Custom Search

Iraq signed final contracts with Angolan state oil company Sonangol on Tuesday to develop the Qayara and Najmah oilfields.

Qayara has reserves of some 800 million barrels and Najmah 900 million. Both are in the violent Nineveh province in Iraq's north, where Sunni Islamist insurgents like al Qaeda remain active almost seven years after the U.S. invasion.

The deals were awarded in Iraq's second bidding round for oil contracts, held last month in Baghdad.

The Sonangol deals are two of a series that Iraq has started to sign which could vault its oil output capacity to 12 million barrels per day in seven years, a level rivalling top producer Saudi Arabia, compared with 2.5 million bpd now.

That would give the country the billions of dollars it needs to rebuild after decades of war and sanctions, and help it to emerge from the violence triggered by the 2003 invasion.

Sonangol clinched the deals with an offer of a $6 a barrel remuneration fee and a plateau production target of 110,000 barrels per day (bpd) for Najmah, and a fee of $5 a barrel and output target of 120,000 bpd for Qayara.

The fees are among the highest paid to any of the oil firms that won one of the 20-year oilfield service contracts tendered last year, reflecting the risks and relatively low quality of oil at the two sites.

The firm had initially proposed a remuneration fee of $8.50 a barrel for Najmah and $12.50 for Qayara, but later agreed to the Oil Ministry's lower offer

Sonangol has said it will invest $2 billion in Qayara, and that several firms have shown an interest in forging joint exploration partnerships with it.

Angola emerged from an almost three-decade long civil war in 2002 to rival Nigeria as Africa's top oil producer.

US super major ExxonMobil and its Anglo-Dutch peer Shell, today signed a final contract for the development of Iraq's 8.7-billion-barrel West Qurna Phase One oilfield

The partners, who will work with an Iraqi state-run oil company, won the right to develop the super giant field in negotiations with the Oil Ministry last year following Iraq's June oilfield auction, the first since the 2003 US invasion, a Reuters report said.

ExxonMobil's regional vice president Richard Vierbuchen and Shell Gas & Power vice president Mounir Bouaziz signed the deal in the presence of Iraqi Oil Minister Hussain Shahristani in Baghdad.

The companies plan to increase output from the oilfield to 2.325 million barrels per day from its current level of 279,000 bpd.

It is one of several deals following two oil contract auctions last year that have the potential to take Iraqi capacity to 12 million bpd - rivaling top producers Saudi Arabia and Russia - from 2.5 million bpd now.

It may be the start of the biggest oil job in the world. Each day, 20 workers from BP and China National Petroleum Corp. (CNPC) buckle down to the task of prepping the Rumaila oil field in southern Iraq for rapid development. In industry lingo, Rumaila is a "supergiant"—a 50-mile-long deposit of sweet crude with estimated reserves of 16 billion barrels, whose output may someday rank second only to Saudi Arabia's vast Ghawar field. The Saudis, though, have carefully managed their oil assets for decades. In contrast, Rumaila, a lightly inhabited expanse of date groves and Bedouin encampments, has not had a proper upgrade since the 1970s. The Iraqis contracted with BP and CNPC last year (BP) to juice Rumaila's production from 1.06 million barrels a day to 2.85 million, all in seven years. No one has ever tried such a ramp-up at a field as huge as this one. Putting Rumaila back in full working order will take tens of thousands of workers, 1,000 new wells, and billions in investment.

BP is the largest partner in the venture, but only by a dipstick: It has a 38% stake, while the Chinese hold 37% (the rest is owned by an Iraqi company). The media focus has been on BP's decision to take up the Rumaila challenge for a low fee of only $2 for every barrel the venture produces. But the more important story could be China's role. "CNPC's involvement brings together the country with the most rapid growth in energy demand in history with the country that plans the greatest buildup of production capacity ever," says Alex Munton, an Iraq specialist at Edinburgh-based oil consultants Wood Mackenzie.

China has moved fast. In a little over a year, CNPC, China's main oil producer with revenues of more than $188 billion and a 1.5 million-worker payroll, has won large stakes in three Iraqi oil fields. The total production target for those fields is around 3.5 million barrels per day—close to China's domestic output.

