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Aberdeen City Council has announced a new initiative to encourage North-east companies to explore business opportunities in Iraq.

Upper Quartile, an Edinburgh-based economic development consultancy, will manage the programme, which will target the oil and gas sector, academic institutions and other contractors.

Seminars will be held over the coming months to inform firms of the economic, political and security issues they need to consider before developing a presence in Iraq. Companies will be invited to attend meetings with Upper Quartile’s experts and get the chance to meet key officials from Scotland and Iraq.

Iraq produces two million barrels of oil per day and aims to increase to 12 million within seven years to propel them to second place among the world’s oil-producing nations. Capital spending in oil-field services in 2011 is estimated to be five times that of Saudi Arabia, Bahrain, the United Arab Emirates, Oman, Qatar and Kuwait combined.

In 2010, foreign firms and investors reported over $42 billion in investments, service contracts and commercial activities across Iraq – up almost 50% on 2009. The top sector was new housing, which accounted for 33% of all foreign commercial activity in 2010, followed by transportation infrastructure, electricity and industry, and oil and gas production. Contracts on offer are expected to push the oil services market to $8 billion by 2014.

Aberdeen City Council Enterprise, Planning and Infrastructure director Gordon McIntosh said: “Aberdeen-based companies have a long history of innovation in the oil and gas business and of developing oil and gas production abroad. Their unrivalled experience, therefore, coupled with committed investment can play an important part in rebuilding an economy, whilst also offering profitable business opportunities in the medium and long term.”

Gavin Jones, co-founder and managing director of Upper Quartile, said: “Iraq possesses vast hydrocarbon reserves, but it lacks the infrastructure and expertise to support large-scale commercial extraction and export. It is therefore an ideal time for established Scottish companies to use their skills to help unlock the country’s enormous potential.”

Iraq’s business marketplace remains in post-conflict phase, characterised by few entrants and risk aversion, but companies which can build relationships with senior Iraqis can expect significant rewards.

Iraq has 16 oil sector companies. Oil exports account for 96% of the country’s economy and in the first seven months of this year Iraq earned more than $48bn in revenue.

Production is set to increase substantially over the next few years. In the short term, however, infrastructure is unable to support this growth and Iraq needs to invest in its export terminals, ports, ageing pipelines, storage capacity, and water and power supplies.

For further information on Aberdeen City Council’s new initiative visit http://www.aberdeencity.gov.uk/iti

Minister Ali al-Dabbagh, Iraqi Government Spokesman, was interviewed by Padraig O'Hannelly for Iraq Business News at last week's Iraq Mining 2011 conference in London. The first part of the interview can be found here.

In this second part of the interview, Dr al-Dabbagh discusses the Hydrocarbon Law, the valuation of the Iraqi dinar, foreign investment in Iraq, and the future of his country:

Iraq Business News: I'd like to ask you about the hydrocarbon law that is currently with the parliament. The Kurdish side has disagreed with the current wording of that. Do you see a possible resolution that would eventually see Kurdish oil contracts being recognised by Baghdad?

Dr Ali al-Dabbagh: It is too early to say that recognition could be achieved for the oil contracts in Kurdistan. First of all, the oil law is going to be subjected to, I think, long debate, lengthy debate in the parliament, because still it is controversial, but in the end we do need that hydrocarbon law – we can't continue without it. We would like to advise that the structure of the parliament is not as in 2007/2008, so by voting a simple majority could be achieved, so we'd like to ask all of the figures in the parliament to look after the common interest, not to their interests, so the Kurdistan contracts need to comply fully to the oil law.

IBN: We hear a lot from foreign companies about difficulties and delays getting investment licences, also difficulties bringing expats into the country to work – what is your policy with regard to that, and what do you plan to do to ease the way for foreign companies coming into Iraq?

The contract for the giant Shell/Mitsubishi project to capture gas from Iraq's southern oilfields has taken a step closer to completion.

Government Spokesman Dr Ali al-Dabbagh told Iraq Business News that Shell has agreed to the changes required by the oil ministry, and that the contract is now awaiting approval by Iraq's Cabinet.

