The foundation stone of a five star hotel and shopping center was laid in Kirkuk on Wednesday, according to AKnews.

The mall and hotel,  the first project of its kind in the city, will cost $31.58m (36.8 billion Iraqi dinars).

Construction will take over three years and will be undertaken by the Rekani company, based in Kurdistan, and several Turkish companies.

(Source: AKnews)

British companies need to move fast if they are to gain a foothold in Iraq and avoid losing out to their competitors.

This was the clear message given at the Middle East Association’s ‘Iraq: Untapped Opportunities’ conference held on 22nd November at the Dorchester Hotel, London.

Supported by the National Investment Commission of Iraq, UK Trade & Investment and Allurentis, the event was sponsored by Shell, Parsons Brinckerhoff, Petrofac and Mott MacDonald and attended by over 230 business and government representatives. A strong Iraqi delegation attended, led by HE Dr Hussein al-Shahristani, Iraqi Deputy Prime Minister for Energy and including HE Dr Khairallah Hassan Babiker, Minister of Trade; HE Mr Herish Muharam, Chairman of the Kurdistan Regional Board of Investment; and Dr Abbas Al Sa’adi, Adviser and General Director of Legal Directorate of the General Secretary of the Council of Ministers.

Opening the conference Middle East Association Director General Charles Hollis commented that Iraq is now entering a more stable phase, and opportunities for business are growing. “We need to replicate the UK success in the Kurdistan region throughout the whole of the country,” he said, adding that the Association is looking to organise a trade mission to Baghdad and Basra within the next twelve months.

In a keynote speech, HE Dr al-Shahristani urged British companies to participate in Iraq’s unprecedented reconstruction and development programme “for the benefit of all parties.” He underlined the Iraqi government’s commitment to creating a conducive environment for foreign investors through the generous benefits and incentives offered by Iraq’s investment law. Highlighting Iraq’s huge economic potential he noted that Iraq’s real growth rate has been more than 7% per annum over the last four years, and is expected to grow even faster over the next decade, with GNP in 2010 standing at $150 billion. Iraq is looking to invest $200 billion over the next six years in the oil and gas sector alone, with a need for new technology and modern management skills. Iraq’s goals “cannot be achieved without international companies” he said. He stressed that the opportunities are not limited to the energy sector, highlighting telecommunications, transport, housing, financial services and tourism as areas offering opportunities.

This morning saw the launch of a major new guide to business in Iraq: Entitled “The New Iraq: 2012 Discovering Business“, it was launched simultaneously in Dubai and at the “Iraq: Untapped Opportunities” conference in London.

Published by Allurentis, in association with UK Trade & Investment (UKTI), the guide containes a wealth of  case studies, commentary and data; it’s 140 pages of essential reading for everyone involved with the redevelopment of Iraq.

And as Dr. Sami Al-Araji, Chairman of the National Investment Commission, says in the introduction, “the sky really is the limit for investors”!

Iraq Business News is delighted to make this guide available to readers in pdf format. Please click here to download the full document (6.8MB).

According to U.S Energy Information Administration data, Iraq generates the majority of its revenue by exporting oil and importing about 30% of the gasoline it uses. The country is now seeking $30 billion in foreign investment to build refineries and develop oil and gas fields to avoid importing gasoline and diesel.

Iraq Mega Projects 2011 taking place from the 18-20 October 2011, at the Ritz Carlton, Istanbul, Turkey, will look in-depth at case studies showcasing the challenges, progress and solutions faced in the development and investment of Iraq’s oil and gas fields, while bringing together operators, local governors, service providers and experts.

The Iraqi Deputy Oil Minister stated “projects would raise Iraq’s capacity to transform crude into fuels by 900,000 barrels a day.”

“Four refineries currently in design and engineering stages are planned for Kirkuk, Maysan, Nassiriyah and will add 750, 000 barrels a day to capacity. In addition, a proposed 150,000 barrel a day facility in Nineveh is in the provisional phase and will refine heavy crude once production starts in nearby fields.”

Conference sessions will be led by field contract holders and service companies who will give their opinion on capacity and showcase both their experiences in Iraq and the expertise they have brought to the region.

Sponsors to date Include: Caterpillar, Iratrac, Unatrac, Emerson, Lakeshore TolTest, Olive Group, ExxonMobil, Statoil, Total, Oxy, Techint, OIEC, ACT, Exterran and Unaoil Group.

For further information visit: http://www.cwcimp.com/index.aspx

Most of Iraq’s revenue comes from oil. But natural riches may also mean fewer political freedoms and a state that behaves like a charity toward its own people. This must change, an Iraqi economist Nagih al-Obeidi argues in this article from Niqash.

The economic and political theory on “rentier states” says that a nation that derives most of its income from one natural resource, such as oil, doesn’t need much other domestic economic activity. Taxes are not as important and the government is not held as accountable by electors.

The same theory indicates that one of the biggest challenges for a rentier state is to develop a democratic, civil society and to ensure that the central government is not autocratic or bloated. And it is often used to explain why oil-rich nations in the Middle East and Africa might not perform as well, in terms of general standards of living and political freedoms. Dr Najeh al-Ubaidi, an Iraqi economic researcher based in Berlin, discusses whether post-Saddam Hussein Iraq is becoming more or less of a rentier state, the dangers of this and the possible solutions.

