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An adviser in the Iraqi government has said that the Prime Minister, Nouri al-Maliki, has instructed the Interior Ministry to combat corruption at border crossing points.

Ahmed al-Shihani told AKnews that the Prime Minister called for action to be taken following official reports about rising corruption at Iraq’s border crossings -- particularly the borders with Jordan and Syria -- due to the increased commercial traffic between Iraq and these countries.

Shihani said that the government will send regular inspection teams to the crossings, and employ “other methods”, in order to detect cases of corruption and bring the perpetrators to justice.

"The border points must be free from corruption,” he said.

On June 7, the Prime Minister demanded the direct supervision of the border crossings.

On November 4, the establishment of a central supervisory committee to oversee the operation of the crossings was announced.

There are many border crossing points between Iraq and its neighboring countries, the busiest of which are the Ibrahim al-Khalil, which connects Iraq with turkey; the al-Walid and Rabeia crossings on the Syrian border; the Treibil [Tirbil, Tarbiel] crossing into Jordan (pictured); the Araar port on the Saudi border, and the Shalamja and Mundhiriya crossings connecting Iraq to Iran.

The balance of risk and reward for investing in Iraq's vast oil reserves is changing, according to a report by Turner Investments.

The report, called Oil in Iraq: A Profitable Gamble?  considers safety risk for oil company employees and their families, risks to operations from bombs and landmines, and political risks ranging from a line of officials seeking bribes to sectarian wars between Sunni, Shia and Kurd factions.

For all the problems, the authors believe there is one big reason why oil companies will seek to profit from Iraq:

"Iraq could hold the greatest potential for growth in global oil production. With 115 billion barrels of oil, Iraq has the world’s third-largest proven reserves, behind only Saudi Arabia and Iran. Some geologists believe that Iraq’s reserves are even greater than that, as many oil fields have yet to be fully explored. There are few, if any, places that have as much oil that’s untapped and close to the surface (and thus relatively economical to extract) as Iraq does."

Iraq has clearly not been an instant success. As the report states, "energy companies have in fact balked at getting entangled in Iraq’s spider web of domestic problems." It goes on to say that in a major auction in June 2009, "only a single deal was struck in that auction; other energy companies considered the risks of a long-term investment in Iraq too formidable to overcome." This year, Iraq has seen four major gas deals and many more oil investment projects announced.

The authors say: "Our own sense is that companies have become decidedly more optimistic about their prospects in Iraq over the past 12 months. Their optimism evidently has been stoked by the 12 development contracts to increase oil production that have been awarded to international companies such as BP, ExxonMobil, Occidental Petroleum, and Royal Dutch Shell."

The authors concurred with Morgan Stanley's forecast that "Iraq can roughly double its oil production by 2016, to 4.2 million barrels per day." That would represent one of the biggest increases in oil capacity in history. They continued: "Doing that would likely require a fourfold increase in capital investment, with $50 billion being spent between now and 2016. The money would fund the drilling of more than 1,700 new wells and upgrading 1,000 existing wells that have been decaying for years. BP alone plans to spend some $15 billion in a joint venture with China National Petroleum Corporation to boost production at the Rumaila field."

The authors conclude: "In short, we think Iraq represents too big of a prospective bonanza for Western oil exploration-and-production companies and energy-services companies to pass up. In truth, the companies are increasingly concluding that the pluses of doing business in Iraq outweigh the undeniably large number of minuses."

(Source: Turner Investments)

An Iraqi ministry has said that Australia supports its quest for World Trade Organisation membership, according to NINA.

WTO membership will significantly boost investment in Iraq as well as increasing its access to goods and services due to fewer restrictions from WTO member countries.

WTO membership takes almost as long to attain as agreement at a UN meeting. Iraq submitted its application to join in 2004, and it met with the WTO's working party for Iraq for the first time to discuss the application in 2007. It took Saudi Arabia ten years before its application was granted finally in 2005.

It's not all bureaucracy that makes the process so slow, by any means. To gain WTO membership there are hundreds of pieces of legislation that a country needs to pass and put into practice, so that it conforms to the standards that make international business easier and more trustworthy.

As Australia and Iraq sign memoranda of understanding to improve trade and investment, the Iraq Ministry of Commerce said: "The meetings included research...in order to activate the memoranda of understanding and urged Australian companies to take advantage of employment opportunities and the huge investment available in Iraq."

