Iraq has awarded Thailand with the tender announced last month seeking a minimum of 30,000 tons of rice, and will purchase a total of 80,000 tons of rice from Thailand. Thai rice was amongst the lowest offers in the tender that closed on March 31, which included invited applications from the U.S., Uruguay, Argentina and Thailand.

The lowest Thai rice quote was $539.59 per ton for 40,000 tons of rice, while the two second lowest quotes were offered at $568.20 per ton for 110,000 tons and $569.65 per ton for 40,000 tons of rice.

Thailand is the second largest exporter of rice in the world, while Iraq’s domestic consumption of rice was up by 5 percent in 2012.

(Source: Black Sea Grain)

By Matthew Gayle.

According to the state-run Grain Board of Iraq, over 5.4 million tons of food were imported into Iraq last year to cover the state-run food rationing system that was originally initiated in 1990.

The system food rationing system was put into place to help offset the impact of U.N. trade sanctions, and allowed Iraqi families free access to quantities of certain food items at almost no charge.

“We imported 2.5 million tons of wheat in 2012,” said the board’s chief Hassan Ismael. Ismael added that annual imports of wheat are usually higher, but domestic wheat yields were high last year with government silos receiving 1.8 million tons from Iraqi farmers.

Ismael also pointed out that Iraq imported 1 million tons of rice, 800 million tons of sugar, 500,000 tons of baby milk formula and 600 tons of cooking oil.

The volume of food imports referred to by Ismael does not represent the food shipments into Iraq by the private sector.

(Source: Azzman)

This week marks the 150th edition of our Iraq Business News newsletter, and we are delighted to mark the occasion by bringing you a major new guide to business in Iraq.

Published by Allurentis, in association with Iraq’s National Investment Commission (NIC) and UK Trade & Investment (UKTI), the fourth edition in the annual New Iraq series — The New Iraq: 2013 Discovering Business — contains a wealth of case studies, commentary and data; it’s 132 pages of essential reading for everyone with an interest in the redevelopment of Iraq.

And as Dr. Sami Al-Araji, Chairman of the National Investment Commission, says in the introduction:

“Rebuilding the country’s economy is one of the biggest global investment opportunities to emerge in the past 50 years, with every sector open for investment.“

We’d like to congratulate Laura Curtis (laura.curtis@allurentis.com) and all her team at Allurentis on a splendid publication.

Iraq Business News is delighted to make this guide available to readers in pdf format: Please click here to view or download the full document.

The Board of EITI (Extractive Industries Transparency Initiative) has declared Iraq to be ‘Compliant’ with the EITI Standard. There are now 18 countries that are ‘EITI Compliant’.

EITI compliance means that the country has an effective process for annual disclosure and reconciliation of all revenues from its extractive sector. This allows citizens to see how much their country receives from oil, gas and mining companies.

With approximately 10% of the world’s proven oil reserves and 2% of the natural gas reserves, Iraq becomes the largest EITI compliant country by oil and gas reserves in the world. It now produces around 3 million barrels every day with production expected to expand rapidly.

The industry in Iraq is completely state-owned with the state-owned companies selling crude to accredited international companies. There are also eleven international Technical Service Contracts (TSCs). The semi-autonomous Kurdish Regional Government (KRG) has a number of production sharing agreements. The 2009 Iraq EITI report showed that the government had received $41billion in revenue for oil and gas exports. The 2010 Iraq report is due out by the end of the year.

EITI Chair Clare Short commended Iraq for its achievement saying

“The Iraqi people have not had the benefits that should have flowed to them from their rich oil resources. Compliance with the EITI is a step towards helping to ensure ensuring that the resources will be better managed in the future. I congratulate Iraq on this excellent achievement.“

By John Lee.

The board of the Export-Import Bank of the United States (Ex-Im Bank) voted to guarantee a JPMorgan Chase loan totaling $35 million to Devco International LLC (Devco) of Tulsa, Okla., for the design and construction of a sulfur purification plant in Mosul, Iraq.

Ex-Im Bank’s financing will support approximately 380 U.S. jobs, according to bank estimates derived from Departments of Commerce and Labor data and methodology.

“This significant transaction not only supports American small-business jobs here at home, but it also supports the sulfur and agricultural industries in Iraq,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “By providing a working-capital guarantee, Ex-Im Bank is demonstrating that we are always looking to support U.S. exporters and grow our economy by creating quality jobs here at home.”

Devco utilizes as part of its design a modular concept that maximizes labor concentration in a fabrication-shop environment. The company will design, procure, fabricate, and pre-assemble the plant in the United States and then ship the plant in modular form to Iraq. Upon arrival, Al Hawarth, an Iraqi-owned company, will re-assemble the facility outside the riverside city of Mosul.

