Iraqi and Kurdistan Region Ministers, diplomatic officials and the business community gathered on Tuesday to inaugurate Lufthansa’s first flights to Erbil International Airport, in the capital of the Kurdistan Region.

Kurdistan Regional Government (KRG) Interior Minister Karim Sinjari and Iraq’s Deputy Prime Minister Dr Roj Shawis and Erbil’s diplomatic community participated in the ceremony.

In his speech Mr Sinjari said, “By coming here, Lufthansa has made the determination that Iraqi Kurdistan is a safe and secure place to work.” He added, “I commend Lufthansa for making the decision to bring their services to us, and to the people and business of Kurdistan and Iraq.”

A large group of guests assembled on the tarmac of Erbil International Airport (EIA) to hear speeches by officials and business representatives and watch the arrival of Lufthansa flight 696 from Frankfurt.

Mr Peter Andres, Lufthansa’s Vice President for Corporate Security, commented on Erbil’s hospitality and beauty. He thanked Austrian Airlines, which was the first regular scheduled carrier to the Kurdistan Region, for paving the way for other airlines, and said that Lufthansa plans to resume flights also to Baghdad this summer after a stoppage of many years. He noted the presence at the ceremony of Germany’s Consul General Dr Oliver Schnakenberg and officials from Germany’s Interior Ministry and Foreign Ministry.

Mr Stafford Clarry, Acting Director of the airport, described its evolution since its beginnings in 2005. School children are given tours of the airport, he said, as “They are our future, the airport is our future, and this airport is also your future.”

Mr Dilsos CEO and Managing Director of Zagros Group, said that in the Kurdistan Region and the rest of Iraq, German products signify quality and he was happy to see another quality German product here.

Lufthansa hosted a gala dinner the evening before the ceremony. The KRG’s Head of Foreign Relations Minister Falah Mustafa Bakir thanked Lufthansa for its important initiative, and Germany’s Consul General in Erbil for strengthening its relationship with the Kurdistan Region. He said, “Lufthansa is a wonderful bridge for our people to Germany and the rest of Europe,” promoting travel to Europe and enabling others to experience the Kurdistan Region in Iraq.

Dr Schnakenberg said, “Today both Baghdad and Erbil are now part of the businessman’s map”. The opening of the German Consulate General in Erbil last year showed how much Germany values its partnership with the Kurdistan Region and Iraq, and its contribution to their reconstruction.

Lufthansa now operates four flights a week between Frankfurt and Erbil.

(Source: KRG)

The value of Iranian exports to Iraq is expected to exceed $8 billion this year, Iranian embassy’s commercial attaché in Baghdad said.

Ali al-Haydari said Tehran’s trade and commercial links with Baghdad boomed shortly after the overthrow of the former regime by the U.S. in 2003.

The exchange of trade was a trickle under former leader Saddam Hussein but it soared to nearly $6 billion last year.

Iran has exported more than 40,000 cars to Iraq so far this year, Haydari said.

Iran’s exports to Iraqi markets, other than vehicles, include construction materials, petrochemicals, industrial equipment, medical appliances and fuel oil necessary for the operation of Iraqi power plants.

Meantime, the countries are currently holding talks on how to develop their joint oil fields straddling their international frontier.

“The sides have a roadmap to follow. The talks would eventually lead to a mechanism under which they would develop these fields,” said Abdulkarim al-Aibi, an Oil Ministry undersecretary.

An Iraqi delegation is due in Tehran shortly for a new deal on a possible hike in amount of power Iraq imports from Iran, Aibi said.

(Source: Azzaman )

The outgoing Iraqi government said on Thursday that France led the supportive countries for investing in Iraq this year through the entry of many of its companies to the Iraqi market and its contribution to play a clear role in developing the economic and the investment reality.
 
government spokesman, Ali Al-Dabbagh said that” France was in the current year and the past few months one of the leading countries that supported investment in Iraq “. The
 
Dabbagh added “more than 66 French companies entered the country during the past few months, carried out major projects and important strategy in the country “. Al-
 
Iraq is trying to attract capital and investors to the Iraqi market to contribute in reconstructing the country and the crumbling infrastructure due to long years of siege and war.
 
The Iraqi Parliament Council conducted amendments on the Investment Law No. 13 of 2006 to encourage the investors to come to the country, the most prominent amendments were the ownership of the non-Iraqi person to the lands of housing projects and including the investment partnerships between the private and public sector with the investment law privileges.
 
Al-Dabbagh noted that “French companies have had a clear role in developing the economic and investment reality during the last period followed by the United States, Iran, and Britain, especially with regard to housing, construction projects and commercial goods.
 
He noted that “France will increase its access to Iraq after being invited by the Iraqi government to increase its investment and economic role to revive the reality of the infrastructure in the country “.

Schlumberger, the world’s largest oilfield services company, expects that in order to avoid extra costs, the companies now setting up shop in Iraq to extract oil will only expand as they win new work.

