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Range Hospitality, a dynamic, progressive and innovative institution focused on hospitality and real estate, has launched the Al Rawdatain Gardens development in Iraq's pilgrimage centre, Karbala, to cater to the significant shortage of accommodation.

Approximately 18 million pilgrims visit Karbala during the peak seasons every year. With a current shortage of accommodation in the city, Al Rawdatain Gardens aims to cater for this demand at accessible prices. Investment in this development is available through Mulkiya Intifa'a - a Shariah Compliant Fractional Ownership proposition.

Iraq's $112 billion economy whose GDP is growing at an average rate of 5.1% over the last three years has seen the Government actively encourage foreign investment through a number of initiatives including an amendment to the National Investment Law.

His Excellency Shehzada Shabbir Bhai Saheb Nuruddin, brother of His Holiness Moula Syedna Mohammed Burhanuddin (TUS), leader of the Dawoodi Bohra Community, has been appointed as Range Hospitality's honorary chairman.  Range Hospitality has recently strengthened its roster of shareholders through the appointment of Ali Hussein Al Nemer (Saudi Arabia), Alykhan Karmali (Uganda), Munaf Ali (United Kingdom) and Mohammed Asaria (United Kingdom) to the Board of Directors.

"We are delighted to be the recipient of Shehzada's support and guidance and honored by his participation. The Board of Directors comprises individuals from various parts of the Muslim world which will ensure a wider catchment area for our offering - Mulkiya Intifa'a," said Mohammed Asaria, Vice Chairman, Range Hospitality.

Earlier this year, Range Hospitality mandated Abu Dhabi-based investment company, Noor Capital PSC, to procure the necessary initial funding for the Al Rawdatain Gardens development. In addition, Range Hospitality has appointed Dewan Architects & Engineers, an architectural firm with over 25 years experience and projects spanning over 10 countries in the Middle East, Asia and North Africa, also known for the Yas Marina Hotel and Marriott Courtyard Dubai, as the lead architects and consultants. Control Risks, a leader in specialist security consultancy with over 30 years experience in the Middle East and seven years in Iraq is another of the leading names supporting the project.

// Range Hospitality has taken every step to protect its Mulkiya Intifa'a investors. "We are providing an Escrow account with one of the leading global financial institutions, Standard Chartered Bank, to assure security of investment and timely delivery of the project to our investors," said Munaf Ali, CEO, Range Hospitality. He further added: "Although it is not mandatory for Range Hospitality to have an escrow account for a development in Iraq, this is a self-regulating step to ensure investor confidence given the current market sentiment."

As the first modern development to be built in Karbala, Al Rawdatain Gardens will have an elegant 12-storey residence structure at its core comprising a mix of fully furnished and serviced studios, one-bedroom and two-bedroom suites. Spread over 55,000 square metres, the development is designed and furnished in accordance with international standards, with full air conditioning and heating, including internet access and safety deposit boxes. The entire development will include a total of 624 suites, extensive public areas, four restaurants, landscaped gardens, health facilities, 24-hour security, child care facilities, business centre, and guest services.

"We are receiving independent approaches from some of the world's leading hotel operators to manage Al Rawdatain Gardens," Asaria revealed. "We are in the process of operator selection and the calibre of the companies approaching us is clear evidence of the importance of Karbala within 'New Iraq' and the wider MENA region."

In conclusion, Ali mentioned: "Range Hospitality was established to achieve both commercial and altruistic objectives.  We have committed to donate 20% of our annual profits to charities under the direction of our Charitable Donation Committee."

About Range Hospitality
Range Hospitality was founded to develop hospitality projects in emerging markets and areas that benefit from significant volumes of pilgrims. Range Hospitality's ethos is to provide the highest quality international standard services to its guests and is a socially responsible investor - at all times ensuring its developments adhere to important local customs. Range Hospitality is owned and supported by a number of prominent business families from across the Islamic world.

An Iraqi oil industry veteran, Dr Thamir Al Uqaili, says there is a general belief that the production plateau targets (PPTs) of the international oil companies who have won contracts in Iraq are too ambitious and that export will face a marketing problem.

