Custom Search

Japan is ready to boost cooperation and projects in Iraq’s energy sector including rebuilding Iraqi nuclear reactor(s), Hussain Shahristani, Iraqi deputy prime minister for energy,has  told reporters.

Shahristani reportedly said after his meeting with the Japanese Economy, Trade and Industry Minister, Akihiro Ohata, in Baghdad, "we discussed the issue of reconstruction of the nuclear reactor(s) in Iraq... and the Japanese expressed their interest in that. Iraq will study the possibilities of developing its peaceful nuclear industry."

A joint statement was issued after the meeting calling on the two countries to reinforce economic cooperation in areas including postwar reconstruction, oil development and electricity generation in Iraq. Feasibility studies have already started to build an electricity generation station in Iraq, according to the statement.

Additionally, Japan will send a trade delegation to Iraq next month to discuss cooperation in the energy and transportation sectors.

This is the first visit to Iraq by a Japanese Cabinet minister since the Democratic Party of Japan (DPJ) took power in September 2009. Arab diplomats in Tokyo told PanOrient News that the DPJ "has not given Arab countries the attention they used to get from Liberal Democratic Party."

The Chairman of Anbar Province’s Council has called on the Iraqi government on Saturday to invest in al-Risha oil field with, shared between Iraq and Jordan, and to lay down clear steps to exploit the field.

“We call on the Iraqi government and the Oil Ministry to expoit al-Risha Oil Field on the Iraqi side of the common border between Iraq and Jordan, being one of the most important oil fields ”, Muzhir Hassan told Aswat al-Iraq news agency.

He said that Iraq’s share in the joint al-Risha Oil Field is estimated at 80%, and Iraq has the right to expoit it through cooperation with the Jordanian government, to be achieved after the approval of the Central Government in Baghdad.

“Al-Risha and Ukaz oil fields in Anbar are a natural resource,” he added.

According to the report, the al-Risha oil field is situated close to the Iraq-Syria and Iraq-Jordan borders, stretching to the border of Saudi Arabia with Jordan.

(Source: Aswat al-Iraq)

Iraq signed deals worth $52 million with France's Schneider Electric and Areva to build 15 power distribution stations in the southern oil hub of Basra, the province's deputy governor, Ahmed Hameed, said on Sunday.

Schneider Electric, has won a $29 million contract to build eight distribution stations, while Areva was awarded a $23 million deal to build seven plants.

The projects would be financed by the province's share in oil revenue and don't need the approval of the Ministry of Electricity in Baghdad.

The province is also in talks with a Saudi private company to supply it with power turbines that could provide an extra 150 megawatts, Hameed said.

Last summer, days of protests in the Shi'ite south, including Basra, over crippling power cuts forced the then electricity minister to step down.

The national grid usually allocates 950 MW of power to Basra, but in case of any technical failure, the supply could fall to less than half of that amount, which is not enough to cover its needs, said Hameed.

Iraq plans to boost power capacity to 27,000 MW in four years and would need to invest at least $3 billion to $4 billion per year to reach that target.

(Sources: Bloomberg, Reuters)

Tamimi Global Co. has won a $35 million arbitration award in London against Houston-based KBR for work it says it did in Iraq, according to court documents filed in Houston.

The Houston Chronicle reports that Tamimi, based in Saudi Arabia, worked as a subcontractor for KBR, providing dining and food services for U.S. troops. The company claims KBR withheld payments starting in 2008 because the U.S. government withheld payments to KBR after an audit of an earlier contract. Tamimi continued to operate through 2009, when its contracts with KBR ended.

The newspaper quotes a spokeswoman, Gabriela Segura, as saying that KBR is disappointed with the arbitration outcome and is evaluating its options.

(Source: Houston Chronicle)

The local administration in Basra decided to allocate the sum of 242.2 billion Iraqi dinars (ID) [$207m] to carry out service and urban projects in preparation for the hosting of the Khaleeji 21 soccer tournament [21st Gulf Cup of Nations], a spokesman said on Thursday.

“The higher committee for the rehabilitation of Basra, chaired by Governor Shaltagh Abboud al-Mayyah, earmarked ID242.2 billion for projects including the construction of three bridges in the city and two others in the province’s districts as well as the rejuvenation of five main intersections,” the source told Aswat al-Iraq news agency.

“The projects also include the rehabilitation of a road between the Khalid Bridge on the Shatt al-Arab waterway, the airport road and other roads leading to the Sports City,” he added.

The Arabian Gulf Cup of Nations, also known as Khaleeji, is a soccer tournament currently held every two years, rotating the host city each time.