Schlumberger chief executive Andrew Gould also said the companies would be unlikely to earn much money from early work in the country, which mainly involves rehabilitation of existing fields and drilling wells in known locations.

He noted that every piece of infrastructure built there added to a company’s security risk and security costs.

‘Every time you have a new base, you have to have more security and it costs you more,’ he said on a call to discuss first-quarter results.

‘So I think people will build out, or certainly we will build out, project by project.’

But Gould, whose views of the oil business are watched closely, said the future of Iraq’s industry would likely belong to its national oil companies, with privately owned companies less likely to commit more money than they already have.

‘I don’t think that the oil companies will hesitate to spend on the first phase of the activity in Iraq, just because at this point in time there is no stable government,’ he said.

‘Two or three years down the road, if they don’t have a satisfactory judicial, fiscal and political atmosphere, they will hesitate before they go into the very large spending that will be required for the new development,’ he added.

Schlumberger is part of a joint venture that has been awarded work on the Rumaila oilfield, along with smaller rival Weatherford International Ltd.

Weatherford said this week it had 1,000 people working in Iraq as it tries to get nine separate drilling operations up and running this quarter. The Wall Street Journal reported last week that Schlumberger was completing a 40-acre compound near Basra, and expected to have 300 employees there by July.

The world’s biggest oilfield contractors are building bases in the deserts of Iraq in a bet they’ll profit as the country strives to boost crude oil output to rival Saudi Arabia.

Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc. are among companies this past week that said they’re expanding operations in Iraq. Weatherford International Ltd., the fourth- largest oilfield-services provider by market value, will expand staff in Iraq to more than 1,000 by July, Chief Executive Officer Bernard Duroc-Danner told investors yesterday on a conference call.

The prize is a share of the billions of dollars to be spent as the war-torn country seeks within seven years to increase crude-oil production capacity to 12 million barrels a day, on a par with the world’s largest oil exporter, Saudi Arabia. Iraq’s current production is about 2.4 million.

“It’s all becoming more real, in that contract awards are getting closer,” said Jeff Tillery, an analyst at investment bank Tudor, Pickering, Holt & Co. in Houston. “It’s a big opportunity for these guys.” Revenue potential is high, he said. “The profit side is a little bit of a leap of faith.”

The risks are financial, legal and political. Contractors don’t yet have a firm grip on what costs might be, Duroc-Danner said. Last month’s parliamentary elections left no political party with enough seats to govern alone, and Iraq doesn’t have a law yet for how oil revenue will be distributed.

Second-Biggest Field

Iraq’s government has signed 10 contracts for oilfield development with London-based BP Plc, Exxon Mobil Corp. and other producers.

BP, which is leading development of Iraq’s biggest oil field, known as Rumaila, awarded $500 million in service contracts last month. Included were projects won by Geneva-based Weatherford and a partnership between Schlumberger, based in Houston and Paris, and state-owned Iraqi Drilling Co.

Rumaila may become the second-biggest oil field by production in the world, BP said earlier this year. Saudi Arabia’s Ghawar field is the largest.

Halliburton, which plans to invest $100 million in Iraq this year, said it’s in the process of securing its first major base in Iraq.

‘Plenty of Work’

“There’s going to be plenty of work in Iraq, and believe me, all the service companies will have opportunities there,” David Lesar, chief executive officer at Houston-based Halliburton, said on an April 19 conference call with investors. “So we’re going along at the pace we want, and we’re confident we’re going to be successful.”

Schlumberger’s base will have 300 people this year, and that number will double by early 2011, CEO Andrew Gould said last month.

“Competition will be fierce, start-up costs high, and we do not expect significant revenue before 2011,” Gould said at the Howard Weil Energy Conference in New Orleans. “The significance of Iraq will only really emerge once the post- election political landscape is understood and some form of oil law has been passed.”

Development of Iraq’s oil industry is moving ahead as security improves after decades of wars and sanctions.

Al-Qaeda

U.S. and Iraqi forces said yesterday that they killed two of al-Qaeda’s regional chiefs in raids. A day earlier, Prime Minister Nouri al-Maliki said Iraqi and U.S. forces killed the terror network’s two principal leaders in the country. “Iraq is probably the biggest opportunity, along with possibly Brazil, confronting the oil-services industry,” said James D. Crandell, an analyst at Barclays Capital in New York. “It’s a country that has a significantly higher capability of exporting crude oil, but it needs a lot of work done on its fields.”

Within five years, service providers may be competing for more than $5 billion annually in contracts, he said.

The four biggest oilfield contractors all rose 4 percent or more yesterday on the New York Stock Exchange. Schlumberger gained 17 cents to $68.02 today, and Halliburton fell 2 cents to $33.29. Baker Hughes climbed 60 cents to $50.89, and Weatherford dropped 59 cents to $16.62.

‘Surge’ coming

if anything, service companies are late in positioning themselves for the “upcoming surge” in oil contracts, said Nansen Saleri, CEO at Quantum Reservoir Impact in Houston and former reservoir-management chief at Saudi Arabia’s state oil company. “Iraq is pregnant for huge growth,” Saleri said yesterday.

