A leading spokesman for the Iraqi Oil Ministry has said on Monday that the current tense situation in Egypt would not affect Iraq’s oil exports, reiterating that the rise in oil prices would benefit Iraq, according to a report from Aswat al-Iraq.

Assem Jihad said that “the Iraqi Oil Ministry is exporting oil from two outlets, the first in southern Iraq, through the Iraqi terminals on the Arab Gulf and the second from north Iraq, through pipelines passing through Turkey,” adding that “foreign companies are being supplied by oil through those two outlets, according to contracts signed with Iraq.”

Noteworthy is that chaos in Egypt has caused the increase of oil prices, with fears that oil exports through the Suez Canal might be restricted.

(Source: Aswat al-Iraq)

Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, has announced its preliminary financial results for the year ended 31st December 2010.

Revenue from the sale of hydrocarbons increased to AED 1,785 million, with gross profit reaching AED 781 million. These figures represent increases of 40% and 79% respectively, compared to 2009 and reflect the Company’s continued production growth in Egypt and from the Khor Mor field in the Kurdistan Region of Iraq.

Earnings before interest, tax, depreciation, amortization and exploration (EBITDAX) was AED 1,034 million. In 2009 EBITDAX was AED 1440 million due to a one-off gain reported in 2009 from the sale of a 10% interest in the Kurdistan Region of Iraq assets.

The resulting full year net profit for Dana Gas in 2010 was AED 158 million compared to AED 88 million in 2009, an 80% increase which reflects growing production and higher oil prices especially in the fourth quarter of 2010.

The above Income Statement results exclude an unrealized gain of AED 118 million during 2010 on the Company’s investment in MOL (the Hungarian oil and gas company, who are one of our partners in Kurdistan), booked directly to equity in line with the Company’s published accounting policy. This gain for 2010 comes on top of an unrealized gain during 2009 of AED 370 million.

The “Total Comprehensive Income” for 2010 is AED 276 million.

The U.K. based engineering and advisory firm, Gaffney, Cline & Associates have carried out an independent evaluation of Dana Gas Egypt’s hydrocarbon reserves as at 31 December 2010. Following this review, the Company’s gross proved reserves (1P) are estimated to be 89 milions of barrels of oil equivalent (“MMBOE”) (in 2009: 47 MMBOE). The gross proved and probable reserves (2P) are estimated to be 152 MMBOE (in 2009: 132 MMBOE). The gross proved, probable and possible reserves (3P) are estimated to be 253 MMBOE (in 2009: 222 MMBOE).

The 2P reserves results give a total reserves addition of 15% (after 2010 production) and 27% (before 2010 production). The total production replacement ratio associated with this 2P reserves increase is 229%.

Operational Results

During 2010, Dana Gas Egypt produced gas, LPG ,condensate and crude oil at an average rate of just over 42,300 barrels of oil equivalent per day (“boepd”), an increase of over 20% compared to 2009, thanks to production from Dana Gas’ recent gas discoveries that were brought on stream during the year. Additionally in the Kurdistan Region of Iraq, gas and condensate was produced at an average rate, net to Dana Gas’ 40% interest, of 13,200 boepd.

Dana Gas Egypt drilled a total of eleven exploration wells during the year which yielded seven discoveries. The reserves associated with these discoveries are reflected in the year end report from Gaffney, Cline & Associates as discussed above. The Income Statement also reflects the costs that have been written off for dry holes drilled during the year.

Commenting on the performance for 2010, Dana Gas Chief Executive Officer, Mr. Ahmed Al-Arbeed, said: “Dana Gas has continued to make progress in its operations during 2010 and this is reflected in our increasing profits. I am particularly pleased that 2010 has been a year in which we have delivered consistent financial results in every quarter which reflect our strong operational performance, with minimal exceptional items. Our Egypt exploration programme continues to deliver class leading performance, yielding seven discoveries in 2010 resulting in a 2P reserves replacement ratio of 229%.”