In two of the ventures, China is the controlling partner. Over two decades or so, CNPC may spend some $20 billion on the fields, the most of any oil company in Iraq since Saddam Hussein fell. For China's oil industry, "Iraq is a game-changer," says Wenrang Jiang, an authority on the country's energy thirst who teaches at Canada's University of Alberta.
TIED TO THE LEADERSHIP

Carved out of China's oil ministry in 1988, state-controlled CNPC managed the oil and gas fields of north China before expanding to Peru, Sudan (where it has been criticized for working with the regime), and Venezuela. It has a reputation as insular and bureaucratic, especially compared with China National Offshore Oil Corp. CNOOC, founded in 1982 with a mandate to drill in offshore locales with foreign companies, has executives who speak English as a matter of course and travel widely. "CNPC always viewed itself as a direct successor of the oil ministry," says Victor GAO, CNOOC's former general counsel and currently a private equity investor. "So it's more orthodox; it considers itself a government entity."

Jiang Jiemin, 54, who has run CNPC since 2004, is a man of few words. In Iraq, though, Jiang and his team played their hand well. Months before the Rumaila deal, CNPC got the rights to develop Ahdab, a medium-sized field. That means CNPC is one of a few outside oil companies with operating experience in Iraq. Jiang has also forged a good relationship with BP CEO Tony Hayward, who sees CNPC as the gateway to China. BP "wants to have them as a partner wherever they can," says Bob Maguire, head of oil and gas investment banking at Perella Weinberg Partners in London. "They are the largest NOC [national oil company] in Hayward's mind." CNPC declined to comment for this story.

BP and CNPC bring different strengths. BP has been studying the field by agreement with the Iraqis and already has worked out a development plan. And the Chinese? Beijing-based CNPC has access to affordable credit from China Development Bank and China Exim Bank. In an industry where supplies are tight, "they have spare capacity, rigs, and other equipment available that you could mobilize and put on the ground," says Andy McAuslan, BP's Iraq commercial director. (He adds that contracts for oil services in Iraq will be awarded competitively.) Fast deployment in Iraq is the key. According to their contract, BP and CNPC won't start getting paid until they have boosted production 10%. The Chinese know how to manage thousands of workers in distant, often hostile locales such as Central Asia and the Sudan. It also knows how to develop onshore fields: In China, it pumps the equivalent of 3.3 million barrels a day.

Besides the role in drilling wells and pumping oil, Chinese companies are good candidates to build the oil terminals, refineries, and pipelines Iraq will need to get its crude to global markets.

China is the low-cost provider in the industry. "As a general rule of thumb, Chinese management and labor costs are about one-third if not one-fourth of Western costs," says GAO, the ex-CNOOC executive.

Nine colleges and universities focus exclusively on oil studies in China: "The Chinese treat the industry as a life-and-death issue," says GAO. The Western oil industry's workforce is aging rapidly. "Analysts always mention that the oil majors face personnel shortages," says Xu Xiaojie, an independent oil and gas adviser in Beijing. "In China we have a surplus."

The Iraq ventures still face formidable obstacles—sectarian strife, corruption, and government instability, among them. The Iraqis also may not welcome large numbers of Chinese to their fields. "Yes, bringing in low-cost engineers is China's advantage," says Trevor Houser, a partner at the Rhodium Group, a New York-based research firm that studies India and China. "But that has created tensions [elsewhere]. Look at Zambia, where an election was pretty much fought over China."

China and CNPC, though, have no choice. The Chinese are hungry for crude and for a position among the worlds top oil companies. Iraq may prove the best place to satisfy both desires.

The Ministry of Finance in Iraq signed a bilateral agreement with Denmark to write- off the debt owed by Iraq by one 100%, and affirmed that States which will reduce debts on Iraq would have a priority in the implementation of investment projects in it.

The Finance Minister Bayan Jabr said in a statement issued by the ministry that Iraq was able to reduce 120 $ billion of the debt owed in its trust, amounting of to 140 billion dollars, adding that this reduction comes as a continuation of the process of debt cancellation promised by the creditor nations of Iraq.