The project will use natural gas that is currently flared off from oil wells to produce electricity.

If you're a regular reader of Iraq Business News, you'll know all about the huge opportunities in sectors such as oil and gas, mining, housing, and electricity.

You'll also be aware of the sorts of challenges facing the country.

But if you could change just three things about Iraq, what would they be? What three pieces of advice would you give to improve Iraq?

Please let us know in the Comments section below.

And remember, if you're looking for advice on doing business in Iraq, please feel free to contact Gavin Jones at Upper Quartile and Adrian Shaw at AAIB.

Turkish entrepreneurs have been invited to bid in a 6,000 megawatt electricity grid tender with a total value of $7 billion in northern Iraq, the Habertürk daily has reported.

The tender for the construction of the grid is due to be open for bids on Thursday.

According to the Turkish daily, the invitation to participate in the tender came from Ahmed al-Mufti, an adviser to the prime minister of Iraq’s northern region, during a meeting on energy organized by the Center for Strategic Economic Social Research (SETAM) in Istanbul.

Energy and Natural Resources Minister Taner Y‎ld‎z also participated in the meeting and with both al-Mufti and Ashti Hawrami, the Kurdish regional administration’s minister for natural resources.

Iraq has been experiencing problems in electricity power supply over the past few years. The Iraqi government expects to overcome this problem with new energy investments.Habertürk quoted al-Mufti as saying: “Turkey and Iraq are two countries that are currently working in close cooperation. … We have gas resources and Turkey has strong investors with improved technology capacity. We could both benefit in new joint investments.” Referring to the pending tender, Mufti said Turkish investors had greater advantages than their rivals in the region.

More than two-thirds of the 2,000 foreign companies in the northern Iraq are Turkish and the number of Turkish employees in the region recently reached 20,000.

(Source: Today's Zaman)

A technical committee at the Iraqi Electricity Ministry is studying the offers by international companies to set up power grids in seven Iraqi provinces, according to AKnews.

A Ministry spokesman, Musab al-Mudarres, told the agency that the Ministry has began studying eight offers from international companies which hope to establish power grids in Babel, Kirkuk, Nineveh, Anbar, Najaf, Wasit, and Basra provinces.

Currently Iraq owns only two power grids, the Rusafa and Karkh.

The bidding companies include among others the U.S. General Electric (GE), French Alstom and Marseille, and Malaysian Ridgestone Discovery.

The installation of facilities should take only 24 months,’ Ministry spokesman added.

(Source: AKnews)

Following his address to the Iraq Mining 2011 conference in London, the Chairman of Iraq's National Investment Commission, Dr Sami al-Araji, was interviewed by Padraig O'Hannelly for Iraq Business News:

Iraq Business News: Dr al-Araji, in your speech you mentioned the visa problems that Iraqis sometimes have entering the UK; what some businesses are also saying is that they have difficulty getting expat workers into Iraq … what is your opinion on this matter?

Dr Sami al-Araji: We have unemployment – officially about 15%, unofficially I don't know – they need to work, and it is unacceptable while we have unemployed people sitting around that we import people from the outside.

But it is fully understood, and fully understandable, that we can't source all the talent we need from engineers in Iraq. Nobody would ask you, for example, why did you bring in this or that. In the beginning [of an investment], you put forward your action program, you say I need engineers and so on, and these I will bring with me because they aren't available. We have a system with the Ministry of Social Affairs, where you say we need 10,000 workers, and 5,000 you will have to bring in for the following reasons, the other 5,000 we will get locally, [and say to the Ministry] “please get us the 5,000”.

And that's exactly what we are working on. Nobody is saying “oh, no, there can be no foreign workers, or if there are foreign workers we have to sit down and [verify] this or that”, the only authority is to the Ministry of Social Affairs, and they are very positive and cooperative and they try very much to help.

But what is happening is that some of the people have mismanaged this, and that's why there has been a problem.

