Thread: Archive News - Iraqi Dinar Think Tank - 01/10/09 - 27/03/10

Iraqi oil may rival Saudi Arabia

NEW YORK (CNNMoney.com) -- Iraq's ravaged oil industry is on the verge of a major reconstruction and experts now believe that by the decade's end it could rival the world's top oil producers. Iraq's success depends in large part on a mosaic of international investments. The oil ministry has awarded contracts to at least a dozen firms from around the globe to develop its oil fields and boost production in the next seven years to over 11 million barrels a day. That's a five-fold increase, and would put it on par with top producers Russia and fellow OPEC member Saudi Arabia.

"They have the oil in the ground," said James Placke, a senior associate at Cambridge Energy Research Associates who specializes in the Middle East. "It's getting it out that's always been the problem."

The payoff

Iraq sits on at least 115 billion barrels of proven oil reserves, the world's third-largest behind Saudi Arabia and Canada. And analysts believe there could be much more, given that the country's western desert hasn't even been explored. But Iraq's oil industry has suffered from decades of mismanagement, sanctions and war.

For the last several years, violence and internal squabbling over distributing oil revenues has largely kept international oil firms out of the country. That changed last summer, when BP and China's CNPC won a bid to develop the huge Rumayla oil field near the southern city of Basra.

China: The new Big Oil

Initially the Rumayla field was the only one that attracted the attention of international oil firms. Iraq's royalty terms seemed too strict, said Colin Lothian, a senior analyst at the energy consultants Wood Mackenzie.

The Iraqis had hired a top-notch negotiating firm that ensuredover 90% of the oil revenues would flow right back to government coffers, one of the highest royalty rates in the world. This is a potentially huge windfall for Iraq, which derives over 75% of its economic output from the relatively small 2.4 million barrels a day of oil it pumps now.

But those terms might be tough for the oil companies.

"They will completely and entirely fund the development of those fields, and get very little profit in return," said Lothian.

Still, faced with declining fields elsewhere and the need to continually find oil in order to support a healthy stock price, the big oil firms have finally agreed to those harsh terms.

This December a dozen other companies bid on at least nine major fields in Iraq. The firms are not just from Anglo-American-led coalition countries that toppled Saddam Hussein, like Exxon, Shell and BP, Russia's Lukoil, China's CNPC, and Malaysia's Petronas, among others, are also in the game.

Whether these tough contract terms will hold is another matter. They may be amended, or more likely, new terms may be negotiated on future contracts.

There is a feeling among analysts that the oil companies came in with low-ball offers just to make sure they establish a history of working in Iraq and aren't shut out of future bids.

Major impact on prices?

Iraq production is expected to remain at around two-and-a-half million barrels day for the next year or two as lawmakers ratify the contracts and security continues to improve.

Barring any unforeseen developments, and contingent on the security situation continuing to improve, foreign oil workers should begin pouring into the country in a couple of years.

They'll have plenty to do. In addition to simply drilling new wells and retrofitting old ones, Iraq needs to repair and expand the major pipeline that runs through the country and expand the shipping facilities south of Basra. But even amid a global recession there's a shortage of skilled workers and materials needed to engage in a project of this magnitude. Skilled workers are especially rare in Iraq as many left the country over the last couple of decades.

Most experts say the 11 million-plus barrel-a-day target is a long shot. Somewhere between 6 million barrels and 10 million barrels is probably more realistic.

But even that would be a significant jump in global oil supplies over a relatively short period of time, potentially sending prices lower and straining the relationships in OPEC.

"Iraq's Ministry of Oil appears to not have considered how the world market can absorb this extra capacity and the impact it could have on prices in the coming decade," Fadhil Chalabi, E.xecutive director of the Center for Global Energy Studies and a former acting secretary general of OPEC, wrote in a recent paper.

Put more bluntly: "Peace in Iraq is probably the biggest threat to OPEC that we've had in decades," said James Williams, an energy economist at the oil and gas consultancy WTRG Economics. "Depending on the state of the economy, you're talking a major impact on prices."

Chalabi noted that it would be expensive for Iraq to build 11 million barrels of production capacity, then shut in nearly half of it, which is what they would have to do under their current OPEC quotas. And it's unlikely the Iraqis would want to flood the market and depress oil prices. So the Iraqis are either hoping to get a larger share of OPEC output at the expense of another cartel member, or they don't believe their own 11 million barrel per day production target.

http://money.cnn.com/2010/01/12/news...onal/iraq_oil/

Maliki calls for Arab states see the facts and developments in Iraq and not simply the old perceptions

Prime Minister Nuri al-Maliki, the Arab League to play a positive role in influencing the Arab countries that harbor terrorists or emanating from its territory s.atellites citizens learn how to make bombs in order to undermine security and stability in Iraq.

