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The chairman of the Iraqi National Investment Commission (NIC) has announced the official launch of the Iraqi-U.S. Business Council in Baghdad, which will be an extension of the American Chamber of Commerce in Iraq.

The council will deal with the Iraqi private sector to encourage economic development, particularly in small- and medium-sized industries.

NIC Chairman Dr. Sami al-Araji met with U.S. Deputy Secretary of State Thomas Nides and his accompanying delegation to complete the meeting in Washington.

The Council will deal with the NIC to attract investors to enter different Iraqi economic fields.

Araji called for the support of U.S. financial institutions through granting facilities to the investors, particularly in the fields of housing, electricity and infrastructure.

"The United States is a best friend and partner for Iraq," Nides stated, calling on U.S. companies to grasp the chances in Iraq and cooperate with both  governmental and private sectors.

The head of the Iraqi-U.S. Business Council, Bruce Larsen, welcomed all contributions to the council.

The meeting was attended by U.S. Ambassador James Jeffrey, members of the embassy, and Iraqi-U.S. council members.

(Sources: Aswat al-Iraq, National Investment Commission)

The Karbala Investment Commission laid the cornerstone for four housing developments valued at a total of $850 million [1 trillion Iraqi dinars], and consisting of about 11.000 housing units, Media Director Raed al-Asali told Aswat al-Iraq:

• The first project will be carried out by a Chinese company to erect 1,300 housing units in Hur area, 5 km west of Karbala, at a cost of 70 million dollars;
• The second consists of 5,166 housing units to be built by a Turkish company, 10 km southwest of Karbala at a cost of 467 million dollars;
• The third will cover 3,828 housing units to be implemented by a Canadian company at a cost of 76 million dollars;
• The fourth project will cost 237 million dollars, include 1,300 housing units by a Turkish company, 2 km outside of the main city.

He added the infrastructure requirements, such as sewerage, water, communications, electricity, internal roads, hospitals, police stations, markets and malls, will be included in these projects.

(Source: Aswat al-Iraq)

Officials in the Ministry of Electricity are involved in the theft of millions of dollars of fuel intended for power stations, an MP from the ruling National Coalition told AKnews on Saturday.

Susan al-Saad said that the tankers used to transport fuel to power plants across the country regularly go missing, and that this would not be possible without official collusion.

"Many officials in the Ministry are involved in the theft. Which is sad because it adversely affects the performance of electrical provision, in addition to contributing to the phenomenon of widespread financial and administrative corruption in state institutions," she said.

"The evidence to prove the existence of such thefts in the Ministry of Electricity will be submitted to parliament soon in order to reduce this phenomenon and also punish those involved."

Iraq recently had to make an emergency agreement for Iran to ship an extra 1.5 million liters of fuel to keep its power stations running.

(Source: AKnews)

AKnews reports that the German energy firm MBH has landed a $625 million contract to build five 100-MW power plants in Nineveh province.

The Iraqi electricity ministry announced the deal on Wednesday, saying that the project is expected to be completed in 21 months.

The establishment of the plants is part of the government’s plan to plug national grid shortages – a central gripe in the nationwide wave of public protests earlier this year – which leave some provinces with just eight hours of national power per day.

According to AKnews, the Electricity Ministry spokesman Mosaab al-Muhandis said that the company will be paid in full one year after the completion of the project, while AFP reports that payment will begin one year after commissioning and will be spread over two years.

(Sources: AKnews, AFP)

Alstom Grid has been awarded a €80 million contract from Calik Energy [Calik Enerji], a leading Turkish energy company, for the supply of electrical transmission equipment to be installed in two power plants being built in Iraq by Calik Energy. This contract is considered the largest one to date for Alstom Grid in Iraq.

The contract, which includes the supply of GIS substations and power transformers, has been signed within the framework of the Ministry of Electricity’s “Mega Deal ” project to add more than 10,000 MW of power generation capacity in the country. The natural gas/ fuel oil power plants are critical to meeting Iraq’s growing demand for energy during the period of reconstruction and rebuilding.

Upon completion, the substations and related equipments supplied by Alstom Grid to transmit electricity from the Al-Khairat and Nainawa [Ninewa, Ninawa] gas-fired power plants will contribute to develop the region by transmitting an additional 2000 MW of new generation capacity through the grid. Project commissioning is scheduled for June 2012 with a second phase planned in October 2012.

Patrick Kron, Chairman and CEO of Alstom, said:

“Iraq is one of the most dynamic countries in the region with major construction plans in infrastructure, oil & gas and utilities. Alstom is proud to support Iraq’s economic development and intends to enhance its strategic partnerships, by bringing expertise close to the customer. This prestigious project demonstrates Alstom’s ability to respond to ever-greater needs with customer-valued solutions."

Iraq has signed a $1.2 billion contract with Canada's Capgent to build 10 power stations with a total capacity of 1,000 megawatts in a bid to meet local demand, Reuters reports.

