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Weekly Security Update, 25 November – 01 December 2014


PM Abadi’s political manoeuvres continued to lead to a number of dismissals within key ministries. On 01 December, the Prime Minister retired 24 senior Interior Ministry officials as part of government restructuring. This decision comes as central authorities uncovered an estimated 50,000 ‘ghost soldiers’ on the military payroll, prompting the government to take steps towards tackling corruption and patronage. In another development detaching Abadi from his predecessor and current VP Nouri al-Maliki, Baghdad reached a deal on oil exports with Kurdistan, potentially ending years of disputes related to trade and budget. Under the new agreement, both regions would export through Iraq’s national oil company, SOMO, while the Kurds will keep 17% of Iraq’s budget expenditure and take a seat on SOMO’s board. As Iraq continues to be confronted by the threat posed by ISIS, rising violence has forced the country to work towards resolving long-lasting disputes and choose compromise over divisions on a number of issues. After suffering major territorial losses over the previous weeks, ISIS renewed its assaults in the North, in a probable bid to force a relocation of ISF resources away from the frontlines where insurgents have been compelled to abandon their positions, particularly in Diyala. This tactic should be sustained and lead to an increased in clashes reported in Salahuddin, where militant assaults on Baiji and Balad have been witnessed, and areas in the vicinity of Kirkuk.

North

Clearing operations continue in Diyala, while ISIS engage Peshmerga forces in a number of locations in Nineveh, Salahuddin and Kirkuk. On 26 November, Peshmerga forces recaptured the village of Tal Ward, between Kirkuk and Hawija, which had briefly fallen to militants as ISIS multiplies attempts at distracting Iraqi and Kurdish forces from other locations. Clashes also occurred in Baiji, where insurgents are still in control of the town’s outskirts. On 30 November, ISIS launched an attack on Balad, north of Baghdad, which was repelled by a force of ISF and Shia volunteers. Fighting was also reported between Peshmerga soldiers and militants near the Mosul dam, in a possible move to delay a planned Kurdish assault on Sinjar. Assaults, such as the one witnessed in Kirkuk which led Kurdish authorities to allocate reinforcements, are likely to be aimed at destabilising the conduct of ISF clearing operations, forced to rethink their priorities and organisation. This strategy is expected to be repeated over the next weeks, ensuring that direct clashes between ISIS and Iraqi forces continue to increase.

Central

As previously assessed, the focus of ISIS on operations in the North and Anbar continued to translate into a decrease in levels of violence in Baghdad, with no car bombs reported. The fiercest clashes reported in Anbar continued to occur in the vicinity Ramadi, where ISIS have allocated most of their resources. Fighting was witnessed west of Anbar’s capital, in Huz district, as well as in districts near Hit. As Ramadi remains the focal point of both ISIS and the Iraqi army, ISF forces reportedly made advances east of the city, while airstrikes continue to target ISIS vehicles converging on the battlefield. ISIS’s continued freedom of movement in the area, despite the sending of reinforcements and ammunition from Baghdad, continued to translate in high-impact incidents. On 30 November, a VBIED detonated in the Sajariya area of Ramadi, injuring three ISF soldiers. Meanwhile, an increase in Shia militant activity in the capital translated into a number of incidents and further demonstrated the autonomy currently enjoyed by Shia brigades. On 25 November, a group of gunmen stormed a house in Sadr City, killing three individuals. Levels of violence in the capital are expected to remain below average over the next reporting period.

South

Amid levels of violence in line with previous averages, threat levels are set to increase as the festival of Arbaeen approaches and pilgrims are expected to start converging in Karbala. Basra continued to witness acts of criminality, while levels of violence in Babil continued to drop. The continued threat of militant penetration into southern provinces was highlighted by the clearing of four VBIEDs in Karbala. Despite the group’s intent to strike the South-East in the lead-up to the festival, the focus of ISIS on northern provinces should ensure that attacks remain low-impact.

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Marathon Expects Kurdish Oil Production by 2015


On Thursday, Marathon Oil Corp. said it expects to start producing oil from its operations in the Kurdish region of Iraq within the next two years. The company posted an 8.4 percent increase in net income for the second quarter of 2013, according to its quarterly report.

According to UPI, the company said it is planning further development of the Atrush reserve area in the Kurdish region of Iraq, and that it notified the Kurdish government in May the prospect had commercial potential.

“The development plan is currently under review with final approval expected in the third quarter of 2013,” the report stated. “We anticipate first production in 2015.”