The exploration of Iraq’s rich oil and gas fields will be under the spotlight during Iraq Energy Future 2010, a top meeting of oil executives and Iraqi energy regulators in Istanbul from 27-28 September, as global companies that have won contracts prepare to start the development of various fields.  Dr Al Uqaili heads up a distinguished list of speakers and experts and will host a roundtable discussion at the event addressing operational challenges, opportunities, legislation, infrastructure and pipeline modernisation.

Common issues on different oil sites
A 30-year-old veteran of Iraqi oil companies such as the Iraq Petroleum Company, Basra Petroleum Company, Iraq National Oil Company, State Company of Oil Projects and the Iraq Drilling Company, Dr Uqaili comments on the challenges facing the IOC winners of the 1st and 2nd bid rounds as they prepare their teams and sites:  “There are certainly common issues, mainly use of production surface facilities, export terminals in addition to achieving and maintaining the contracted plateaus ‘PPTs’ (production plateau targets).”

Maintaining field pressure and boosting production is a key area for the IOCs to solve as they get started, says Dr Al Uqaili: “The fields are multi-reservoir fields of different characters. The IOCs are evaluating the characteristics and requirements of each reservoir. The evaluation includes revising recoverable oil under water injection and may be other solutions, to be able not only to achieve the production plateau target but to maintain it for some seven years. “

Export infrastructure

According to Dr Al Uqaili there are several production or export facilities that need upgrading and expansion to ensure Iraq can export its output.  “A new production centre like Hlafaya-Nahr-Umer-Majnoon down to the Fao [Faw] sea terminal and removing the bottlenecks in the pipelines from Rumaila and Zubair depots to the Fao terminal”, he continues, “as well as sea lines from Fao to the Basra sea terminal and installations of single buoy moorings (SBMs) in the Basra sea terminal”.

He also believes that the current bottleneck in the Iraq-Turkey export pipeline must be removed and perhaps a third line constructed.  Furthermore, should Iraq reach an agreement with Saudi Arabia, the Iraq Petroleum Saudi Arabia (IPSA) pipeline should be put into service.  He continues:"There is the possibility of constructing a pipeline each to Kuwait and Jordan.  Furthermore, we can resolve the current stalemate of the oil export from Kurdistan by using Iraq’s transport transportation system.”

Safety and security

“The main worries are security and political stability”, says Dr Al Uqaili, “that may severely affect fulfillment of a reliable national integrated plan that includes other sectors beside the oil sector. This integrated plan has not been started yet.”

High-level speakers at Iraq Future Energy 2010 include:

• His Excellency Thamir Al Ghadhban, Chairman, Advisory Committee to the Prime Minister of Iraq, Former Oil Minister
• Michael Townshend, President Iraq, BP
• Dr Abdul Hadi Al Hassani, Vice Chairman, Oil and Gas Committee, Iraqi Parliament
• Baroness Nicholson of Winterbourne, Executive Chairman, IBBC (Iraq Britain Business Council)
• Mounir Bouaziz, Vice President Commercial, New Business, LNG, Middle East and North Africa, Shell EP International

Event website:  www.theenergyexchange.co.uk/iraq10
Event dates and location:  27-28 September 2010 - Istanbul, Turkey

For more information:
Programme director: Claire Pallen [email protected]
Mobile: +44 78 330 93510

For more information, interviews and media accreditation:
Communications manager:  Annemarie Roodbol
Tel.  +27 21 700 3558
Fax.  +27 21 700 3501
Mobile: +27 82 562 7844
Email:  [email protected]

AAIB View

A spokesperson from A.A.I.B. Insurance Brokers observed "a number of commentators have recently raised the question of the achievability of the documented production targets within the planned timescales, feeling that they may not be realistic considering the circumstances faced.

However, penalty clauses built into contracts if certain project milestones are not met and output targets are not achieved, are additional spurs for the International Oil Companies and the oilfield support and service companies to strive to meet contractual deliverables and get the Oil and Gas sector infrastructure refurbished and expanded as quickly as they are able to.

The challenges of operating in Iraq in this sector are formidable and should not be underestimated. The security situation, the bureaucratic procedures faced by businesses operating in the country, the current degree of political uncertainty, the transportation bottlenecks at Umm Qasr etc. have all been highlighted and are caused for concern.