Al-Zubaidi , said the signing of the agreement with Denmark will reduce the remaining debt amounting about 20% after he signed with them earlier the convention for reduction of 80% of the debt of 55 $ million, noting that Iraq has begun negotiating States extinguished 80 % of the debt to extinguish the remaining amount . The minister pointed out that Iraq will give priority to investment companies of the States which will reduce debts on Iraq, 100 % for work in Iraq, noting in this regard that Iraq had managed to write- off debt for some foreign countries like the United States and Cyprus and Malta and the United Arab Emirates, and reduced its debt by 80% for a number of countries, including Russia, Germany and France. "

Al-Zubaidi pointed out that debts owed by Iraq to Saudi Arabia and Kuwait, which he refused to reveal their size has not been resolved, stressing that Iraq is seeking to sign a number of agreements to reduce debts, with some Arab countries like Egypt and Morocco. For his part, said Danish Ambassador Michael winder, "Denmark is continuing to support Iraq in all fields of economic, agricultural and industrial as well as support for human rights situation and provide support to Iraqi universities, pointing out that Danish companies looking out for work in Iraq as soon as possible.

The head of Anbar's provincial council on Saturday said that it has received a budget of nearly $1.153 U.S. dollars for next year, adding that it is not enough to finance projects in the province.

"The council will inform the ministries of finance and planning of its objection to the lack of financial allocations," Jassem al-Halbousy told Aswat al-Iraq news agency.

Halbousy called on concerned authorities to keep the area factor, not only the population of Anbar, in mind when considering a budget for the province.

Ramadi, the capital city of Anbar province, lies 110 km west of Baghdad.

Anbar is the largest province in Iraq geographically. Encompassing much of the country's western territory, it shares borders with Syria, Jordan and Saudi Arabia. Anbar is overwhelmingly Sunni Muslim Arab. Anbar's main cities are Falluja, the capital Ramadi, Haditha, Hit, Aana and Rutba.

The name of the province translates "granaries," as this region was the primary entrepôt on the western borders of Lakhmid Kingdom.

The province was known as Dulaim until 1962 when it was changed to Ramadi. In 1976 it was renamed Anbar.

Zain, the leading mobile telecommunication operator in the Middle East and Africa with a commercial presence in 24 countries, is pleased to announce its consolidated financial results for the nine months ending September 30, 2009. The results showed significant growth in many key indicators when compared to the corresponding nine months period in 2008.

For the first nine months of 2009, Zain Group recorded impressive consolidated revenues of KD1.78bn ($6.169bn), an increase of 24% compared to the first nine months of 2008. The company's consolidated EBITDA increased by 37% for the same period to reach KD757.3m ($2.624bn) with EBIT rising 33% to reach KD454.9m ($1.576bn). Consolidated Net Income reached KD195.7m ($677.1m), a decrease of 17%. The earnings per share for the nine months period stood at KD0.051 fils ($0.18).

Year-on-year customer growth on the two continents across which Zain operates was 28%, whereby the company is serving 71.8m managed active customers as of September 30, 2009. Zain Group has added over 15m new active customers relative to the same time last year while the Group undertook a companywide exercise to increase its focus on the acquisition and retention of high value customers and build on the delivery of a brand experience of a Wonderful World to align customers' lifetime value with better customer service and experience.

Chief Executive Officer of Zain, Dr Saad Al Barrak commenting on the nine months results, said:

"The Company continues to post impressive growth in several key operational and financial indicators as is evident by the increases of our customer numbers, consolidated revenues, EBITDA, EBITDA margin and EBIT. This is a result of our vast and capital intensive network expansion and marketing programs that are attracting new customers and further enhancing our young award winning Zain brand."

Dr Al Barrak was keen to comment on the "exceptional EBITDA and EBIT performance that soared by 37% and 33% respectively while revenues increased 24% over the last 12 months, an indication of the effectiveness of the company's focus on customer value and cost optimization," he said.

Earlier in the year, the company introduced 'Drive11', an initiative that sees Zain focusing on customer-facing services and commercial activities to enhance customer experience, while centralizing and outsourcing certain back office/non-core functions to strategic partners. This program will maximize economies of scale and scope and realize significant efficiencies, allowing Zain to provide communication services within an optimum cost structure thereby enhancing all stakeholder value.