A statement from the prime minister, said al-Maliki on Monday discussed with the Assistant Secretary-General of the Arab League, Ahmed Ben Helli, developments in Iraq and the preparations for parliamentary elections.

Maliki confirmed Iraq's desire to attend the Arab League and the perpetuation of relations between Iraq and other Arab countries, pointing out that the dictatorial regime to disrupt the atmosphere of these relationships, calling on Arab countries to see the facts and political developments, economic and security situation in the country and not simply the old perceptions of or reliance on information conveyed by some s.atellite channels that distort the facts.

He noted that the election period to complete the task of the political system through the formation of a new Parliament paints a new political map in Iraq free from sectarianism, which have paralyzed the work of the present. Expressing his appreciation for "the presence of the Arab League and as.pire to be a niche for itself with the rest of the international organizations."

Maliki called the League of Arab States to play a positive role in influencing the Arab countries that harbor terrorists or emanating from its territory s.atellites citizens learn how to make bombs in order to undermine security and stability in Iraq.

For his part, Ben Helli "for tranquility and satisfaction of the ongoing developments in Iraq and the new phase that accepts them and said," You have been great achievements you have put Iraq on the positive line to the safety and wisdom."

Bin Helli pointed out that the attention going to Iraq, which is preparing for parliamentary elections, which require politicians to stay away from statements that disrupts the atmosphere, adding that the Arab League is working to communicate with Iraq and the transfer of positive picture of developments in Iraq.

The Assistant Secretary-General of the League of Arab States "I was very joy when I saw the Iraqi soldier doing his duty on the streets instead of foreign soldier, and these developments and the security and stability will encourage Arab investors and businessmen to go to Iraq and the Arab League will be all it can to support Iraq through attendance and activate the joint committees and to facilitate the success of the elections, and do everything possible to support the security and stability in Iraq."

http://www.ipairaq.com/index.php?nam...itics&id=19874

Sirwan Zahawi: focus on the new appointments will be after the next election

MP Sirwan Zahawi from the Kurdistan Alliance, "The focus on the new appointments will be after the next election to prevent the use of this propaganda campaign."

Is due to hold parliamentary elections coming in the seventh month of March.

He Zahawi in contact with the agency and the independent press (Iba) on Wednesday that "the new appointments will include all Mwossat State and by the need to contribute to the development of efficient services and Almwossat."

The Minister of Finance Baqir al-Zubaidi, had announced it through the hosting of the House of Representatives has recently been allocated 115 thousand degrees and careers for the current year.

The Zahawi "The allocation of these grades is to develop the levers of government and the elimination of unemployment through the recruitment of new graduates and the authors experience, pointing out that this will contribute to raising the standard of living of the citizens."

Have been linked to the Ministry of Finance direct firing grades of state institutions adopt the House of Representatives for the public budget.

He Zahawi that "the House of Representatives will vote to approve the budget for the current year during the next few days after reaching a resolution of all disputes that revolve around between various political blocs."

Some ministries have been identified as the delay in the House of Representatives passed the public budget as a negative impact on their plans in the implementation of projects, particularly services from them.

http://www.ipairaq.com/index.php?nam...itics&id=19870

U.S. Companies Race on Iraqi Oil Bonanza

A wave of American companies have been arriving in Iraq in recent months to pursue what is expected to be a multibillion-dollar bonanza of projects to revive the country’s stagnant petroleum industry, as Iraq seeks to establish itself as a rival to Saudi Arabia as the world’s top oil producer.

Since the 2003 American-led invasion, nearly all of the biggest reconstruction projects in Iraq have been controlled by the United States. But many rebuilding contracts are expected to be awarded as soon as this month for drilling hundreds of new wells, repairing thousands of miles of pipeline and building several giant floating oil terminals in the Persian Gulf, and possibly a new port.

The contracts will be administered either directly by the Iraqi government or as part of Baghdad’s oversight of international oil companies that have signed agreements during the past few months to develop the country’s most promising oil fields.

There are misgivings, however, about Iraq’s ability to adequately monitor contracts that could total $10 billion over the next five years. The concerns have been heightened by the prominent role expected to be played by American companies that have been criticized in the past by United States government auditors and inspectors for overcharging by hundreds of millions of dollars, performing shoddy work and failing to finish hundreds of crucial projects while under contract in Iraq.

