South Korea’s STX Heavy Industries concluded a deal with Iraq for a petrochemical plant in the southern city of Basra, according to Aswat al-Iraq.

A Basra official said.“The delegation discussed with the governor the mechanism to implement a memorandum of understanding the company signed with the industry ministry to rehabilitate the petrochemical complex in Basra.”

The deal is to construct a $3 billion petrochemical complex to be run by Iraq’s State Company for Petrochemical Industries. It will produce plastics such as propylene, polyethylene and PVC. It will also produce ethylene, which is a material used to make plastics. Production is expected to begin in 2014.

STX Heavy Industries is already contracted to build a $6.2bn steel mill complex and a power station.

 (Source: Aswat al-Iraq)

The oil minister, Abdul Karim al-Luaibi, has been busy in the few days since his appointment. Not only has he announced that exports from the northern Kurdistan region are to resume, but he has also promised that the focus will be on rebuilding the decayed oil infrastructure, according to the Arab Times.

Al-Luaibi, who has a lot of experience in the sector, has said that in addition to rebuilding infrastructure the priority will be to increase export capacity from the south to 4.5m barrels per day from around 1.6m bpd.

The increase is to be found in two fields: the Rumaila field, holding 17.8bn barrels of oil and being developed by BP and China’s CNPC, and the Zubair field, being developed by Italy’s Eni, the US’s Occidental Petroleum Corp and South Korea’s KOGAS.

However, Samuel Ciszuk of analysts IHS Global Insight is worried that improvements in infrastructure to transport and export oil cannot keep up with the rapid increase in production, due to a lack of financial resources and “infrastructural bottlenecks.”

(Source: Arab Times)

With a new Iraqi government now finally formed, Basra’s desire for a referendum on becoming semi-autonomous may finally get past Baghdad’s stalling tactics.

The Iraqi constitution allows provinces to become semi-autonomous, just like the northern region of Kurdistan. The Associated Press reported on the pros and cons, writing that Basra would be able to stop sending more money to Baghdad than it receives back in aid, but the fear would then be lower accountability and increased local corruption.

More seriously, the power may cause conflict between local factions. There is strong enmity between some of the political factions in the region, as well as local militia and gangs all enmeshed in the same web. Local power will lead to greater competition between them and potentially more violence.

Other potential issues are that an autonomous Basra may weaken Iraq and divide the nation, leading to squabbling over such things as oil revenues. This has already happened with Kurdistan. The heavily Shiite province of Basra may also fall more under the influence of Iran, which is the largest investor in the province.

Even so, if its budget was autonomous it would be entitled to a much larger slice of the national cake and it would not face incessant delays in releasing its share of the oil revenues from locally produced oil.

Basra is very important for Iraq, as it has almost three quarters of the country’s oil reserves at more than 140bn barrels. It is also the gateway to Iraq’s only major ports.

(Source: The Associated Press)

A tourist resort has been opened this week in central Amara, 150km north of Basra, at a cost of more than 12 billion dinars, reports Aswat al-Iraq. It is part of a 2007 plan to construct a tourist town in the southern city, which is better known for its marshes and Mesopotamian sites.

“Adan tourist resort was opened on Monday to receive citizens on the occasion of Eid al-Adha, said Muayad al-Saadi. The project cost 12.258 billion dinars in total and it was completed within 24 months.

He added: “The resort is one of the investment projects implemented for the first time in the province. It includes a hotel, five-star restaurant, suites and tourist apartments”.

 (Source: Aswat al-Iraq, Azzaman)

Baghdad’s airport road was considered the most dangerous motorway in the world, but the city is now turning it into “the most beautiful street in the world”, according to AFP.

The US military had called it ”RPG alley” (that’s rocket-propelled grenade), as road users were at the receiving end of particularly frequent attacks during 2006 and 2007. The road itself took a double beating from explosions and lack of maintenance, but it is now safer and heavily protected.

Baghdad mayor Saber al-Issawi said on Sunday that he will beautify the road before the city hosts the Arab League summit next March.

Iraq’s government has budgeted more than US$80 billion for infrastructure development, many of which are focusing on a number of large projects relating to construction and roads. Al-Issawi said: “More than 23 international companies from seven countries…will start at the end of this month to develop a large number of streets and places in Baghdad.”