"'Drive11' was designed to improve Zain's operating margin and provide the company with the necessary thrust to capture the future growth potential of the markets in which we operate. Already we have seen the EBITDA margin increase by 5 percentage points to reach 43%, a very appealing and healthy figure that puts Zain among the top companies in its sector," said Dr Al Barrak.

Dr Al Barrak also noted however, that, "the global economic crisis, unfavorable foreign currency fluctuations, particularly in many of our African operations coupled with reduced interest income and investment income plus higher financing costs, have had an significant impact on the company's overall profit. Adding to these challenges are the associated 'start-up' capital and operational expenditures in two large and promising operations that were launched in the last 12 months, namely the Kingdom of Saudi Arabia and Ghana, as well increased fixed costs charges as a result of network expansion in many of our markets".

During this nine months period, foreign currency fluctuations have negatively impacted net profit by $130m, a 125% increase relative to the same period for 2008. "With improving currency stability in many of our African operations, we expect to attain better results in 2010 and beyond," added Dr Al Barrak. "Compared to the same period last year, interest income from investments as well as investment income for the period dropped 80% to reach only $19m".

Furthermore, the vast and capital intensive expansion of Zain's network in key growth driving several operations, namely Nigeria, Zambia, Sudan, and Iraq, has resulted in increases in fixed costs from depreciation and amortization, with the company being further burdened by increases in financing costs.

Dr Al Barrak further added, "The nature of the nine months 2009 net income result is all the more impressive when one takes into account that during this period in 2008 we had an extraordinary gain of KWD26.6m ($99m) from the successful Zambia IPO. This is an indication that operational net income growth is better than indicated for this period."

In recent years, Zain has invested heavily in network expansion and service offerings such as 'One Network" on both continents, resulting in year-on-year robust customer acquisition of 28%, a strategy on which Dr Al Barrak was keen to stress. "We have seen impressive customer growth in several of our key revenue generating operations, and these huge network investments will reap more financial rewards in the very near future," he concluded.

New Arab Advisors Group's research revealed that 338 local FM radio stations broadcast in 18 Arab countries, by July 2009. The regional landscape varies widely: Algeria and the UAE have the highest number of local government-owned FM radio stations while Palestine, Iraq and Lebanon have the highest number of private local radio stations.

The research revealed 8 regional radio stations that broadcast on FM frequencies in multiple countries. These regional stations raise the total of FM radio stations to 346 FM radio stations in the 18 covered countries.

Liberalization in several Arab countries was a key factor for the growth in private FM radio stations. Out of the 18 countries, five do not allow private radio stations, with Libya and Oman being the latest to liberalize their markets in 2006. In addition to the liberalization of the sector, the need to broadcast in multiple languages to cater for expatriates enhances the number of FM radio stations even in countries where private FM radio stations do not exist. The UAE is a clear example of this as it hosts FM radio stations broadcasting in Arabic, English, Malayalam, Hindi, Urdu and Filipino.

A new report, 'FM Radio in the Arab World 2009' was released to the Arab Advisors Group's Media Strategic Research Service subscribers on October 22, 2009. The 81-page report, which has 42 detailed exhibits, provides a detailed analysis of the FM Radio regulations and landscape in the 18 Arab countries of Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, UAE and Yemen. The report includes analysis and profiles of the main FM radio stations (private and state owned) in the region.

"State-owned radio stations in the Arab World still outnumber private radio stations, although the number of private ones is growing and approaching the number of state-owned radio stations," Mrs. Faten Bader, Arab Advisors senior research analyst wrote in the report.

"State-owned radio stations reached 176 by July 2009, up from 157 stations by February 2008, a growth rate of 12.10%. Private radio stations increased from 150 stations by February 2008 to 162 by July 2009, translating into a growth rate of 8%," she added.

"Algeria ranks first with 50 state-owned radio stations (28.41% of the total number of state-owned radio stations). The UAE follows with 24 state-owned radio stations. On the opposite side, Iraq, Lebanon and Palestine lead all Arab countries with the number of private radio stations," Mrs. Bader added.

The Arab Advisors Group's team of analysts in the region has produced over 1,700 reports on the Arab World's communications and media markets.