However the International Oil Companies and their support network have faced similar obstacles before in many other challenging environments such as Angola and Nigeria, etc. and have gained valuable experience in overcoming such obstacles.

They have demonstrated adaptability and determination and they will certainly need these qualities in order to build a long term presence in Iraq and in supporting the modernisation and expansion of Iraq’s Oil and Gas sector.

Iraq's State Oil Marketing Organisation (SOMO) has cut the official selling price for September shipments of its Basra Light crude to Asia, reducing the cost to its lowest level in eighteen months, while raising its price to the US.

In common with some other countries, Iraq's oil is priced relative to regional benchmark prices:

• For shipments to US, contracts are priced are relative to the Argus Sour Crude Index (ASCI);
• Shipments to Europe are priced relative the North Sea Spot BFOE; and
• Asian shipmentas are priced relative to the Dubai-Oman crude benchmark, published by Platts, the energy-information division of McGraw-Hill.

Basra Light Crude is now priced at:

• For US, a discount of $1.30 relative to the ASCI for September (up from a discount of $1.40 in August);
• For Europe, a discount of $2.95 relative to North Sea for September (down from a discount of $1.95 in August);
• For Asia, a discount of $1.55 relative to Dubai-Oman (down from a discount of $1.10 in August).

While Kirkuk crude will sell for:

• For US, a premium of $0.25 relative to the ASCI for September (same as in August);
• For Europe, a discount of $1.80 relative to North Sea for September (down from a discount of $0.95 in August).

Iraq exported 627,000 barrels of crude a day to the US in 2008, representing about 6.4 per cent of all US oil imports, according to the Energy Information Administration.

Saudi Arabia this month cut prices for September liftings of all crude grades to Asia and lowered prices for light crudes to the US.

(Source: Wall Street Journal, Gulf News, Arab Times)

Related articles:

• Iraq Oil Revenues 95% of State Income
• Iraq Oil and Gas Report

Basra International Fair Ground
25 - 28 November 2010

Iraq is opening its doors. International Basra Oil and Gas Conference & Exhibition will take its place as the first and foremost gas and oil exhibition of the region. Events will have support from Iraq Government.

Exploring Iraq's true natural resources, modernizing its oil and gas industry is the single and most expensive project of the world at least for the next decade. Basra Oil & Gas as the first will be a unique meeting point for interested parties to achieve the results of this project.

Given these advantages, Iraq can expand its oil production rapidly and supply the international oil market with substantial amounts of oil exports.  Considering the above possibilities of Iraq can make use and benefit from the future development of the international oil market and especially the future rapid increase in the global demand for oil. The International Energy Agency estimates that world demand will increase from the present level of 85mn b/d to 116mn b/d in 2030. In other words, in the next 23 years the global demand for oil will increase by about 30mn b/d. How will this increase be met and by whom?

Most of the world oil reserves (1,200bn barrels) are located in OPEC countries with its share reaching 76%. The Gulf countries’ share (Iraq, Iran and GCC states) is 62%.Therefore, there is a concentration of global oil reserves in a few countries, namely in the Gulf region including Iraq.

PR campaign has already started with ministries. Conference aims to cover macro dynamics of oil and gas industry in Iraq; emphasizing opportunities, challenges, and affects of projects. The governmental authorities, national oil and gas companies, recognized names of the industry will be involved with their speeches. Lunch, dinner and cocktail programs, along with other sponsorship opportunities are available.

Basra is ready and wants your business. There is no alternative for these events in the region. Participants of the first year will have a priority for the next years. Space is limited  and interested companies are urged to register early.

Basra: logistical hub of Iraq

Basra has no less than 70% of Iraq's oil reserves but what makes Basra crucial is not just the oil reserve in the region but also its strategical location which is an attractive logistical port for the international companies. The city is located along the Shatt al Arab waterway near the Persian Gulf and defined as the southern gateway of Iraq.

There are 4 big advantages to invest in this region:  Large oil and gas reserves, low cost of oil production, oil fields are located across Iraq, and also the oil export routes are many and can go through several directions such as the Gulf, Turkey, Syria, Saudi Arabia, Iran, Jordan and Kuwait.

The Al Basrah Oil Terminal is the main Iraqi oil terminal for off loading oil from Iraq. It accounts for approximately 80% of their GDP on a daily basis and receives an average of 6 tankers per week and pumps around 1,5 million barrels of oil a day.