“Included in those is Baghdad International Airport street, which extends from Baghdad airport to the Green Zone, at a cost of $200m, to transform it into the most beautiful street in the world.”

In all, for the summit, Baghdad is going to redevelop 50 roads and areas at a cost of $425m.

(Source: AFP, IRaq Business News)

 It may be that the International DBX Trade Fair in Sulaymaniyah city in the Kurdistan region was one trade fair too many in Iraq, as it was unable to draw in the numbers that it wanted to in the four days to Sunday, 14th November.

And yet, despite being held in the middle of nowhere easy to get to, the 330 companies from 17 countries exhibiting their products and services still received 90,000 visitors and made US$50m in deals. More are expected to follow as a result of the networking done at the fair.

Erbil, also in Kurdistan and the capital of the region, has so far held six trade fairs this year and they have had great success, including one single deal worth $250m.

Even so, not all the exhibiting companies were pleased. AKNews reports that Abdul Latif, sales manager of Korek Telecom, a local mobile service provider, said that 90,000 was a relatively low turnout which is “due to the limited participation of foreign companies”.

The fair was also some way from the city centre and, according to AKNews, the catering facilities were inadequate.

Despite the low numbers of visitors, Sulaymaniyah’s Chamber of Commerce said: “The agreements signed during the show are worth around US$50 million, excluding the joint ventures to be signed in the future.”

Foodstuffs, clothing, agriculture, building materials and construction, cars, machinery, heavy industry, agricultural equipment, food, plastics, handmade toiletries, IT technology and banking were all represented at the expo.

A major trade fair next year is expecting 300 exhibiting companies and 150,000 visitors. Whilst more than $43bn has been pledged already to major projects, the total amount of investment required for Iraq is estimated to be $500bn, and that’s just on reconstruction costs. There will be a lot more trade fairs.

(Source: NINA, AKNews)

Property prices rose fast in Baghdad in recent years, going up 50% and even 100% in many places. Now, Nina News reports that property-price rises in Wasit Province, halfway between Baghdad in central Iraq and Basra in the south-east, are “insane”.

Prices in the province are far exceeding those of neighbouring ones. The price per square metre in some areas of the capital Al Kut, on the river Tigris, now exceeds the prices of comparable properties in many developed countries, such as Norway, with the price per square metre now 1m dinars (US$860).

House prices have risen during the world economic crisis, despite food, cars, energy and other supplies falling in price. The blame is split between speculators and lack of supply. Social changes, with more divorce and more families splitting into smaller units, is also cited as a contributory factor.

Professor of Sociology Mohammed Saleh believes that more housing units need to be created for younger people and the right to re-sell should be postponed for 20 years to control speculation.

The Iraqi government is looking to build at least two million housing units in order to remove the shortage of liveable properties in Iraq.

(Source: Nina News, Iraq Business News)

Iraq’s developing situation continues to astound me when I contrast it with much of the west.

Take the UK, where Prime Minister David Cameron has on 20 October announced £81bn ($127bn) of cuts from total government expenditure of £661bn ($1,040bn), the largest budget cuts in decades by a large margin. All this it needs to do to try and stop national debt rising at £5,900 ($9,300) a second. 

Iraq, on the other hand, is going the other way. Not only does it expect to be in budget surplus by 2012, but it is pulling money in for investment at an ever-increasing rate. 

Iraq had a five-year plan to attract $6bn-worth of investments. It then said it wants $200bn. And this week it has gone up to a new target of $600bn. 

It would be happy if it gets to 50% of that target, but it has reasons to be optimistic. 

In the first 20 days of this month alone we reported on private investments in Basra for 1,000 housing units, a shopping mall and a huge drinking water project. In and around Amara there will be another 1,150 housing units and an industrial park, and Erbil is building two big roads, Muthanna a large cement factory to help with yet other developments, and Baghdad is awarding another 11 investment permits for housing, commerce, tourism and industry. And I haven’t even mentioned the energy projects yet.

In the global economic seesaw, it seems like it is Iraq’s turn to rise up again.