“In the Kurdistan Region of Iraq, Dana Gas continues to supply gas to the Erbil and Bazian power stations at increasing rates producing 76% higher volumes in 2010 compared to 2009 which will further increase now that LPG production has commenced from our LPG Plant.” said Mr. Al-Arbeed.

The Grain Board of Iraq (Ministry of Trade) has announced a tender for the supply of 100,000 tonnes of grain.

The deadline for bids is 10:00 am Baghdad time on 2nd February, and if the English version of the documents are correctly translated, interested parties must visit the Grain Board’s offices in Baghdad.

Please click here to download the tender document.

The Undersecretary of the Iraqi Trade Ministry has stated that a new mechanism has been adopted to address the crisis in the distribution of the ration card items, especially with regard to facilitating the contracting process between them and the importing companies.

Walid al-Helo told AKnews that the Ministry will work to facilitate the process of contracting with companies, dealers and suppliers of foodstuffs in order to accelerate the distribution of the ration card items during specific periods.

“The president of the Council of Ministers agreed to grant full powers to the ministry to contract with traders and companies during the coming period in order to provide food products with good quality and origins”.

During his meeting with staff in the Trade Ministry, the Prime Minister Nouri al-Maliki stressed the need to facilitate the contracting process through legal and technical means and remove obstacles that impede the delivery of the ration card items to citizens.

The Ministry of Planning and Development Cooperation stated that responsibility for the ration card file will be trasferred from the Ministry of Trade to the Ministry of Labour and Social Affairs in early 2014, indicating that the system hindered the development of Iraq’s economy and the conclusion of international agreements.

The Ministry of Trade in Iraq announced earlier it was preparing a comprehensive study to give priority to poor areas in the distribution of ration cards, indicating that the lack of financial allocations delay the delivery of ration card items to the citizens.

The delivery of ration card items by the Trade Ministry was delayed this year in most provinces for reasons described as “technical.”

The Trade Ministry has developed a new plan that includes withholding ration cards for government employees who earn salaries of more than 1.5 million Iraqi dinars, and it reduced the number of ration card items to four — flour, sugar, cooking oil and rice — according to the ministry’s plan last year.

The financial allocation for the ration card in the 2010 budget 3.5 trillion Iraqi dinars (about 2,9 billion dollars), down from 4 trillion dinars in 2009.

On Nov. 17, the Trade Ministry stated that it will implement a new plan for the distribution of the ration card items that depend on the income level of the citizens.

(Source: AKnews)

By Tariq Abdell, Iraq’s political risk analyst, and Founder & CEO, Mesopotamia Insight

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

 Iraq’s impending multi-billion dollar mega-reconstruction projects (housing, roads, hospitals, bridges, airports, schools, dams, etc…) and its colossal and untapped natural resources – billions of proven oil and gas reserves- are irrefutably the modern day ‘s El Dorado, affording risk-taking  investors a unique and unparallelled opportunity to thrive and prosper.

 Nonetheless, venturing into Iraq’s quagmire (fragile democracy, geopolitical tensions, severely languished infrastructure, and impoverished population) without strategic foresight and versatility entails grave risk and dire consequences far beyond repair: assets depletion, workforce distress, capital exposure and, ultimately, investments annihilation.

 Furthermore, in the absence of socio-economic data repositories, as result of decades of isolation, to support strategic foresight analysis and corporate sustainability strategies, international investors’ only cogent alternative is to device a comprehensive strategy incorporating constructive engagements, strategic partnerships, and the needed political capital as viable mean to foster and strengthen their corporate sustainability and, ultimately, competitiveness.

 Given Iraq’s decades of wars, sanctions, and economic hardship, the suggested strategy will entail four interconnected points:

Constructive engagements

 Understanding local communities’ value systems, cultural nuances, and earning their trust is an absolute imperative for international investors’ survival and competitiveness. To this end, international investors need to engage all the stakeholders in their areas of operation (e.g., tribal and religious leaders, NGOs, media, members of the provincial government, etc…) via a participatory and inclusive approach to foster mutual understanding, respect and, most importantly, common interest.