While the competition is usually held on a biannual basis, the history of the competition has also seen it held every three, or even four years, due to political or organizational problems.

The Arabian Gulf Cup of Nations was founded at the 1968 Summer Olympics in Mexico by Bahrain, Kuwait, Saudi Arabia and Qatar.

The First Arabian Gulf Cup tournament took place in Bahrain in 1970, and was won by the Kuwaiti team.

(Source: Aswat al-Iraq)

By Tariq Abdell, Founder & Chairman, Mesopotamia Insight.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The unanimous approval of the new Iraqi government by the Iraqi lawmakers, to be led by the incumbent premier al-Maliki, is long-awaited news - ending nine tumultuous months of political horse-trading. However, the highly politicized nature  of the new cabinet could easily jeopardize its effectiveness and its decision-making independence; subsequently, protracting Iraq’s tribulations: ethno-sectarian strife, improvised population, and languished infrastructure.

Inarguably, Iraq's new cabinet first order of business is security, 2011 budget, hydrocarbon and investment laws and, most importantly,  revamping of  Iraq's underdeveloped oil sector which provides over 90 percent of its budget revenues.

Given Iraq’s colossal energy reserves, 115 billion barrels of oil and 112 trillion cubic feet of gas, and the international markets insatiable appetite for energy resources, chiefly the U.S., China, and India; Iraq is strategically positioned as ever before to reclaim its well-deserved seat among the major oil producers  such as Saudi Arabia and Iran.

Nevertheless, the daunting challenges of the oil sector - decades of wars and sanctions- are solemnly hampering the country’seconomic  recovery and its multi-billion dollar mega-reconstruction projects (e.g., housing, schools, hospitals, roads, bridges, airports, dams, etc…) – among them:   

• The oil sector is a highly politicized field.
• Major oil fields require billions of dollars for rehabilitation and development.
• The oil workforce is in desperate need of training and technological know-how.
• OPEC constraints (production quotas, for instance).
• Severely languished oil  infrastructure (systematic bottleneck, for instance)
• Repealed hydrocarbon law

Given the aforementioned challenges, the new Iraqi Government shall devise a concerted post-conflict oil strategy, that is capable of revamping the oil sector and, subsequently, boosting production capacity to its desired levels - from 2.5 million barrels a day to 12 million bpd over the next six years- the strategy shall entail the followings:

a)  Independent and inclusive Petroleum Council -reflecting the geographic distribution of Iraq’s energy resources- that is responsible for formulating oil strategies, enforcing transparency and accountability as bulwarks against corruption, and, most importantly, deflecting the politicization of the oil sector.

b) Conducive and transparent business environment compatible with Iraq’s new constitution -ratification of  the  investment and hydrocarbon laws-  susceptible to assure and attract greatly needed foreign capital and technological know-how.  

C) Equitable distribution of oil revenues to avoid the resource-rich nations’ deleterious disease also known as the resource war. Historically, the bulk of Iraq’s oil revenues are distributed along ethno-sectarian and tribal allegiances, as opposed to inclusive and growth-oriented economic policies,

Moreover, given the IOCs vested interest in the Iraqi oil, the new government ought to seek the IOCs' expertise to help revamp its oil sector by introducing technological know-how, the industry best practices, and foster a professionally literate workforce. With such perspicacious initiative, Iraqi government will definitely enhance its oil sector efficiency, boost production, and, eventually, spur economic recovery.

Conversely, in the absence of a concerted and inclusive national development strategy susceptible to resuscitate the country’s weakened economy, create jobs, and, ultimately, improve the well-being of  of its impoverished population; Iraq may risk reigniting political instability, ethno-sectarian strife, religious fanaticism, and foreign intervention as result of its  injudicious policies. 

 The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The author, Tariq Abdell, is an Iraq analyst, and Founder & Chairman of Mesopotamia Insight

He can be contacted at: [email protected]

or

Followed on twitter: http://www.twitter.com/atariqx

According to a report from Reuters, Turkish clothing and beer are hot sellers in the streets of Erbil, the capital of Iraq's Kurdish north, while in the South, Iranian cars roam the streets of Basra and Iranian pilgrims flock to Iraq's holy sites.

Sunni Ankara and Shi'ite Tehran, old rivals turned friends, are vying for post-war economic clout in neighbouring Iraq to capitalise on an expected oil boom, and have been flexing their muscles in Baghdad's government formation talks, diplomats and politicians said.

Both Iran and Turkey are using Iraq to increase their respective economic and political power.

