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Reuters reports that Iraq signed a $349 million contract with Greek power plant builder Metka, a subsidiary of the Mytilineos Group, on Wednesday.

The Shat-Al-Basra Power Plant Project will be a gas-fired, 1,250-MW power plant in southern Iraq.

It comprises 10 units of 125 MW each, which were purchased from General Electric in a contract signed in 2008.

Deputy Electricity Minister Salam Qazaz said the ministry plans to add 22,000 megawatts of production capacity across Iraq over the next three years, which would triple the current capacity.

(Sources: Reuters, Metka)

Lafarge plans to triple cement production over the next two to three years at its plant in Karbala, according to Bloomberg.

Eric le Blan, Acting Chief Executive Officer of Lafarge's partner MerchantBridge, told the agency that production at Karbala would increase from 576,000 tons of cement per year to at least 1.8 million tons by 2013 or 2014.

Demand for building materials in Iraq is expected to increase dramatically as the country develops its infrastructure and build 2.5 million homes by 2015. Annual demand for cement in Iraq is about 20 million tons at present and is expected to rise to at least 35 million tons by 2015, versus current domestic production of about 5 million tons a year.

The company expects to start breaking even in January.

MerchantBridge completed a $220 million deal with Lafarge in 2010, the world’s biggest cement company, under which they took over the Karbala plant on a 15-year lease from the government. Production at the time was about 300,000 tons.

MerchantBridge plans to pursue additional investments in Iraq next year, including in the electricity market, where multibillion dollar projects are under way to help resolve power shortages, le Blan said.

(Source: Bloomberg)

British companies need to move fast if they are to gain a foothold in Iraq and avoid losing out to their competitors.

This was the clear message given at the Middle East Association’s ‘Iraq: Untapped Opportunities’ conference held on 22nd November at the Dorchester Hotel, London.

Supported by the National Investment Commission of Iraq, UK Trade & Investment and Allurentis, the event was sponsored by Shell, Parsons Brinckerhoff, Petrofac and Mott MacDonald and attended by over 230 business and government representatives. A strong Iraqi delegation attended, led by HE Dr Hussein al-Shahristani, Iraqi Deputy Prime Minister for Energy and including HE Dr Khairallah Hassan Babiker, Minister of Trade; HE Mr Herish Muharam, Chairman of the Kurdistan Regional Board of Investment; and Dr Abbas Al Sa’adi, Adviser and General Director of Legal Directorate of the General Secretary of the Council of Ministers.

Opening the conference Middle East Association Director General Charles Hollis commented that Iraq is now entering a more stable phase, and opportunities for business are growing. “We need to replicate the UK success in the Kurdistan region throughout the whole of the country,” he said, adding that the Association is looking to organise a trade mission to Baghdad and Basra within the next twelve months.

In a keynote speech, HE Dr al-Shahristani urged British companies to participate in Iraq’s unprecedented reconstruction and development programme “for the benefit of all parties.” He underlined the Iraqi government’s commitment to creating a conducive environment for foreign investors through the generous benefits and incentives offered by Iraq’s investment law. Highlighting Iraq’s huge economic potential he noted that Iraq’s real growth rate has been more than 7% per annum over the last four years, and is expected to grow even faster over the next decade, with GNP in 2010 standing at $150 billion. Iraq is looking to invest $200 billion over the next six years in the oil and gas sector alone, with a need for new technology and modern management skills. Iraq’s goals “cannot be achieved without international companies” he said. He stressed that the opportunities are not limited to the energy sector, highlighting telecommunications, transport, housing, financial services and tourism as areas offering opportunities.

The United Nations Development Programme (UNDP) has announced that it is boosting its partnership with the Government of Iraq and the Iraqi people.

"We have tripled the number of our staff based in Iraq to 44 with further increases planned in the next year. Each and every one of them is committed to improving the lives of Iraqis through an enhanced partnership with the Government of Iraq and its people" said Ms. Amat Al Alim Alsoswa, Director of the Regional Bureau for Arab States of UNDP, during a meeting with the press in Baghdad.

The announcement to increase UNDP’s staff presence in Baghdad comes as UNDP is getting ready to undertake the first annual review jointly with the Government on its four-year country programme in Iraq which focusses on strengthening democratic governance, combating poverty, empowering women and youth, promoting environmental protection and supporting the revitalisation of Iraq's economy.

UNDP has worked to support the Government and people of Iraq for more than 35 years now. Since 2003, it has actively supported the transition towards reconciliation, peace and stability in the areas of democratic governance, poverty reduction, restoration of basic services such as water and electricity, crisis prevention and recovery, energy and environment, and the Global Fund to Fight HIV/AIDS, TB and Malaria.

Most recently, UNDP contributed to strengthening the democratic process in Iraq primarily through the 2010 national elections. With continued work on anti-corruption, rule of law, justice, human rights, public sector reform, disaster risk reduction, environment and climate change.

“I am proud of the progress Iraq has achieved in overcoming years of conflict and violence and getting onto the right development track." said Alsoswa.

(Source: UNDP)

Azzaman news agency reports that Iraq's Ministry of Electricity has struck a deal with Siemens for the construction of three electrical transformer stations.

The deal, said to be worth $76 million, is the latest in a series of contracts by the ministry to upgrade the national grid and increase the supply of electricity, which is currently less than half the total demand.