Basra is connected by air through its international airport with connecting flights to number of international capitals. Strategically located within the province of Basra, the city of Basra has four extensive highways, river transportation systems on both the Tigris and Euphrates rivers, and a railway linking it to Baghdad.

Basra has a big potential to become perhaps the next Dubai with the shimmering skyscrapers in the future. It is already home to majority of professionals and company headquarters in the country However, to expand its oil industry, this region needs foreign investment, as this is a capital intensive industry. There is already number of companies operating in the region, but the potential of the region is not fully obtained. Therefore, International Basra Oil and Gas Conference & Exhibition will be the perfect platform to meet for all companies in the industry.

Because of the security measures taken by the government, Basra  has become a very safe city and no any big incident has happened for last three years. If any incident occurs, expert security staff is planted and they  reach any place in the city within minutes.You may also have additional information about the city from your country's embassy.

Basra is one of the oldest Islamic cities which was established during the Islamic conquest in 625 A.D. The Prophet's companion, Utba Bin Gazwan, choses the city site in 14 A.H. (636 A.D.), and the city was formally planned and built by Abu Musa Al-Asha'ari six months prior to the building of Kufa city upriver. Basra was constructed close to Al-Busaira from the most ancient eras of history.

A network of canals flowed through the city, giving it the nickname "The Venice of the Middle East", at least at high tide. The tides at Basra fall by about 9 feet. For long, Basra grew the finest dates in the world.

The city was renovated by the financial help of the allies and  now  it is on way of being one of the glorious cities of Gulf region.

http://www.basraoilgas.com/
[email protected]

A group led by Gazprom Neft aims to start drilling in Iraq's Badrah oilfield next year as part of its plan to reach 15,000 barrels per day by the last quarter of 2013, a company executive said yesterday.

Gazprom and its partners plan to issue a tender this month to drill three to four new wells and could award a contract later in the year, said Alexander V Kolomatsky, project director Middle East at Gazprom Neft, the oil unit of Russia's Gazprom, according to a report from Reuters.

"We will call for several tenders for 3D seismic I think within a week, then for drilling... we will issue (drilling) tenders during this month," he told Reuters on the sidelines of a conference between international oil companies and the Oil Ministry in Baghdad.

In January, Iraq signed a deal with Gazprom, Turkey's TPAO, Korea's Kogas and Malaysia's Petronas to develop its eastern Badrah oilfield, which has estimated reserves of 100 million barrels of oil. The field is near Iraq's border with Iran.

Kolomatsky said initial expectations of total investment in Badrah were about $2 billion. The company was also in the "final stage" of negotiations with Iran to develop the Azar oilfield, a part of Iraq's Badrah field which lies across the border, he said.

"I think talks are going well... but it's difficult with sanctions," he said. The Russian company last year signed a memorandum of understanding with the National Iranian Oil Co (NIOC) to study the development of Azar and Shanguletwo oilfields in Iran.

Iran, a major oil exporter and holder of the world's second-largest gas reserves, has been hit by a new wave of international sanctions for its nuclear program and the United States has also stepped up its push to isolate Tehran economically.

Kolomatsky also said the Russian firm is looking for other opportunities to increase its activities in Iraq and could be interested in bidding for exploration and production rights in areas like the unexplored Western Desert along the border with Saudi Arabia and Jordan.

(Source: Reuters)

Related articles:

• Petronas Recruiting Hundreds of Staff for Four Iraqi Projects
• Foreign Investment Continues, as Lukoil Announces Plans
• Gazprom to Offer $10 Bn of Bonds

Iraq’s oil minister, Hussain al-Shahristani, has addressed some of the complaints by oil majors about bureaucracy hampering their efforts to bring staff and equipment into the country, according to a report from Reuters.

Getting visas for oil industry professionals entering Iraq to work on oilfield development contracts ranks as a major hassle facing oil companies as they start work.

"This obstacle has been overcome with the cooperation of the Ministry of Interior, which thankfully has agreed to issue visas at the Iraqi airports to employees working on the contracts to develop the fields," Minister Hussain Shahristani said.