"The Australian side expressed its readiness to support Iraq in building human capacity through intensive training courses. Australia's support for Iraq in the process of joining the World Trade Organization also showed its great support in the ideas the Iraqi side."

(Source: NINA, Department of Commerce)

AAIB View

A spokesperson at A.A.I.B. Insurance Brokers, a company specialising in Iraq commented; the support of Australia for Iraq’s intention to join the W.T.O. is to be applauded as membership should provide clear to Iraq as it strives to diversify and deepen its economy.

However the W.T.O. has been criticised in some quarters. Allegations have been made that the W.T.O generally favours the interests of the rich, industrialised counties at the expense of the less developed countries, that its workings and decision making processes are not transparent enough and that it puts commercial interests above environmental considerations and human rights. Also policies to protect the positions of small, emerging domestic industries are restricted.

Most countries however believe that the benefits of membership of the W.T.O. far outweigh such concerns. W.T.O. members trade with lower trade barriers, including tariffs and quotas and the avoidance of excessive regulations. W.T.O. principles include; non-discrimination, transparency and increased certainty about trading rules and conditions. Overall these factors make trading easier, cut unnecessary costs and increasing confidence in the commercial and contractual environment.

All these things ultimately facilitate more investment in productive capacity and job creation opportunities and can result in a wider choice of lower priced goods and services being available to consumers. Importantly, governments are better placed to defend themselves against lobbying from narrow interest groups; the W.T.O. system encourages good governance and reduces opportunities for corruption.

As regards Iraq, various studies and news articles have identified obstacles (real or perceived) to raising investment and deepening commercial involvement within the country. Such obstacles have included the problems of widespread corruption, overly complex bureaucracy, limited infrastructure and power supplies and lack of contract certainty.

The potential benefits of W.T.O. membership to Iraq are many. For the country to meet the membership acceptance criteria structural changes to the economy and labour market will be needed along with development of the legislative landscape. Ultimately senior and sustained political effort will be needed to bring Iraq into the W.T.O. fold.

Our sources in Iraq tell us that negotiations are expected to continue late on Wednesday to decide the formation of the next Iraqi government, and it looks likely that the parliamentary session that had been postponed until Thursday will be delayed further.

It is now generally accepted that Nouri al-Maliki will retain the position of Prime Minister, but the positions of President and Speaker (or Head of Parliament) are still being hotly contested.

The expectation is still that Jalal Talabani will hold on to the Presidency, and that Ayad Allawi will have to accept the position of Speaker.

But there is also some significant horse-trading to be done regarding the service ministries, such as Communications, Education, and Health. The Sunnis from Allawi's Iraqiya bloc who have agreed to support Maliki need to be kept happy, and the more important of these will expect to receive ministries.

The campaign of bomb attacks has been stepped up, blamed on al-Qaeda and disaffected Ba'athists who are unhappy with the direction of the talks. The Mansur district of Baghdad was heavily targeted this morning, with the timing of the attacks considered by some to be linked to the information flow from the negotiations.

Saudi Arabia is said to be particularly displeased with the latest developments, and doubts have been cast on the sincerity of plans to re-build the Iraq-Saudi oil pipeline. “It's all just talk”, said one commentator.

Many are blaming the delays in forming a government on what they see as foreign 'interference' in the process.

We'll keep you informed at Iraq Business News as the story develops.

Iraq's Oil Ministry is studying an offer submitted by a private a Saudi company to rebuild the idled Iraq-Saudi oil export pipeline, ministry spokesman Asim Jihad told Reuters.

Jihad and a representative of the Saudi firm, Ali Mahir, said the offer proposed involving Japan's Mitsubishi and a Hungarian company identified as OTV, which took part in the construction of the original 626 km (390 mile) pipeline, which had a capacity of 1.7-million barrels per day. Alsumaria TV says the proposal involves Mitsubishi along with Bulgarian and American companies.

"We welcome any cooperation with Saudi Arabia in the oil sector to enhance bilateral relations. The offer is under discussion," Jihad said.

(Sources: Alsumaria TV, Reuters)

Iraq’s Transport Minister has said that Iraq turned down a project to create rail links between Iraq and the Gulf states because it wanted to project Iraqi ports.

He added that the border problem with Iran had hampered the clearing of sunken ships and materials in Shatt Al-Arab Waterway.

“If the country is linked with the Gulf states and Iran by railways, the Iraqi ports will die!,” Minister Amer Abdul-Jabbar told Saudi Middle East Newspaper.