Marathon holds a 15 percent stake in the Atrush area, and is working on testing programs at other assets in the Kurdish region. Marathon started exploratory drilling campaigns in a well in the region in March.

The semi-autonomous Kurdish north has been shielded from much of the violence plaguing Iraq, but its government is at odds with the national government over who controls the country’s oil sector.

(Source: UPI)

 

Posted in Industry & Trade, Oil & GasComments (4)

Iraq Now 2nd Biggest OPEC Oil Producer, Bigger Budget In 2013


Iraq continues to grow its oil production at a good pace. Having recently breached the three million barrels of oil in a day mark, it is now averaging over a month 2.6m b/d, the most in three decades, according to Falah Alamri, the head of the State Oil Marketing Organisation.

With Iran’s oil production having stalled recently, potentially due to oil sanctions or lack of investment, Iraq has now overtaken it to become the second-largest oil exporter in the Organization of the Petroleum Exporting Countries, making $8bn per month in revenue from oil exports on an average price this year of more than $100 per barrel.

Iraq still has a long way to go to catch up with Saudi Arabia, which, as the OPEC country with the highest production, produces around 10m b/d. Saudi Arabia claims to have one fifth of the world’s oil reserves.

Hadi Abbas, secretary for the Parliamentary Finance Committee, said that they are expecting that higher oil revenues will lead to the Iraqi government approving a bigger budget for next year.

 

 

Sources: Reuters; Euphrates

 

Reuters

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Dunia Weekly Iraq Market Tracker


Advertising Feature

Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

DNO, ExxonMobil, Shell

Action Calls:

  • Moves afoot as Maliki pushes back on rivals: Maliki shows once again why he maintains his position on top of Iraqi politics.
  • Shell negotiates cut to Majnoon output target: As we expected, Exxon is not the only one to benefit from their Kurdish PSC move.
  • DNO lifts reserve estimates: DNO’s adjustment – opportunity to revisit our Kurdish oil thesis.

Headlines:

  • Move towards police supremacy continuing: One small potential step towards normalization of Iraq.
  • Sadrist PDB asserting self in Basra: Potentially an indicator of SoL-Sadrist relations.

Calendar Events Discussed:

  • May 23 – P5+1 Nuclear Talks in Baghdad
  • May 30-31 – 4th Round Oil and Gas Auction
  • June 15 – Parliament returns from 6 week break

Click here to access the report, or to add your email address to Dunia’s mailing list to receive the Iraq Market Tracker via email.

 

Posted in Banking & Finance, DFC Market Tracker, Oil & Gas, Politics, SecurityComments Off

Dunia Weekly Iraq Market Tracker


Advertising Feature

Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

ExxonMobil, Gulf Keystone, Halliburton

Action Calls:

  • Gulf Keystone shares hit as Exxon fear overcomes greed: Watch increasing noise out of Baghdad to signal crisis and closure.
  • New Kurd rules tie oil equipment imports to PSCs: Signals that Kurds continue to pursue their own path.
  • Iraq starts oil exports from SPM: Status quo continues – Iraq infrastructure progress in fits and starts.

Headlines:

  • Iraqiya indicates positive steps in Hashemi talks with Maliki: Maliki probably pursuing holding pattern until after Arab League summit.
  • KRG says negotiating Peshmerga deployment in Diyala : Could be very positive move, if it indeed has Baghdad’s support.
  • Al-Qaeda attack in Anbar: AQI attacks likely to continue in run-up to Arab League summit.

Calendar Events Discussed:

  • 29 March – Arab League summit
  • April – National Reconciliation Conference

Click here to access the report, or to add your email address to Dunia’s mailing list to receive the Iraq Market Tracker via email.

 

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Al-Ahdab Oilfield Three-Years Ahead Of Schedule


Capacity at Al-Ahdab oilfield reached 120,000 bpd on Friday, three years ahead of schedule, according to Reuters.

The one-billion barrel field in Wassit Province, central Iraq, is being developed by Chinese firm CNPC. The firm started production at 60,000 bpd in summer, six months ahead of schedule and it has doubled it far faster than expected.

CNPC is the first foreign oil company to sign an oil service contract in the post-Saddam era. It renegotiated an old development deal for Al-Ahdab back in March 2009. It collected its first payment this week for work on the field: 650,000 barrels of crude oil.

Output for the field is intended mostly for export, but it will also fuel local power stations to ease fuel shortages.