Turkish companies are top investors in hotels, real estate, industry and energy in Iraq's semi-autonomous northern Kurdish region, and increasingly in the Shi'ite south where Iranian influence had been almost unchallenged, says Reuters.

Iran is Iraq's main trading partner and has been one of the largest investors in its construction and industrial sectors since the fall of Sunni dictator Saddam Hussein.

"It is clear that they are competing, specifically in Turkey's effort to dam in Iranian influence. Iran has undoubtedly gained a significant role in Iraq since 2003, and from about 2007 on, Turkey has started to push back," said Joost Hiltermann of the International Crisis Group.

"They are holding each other in balance."

I used to think that rapid increases in Iraqi oil production would practically guarantee a significant strengthening of the dinar over the next ten years. Surprisingly, however, history suggests that this is far from a foregone conclusion.

While the Oil Ministry claims that Iraqi capacity will rise by 10 million barrels per day (mn bbl/d) to something like 12 mn bbl/d by the end of this decade, few analysts take this projection seriously. In fact, no country has ever achieved such a large incremental increase in a ten-year period. Historically, a recent study by the Energy Policy Research Foundation (available at http://www.eprinc.org/pdf/EPRINC-Iraq-FirstLook.pdf) found that Saudi Arabia came closest, with an increase of about 6 mn bbl/d (up 150%) from 1970 – 79, followed by Iran, which went from around 2 – 6 mn bbl/d from 1965 – 1974, and Russia, which raised production by some 4 mn bbl/d (68%) from 1998 – 2007.

But suppose for the sake of argument that Iraq was able to match these precedents and raised production from approximately 2 mn bbl/d at present to, say, 6 mn bbl/d by 2019. What would happen to the dinar if it followed a trajectory similar to the Saudi riyal, Iranian rial, or Russian ruble during the oil booms in those three countries?

Not much, as it turns out. If it’s like the riyal or the ruble, the dinar would actually depreciate in US dollar terms by 25% or 16%, respectively. And the rial appreciated by just 12% from 1965 – 1974. (See chart. As the indices are based on year-end US$/local currency exchange rates, increases/decreases in an index correspond to appreciation/depreciation against the dollar.)

The problem with the idea that increased oil production must be bullish for the dinar is that it is based on the assumption that nothing changes except the output of oil (what economists call a “ceteris paribus” assumption). In fact, however, many other things can be expected to change. In the case of a large country like Russia, for example, domestic demand for refined products may rise significantly as well so that exports don’t go up at the same pace as crude production volumes. In the Saudi and Iranian cases, oil booms led to import booms, with the result that demand for foreign exchange rose along with increased export earnings. There might also be scenarios in which an increasingly confiscatory taxation regime led to greater dollar demand due to capital flight. And of course exporting more barrels won’t necessarily lead to higher forex revenues during an oil-price slump.

History’s lesson for the dinar is that whether it strengthens or weakens over the next decade will depend not only on Iraq’s success in increasing oil production but also on the economic changes that this increased production induces. If Iraqi demand for imports and refined products were frozen for ten years at current levels, a 4 mn bbl/d production increase would be unambiguously dinar positive. But in a more realistic scenario, supply and demand for foreign exchange are likely to grow together, with the result that the exchange rate may not deviate dramatically from its current level.

Basrah airport has been hit by several mortars over the last week. Although no casualties were reported the facility was shut for several hours and flights delayed and cancelled as a result.

Local militancy

Blame has speculatively been assigned to local Shi'ah militia groups, such as those affiliated with the now splintered Jaysh al-Mahdi (the Mehdi army) and those taking direction from Iranian elements. The culprits have not been identified and whilst there is no firm proof, the attacks fit the modus operandi of these groups.

Possible Motives

Initial reports focused on the disruption the airport closure had on Hajj pilgrims returning from Saudi Arabia. However, the attacks may have been aimed at disrupting travel by individuals attending a high profile oil and gas conference in Basrah city. The militants were likely intent on sending a strong signal of presence to would-be investors. If the perpetrators were linked to Iran their intent may have been to illustrate the potential hazards Western firms may face when working in an area so affected by Tehran proxy groups.

Meanwhile, prime minister Nuri al-Maliki has been granted 30 days in which to form a government. He is highly unpopular amongst the militant groups based in Basrah province after he clamped down on their activities in spring 2008. The arrest and killing of numerous militants in the operation Charge of the Knights has not been forgotten and the remaining elements may have wanted to express their displeasure with his mandate. Their aim would have been to embarrass al-Maliki and undermine his credibility as a stabilising force, not just in the eyes of Basrawis, but also amongst the foreign nationals travelling to Basrah to do business.