Because of its dependence on one resource – oil – the Iraqi economy is usually described as a “rentier economy”. The Iraqi government has been controlling oil income for several decades and this has allowed it to redistribute that income in a way that serves only the interests of the ruling elites. A rentier state may not need to tax its citizens as heavily because it relies on the sale of oil supplies. It is estimated that internal tax revenues amount to only a few percentage points of the annual Iraqi state budget. And when it comes to expenditure, the state often behaves like a charity, distributing public money as though it were alms to citizens. But even the description – rentier economy – does not adequately describe the behaviour of the Iraqi state and the nature of its relationship with its citizens. While there is no doubt that Iraq’s oil wealth can be a key factor in achieving a better standard of living and welfare in Iraq, it is also the reason why the Iraqi government should be assessing its policies and its position.

Rentier Symptom #1: The State as Charity

Under the first system of government established in Islam, also known as a caliphate, the leader of the state – the caliph – could distribute state moneys more or less as he pleased. And it seems that Saddam Hussein’s regime contributed to this tradition. Today, the rise of a more Islamic political bloc to power seems to be continuing with this attitude.

Following his address to the Iraq Mining 2011 conference in London, the Chairman of Iraq’s National Investment Commission, Dr Sami al-Araji, was interviewed by Padraig O’Hannelly for Iraq Business News:

Iraq Business News: Dr al-Araji, in your speech you mentioned the visa problems that Iraqis sometimes have entering the UK; what some businesses are also saying is that they have difficulty getting expat workers into Iraq … what is your opinion on this matter?

Dr Sami al-Araji: We have unemployment – officially about 15%, unofficially I don’t know – they need to work, and it is unacceptable while we have unemployed people sitting around that we import people from the outside.

But it is fully understood, and fully understandable, that we can’t source all the talent we need from engineers in Iraq. Nobody would ask you, for example, why did you bring in this or that. In the beginning [of an investment], you put forward your action program, you say I need engineers and so on, and these I will bring with me because they aren’t available. We have a system with the Ministry of Social Affairs, where you say we need 10,000 workers, and 5,000 you will have to bring in for the following reasons, the other 5,000 we will get locally, [and say to the Ministry] “please get us the 5,000”.

And that’s exactly what we are working on. Nobody is saying “oh, no, there can be no foreign workers, or if there are foreign workers we have to sit down and [verify] this or that”, the only authority is to the Ministry of Social Affairs, and they are very positive and cooperative and they try very much to help.

But what is happening is that some of the people have mismanaged this, and that’s why there has been a problem.

IBN: Regarding foreign companies’ perception of problems like corruption, and the Transparency International index on corruption, do you have any specific targets or plans to address that problem?

SA: We know there is some corruption, but I think very honestly it is magnified by the press and by the different committees around the world. We have made a lot of progress in fighting corruption and improving transparency, that is number one.

Iraq Business News is attending the Iraq Mining 2011 conference in London on Wednesday and Thursday as Principal Media Sponsor, and it is exciting to see the wealth of opportunities available to investors in the non-oil resources sector.

Silica sand, marble, limestone, gypsum, dolomite, kaolin, glauberite and quartzite were just some of the minerals discussed, while metals such as gold and lead may be present in Iraqi Kurdistan and Anbar.

A key point is that Iraq is the only country to have abundant reserves of all four of the main requirements for agricultural fertiliser — phosphates, sulphur, nitrates (urea and ammonia, from natural gas), and potash — which are increasingly in demand in the developing world.

The Iraqi government is determined to capitalise on this potential as it attempts to reduce its dependency on the oil and gas industry. Seizing the opportunity for a pun, Dr Sami al-Araji, Chairman of the National Investment Commission (NIC) told delegates, “we will leave no stone unturned until Iraq reaches its full potential“.

Over the coming days Iraq Business News will bring you interviews with leading Iraqi officials attending the conference.

Dr Ahmed al Shamma, Deputy Minister of Oil, to launch massive investment in refineries at the Iraq Mining conference on 7-8 September 2011. Dr al Shamma will present:

• A review of present refineries and operating capacities and details of major projects to rehabilitate and upgrade these refineries.
• A review of planned grass roots refineries to cater for domestic demand in the next two decades.
• A review of the main features of law 64 2007 and its amendment as regards to investment in refineries.

A recent Reuters report noted that Iraq is set to import 950,000 tonnes of gasoline and gas oil in the fourth quarter. Dr Al Shamma will reveal the Ministry’s plans for welcoming international investment in refineries to turn Iraq into an exporter of refined oil products.

Minister of Construction to reveal massive infrastructure programmes          

Minister for Construction and Housing, Mr Muhammad al Darraji, will reveal major projects with excellent incentives for international investment in infrastructure.

• Iraq Ministry will act as guarantor for international investment in infrastructure.
• Huge incentives are to be revealed at the conference for investment in highways, bridges and housing.
• A detailed overview of the Ministry’s strategy for generating foreign investment in the housing and construction sectors will be revealed.

Iraq Mining 2011 is the significant conference to take place on the redevelopment of industries in Iraq. Distinguished Iraqi delegates and decision-makers headed by the Deputy Prime Minister for Economical and Industrial Affairs, Dr Rouzh Nouri Shawis, will participate.

To register for Iraq Mining 2011, being held at the Royal Garden Hotel, London, 7 – 8 September, please visit www.iraqmining.com to register. Organisations interested in exhibiting should email info@iraqmining.com or call +44 (0) 207 559 1412