Among the companies that have started sending workers and equipment to the country or have plans to are Halliburton, Baker Hughes, Weatherford International and Schlumberger, all Houston-based oil-services companies, and several construction and engineering giants, including KBR, Bechtel, Parsons, Fluor and Foster Wheeler.

Halliburton and its former subsidiary KBR, as well as Bechtel and Parsons, have been singled out for criticism by the Special Inspector General for Iraq Reconstruction for their previous work in Iraq.

The new contracts will put the companies into direct contact with an Iraqi government that has frequently acknowledged its own challenges in dealing with corruption and cronyism, and that has a lack of experienced managers, adequate enforcement and efficient auditing systems.

The companies deny intentional wrongdoing in their dealings in Iraq and say that their experience there and in other oil-producing countries in Central Asia gives them an advantage.

“KBR has historic experience on previous oil and gas production projects ranging from Azerbaijan to Kazakhstan,” Heather Browne, KBR’s director of corporate communications, wrote in an e-mail response to questions. “Our pursuit of additional contracts in the region is based on this experience in addition to KBR’s work on Project RIO (Restore Iraq Oil).”

During a conference call with industry analysts in October, David J. Lesar, Halliburton’s chief E.xecutive, said that he had visited Iraq and that the company was already doing a limited amount of work on oil wells there.

“I think you see everybody trying to establish a base there, and we’re no exception,” Mr. Lesar said. “Clearly, a great future there and one we will participate in — in a big way.”

But others questioned the Iraqi government’s capacity to police the companies. “These are for-profit concerns and they are trying to make as much money as they can,” said Pratap Chatterjee, former E.xecutive director of an anticorruption group, CorpWatch, and author of a recent book about Halliburton. “What the Iraq government needs is a good system of transparency and accountability, and for someone who knows what they’re doing to oversee the work. Otherwise, they are going to be taken for a ride.”

During the past several months, Iraq has signed 10 production contracts with international oil companies as it tries to increase its oil output from a relatively static 2.4 million barrels a day to as much as 12 million barrels a day within six years. Officials said they hoped to drill at least 430 oil wells during the next two years.

The planned work will require new pipelines, including as many as three undersea lines, floating terminals, water treatment facilities, pump stations, oil storage tanks, power plants and possibly a new Persian Gulf port that might be needed to handle the increased oil exports.

There will also be a need for new housing, roads and schools, and workers will need to remove unexploded ordnance from oil fields and shipping lanes, transport massive oil rigs and use extraordinary amounts of concrete and steel to reinforce the wells.

While American oil companies have enjoyed only modest success in winning oil development deals in Iraq, the numerous contracts signed in recent months have created an enormous backlog of work that leaves Baghdad with limited alternatives to Halliburton and the other American companies that dominate the oil industry services sector.

“Iraq has little choice,” said Joost R. Hiltermann, deputy program director for the Middle East and North Africa with the International Crisis Group, a nonprofit organization that aims to prevent deadly conflicts. “It is desperate to increase its revenues, almost all of which derive from the sale of oil. But the government has little capacity to monitor the many companies that will be involved in rehabilitating its ailing oil industry, or indeed its own operations. This is a recipe for massive corruption, but for Iraqi policy makers the cost will be worth it, given the expected massive returns.”

Government officials maintain, however, that Iraq’s system of checks and balances will help it avoid the mistakes made by the United States.
“There are procedures where if a company breaches a contract or makes errors, they will be blacklisted from working in Iraq,” said Dr. Sabah A. Shibeeb al-Saidi, chief of the Ministry of Oil’s legal and commercial department in the petroleum contracts and licensing directorate. “But if they are not blacklisted we will deal with them. We expect oil services companies to do many things in Iraq.”

Neither Halliburton nor KBR is on the Iraqi government blacklist, and Mr. Saidi and other senior Iraqi government officials interviewed said they had never heard of either those companies or of other American ones that have become household names in the United States because of their work in Iraq.

Halliburton’s former subsidiary, KBR, which was once run by former Vice President Dick Cheney, has won contracts worth more than $24 billion since the start of the war, giving it vast responsibility for reinvigorating Iraq’s oil sector. Among many other criticisms of the company’s performance in Iraq, Pentagon auditors found that KBR had overcharged the government by more than $200 million.

http://www.nytimes.com/2010/01/14/wo...14rebuild.html

Washington hails Iraqi oil reforms

Bipartisan members of the U.S. Senate Foreign Relations Committee praised a Baghdad decision to make transparency commitments in its energy sector.

Iraqi Prime Minister Nouri al-Maliki announced plans to implement the Extractive Industries Transparency Initiative by becoming an EITI candidate country in February.