The three stations will all be in southern Iraq, and will take two years to complete.

Iraq imports electricity from both Iran and Turkey at a cost of hundreds of millions of dollars per year.

(Source: Azzaman)

AFP reports that the Iraqi cabinet has approved a $540 million contract for French firm Alstom to build a 182.4 megawatt gas power plant in central Iraq.

Ggovernment spokesman Ali al-Dabbagh said in a statement that the plant, which should be up and running 18 months after the signature of the contract, is to be built in Mansuriya in the Diyala province, about 50 kilometres (30 miles) northeast of the capital.

The cabinet chose Alstom over the Iranian company company Mabna "because the offer was more attractive and less expensive," he said.

Alstom has already been selected to refurbish a gas power plant in the central province of Najaf.

(Source: AFP)

The past week has seen two of the biggest oil stories in recent times in Iraq -- the approval by the Iraqi cabinet of the $17 billion project with Shell and Mitsubishi to capture gas from Iraq's main southern oilfields, and the confirmation that the KRG has signed an exploration agreement with the giant ExxonMobil.

The Shell contract has been very broadly welcomed, and it brings us closer to the day when Iraqi homes and businesses will have a reliable supply of electricity, powered by the gas that is currently flared off into the atmosphere.

Exxon's project, on the other hand, is more politically sensitive, and the full implications of it remain to seen.

But it is very clear that significant deals such as these in the energy sector will be required to push Iraq forward towards greater prosperity and stability. And as the UK's Ambassador Michael Aron said this week:

"A combination of stability, economic development and the creation of a competitive private sector offer huge opportunities for international and Iraqi business. And it puts Iraq right back at the centre of the global economy it left 20 years ago ...

"Ultimately, business will go where conditions are best."

Few would argue with that.

Will your business be part of the evolving Iraqi success story? If so, Upper Quartile and AAIB can help you. For more information please contact Gavin Jones or Adrian Shaw.

Reuters reports that Iraq's cabinet approved a $17 billion deal with Royal Dutch Shell and Mitsubishi on Tuesday to capture gas that is now being flared off in the oilfields around the southern oil hub of Basra.

The 25-year venture is expected to help Iraq make use of more than 700 million cubic feet per day of gas that is being burnt off at Rumaila, Zubair and West Qurna, government spokesman Ali al-Dabbagh said. "The value of the contract is $17 billion for 25 years," he added.

The deal establishes a new company called the Basra Gas Company, a joint venture of the South Gas Company and the consortium of Shell and Mitsubishi, and could open the door to the export of liquefied gas. The contract is one of the largest signed by Iraq.

Capturing flared gas is considered vital to ramping up power production in Iraq, where electricity demand is around double the supply.

Under the terms of the deal, which Iraq and the companies initialled in July, the government will hold 51 percent of the joint venture, with Shell at 44 percent, and Mitsubishi 5 percent.

Iraq loses an estimated 1 billion cubic feet per day of gas, mostly from southern fields. The Shell project may eventually handle up to 2 billion cubic feet of gas per day.

Iraqi officials have said the project could include building an LNG export facility with a maximum capacity of 600 million cubic feet of gas per day, so long as Iraq's own gas needs are satisfied first.

A summary of the official agreement obtained by Reuters after the initial signing in July lists a $4.4 billion LNG export unit, in addition to the $12.8 billion estimated cost of rehabilitating existing gas facilities and building new ones, but it does not say when the LNG plant might be built.

The Shell-Mitsubishi partnership expects an internal rate of return on the project of 15 percent on an initial investment of $6.98 billion, while SGC plans to put in $3.7 billion of public funds initially and fund the rest through gas sales.

(Sources: Reuters, Bloomberg, Dow Jones)

The Kurdistan-Iraq Oil and Gas Conference in Erbil heard confirmation that the Kurdistan Regional Government has signed an oil exploration contract with ExxonMobil, the world's largest oil company.

Ashti Hawrami, the minister for natural resources, told the conference that the KRG had signed a contract with ExxonMobil and that the federal government was kept informed throughout the negotiations.

He said, "This will make a dynamic change in the region and will lead to mergers and acquisitions." He said that Kurdistan had initially signed contracts with "small and beautiful" companies and was now working with "the giant and magnificent".

In answer to questions from the audience, Dr Hawrami said the ExxonMobil contract was signed on October 18 and involves six exploration areas. "This agreement is good news not just for us but for all Iraq. This is also good news for the industry. It adds more value in terms of expertise and investment," he said.

Dr Hawrami was speaking at the two-day conference which attracted hundreds of industry executives from around the world, including representatives from major oil companies not currently working in the region.

The conference was opened by Prime Minister Barham Salih on Sunday and was attended by Kamal Kirkuki, the Speaker of the Kurdistan Parliament, Selahattin Cimen, Turkey's deputy energy minister, and Britain's ambassador to Iraq Michael Aron.

The Iraqi Ports Administration announced today that a power generation vessel arrived at Khor al-Zubair port last week.

Aswat al-Iraq reports that the Turkish vessel will supply the national electrical grid with 110 megawatts of power.

This is the third electricity generation vessel to arrive in Basra province.

Two vessels are already working in Umm Qasr port supplying the network with 200 megawatts.

(Source: Aswat al-Iraq)