Strategic partnerships

  With the already established relationships, that is corroborated with strategic insights, international investors ought to capitalize on the achievements of the previous phase, by strengthening and solidifying those relationships perceived to be promising, fruitful, and prone to grow into sustainable strategic partnerships.

 Corporate social responsibility

 Given the socio-economic dynamics of their areas of operation, International investors must adopt an acculturated corporate social responsibility – not charity- to attain broad and immediate impact. To this end, international investors, in concert with local partners, ought to leverage their strategic partnerships to deliver their envisioned corporate social responsibility strategies. For instance, international investors need to work closely with local NGOs and institutions (Basrah University, for instance) to solve a communal problem or foster a fruitful cooperation.

 Political capital                 

  To ensure their businesses survival and success in an environment replete with uncertainty, international investors ought to foster their political capital that commensurate with their operational efficiency by leveraging their strategic partnerships and the achievements of their constructive engagements.

 Case in point:

 Given Basrah’s high unemployment rates – 70%- and its colossal oil reserves, IOCs could play a crucial role in the local economy by introducing the critically needed technical know-how and, thus, help develop local workforce literacy through strategic partnership with local institutions such as Basrah University – suitable platforms for knowledge sharing and dissemination. Unarguably, such perspicacious initiatives would help alleviate Basrah unemployment, spur economic recovery, strengthen IOCs’ political capital, and, ultimately, their corporate sustainability.

 Drawing on past experiences (Eastern bloc, for instance), transitioning from years of planned economy into free market societies – adaption of democratic and free market principles- is an intricate and time consuming process, that is exacerbated with the geopolitical tensions. Therefore, to overcome the unforeseen externalities associated with Iraq’s post-conflict environment, international investors ought to:

• Recalibrate their corporate sustainability strategies to reflect Iraqi market’s idiosyncrasies. Among them, political landscape, tribal and cultural nuances, ethno-sectarian fabric, institutional and bureaucratic hurdles.
•  Build in-house leaders and foster their global mindset, transcultural competence, and societal capital. Such virtues are essential prerequisites for the implementation of the aforementioned strategies.

Simply put, “Ignorant both of your enemy and yourself, you are certain to be in peril”  Sun Tzu, a renowned Chinese military general, strategist and philosopher.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The author, Tariq Abdell, is Iraq’s political risk analyst, and Founder & CEO of Mesopotamia Insight

He can be contacted at: atariq2000@hotmail.com

or

Followed on twitter: http://www.twitter.com/atariqx

Last week the federal supreme court ruled in favor of the government’s request to have the Central Bank of Iraq (CBI), along with the Independent High Electoral Commission, the Integrity Commission, and the High Commission for Human Rights, put under the supervision of the cabinet. This is bad news for the central bank.

Up to now, the CBI has been under the supervision of the parliament, as stipulated by the constitution. There is a good reason for this. Under the parliament, the central bank is not answerable to any single politician. Under the cabinet, it could potentially be directly controlled by one man.

A dangerous opportunity has been created for the government to increase the money supply arbitrarily. Saddam Hussein tried this during the 1990s. The result was hyperinflation.

Iraq’s US$ 50 billion in forex reserves are also at risk. There will be a big temptation to use these for local patronage projects with foreign currency-denominated expenses. If this happens, the CBI could be saddled with significant losses. It could even end up having to be recapitalized.

The court’s ruling is great news for anyone who might some day be in a position to “wet his beak” at the CBI’s expense. Bad news for everyone else.

By Lisa Knight, Creative Director & Founder of The Brand Foundation.

National branding is a vital strategic activity undertaken by governments worldwide, in emerging and established nations, the impact of which goes far beyond tourism — ­ it has the power to dramatically alter the economic landscape and attract major foreign investment, dramatically impacting the lives of its citizens.

How does a re-emerging nation get it right without resorting to modern-day propaganda? How can Iraq weaken the popular global perception that doing business in Iraq is simply too risky? Firstly, doing business in Iraq must become less risky and the future Iraq brand must align who it is with who it says it is.

