Who is the biggest winner from the recovery in Iraqi oil production? Denise Natali, a Middle East expert at the National Defense University in Washington, told the New York Times:

“The Chinese are the biggest beneficiary of this post-Saddam oil boom in Iraq … They need energy, and they want to get into the market.”

China already buys about 1.5 million barrels a day from Iraq — nearly half the oil that Iraq produces — and it looks like the front runner to take over Exxon Mobil‘s stake in the giant West Qurna-1 oilfield.

All of which sits very well with Abdul Mahdy al-Ameedi, head of Iraq’s Petroleum Contracts and Licensing Directorate (PCLD). “We don’t have any problems with [the Chinese],” he said. “They are very cooperative. There’s a big difference, the Chinese companies are state companies, while Exxon or BP or Shell are different.”

Poking fun at the idea that the US really invaded Iraqi to get its oil, Daily Show presenter Jon Stewart quipped:

“Don’t you have to be in a war to win it?“

But regardless of who actually wins the contracts, the increasing supply of oil from Iraq is helping to take the pressure off world oil supply, and the impact of that is felt around the globe.

It has been a rough couple of weeks in Iraq, with a string of major attacks bringing the death toll for the year to nearly 2,500.

But despite the upsurge in sectarian attacks, the country is still managing to make progress on a number of fronts.

In the energy sector, for example, Shell has announced that production will start at Majnoon as early as next month, while in the north of the country WesternZagros Resources has announced that it has started its latest drilling program at the Garmian Block.

In construction, Dubai-based DAMAC Properties has begun work on Princess Tower, a 26-storey, luxury furnished apartment complex in Baghdad, while property consultancy Colliers identifies a “clear market opportunity” to develop branded hotel projects in Erbil.

As always in Iraq, instability and other challenges continue to feature, and quite understandably these are the stories that make the headlines in the mainstream media, but here at Iraq Business News we remain committed to bringing you the full picture from a business perspective.

In Iraq already, or thinking about it? Iraq Business News marketing services take your message to the decision makers.

By Padraig O’Hannelly.

At Iraq Business News we’ve always been clear that Iraq is a land of both opportunities and risks. The challenge for any investor or businessperson has always been to decide what risks are worth taking, and at what price.

In the investment arena, real out-performance can only come from having a different view from that of the market — what hedge fund veteran Michael Steinhardt dubbed a ‘variant perception’.

This means, for example, that if you want to beat the market by picking shares to buy, you must believe that the market has undervalued them.

But scanning through the excellent report from Sansar Capital on the banking sector in Iraq, which we made available to readers last week, one bank share stood out as possibly overvalued.

While being generally very positive on the sector as a whole, the analysis of North Bank (BNOR) raised a number of concerns, including: dependency on foreign-exchange activities that “are likely to shrink significantly“; risk of significant losses from over-draft facilities; a high level of off-balance sheet leverage; and “selective mistranslation” from Arabic to English.

The report goes into more detail on these issues, and says the bank’s auditors point out that many off-balance-sheet credit facilities are given out in a concentrated manner and with insufficient collateral. If that’s the case, potential investors, and indeed depositors, must be asking themselves if this is evidence of poor risk management, or perhaps something worse.

Yet, despite these possible warning signs, shares in North Bank were trading on valuations similar to those of their peers. Whether Mr Market is right or wrong remains to be seen.

Please click here to read Mark DeWeaver’s article, “Why I Still Like North Bank“.

With so much gloomy news around, it is good to find some analysis that shows the other side of the story: A report just issued by Sansar Capital suggests that shares in Iraq’s banking sector may be ripe for a re-rating.

Key to the report’s findings is the argument that Iraq’s banks are exceptionally well capitalised, having been forced to raise significant funding to comply with the “arbitrary” rules set by the Central Bank of Iraq (CBI).

To put it another way, they are sitting on a huge pile of cash that is not working for them, or more accurately, not yet working for them. This should enable to the banks to grow rapidly in an underbanked economy, while adjusting the return on equity (RoE) to allow for this gives some rather attractive numbers.

The report also finds that some of the most efficient banks are trading on the most attractive valuations, which may be caused by unsophisticated investors focusing on the nominal share price, while ignoring the capital and future earnings per share.