IBN: Regarding foreign companies' perception of problems like corruption, and the Transparency International index on corruption, do you have any specific targets or plans to address that problem?

SA: We know there is some corruption, but I think very honestly it is magnified by the press and by the different committees around the world. We have made a lot of progress in fighting corruption and improving transparency, that is number one.

The following article was published by Reidar Visser, an historian of Iraq educated at the University of Oxford and currently based at the Norwegian Institute of International Affairs. It is reproduced here with the author’s permission. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

A recent statement by the governorate council of Wasit had an extraordinary tone: The council “rejected” the appointment of Vice Premier Hussein al-Shahristani as acting electricity minister (after Raad al-Ani “resigned” subsequent to being forced out), alleging that Shahristani had created problems for Wasit in the past through his opposition to several electricity schemes and his management of the disputed Ahdab oilfield, where a Chinese company is involved. The conflict between the local council and the oil ministry (previously headed by Shahristani) has been festering since 2009 and includes serious accusations by local politicians for example to the effect that Chinese prisoners are doing underpaid work at the oilfield.

The statement would seem like an unprecedented attempt by a provincial council to interfere in the workings of the central government. But it is very real, and reflects intense intra-Shiite disagreement ranging from the very personal to key political issues like the question of the basic structure of the Iraqi state. At the time the Wasit federalism project first emerged around June 2010, it was reportedly supported by ISCI and resisted by Sadrists and State of Law, with the rest of the council (the Shahristani bloc, the Iraqi constitutional party, Iraqiyya and independents) uncommitted. Unfortunately, the few existing recent press reports on the subject are somewhat ambiguous in that they identify a key pro-federal leader as “Mahdi Husayn al-Musawi, deputy speaker of the Wasit governorate assembly”. This seems to be a mix-up of names since the governor is Mahdi Hussein al-Zubaydi (State of Law) whereas the deputy speaker is Mahdi Ali Jabbar al-Musawi (same bloc but previously the Tanzim al-Iraq faction and with a track record of conflict with Shahristani over Ahdab in the past). In any case, these developments clearly suggest that disagreement over federalism is creating challenges for Maliki as well as for Shahristani in Wasit. It is noteworthy that also in Wasit, ISCI is apparently playing a lead role in forcing the rest of the Shiites towards a remorseless approach in the de-Baathification question, in April this year even challenging a decision by the de-Baathification commission to reinstate former Baathists in the education sector.

Iraqi's Ministry of Electricity signed a contract on Saturday with French conglomerate Alstom to build a power generation plant in Nineveh province at a cost of approximately $94 million, according to AKnews.

The Ministry said the plant will begin generating by the end of 2012.

Reuters reportst that the deal requires Iraq to pay 10 percent of the cost to Alstom in advance, and 40 percent a year after the start of construction. There were no details on when the rest of the cost would be paid.

(Sources: AKnews, Reuters)

Hussein al-Shahristani (pictured), Iraq's Deputy Prime Minister, will be summoned to parliament after the Eid al-Fitr holiday to answer questions about two fraudulent ministry of electricity contracts worth more than $1.7 billion, according to AKnews.

A member of the parliamentary commission set up to investigate the case, Uday Awwad, told the agency that MPs signatures have been collected to summon Shahristani, adding that the commission is continuing to accumulate documents and files on the case.

Shahristani was assigned interim Electricity Minister last week, replacing former Minister Raad Shallal who stepped down under government pressure following the revelation of the fraud earlier this month.

The parliamentary Commission on Integrity has published documents purporting to implicate Shahristani and Prime Minister Nouri al-Maliki in approving the contracts, pointing at the same time to the signatures of other senior officials on the deal.

According to Mr Awwad, “Al-Shahristani addressed, through official letters, the Ministry of Electricity saying that he had researched the German and Canadian companies on the Internet and made sure that they were suitable."

Thye commission member questioned the depth of the Deputy Prime Minister’s research into the firms set to construct and equip power stations at a combined cost of $1.7 billion.

"How can the Iraqi government verify its contracts on the Internet?", he asked.

(Source: AKnews)