The plant will process sulfur from underground deposits utilizing a priority process, Submerged Combustion Distillation, developed by CTI Consulting of New Orleans, La. The Al-Mishraq Sulphur State Company, which will own and operate the facility, plans to retail the purified sulfur output in Iraq for domestic use. Sulfur is a key ingredient in fertilizer and therefore is in demand within the agricultural sector.

By Padraig O’Hannelly.

With increasing commercial activity in Iraq, much of it by foreign-based investors, there’s a growing market for adequate insurance to cover the risks. But in a country emerging from years of chaos, how can you be sure that the insurance you buy is legal and valid?

To help clarify this point, Iraq Business News spoke with Ms Shirook Adnan, the head of the country’s insurance regulator, the Iraqi Insurance Diwan (IID).

“The law states that an organisation may not carry on a regulated insurance activity in Iraq unless it is authorised by the IID”, she explained. “An insurance broker, for example, must apply to the Ministry of Trade for a licence to set up a business, and the Ministry will not grant this licence without approval from the IID.”

“This also applies to foreign businesses. Our law doesn’t allow for a foreign insurance company or broker to work in Iraq; they must first establish and register a branch within the country.”

The regulator went on to explain that “any insurer not complying with these requirements would be liable to severe financial penalties, and any policy taken out with a broker who is not properly licensed within Iraq would not be valid under Iraqi insurance law”.

Sonoro Energy recently announced the following operational and corporate updates.

Drilling Rig

As previously announced on June 12, 2012, Sonoro and its partners entered into an agreement to establish a joint venture company (“JV Co”) and purchase a 750 HP drilling rig, subject to certain conditions including a final satisfactory rig inspection.

JV Co has now been established and an independent third party has completed the rig inspection on behalf of JV Co with no significant deficiencies noted. In addition, JV Co has completed a number of rig modifications and is now packing the drilling rig and its components for transportation in contemplation of closing the rig purchase.

Upon completion of the rig purchase and obtaining the necessary import and transportation approvals, JV Co will transport the rig to the drilling location in Salah ad Din. The three well drilling program is expected to last 45-60 days. Prior to drilling, civil works will prepare the leases and access roads.

Drilling Program

As a result of ongoing geological and technical evaluation, the Company has identified an additional structure to be drilled as part of the three well drilling program. The Company now plans to drill two wells into the North Salah ad Din (“NSD”) structure, with final locations having been moved from the initial prognosis. The new locations are closer to the main highway and are expected to require less civil construction work.

The new Sherqat structure, on which the Company plans to drill the third well, lies approximately 8 kilometres to the east of the NSD targets. The Sherqat structure has not been included in the Company’s reported contingent resources report. The Sherqat structure is more subtle than the NSD structure, and appears to have good closure and seals at approximately the same depths as the NSD structure.

Permitting

With the NSD well locations shifted, the Company has reapplied for the land lease permits. Most of the necessary approvals have been obtained for the land lease, with those remaining expected soon.

The Company has applied for drilling permits within the NSD and Sherqat areas from the Ministry of Mines and Industry.

The Company has also received confirmation from the Salah ad Din Provincial Government that the Ministry of Oil has confirmed to the Provincial Government, in response to their request for clarification, that asphalt does not fall under the regulations of the Ministry of Oil.

Corporate Development

During the second quarter of 2012, the Company entered into a Farmout Agreement (the “Farmout Agreement”) with Berkeley Mesopotamia Petroleum Limited and Geopetrol Iraq Corp. by which it agreed to acquire a 40% interest in oil and gas rights in Iraq. Sonoro’s rights and obligations under the Farmout Agreement are subject to satisfaction of certain conditions by July 31, 2012.

The Company has determined that the closing conditions will not be met prior to the July 31st deadline and, as a result, the Company’s interest under the Farmout Agreement will expire. The Company will continue to focus on its Asphalt License and the upcoming NSD and Sherqat programs.

The Turkish Consul in Basra, Farouk Qaimagja, and the Commercial Attache of the Turkish Embassy, met the head of Basra Investment Commission to discuss ways of boosting economic and trade cooperation.

“The consul, accompanied by representatives of a number of Turkish companies, reviewed with local officials in Basra ways of attracting Turkish investments to the province and encouraging Turkish companies to invest in vital fields in Basra,” said the statement received by Aswat al-Iraq news agency.

He unveiled an investment plan to set up the Turkish school in the area, and noted that the project will have positive effects on local residents and will help to develop their capabilities.

Meanwhile, a Turkish company presented plans for an aluminum industries project in the region.

(Sources: Aswat al-Iraq, Basra Investment Commission)