Taken together, this could represent a buying opportunity for investors, but they should, of course, form their own opinions on these metrics. The full report can be read here, as part of Iraq Business News reports service.

The provision of healthcare is a priority in Iraq, with the government allocating an estimated $5 billion annually to cover it, and creating three committees to work on a new draft healthcare law.

So far this year, we’ve seen several initiatives in the sector, including:

• USAID and the Iraqi Ministry of Health hosting the Second Annual Conference of Primary Health Care and Preventive Medicine in Baghdad in February;
• The Iranian Red Crescent Society (IRCS) announcing the development of two new clinics for pilgrims in Najaf and Karbala;
• Work starting on a $350-million project to build an integrated, modern ‘medical city’ in Baghdad;
• Japan’s Shimadzu winning a contract to supply X-ray equipment to the Iraqi government.

Iraq Business News is also pleased to have been selected as the official online media partner for the Iraq Healthcare Conference, which takes place in Erbil on 27th and 28th of May.

To keep abreast of developments in this increasingly important sector, please sign up to our newsletter, and check out the Healthcare tab on our website.

Whatever sector of the economy your business operates in, Upper Quartile and AAIB are here to help you. For more information please contact Gavin Jones or Adrian Shaw.

By Padraig O’Hannelly.

Before the local elections, an art student climbed the tallest building in central Baghdad and hung a banner depicting a giant eye, with the caption “We can see you“, overlooking the Green Zone.

It’s an image that should be in the minds of all who consider bribery to be a perk of the job, or even an entitlement.

This week in the UK, businessman Jim McCormick was found guilty of selling fake bomb detectors to security forces, many of them in Iraq; he made an estimated $84 million from the scam, and was facilitated by corrupt officials who were happy to take his life-changing backhanders. Many others, however, had their lives changed in very different ways, when they fell victim to the bombs that went undetected by McCormick’s phoney devices.

At a different level, there are many who believe it’s OK to accept ‘gifts’ for simply doing their jobs, and they will always have an excuse for it: “everyone else is doing it“, “I need the money“, “other people are taking more“, …

But it’s all part of the same amoral culture that must be eradicated from any civilised society. Finding the culprits is one thing, but making the crime of corruption socially unacceptable is another. The people can see you, and ultimately will have zero tolerance for what you do.

By Padraig O’Hannelly.

Iraqis go to the polls on Saturday in the first elections since the withdrawal of US troops at the end of 2011. While these provincial elections are important in themselves, they may also serve as a barometer of public satisfaction with the government of Prime Minister Nouri al-Maliki.

But the real decision on Maliki’s future will be made in the parliamentary elections in early 2014, and it looks increasingly likely that moves to restrict the prime minister to two terms in office will not make it through the courts in time to limit his ambition to head up a majority government.

If Maliki was to win a third term in office, without having to reach compromises with other parties, what would that mean for Iraq, and more specifically, for business in Iraq? Third terms are not generally noted for their success, with the incumbents often running out of steam, but would the added power of majority, were it to happen, be enough to reinvigorate the ruling party? Or are the current checks and balances, provided by his coalition partners, all that stands between Maliki and full autocratic control?

We hope to get some indication of the public’s mood in the coming days.

By Padraig O’Hannelly.

In 1987, management guru and writer Tom Peters wrote that the formula for success was to under-promise and over-deliver — in other words, to manage expectations.

We can only hope that this maxim was in the mind of Iraq’s Minister of Electricity, Abdulkarim Aftan [Karrem Aftan al-Jumali]., when he spoke this week about his plans for power generation in the country.

In a bold and confident speech in Basra, the Minister urged the owners of private generators to sell them to scrap yards, as there will be no more need for them.

“Iraq will hit the final nail into the coffin of darkness which has descended on the country for so many years,” he said. “The issue of electricity will be solved once for all by the end of October.”

That won’t be in time to power all the air-conditioners needed in the searing heat of the coming summer, but the promise will be remembered and will be put to the test in due course.

If the Minister can deliver on his promise, then we will not be forced to recall the words of another famous writer, Mark Twain, who a hundred years earlier wrote that you can always tell that a politician is lying if his lips are moving.