.

“One of the most important things here is to bring electricity to the plant by buying generators,” he said. “We hope to also get the know-how to reach very soon the production capacity, or 95% of the production capacity, so the dire need of cement in Iraq could be satisfied.”

Speaking on the sidelines of the conference Paul Brinkley, the US Deputy Under Secretary of Defence for Business Transformation based in Baghdad, said that Iraq was now in a much better position to confidently negotiate such deals for bringing in new investment.

"We are really seeing a groundswell at the moment. It is leading edge, and it is the most risk-oriented investors that are coming in. In the last two days we have seen serious, protracted discussions in the multi millions of dollars, and these developments speak for themselves. Today the evidence is that Iraq is open for business.”

Andrew Wylegala, a commerce official at the US Embassy in Baghdad, said the sooner business reforms come, the better, so Iraqis can pick up where the US reconstruction projects leave off.

“Clearly the private sector is the way forward,” Wylegala said. “The work that has been done through official funds and through reconstruction efforts…has made good headway in setting the stage so private-sector players could come in and continue the job.”

The Ministry of Industry seems to be in the lead in encouraging private investment. In addition to the two cement plants, the Ministry has attracted investors to bid on 20 new, privately-owned cement plants over the next three years. The investment, according to the US Embassy, will come from international and Iraqi investors, who are expected to pledge US$3 billion toward the plants.

Business Intelligence Middle East - bi-me.com - Report from the Iraq Commercial Investment Summit - News, analysis, reports