The country has potential reserves of 200 billion to 300 billion barrels of oil, Saleri said, and “the early movers will be the big winners.”

“It presents a tremendous opportunity for the service companies,” Gene Shiels, a spokesman for Houston-based Baker Hughes, said yesterday.

All of the companies said investors shouldn’t be quick to judge results from their Iraq forays.

“It’s going to be a very expensive place to operate, at least initially, because you’ve got all your mobilization costs, you’ve got people you’ve hired, bases that you’ve built,” Shiels said. “It’s going to take some time.”

The outgoing Iraqi government announced Sunday that it was seeking to link Iraq with the neighboring countries and further with European countries by a railway system.

The government spokesman, Ali Al-Dabbagh said “The Government is working hard to link Iraq to the railway, which begins from Turkey to Europe for its effective role in changing the economy of the country when being connected to countries with considerable economic impact in the region.”

The government has already opened Iraq-Syria-Turkey railways and seeks to develop it with other European countries, Dabbagh said, before adding that “there are security problems that prevent these countries from joining the rail road’s coming from Iraq, but those problems are going to fade.”

The international railroad Iraq is attempting to link its railway to connect the Mediterranean countries, the Arabian Gulf and East Asia which is considered as the largest railway in the world.

The Iraqi government seeks to revive the production in the country through reforming the economic and trading system to turn the Iraqi economy from a socialist to a liberal one that follows the global market,” according to the spokesman of the Iraqi government Ali al-Dabbagh.

“The economic system in the country is feeble and needs many reforms, particularly with regard to economic law, which regulates the circulation of funds between companies, banks, and citizens,” he said.

The former parliament failed to find a clear mechanism to organize the Iraqi economy and make money trading in a flexible manner in the markets, in his opinion.

“Iraq needs the financial expertise of the United States to reform its economic system that suffers a lot of insecurity, and one of the main reasons for the delayed evolution of the economic system is the legislation and the old laws which do not fit with the evolution of the financial situation in the country.”

The General Secretariat of the Cabinet presidency Ali Al-Allaq underlined on Sunday the necessity of restructuring the Iraqi economy in accordance to the requirements of the transition from a general central economy to the private market to ensure the expansion of the productive base of the Iraqi economy, by adopting the free market mechanism and organize the price system, foreign and interior trade.

The country’s reserves of foreign currency reached at the end of 2009 US$ 42 billion, compared to 27 billion dollars in 2008, after the worldwide rise of oil prices.

Development of Iraq’s oilfields by foreign oil companies is progressing swiftly despite the lengthy process of government formation after Iraqi elections in March, a senior Statoil executive said on Tuesday.

“The major oil companies are starting to move forward at a very high speed. Oil companies are tendering huge contracts and making commitments in the market,” said Kjetil Tonstad, Statoil’s vice-president for International Exploration and Production, Middle East. “Execution is going full speed ahead despite the political situation.”

International oil firms have signed up to deals that could vault Iraq into the top three of world oil producers in 2017. But final deals were signed just months before elections in March, leading to concern that politics could delay work.

Iraq is in a political vacuum after an inconclusive vote, with former Prime Minister Iyad Allawi winning a slim lead over Prime Minister Nuri al-Maliki and neither side yet to conclude tie-ups with groups that would give them a majority.

“Both Maliki and Allawi are positive on the contracts,” said Tonstad, talking to reporters on the sidelines of an energy event. “No questions were raised in the election campaign or after questioning the contracts. A contract is a contract, it’s awarded and then you have an obligation to go ahead.”

Norway’s Statoil and Russian partner LUKOIL would increase output to 120,000 barrels per day (bpd) at Iraq’s West Qurna phase two oilfield in 2012, Tonstad said. That was the level set by Iraq for first commercial production at the field.

The consortium has already started issuing tenders for work at the field, he said. He declined to give further details.

Lukoil and Statoil sealed the 20-year deal to develop the West Qurna Phase Two, a 12.9 billion barrel oilfield in the south, in an auction in December.

In a presentation to an industry event, Tonstad hailed the opening of Iraq’s oilfields to foreign investment last year as marking the largest opening in an oilfield province since the collapse of the former Soviet Union.

“We still haven’t captured the significance of this historical moment,” he said.

Plans to reach around 12 million bpd of output under the contracts in 2017 were feasible, but faced a myriad of challenges, he said. The development would mark an unprecedented build in capacity in the oil industry, marking an increase of around 10 million bpd from Iraq’s current capacity of 2.5 million bpd.

Challenges included security in a country emerging from war and sectarian violence, access to water, and limited construction capacity and workforce availability, he said.

The ability of the world oil market to absorb 10 million bpd of increased output in such a short time was also unclear, he said.

“From my point of view, the fields can deliver, the infrastructure can be dealt with, but can the market take all this oil? And if not, does Iraq want to invest billions of dollars in building capacity that would remain idle?”

Statoil was evaluating the possibility of taking part in an upcoming bidding round for Iraqi gas fields, he said.