Shahristani said other problems, such as inadequate ports, decrepit roads and crumbling bridges, would not be overcome rapidly and oil majors would have to find a way to manage.

"It is expected there will be problems, especially as we know that Iraqi infrastructure like roads, bridges, ports, railways, airports and other things are not as they need to be at the current time," he said in a news conference in Baghdad.

Iraq awarded a series of massive oilfield development contracts last year to majors such as Shell and BP that could quadruple its output capacity to 12 million barrels per day within seven years.

Those output levels would rival top producer Saudi and give Iraq the billions it needs to rebuild after decades of war, sanctions and neglect.

Sabotage and a lack of investment since the 2003 US-led invasion has further degraded the infrastructure and hundreds of billions of dollars are needed for housing, the power grid, water and sewage plants and other sectors.

As the projects get off the ground, inadequate dock space at Umm Qasr, the country's main port, bureaucratic impediments to securing visas, customs clearance, and corruption have become tops complaints of oil executives.

Shahristani said the problem of the ports would be addressed by opening up new land border crossings.

"We have started discussing the opening of new border posts specifically for oil equipment in order not to affect the functioning of the Iraqi ports and not to delay our projects due to the capabilities of Iraqi ports," Shahristani said.

(Source: Reuters)

Related articles:

• Kuwait Gives Initial Approval for Oil Border Crossing
• Investment in New Container Port at Umm Qasr
• Grand Faw Port Tenders Set for 2011

Saudi industrial and energy services company Taqa (TAQA.AD) is considering investing $1.6 billion in pipelines and $133 million in offshore platforms in Qatar and Iraq, an Arabic newspaper said on Friday.

Officials from Taqa told the Saudi-owned daily Asharq al-Awsat they were considering investing in the gas industry in Qatar and the oil industry in Iraq by building platforms and pipelines for companies already working in the two countries. Taqa, 40 percent owned by the Saudi government, said it has already invested 500 million riyals ($133.3 million) in offshore oil and gas platforms in Saudi Arabia.

Officials said interest has increased since one of the company's main partners, the Italian oilfields services company Saipem (SPMI.MI), won a $10 billion contract to develop fields in southern Iraq.

Taqa has recently been on the acquisition trail, buying a 40% stake in Oman's Sohar Aluminium for $400m, and some of Suncor Energy’s assets in Canada for C$285 million.

(Source: Reuters, BusinessWeek)

Iraq expects the CNPC-operated al-Ahdab oilfield to have an initial production rate of 60,000 barrels per day from July 2011, Deputy Oil Minister Abdul Kareem Luaibi said on Sunday.

Al-Ahdab was the first major oilfield development contract awarded by the Iraqi government after the 2003 US-led invasion when it agreed to revive a Saddam Hussein-era deal with the Chinese oil company.

In June 1997, Al-waha Petroleum Co., Ltd, a joint venture of CNPC and China North Industries Corporation, signed an agreement with Iraq's Saddam Hussein government to develop the al-Ahdab oil field, which was postponed by the UN sanctions on Iraq and the subsequent U.S.-led invasion to the oil-rich state.

In November 2008, CNPC signed a Development Service Contract of Al-Ahdab Oilfield with Iraq's Ministry of Oil.

Located 180 kilometers southeast to Iraq's capital city of Bagdad, Al-Ahdab Oilfield has a structural area of about 200 square kilometers.

It has since struck 11 other deals with global oil majors to help it quadruple its output capacity to Saudi levels of 12 million bpd within seven years.

(Sources: CNPC, Reuters)

Related articles:

• Oil Pipelines Extended to Nassiriya
• China Races to Secure Middle East Oil Deals
• CNOOC Seals Deal on Iraq Oil Field

By end of June 2010, 26 out of 55 operators licensed to offer WiMAX offered the service. WiMAX is commercially available in Algeria, Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Saudi Arabia, Tunisia and the UAE. Moreover, Yemen and Oman are slated to WiMAX services in the second half of 2010.