Alternatively, the attack may have been timed to coincide with Thanksgiving. American soldiers on site at Basrah airport were celebrating during the strikes, which may simply have been aimed at reminding US forces that they have not eradicated militant groups based in the country.

The Tactic

Rocket and mortar attacks in Iraq are most commonly directed at fortified and 'secure' facilities. These areas are normally too well guarded for terrorists to gain access. A mortar, which can be fired from a distance, is therefore the only means available to a group seeking to cause damage and casualties. As such, the risk is highest in the locations where personnel might otherwise consider themselves to be 'safe'. The Green Zone, for example, suffers the vast majority of mortar attacks in the country. Conversely, areas in the so-called 'Red Zone' may be perceived as being dangerous, but they are rarely subjected to mortar attacks, save those aimed at the Green Zone but which fly astray accidentally. Airports and US military bases are the next most affected facilities.

While this may make the International/Green Zone sound like an alarming place, it should be noted that mortar attacks are now highly infrequent when compared to earlier years. Furthermore, most attacks tend not to cause casualties. In the event that an attack does take place, however, personnel should be prepared.

AKE Recommendations

Before travelling to Iraq individuals should have adequate insurance cover for their activities. Hostile environment training should also be considered so that the risk posed by mortars (and other tactics) can be fully explained, learnt and prepared for. Once in the country, and especially in areas deemed otherwise 'secure' such as bases, airports and the Green Zone, individuals should familiarise themselves with emergency procedures such as warning sirens and evacuation routes. The whereabouts of your nearest shelters, exits, first aid kits and medical personnel should all be known. In the event of a mortar attack you will have little to no warning, so you should know how to react as second nature, without panic or confusion. As mentioned, the risk of casualties is low, but if individuals are prepared and ready to react the risk will be even lower.

John F Drake is a senior risk consultant with AKE Group, a British private security firm working in Iraq since before 2003. Further details on the company can be found at www.akegroup.com/iraq

You can also follow John on twitter at www.twitter.com/johnfdrake

By Lisa Knight, Creative Director & Founder of The Brand Foundation.

Since 2007 Iraq has witnessed a number of multinationals setting up regional operations – GE, Daimler Benz, Shell, and global finance and banking institutions such as J. P Morgan Chase and Citibank publicly proclaiming an interest in the Iraqi financial sector, its only a matter of time before a cross-sector multinational influx occurs.

How does a multinational go about presenting itself to an Iraqi population of approximately 28 million people? Iraq, unlike the UAE or Saudi Arabia has a significant amount of historical baggage, local perceptions of large western organizations are unclear at such an early stage of re-development, and the idea of a multinational being welcomed with open arms is not guaranteed – neither is global brand recognition a given in a country that has largely been shut off from western media.

With the possibility of political baggage being directly associated with big, foreign businesses, especially those that are US or British owned, does entering Iraq mean a major brand positioning exercise is required?

In the case of Iraq, I believe it should. The Iraqi market is to be entered sensitively, with tact, diplomacy and an acute cultural awareness of the impact of a turbulent history. Imposing your tried-and-tested western brand on this market with disregard for its troubled past and cautious nationals could be an opportunity missed.

In the marketing and branding world, getting to know your customers has always been a vital research activity that helps you develop an appropriate brand dialogue, in Iraq the concept remains the same, however it isn’t a small market segment one is analyzing, it’s a population of tens of millions of people, the majority of which are potentially receptive to your proposition, provided you get the dialogue right – and dialogue, not just identity, is key.

Understanding their purchasing habits, lifestyle traits, beliefs and customs will lead you to appropriate solutions, including when and where to interact and what tone of voice to adopt. A bi-lingual logo isn’t enough to say “Hello/Salam, we’re here – we speak your language, so trust us,” – a far more considered, sophisticated approach is needed to achieve a deep-routed penetration whereby in time trust is established between your organization and your new customers.

Localization is just that. Local. Methods that work in other parts of the world, or other parts of the Middle East may or may not be appropriate for Iraq.

Lisa Knight is Creative Director & Founder of The Brand Foundation, a UAE-based branding agency that specialises in the property sector in emerging markets. Prior to that, Lisa led the creative team of the UK’s governing political party, firstly under Rt. Hon Tony Blair and latterly, Rt. Hon Gordon Brown. Lisa’s career spans 16 years and numerous industries: arts & entertainment, business & finance, fashion, travel, youth, sport, and international development.