What role do Iraqi people believe their country should play in the world? Just what does Iraq stand for? Should Iraq ignore its recent past & tuck it away or should it be compared to its current standing and utilized as a tool to demonstrate progress? How far back does one look, pre-Saddam, pre-invasion, what about the country’s rich heritage?

As a result of Iraq’s troubles, past and present, the world is watching, waiting; mass media coverage is a given, as interest in what shape Iraq forms in the future is mammoth. The stage is set, but what’s the message?

Back in 2006 Iraqi Kurdistan positioned itself as ‘the other Iraq’, the peaceful, and relatively troop-less Iraq. Regardless of how successful that campaign was, surely Iraq could do without further comparisons that stoke the fire of instability.

Despite the efforts of the government over the last 2 years, maybe the time isn’t right for a fully-fledged Iraqi tourism campaign and perhaps a revitalized brand Iraq is a decade away, but nonetheless the dialogue needs to begin and ­ the debate needs to be had.

When looking to the future of brand Iraq, perhaps looking back to the distant past isn’t such a bad idea?

What’s your vision of brand Iraq?

Lisa Knight is Creative Director & Founder of The Brand Foundation, a UAE-based branding agency that specialises in the property sector in emerging markets. Prior to that, Lisa led the creative team of the UK’s governing political party, firstly under Rt. Hon Tony Blair and latterly, Rt. Hon Gordon Brown. Lisa’s career spans 16 years and numerous industries: arts & entertainment, business & finance, fashion, travel, youth, sport, and international development.

Gulf Keystone provided an update this morning on its active work program in Kurdistan.

Sheikh Adi – 1

The Sheikh Adi-1 exploration well is currently at the 13.375 inch casing point at the bottom of the Cretaceous interval after side tracking around a section of the bottom hole assembly that had become stuck in the open hole.  The forward plan is to set 13.375 inch casing and drill out into the top of the Jurassic age formations and the first of the primary exploration targets for this well.

Shaikan-2

The Shaikan-2 appraisal well (9 km east of Shaikan-1) is currently drilling 17.5 inch hole at approximately 1,210 metres.  The forward plan is to drill to the bottom of the Cretaceous interval, set 13.375 inch casing and then drill into the first of the Jurassic age target intervals.

Extended Well Test

The Shaikan-1 discovery well and the Shaikan-3 well are both now tied into the extended well test facility and ready to produce from the Jurassic age Sargelu reservoir.  To date, the Company has sold over 63,000 barrels of oil into the domestic Kurdistan market, which has yielded valuable commercial and marketing information.  The Company has signed an initial quarterly sales contract for 2,500 tons (for Sargelu crude oil, one ton equals 6.7 barrels) of oil per week to be sold into the Kurdistan domestic market.

3D Seismic Program

The 3D seismic data acquisition program has been fully completed on both the Shaikan and the Sheikh Adi structures.  Data processing and seismic interpretation will continue until at least June of this year.

Shaikan-4

The location for this well, the second deep appraisal well on the Shaikan structure (6 km west of Shaikan-1), has been completed and the Company has signed a letter of intent with AOS for their Discoverer 3 drilling rig.  This 2000 hp rig will begin moving from Tunisia to Kurdistan in February and well spud is currently anticipated by the end of March.  Shaikan-4 is targeted to drill the Jurassic and Triassic age formations and if warranted, into the top of the Permian.

Akri-Bijeel

Kalegran (100% subsidiary of MOL) is currently rigging up on the Bekhme-1.  This well is designated as a Jurassic exploration well with a target depth of 2,900 metres (depending on well results). The well is expected to spud by mid March.

John Gerstenlauer, Gulf Keystone’s Chief Operating Officer commented “We will very shortly have two appraisal wells and two exploration wells underway in Kurdistan.  We are very excited about the possibilities that this implies for our holdings in Kurdistan and we are looking forward to a very interesting and rewarding 2011.“