WiMAX stands for World Interoperability for Microwave Access. WiMAX/IEEE 802.16 is a global standard-based technology for Broadband Wireless Access. WiMAX is a broadband wireless technology that is largely supported by the computer and the telecom industry. Its guarantee is that it is engineered to deliver ever-present fixed and mobile services such as VoIP, Information Technology and Video at relatively low cost. Furthermore, WiMAX vendors state that WiMAX systems are able to cover a large geographical area (up to 50 km) and to deliver significant bandwidth to end-users at up to 40 Mbps. WiMAX technology can be deployed as a Point Multi-Point in last mile connection and as part of the backhaul to the PSTN and Internet access points.

The first commercial deployment of WiMAX in the Arab World was in Algeria in 2007. Moreover, by end of June 2010, a total of 26 service providers in 11 countries (including Algeria) in the MENA region offered WiMAX. The Arab Advisors Group expects an increase of 3 operators, at least, by end of 2010. A new report, “WiMAX in the Arab World 2010” was released to the Arab Advisors Group’s Telecoms Strategic Research Service subscribers on June 19^th, 2010. This report can be purchased from the Arab Advisors Group for only US$ 950. The 37-page report, which has 51 detailed exhibits, investigates the availability of WiMAX regulations in 18 Arab countries, the frequencies used, entities that have tested WiMAX or pre-WiMAX services, and vendors for equipment. The report covers the following Arab countries: Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Syria, Tunisia, UAE, and Yemen. Any investment in this report will count towards an annual Strategic Research Service subscription should the service be acquired within three months from purchasing the report.  Please contact the Arab Advisors Group to get a copy of the report’s Table of Contents. “There are still no detailed regulations specific to WiMAX in some Arab countries. Still, a few have specified the type of license that needs to be obtained to provide WiMAX service. For example, in Algeria, the company should have a VoIP authorization and the regulator’s specified band for WiMAX. In Jordan, the company should have an individual license needed to use the frequency (a scarce resource) as well as win the spectrum auction for WiMAX.” Alaa Numair, Research Analyst at Arab Advisors Group noted in the report.

The top three frequencies allocated to operators in the Arab world are 3.5 GHz, 3.6 GHz and 2.6 MHz. The 3.5 GHz band, allocated to 19 out of 55 licensed operators to provide WiMAX, is the most common allocated frequency in the Arab countries. 3.6 MHz and 2.6 MHz followed with 8 and 7 licensed operators, respectively. Tareq Masarweh, Research Analyst at Arab Advisors Group added. The Arab Advisors Group’s team of analysts in the region has already produced over close to 1,920 reports on the Arab World’s communications and media markets. The reports can be purchased individually or received through an annual subscription to Arab Advisors Group’s (www.arabadvisors.com) Strategic Research Services (Media and Telecom).  To date, Arab Advisors Group has served over 600 global and regional companies by providing reliable research analysis and forecasts of Arab communications markets to these clients.

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.

Iraq's Lebanized democracy coupled with its lingering and convoluted political impasse are perfect recipes for a week and sectarian-based government, that is shackled by the region's geopolitics (e.g., Iran's nuclear and regional ambitions, Saudi Arabia, Syria, Turkey, etc...) consequently turning Iraq into proxy wars battleground for years to come and long after the U.S. forces are gone.

Thus, investors contemplating on doing business in Iraq, given the country's untapped natural resources (billions of oil and gas reserves), are most likely to encounter a series of costly and challenging constraints common to post-conflict environments both internal and regional. These constraints are most likely to derail investors’ market entrée strategies, left unchecked, and damaged their long-term business interests in Iraq:

Internal constraints:

• According to transparency international 2009 corruption index, Iraq is the fourth most corrupt country along with Sudan.
• Well-entrenched tribal laws and archaic costumes undermine central government and foreign investors' interests alike (tribal discontent of the oil companies, for instance).
• 20 to 25 percent of Iraqis still live below the country's poverty line (Ministry of Planning), a potential source of societal and political upheavals.
• Higher illiteracy levels make it difficult for domestic and foreign investors to find a skilled and professionally literate workforce.
• Higher unemployment rates, notably among military-age male population, are direct causes of the sudden surge of organized crime and militia's activities.
• Lack of basic services, e.g., drinking water, electricity, and running sewer nurtures resentment vis-a-vis public officials and foreign investors alike as recently demonstrated by electricity protests across Iraq.
• Deep-seeded distrust and apprehension of oil companies are crippling residues of decades of planned economy, e.g., oil union fervent opposition to the oil law and contracts.

