By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

It is very difficult with a market like Iraq to separate current issues, past progress and likely consequences. Since mid-2009 there has been significant achievement and progress, a sustained period of calm which now, sadly, is turning into what will probably be a very violent period as the actions and indecisions running up to the last election start to be resolved.

Let us take a quick look back at what has been achieved by the Iraqi Government:

• Two licence rounds that were very much more transparent than most in Western countries;
• Production has increased from about 2 million barrels of oil a day in 2009 to about 3 million today and is increasing rapidly;
• 14 IOC’s (International Oil Companies) and hundreds of service companies operating in Iraq;
• $43 billion in foreign investment during 2010 with numbers showing about twice that expected in 2011.
• The Central Bank of Iraq has a surplus of $50 billion

The contracts being awarded are massive, but it is not clear to me that many companies are making much in the way of profits in the country because the operating costs are so high. If companies cannot generate earnings commensurate with the risk, they will leave – especially with the price of oil rising quickly.

Businesses considering entering the Iraqi market are being offered a second free seminar, to explore further the considerations for operating in Iraq.

The second of a series of “Opportunity Iraq” seminars is being delivered by Upper Quartile as part of Aberdeen City Council’s international trade and investment team’s support services. This will deal with the commercial aspects of managing and building a commercial operation in Iraq and in particularly Basra.

The Seminar will be held in Marischal College on Friday 27 January, with presentations commencing at 2pm and concluding by 5pm.

Presenters include representatives from AAIB Insurance, who offer specialist insurance in high-risk markets including Iraq Insurance; Blue Hackle, who offer security in Iraq and an Iraqi national whose business helps foreign companies set up in Iraq.

Companies attending the seminar will have the opportunity to discuss specific issues relating to their business with the speakers, representatives of both Upper Quartile and Aberdeen City Council.

Please click here to download futher details and agenda.

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Last week hundreds of people were arrested all over Iraq in an operation launched by the security forces against members of the Ba’ath party. Fair enough – it is a banned Party. However the authorities have used the membership list of the old party to find the people worth arresting, and claimed that the Party had revived its old structure.

The crackdown came a few days after Barack Obama announced that U. S. forces will pull out from Iraq by the end of 2011 and the sweep was one of the biggest of its kind in post—war Iraq. Iraqi officials introduced it as a pre-emptive strike against a sneaky plan by the pesky Ba’athists to overthrow the government. However this has not rung true and has just heightened tension throughout the Government. It was reported that Prime Minister Nouri al-Maliki had a verbal encounter with one of his Deputy Prime Ministers — Saleh al-Mutlaq — over the issue during a cabinet session. He needs to be careful as he is losing the trust of Deputy Prime Ministers more quickly than he can replace them.

For months the Iraqi parties debated whether they should ask U.S. forces to stay or not. The Kurds were for the extension and Shia cleric Moqtada al-Sadr was against – with the rest of Iraq’s leaders looking for political advantage before choosing sides.

In a bid to encourage firms to develop a presence in the Middle Eastern state of Iraq, Upper Quartile, in partnership with Aberdeen City Council’s International Trade and Investment team, held a seminar yesterday in Aberdeen, attracting representatives from around 20 oil and gas service companies interested in the investment opportunities available in Iraq.

Over the afternoon, presentations were given by Blue Hackle, a security firm who offer specialist risk mitigation and management services, and operate in Iraq; and KCA Deutag, a drilling company who already have operations employing some 65 staff in Iraq, and Upper Quartile.

After the presentations, delegates entered into discussion on their own experiences of the country, and the problems they had encountered with obtaining visas and payments for work done.

In order to address these problems, it was agreed that a small forum be set up, which would bring together companies currently doing or wishing to do business in Iraq, for dinner and informal discussion every quarter.

The event attracted significant interest and was covered by both BBC Scotland and STV, with pieces broadcast on the radio and on the news.

Another Opportunity Iraq Seminar will be held on January 26th. Should you wish to attend, please register your interest here.

For further information please contact Siobhan Young.

Aberdeen companies looking to the Iraq energy sector for business opportunities are invited to sign up for a free seminar hosted by the City Council.

The Opportunity Iraq Seminar on Thursday, 17 November will be hosted by the council’s International Trade and Investment team and will be led by Iraq market experts, Upper Quartile.

Speakers will include a company which currently supports foreign businesses operating in Iraq, a security firm which offers a risk management service and an oil and gas company which has already invested in the country.

The session will run from 2pm-5pm. It will offer business advice on entering the Iraq market and inform firms attending of the economic, political and security issues which need to be considered to have a successful presence in the country.

Businesses wanting to attend must register by contacting Siobhan Young at Upper Quartile on 01224 638890 or visit www.upperquartile.co.uk/Iraq.

For more information contact Aberdeen City Council’s International Trade and Investment team by calling 01224 513109.

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

We are seeing an unprecedented level of interest in Iraq from UK and International companies – we regularly run trips into Baghdad and Basra, have been running recruiting programmes for large international companies and have had a lot of interest from senior Iraqi Government officials and technical staff in visiting the UK to identify partners.