As regards to the problem with the Iranian side, the Minister said: “The main problem related to clearing up the ships and other materials sunk in Shatt Al-Arab Waterway is the drawing of the borders with Iran,” adding that “there are problems with Iran regarding the drawing of borders, and there is a joint committee discussing the problem, that we hope would be able to settle the problem, to enable us clear the sunken ships and materials as soon as possible.

Iraq does not have the heavy lifting machines, with 2,000-ton capacity, required to lift the sunken ships, but progress has been made.

(Source: Aswat al-Iraq)

Iraq Business News has received information late on Sunday that between 30 and 34 politicians have defected from Iyad Allawi's Iraqiya bloc, and will support Nouri al-Maliki's bid to form the next Iraqi government.

Although these rumours are still unconfirmed, they are from a source trusted by Iraq Business News. The details are understood to be as follows:

• Monday's planned parliamentary session will be delayed until Thursday;
• Cabinet positions are in the process of being allocated;
• Kurdish leader Jalal Talabani will retain the position of President, with Nouri al-Maliki as Prime Minister, and Ayad Allawi as Head of Parliament;
• Iraq's neighbours, with the notable exception of Saudi Arabia, are generally in agreement.

We are currently checking with other sources and will bring you more details as we have them.

MEED reports that prospects look good for the only oil services companies eligible to bid for work on Iraq’s oil fields.

At the Adipec oil and gas conference, which took place between 1-4 November in Abu Dhabi, the stands belonging to the ‘big four’ US oilfield services companies -- Schlumberger, Baker Hughes, Halliburton and Weatherford -- were busy as people queued up meet their senior decision-makers.

Prospects are definitely looking up for the big four at the moment and the reason, according to MEED, is Iraq. They, together with local Oil Serv, are the only oil field services companies being allowed to bid for work on the country's existing oil fields.

After spending so much money during the licensing rounds, the international oil companies need to ramp up production on the Iraq fields and the quickest way to do it is to give the work to the services companies on a turnkey basis. By taking on such a risky venture, these five companies are hoping that it positions them correctly for when the market opens up fully.

Working in Iraq is risky in many ways, but developing these oil fields is about as close as you can get to a sure thing in the country. The industry knows that developing Iraq’s hydrocarbon reserves is real and it is happening. That’s why the big four’s stands were so popular at Adipec.

With Abu Dhabi and Saudi Arabia becoming quieter as they reach their production targets, the whole of the upstream oil and gas industry is relying on Iraq to drive regional revenues for the next 10 to 20 years.

That is where the big four are going and the rest are queuing up to follow.

(Source: MEED)

The International Energy Agency (IEA) has reportedly poured cold water on Iraq's plans to quadruple oil production to 12 million barrels a day by 2017, saying it could take 20 years just to reach half the target total.

But the agency predicted in a draft of its annual World Energy Outlook that Iraq will succeed in pushing production up enough to overtake its longtime regional rival, Iran, "by soon after 2015", according to reports from UPI and the Financial Times.

The only countries that have been able to pull off the kind of feat that Iraq seeks to achieve are the former Soviet Union and Saudi Arabia, who during the 1960s pushed through the 10 million bpd barrier. The difference is that they had the infrastructural capabilities and postwar Iraq doesn't.

Industry analysts have long been skeptical of Baghdad's ambitious plans and say although Iraq wants to rapidly upgrade and expand its long-neglected oil infrastructure, the task is immense.

"In some cases, the only thing holding the pipelines together is the sludge in them," a Western diplomat observed recently.

Erbil Building Trade Solo Exhibition will be held in Erbil from 3rd to 6th of March 2011 in the Sami Abdulrahman Park Exhibition Centre

Erbil is ready to host building and construction industry professionals in this essential event with its growing market and population of 8 million.

Erbil Building Trade Solo Exhibition is the greatest event in the building industry in the whole region and it will be a meeting point for visitors, trade visitors and international industry members from all over the world.

It is expecting more than 300 exhibitors and 150,000 visitors from a variety countries. Iraq is in need of a full range of infrastructure related products, services and systems, including hospital equipment and supplies, security products, road and rail machinery, oil production equipment and finance and telecom systems.

Work on hundreds of major projects worth $43.5bn - pledged by the interim Iraqi government with funds from Iraq's own oil revenues - is moving ahead. The amount of investment required for reconstruction of Iraq is estimated $500bn, Iraq Deputy Prime Minister Rafea Al Issawi told a conference in Sharjah in June 2009.