Regional constraints:

• Iran, third's largest oil producer (3.2 million bpd), is a major player in Iraq's politics through its infamous Islamic Revolutionary Guard Corps' elite Qods Force and its proxies. As top U.S. commander in the country Gen. Ray Odierno said "There is a very consistent threat from Iranian surrogates operating in Iraq," (Washington Post July 13th).
• The fallouts of Iran nuclear standoff with the West, United States recent approved new unilateral sanctions against Tehran, could easily spillover to Iraq's internal politics and further undermine its stability. In fact, early signs of undercutting U.S. sanctions already been detected in the northern region where millions of dollars of oil and goods are smuggled to Iran (New York times report July 8).
• The proximity of Iraq's major oil fields to Iraq-Iran porous borders makes international oil companies’ workforce and equipments a vulnerable target for kidnapping and sabotage -Granting Iran invaluable leverage against the west.
• Saudi Arabia, world's largest oil producer (8.2 million bpd), could be a potential destabilizing force if the Shiite establishment continues to marginalize and ignore Sunnis' demands.
• Turkey's recurrent incursion into Northern Iraq in the pursuit of the Kurdish workers party (PKK) elements and PKK assiduous attacks on the northern oil pipelines are a major threat to the country's sovereignty and unity. According to Gen. IIker Basbug, head of the Turkish army, "The presence of PKK bases in northern Iraq will certainly affect Turkey and Iraq's relationship, and will negatively influence relations between the U.S. and Turkey" (VOA News).
• Kirkuk's unsettled dispute (Northern oil hub) is a timed bomb that could expeditiously ignite a second civil war given Kirkuk's ethnic diversity, e.g., Arabs, Kurds, Turkmens, etc...
• U.S. planned hastily withdrawal in the absence of a legitimate and strong government it's a strategic misjudgment with a dangerous and costly repercussions - Foreign investors may need to beef up their security personnel to countervail U.S. troops withdrawal.

Hence, foreign investors' only cogent avenue, to overcome the aforementioned challenges, is to foster a sustainable political capital via a genuine and acculturated corporate social responsibility, and as Abraham Lincoln once said "Public sentiment is everything. With public sentiment, nothing can fail. Without it, nothing can succeed"

Case in point:

According to the terms of certain service contracts, in the absence of the hydrocarbon law, the international oil companies (IOCs) will receive $1.90 for each additional barrel produced, which is then charged with 35 percent tax and 25 percent cut for the state oil partner. Moreover, IOCs must factor in the financial impacts of the oil sector current constraints, for instance:

• Major Oil fields require billions of dollars for rehabilitation and development as result of years of sanctions and wars.
• Current oil workforce is in desperate need of training and know-how.
• The Iraqi federation of Oil Union could be extremely problematic if both the IOCs and the government continue to ignore the Union's demands.
• Oil facilities protection services (FPS) lacks adequate training, equipments, and, most importantly, loyalty.
• Contractually, ministry of oil can ask IOCs to reduce production to either meet Global markets demands (OPEC quotas, for instance) or to avoid systematic bottleneck as result of inadequate infrastructure.

Consequently, in order for IOCs to minimize their capital exposure while safeguarding their bottom line, IOCs should ask the following before committing billions of dollars for years to come:

a) Does the IOC's leadership embody Transcultural competence and strategic insight?

b) What's the IOC’s risk tolerance and price tag it's willing to pay to mitigate the impact of unforeseen externalities associated with the post-conflict environment.

In sum, given international investors and oil companies experiences in high-risk environments, understanding and anticipating policy risks in a politically volatile environment such as Iraq could be a valuable source of a competitive advantage. furthermore, IOCs and investors who adopt business model which entails balanced operational efficiency with sustainable political capital (efficient leverage of trusted relationships) are most likely to survive Iraq's political quagmire for years to come. Conversely, operating impetuously with no apparent understanding of the country's political landmines and nuances could be a costly and dangerous venture with detrimental effects on both humans and capital, and as the renowned American businessman Malcolm Forbes once said "The best vision is insight".

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

Tariq Abdell, founder & chairman, Mesopotamia Insight and Iraq analyst

Can be contacted at: [email protected]

or

Follow him on twitter: www.twitter.com/atariqx