The EITI builds transparency by creating a forum for the management of the country's oil revenues. Following a December oil auction, Baghdad said it was on the way to rivaling Saudi Arabia in terms of oil production.

U.S. Sens. Benja.min Cardin, D-Md., and Richard Lugar, R-Ind., hailed the measure as an important move by the Iraqi government to tackle corruption.

"As oil and gas is the single largest source of revenue for Iraq, it is important that the revenues generated benefit the people of Iraq, and not just a handful of businessmen and officials," said Lugar. "By committing to implement EITI, Iraq is creating a foundation for good governance and accountability in a sector critical to Iraq's future stability."

Iraq sits on some of the largest oil deposits in the world and looks to oil sales for the vast majority of its government revenue. Baghdad committed to implement the EITI in May 2008.

http://www.upi.com/Science_News/Reso...5261263406626/

Federal budget the balance is now complete and will vote for next week

According to a member Council of Representatives proper Jubouri federal budget for 2010 is now complete and there are some questions that needed legal committee be completed through dialogue with the Ministry of Finance.

Jubouri said told the independent press (Iba) that next week will vote on the budget bill, the Federal recognition of the need for approval and the fear that change may have a negative impact on the civic life of the people.

"There are some points of contention on the budget but does not live up to the level of objection to a great team at key points in the budget.

He suggested that the vote on the budget depends on the presence of members of the House and a quorum until the Council decides next Tuesday is to vote on the budget.

Wicker said the government indicated that some parliamentary blocs depends delay approving the budget for electoral purposes and to influence the work of the government, and denied that members of the House of Representatives.

http://www.ipairaq.com/index.php?nam...onomy&id=19919

The opening line in Baghdad - London via Istanbul airport soon

The Ministry of Transport announced the launch of Navigational Line BAGHDAD - London via Istanbul airport.

And the transfer of the Information Office of the Director in the Ministry Kausar Aqil told the independent press (Iba) Transport Minister Amir Abdul-Jabbar said, "It will be the opening of this line during the next few days, pointing to the imminent opening of the second waiting room at Baghdad International Airport."

Meanwhile, the ministry announced on leasing a new type of 400 - B737 from the new generations.

A source at the Iraqi Airways, told the independent press (Iba) "that the company has several measures, including non-renewal of any contract of employment particularly old aircraft and leasing of aircraft."

He added: "The company has now a modern fleet of aircraft and the new generations of 15 aircraft to carry out tours to all countries."

http://translate.googleusercontent.c...hPPa8rNdOYybIQ

9 projects worth $642m granted investment licenses in Baghdad

The Investment Commission in Baghdad has given the green light to the implementation of nine investment projects worth $642 million in the capital, an official statement said on Thursday.

“The projects include three housing projects, four tourist projects, an Iraqi-German hospital and a special needs center,” according to a statement released by the commission and received by Aswat al-Iraq news agency.

http://en.aswataliraq.info/?p=125185

Dollar sales stable in CBI’s auction

The Central Bank of Iraq’s (CBI) dollar sales remained stable at $295.317 million in its daily auction on Thursday, compared to $295.385 million during the previous session.

“The demand hit $14 million in cash, covered at an exchange rate of 1,170 Iraqi dinars per dollar, and $280.437 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

None of the 16 banks that participated in today’s session offered to sell dollars.

http://en.aswataliraq.info/?p=125195

U.S. reconstruction team in Basra: We will move the financing of infrastructure projects to the Iraqi side

Head of the U.S. reconstruction team in Basra on Thursday that funding for infrastructure projects will move to preserve the Iraqi side, pointing at the same time that the efforts of reconstruction team in the coming stage will focus on the training of government employees in the province.

The President of the U.S. reconstruction team, John Niln during a joint news conference with the Governor of Basra and was attended by President of the Provincial Agency (Voices of Iraq), "over the next year 2011 we start new projects will be focused on providing training and technical advice and technical assistance to government employees," adding that " responsibility for financing the infrastructure projects will be transferred to the Iraqi government."

"The projects we are working on in Basra province, worth more than $ 120 million awarded from the United States of America to lift the standard of living in Basra."

He continued that "These assignments are distributed on the spending of $ 40 million to ensure enough potable water and 25 million dollars for sewer and $ 20 million for the development of electricity networks has also been allocated $ 20 million to build new infrastructure in Basra."

Abizaid and Niln "has also been allocated $ 15 million for the rehabilitation of the judicial and security installations while $ 10 million for the removal and garbage."

He noted that "These projects have been initiated since 2009 and the other part will be implemented during this year."

http://radionawa.com/Ar/NewsDetailN....160&LinkID=105