On several occasions we have been asked where UK Trade and Investment is and what they have in place in Iraq to support British companies. The straight answer is that what UKT&I have is very limited, restricted to Baghdad and (appears to me) to be limited to a meeting once a week with the British companies in Iraq that can make it into the British Embassy. This is appalling following the cost in terms of lives and money of getting Iraq into the position of being willing and able to accept international investment. It is all the more galling when a significant number of senior influential Iraqi’s have a close relationship with the UK. As one said “..we would like to work with UK companies but we don’t have to..”

To put the situation into perspective the UK closed their Consulate in Basra in May – then Kuwait opened one in June and the US opened theirs in July; the Russians, Germans, Danes and Turkey have functioning Consulates in Basra. The Basra Oil and Gas show in November has the Swedish Trade Council, South California and Oil and Gas – French Industry ….. all there. No British Government presence. See attached Basra Oil and Gas Exhibition floor plan

There are two reasons behind this myopia that that I can see:

The first is that old one of budget restrictions and argument that UKT&I can maintain a network of representatives in – say – India from which there is a bigger and better established trade relationship, whereas the costs of operating in Iraq are so high that they can only afford a network of two or three staff. This does not really wash – countries with an established (and often sizeable) trade with the UK do not really need support in the same way as a new, very large, wholly untapped and very misunderstood market like Iraq does.  If there was ever a place that companies looking to establish a presence in were crying out for UK Government help in – it is Iraq.

Aberdeen City Council has announced a new initiative to encourage North-east companies to explore business opportunities in Iraq.

Upper Quartile, an Edinburgh-based economic development consultancy, will manage the programme, which will target the oil and gas sector, academic institutions and other contractors.

Seminars will be held over the coming months to inform firms of the economic, political and security issues they need to consider before developing a presence in Iraq. Companies will be invited to attend meetings with Upper Quartile’s experts and get the chance to meet key officials from Scotland and Iraq.

Iraq produces two million barrels of oil per day and aims to increase to 12 million within seven years to propel them to second place among the world’s oil-producing nations. Capital spending in oil-field services in 2011 is estimated to be five times that of Saudi Arabia, Bahrain, the United Arab Emirates, Oman, Qatar and Kuwait combined.

In 2010, foreign firms and investors reported over $42 billion in investments, service contracts and commercial activities across Iraq – up almost 50% on 2009. The top sector was new housing, which accounted for 33% of all foreign commercial activity in 2010, followed by transportation infrastructure, electricity and industry, and oil and gas production. Contracts on offer are expected to push the oil services market to $8 billion by 2014.

Aberdeen City Council Enterprise, Planning and Infrastructure director Gordon McIntosh said: “Aberdeen-based companies have a long history of innovation in the oil and gas business and of developing oil and gas production abroad. Their unrivalled experience, therefore, coupled with committed investment can play an important part in rebuilding an economy, whilst also offering profitable business opportunities in the medium and long term.”

Gavin Jones, co-founder and managing director of Upper Quartile, said: “Iraq possesses vast hydrocarbon reserves, but it lacks the infrastructure and expertise to support large-scale commercial extraction and export. It is therefore an ideal time for established Scottish companies to use their skills to help unlock the country’s enormous potential.”

Iraq’s business marketplace remains in post-conflict phase, characterised by few entrants and risk aversion, but companies which can build relationships with senior Iraqis can expect significant rewards.

Iraq has 16 oil sector companies. Oil exports account for 96% of the country’s economy and in the first seven months of this year Iraq earned more than $48bn in revenue.

Production is set to increase substantially over the next few years. In the short term, however, infrastructure is unable to support this growth and Iraq needs to invest in its export terminals, ports, ageing pipelines, storage capacity, and water and power supplies.

For further information on Aberdeen City Council’s new initiative visit http://www.aberdeencity.gov.uk/iti

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The US administration has declared again that it is “on track” to withdraw all US military forces from Iraq by the end of 2011. But, even as the White House publically pushes this position, many of the US policymakers are hoping that the Iraqi government will come and politely ask if some US troops could possibly stay. Just 10,000 or so would be good ……. and the cream on the cake ……… an extension of the SOFA [Status of forces agreement] providing that all important diplomatic cover “just in case” the military have to do something nasty. However a series of summertime incidents have now made it pretty clear this is unlikely to smoothly or without repercussions.

First, the PM Maliki came out openly (and very publically) against prolonging the SOFA and then started to define his view of the environment that he would be “happy” to see US forces extend their stay in Iraq – basically a limited number of military “instructors” restricted to doing things that the Iraqi’s forces cannot do by themselves i.e. intelligence, electronic security, that sort of stuff. Then at the beginning of August a key group of senior Iraqi politicians authorised Maliki to start negotiations with the US over the rules and regulations of any forces that might be invited to stay.

Leaving the start of the negotiations to the point where most US military units have been loading up planes with their equipment has not helped Iraq / US relations much.

And this means …………….

If all this goes through as looks likely then from January US forces in Iraq will be unable do anything that they are cannot describe as “training.” No-one is very clear what this will actually mean or how it will change the operations in Iraq but it will probably mean that US forces will not be patrolling and separating the Iraqi army and Kurdish militias in the north-central region; it will not be able to jump on any al-Qaeda remnants; or provide security for the massive US embassy in Baghdad or the hordes of US diplomats elsewhere in the country. So pretty restrictive and a big change.