 

(Sources: Reuters; AFP)

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Iraq Could Slash Deficit Next Year


The high price of oil could prove the latest projection of a USD14.5bn budget deficit in 2012 as being too pessimistic.

The Cabinet approved a $100bn budget for 2012 in the first week of December, although it is still waiting for Parliament to give its approval. The budget is based on oil at an average $85 dollars per barrel. With around 95% of Iraqi government revenue coming from oil, the price of a barrel is the most important factor to forecast.

At the end of 2010 the government had forecast a budget surplus for 2012, but in its latest budget it has instead committed to greater expenditure to speed up infrastructure investment and growth. Iraq’s budget has risen by around $30bn since 2010, leading to a forecast of a $14.5bn deficit in 2012.

With oil now at $100/barrel or more, it is possible that the government will cut into this deficit in 2012 if prices remain higher for most of the coming year. In the past two years, Cabinet and Parliament have based their budgets on conservative oil price estimates. If these latest projections also turn out to be conservative enough, the projected deficit could come down significantly.

The second tricky number to project is the number of barrels of oil the country will produce. The final numbers are not in, but it looks like the government was pretty close to its target of 2.2m/bpd target in 2011.  The 2012 budget is projecting an average 2.65m barrels per day.

Posted in Investment, Oil & Gas, PoliticsComments Off

Weekly Security Update for 21st December 2011


Levels of violence fell in Iraq over the past week, with attacks concentrated in Mosul, Baghdad and Kirkuk. There was a scattering of incidents throughout the central provinces and a notable bombing attack on oil and gas infrastructure in Basrah province. Bomb attacks left at least 15 people dead and 77 injured, a decline from the previous week, while a consistent number of small arms attacks left 15 people dead and seven injured. There were no suicide attacks recorded over the course of the week, and the country should now be considered statistically overdue.

Politicking
The political situation appears to have deteriorated considerably over recent days. There are growing concerns that the arrest warrant for vice prime minister Tariq al-Hashimi will bring Iraq’s political communities to the brink of confrontation. Whether or not there is truth in the allegations made against al-Hashimi, the ongoing pursuit of alleged Ba’athists and suspected terrorists from the Sunni community in the central provinces will increase suspicions amongst the public that a witch hunt is underway. This is hardly a situation conducive towards reconciliation, development and advancement in the post-US era of the country and does not bode well for stability and security in 2012.

The Withdrawal
AKE issued a risk advisory for Iraq following the withdrawal of US forces which concluded on 17 December. US counter-insurgency operations will no longer take place on the ground while training of the Iraqi security forces has also been significantly scaled back. The country now faces a security gap, which various threat groups, both domestic and external may attempt to capitalise on. Violence may therefore rise over the course of 2012, not least as the political environment appears to growing more competitive and confrontational.

Medical Concerns
From a practical perspective foreign personnel will no longer be able to rely on advanced medical treatment in the event of illness or injury in the country. Organisations should therefore aim to be as medically self-sufficient as possible and ensure that employees have sufficient evacuation, repatriation and insurance cover in advance of travel. Organisations should also strongly consider taking medically trained personnel with them on deployments. For further information on security and medical support in the country please email [email protected].

Abductions
Three people were kidnapped in separate incidents in the central provinces last week, including a mayor in Babil province who was later found shot dead. Three ministry employees abducted last week were also found shot dead in Salah ad-Din province. AKE will be producing its quarterly update on worldwide kidnap trends in the new year. If you would like to be added to the mailing list please complete your details here.

Basrah Bombings
Up to three improvised explosive devices targeted oil pipelines servicing southern oilfields last week. There were no casualties but open sources indicate that the pipes were damaged and local output was reduced by half for at least a day. While an investigation is ongoing, there is widespread speculation over the threat group behind the incident. With the perpetrators potentially either from local communities along the length of the pipeline, or amongst energy workers themselves, the importance of due diligence, employee consultation and community engagement has once again been highlighted. It is not economically feasible to station guards along the entire length of pipeline infrastructure, but engaging with local communities and staying in close communication with employees will work well towards mitigating the risk of further violence. Needless to say, close relations with local communities will also work towards empowering the Iraqi public and illustrating that the energy sector is there for the good of the country, and not to steal a sovereign resource.

John Drake is a senior risk consultant with AKE, a British private security firm working in Iraq since 2003. You can access AKE’s intelligence website Global Intake here, and you can obtain a free trial of AKE’s Iraq intelligence reports here.


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