A ministry spokesman told AFP that the plants were to be constructed within 12 months in the provinces of Anbar, western Iraq, and in Salaheddin in the centre of the country. AFP puts the value of the contract at $1.66 billion.

Each station has a capacity of 100 MW and will be installed by the Canadian Alliance for Power Generation Equipment (Capgent) around Iraq over 12 months, the country's Electricity Ministry said in a statement.

The private Canadian thermal and diesel power plant construction company has electricity projects around the world, including in Kenya, Nepal, Angola and Mexico.

Iraq will have to repay the cost of the contract to Capgent once the power stations come into service and the total amount should be paid within two years, the statement said.

In January Iraq awarded a $219 million contract to South Korea's Hyundai Engineering & Construction to install four gas turbines in Baghdad with a total generating capacity of 500 MW.

(Sources: Reuters, AFP)

Iraq signed a $365 million agreement to install a pipeline network to import natural gas from Iran for power stations in the country, according to reports from Bloomberg and Iran Independent News Service.

The pipelines will eventually supply 25 million cubic meters of Iranian natural gas a day to the Sadr, al-Quds and South Baghdad power stations in the Iraqi capital, Mosaab Serri, a spokesman for the Iraqi Ministry of Electricity, told Bloomberg by telephone. The agreement with Iran, which holds the world’s second-largest gas reserves, requires the approval of the Iraqi Council of Ministers and Parliament.

The network of 48-inch pipelines will run for 130 km, and will pass the Mansouriya gas field, which is due to supply gas to the two power plants instead of Iran starting 2016, Serri said in a statement on May 22. Kuwait Energy Co., Turkiye Petrolleri AO (TPAO) and Korea Gas (Kogas) secured rights to develop Mansouriya.

Iraq and Iran have also reached an initial agreement to install another pipeline network from the Iranian region of Abadan to Basra in southern Iraq where it will feed a planned 1,250-megawatt power station, Serri said.

(Sources: Bloomberg, Iran Independent News Service)

Levels of violence are rising in Iraq. While some commentators in the press are referring to the increase as a spike, regular readers of Iraq Business News will understand that the rise has actually been very gradual - but consistent - with the number of attacks building up all the way from the beginning of the year. Last week AKE raised the risk rating for the country on Global Intake amid the slowly deteriorating situation and while it is our opinion that Iraq remains a major business opportunity, companies nonetheless need to emphasise the health, safety and security elements of their projects so as to minimise the risk of harm to their staff and assets.

Blame

Groups have not claimed responsibility for the latest string of violence but AKE believes that there is more than one organisation involved. Three of the attacks, including one in Basrah province, involved well planned and co-ordinated attacks using suicide bombers. This is a hallmark of radical Sunni groups such as the Islamic State of Iraq, while the targeting of the government and security forces is also typical of the group. Al-Qaeda affiliated organisations still have intentions of creating their own religious state in the country. While they have been critically weakened over the past four years they remain unwilling to compromise or negotiate with what they see as a corrupt, foreign-backed and apostate government. At the same time, recent attacks in the capital have taken place in areas normally associated with Shi'ah groups, while the prevalence of rocket and mortar attacks also suggests their involvement. Threat groups evidently abound on both sides of the sectarian divide.

Potential Targets

Some of the latest attacks have specifically targeted the places where individuals are supposed to be protected. Military bases, police stations and government compounds have all been targeted. Even normally well-guarded districts such as Jadriyah in Baghdad have been hit. While the Green Zone has not recently been attacked, it may be next on the target list if militant groups want to make an impact on the foreign presence in the country. While it remains well defended against infiltration it is nonetheless still vulnerable to rocket and mortar attacks.

Analysis

There are several possible reasons why conditions have worsened over recent weeks. As mentioned, conditions have been deteriorating gradually since the beginning of the year. Many are frustrated with the government's inability to provide electricity and jobs. Amid the 'Arab Spring' elsewhere in the region, Iraq too has suffered its own unrest, and some of the more radicalised elements of the frustrated population may be turning to militancy to express their dissatisfaction with the government.

The next weekly security update from AKE will show that conditions worsened once again in Iraq last week

The rise in attacks specifically against foreign interests is likely due to a different trend. The US is coming under increasing pressure to withdraw its military from the country by the end of the year. Amid speculation over the possibility of an extension of the Status Of Forces Agreement it could be that radical groups are attempting to send a strong signal to Washington that American forces are not welcome.

Advice

Foreign organisations looking to do business in the country should not be alarmed by what has been a very slow evolving trend in deteriorating security this year. However, safety needs to be treated as paramount when planning trips, meetings, accommodation and projects. Crisis management measures should also be taken into consideration. If you would like any assistance in planning an upcoming visit or you would like any advice in reviewing your current security measures please contact the AKE Iraq office at [email protected]

John Drake is a senior risk consultant with AKE, a British private security firm working in Iraq from before 2003. Further details on the company can be found here while AKE’s intelligence and political risk website Global IntAKE can be accessed here.

You can obtain a free trial of AKE’s intelligence reports here.
You can also follow John Drake on twitter here.

By Chris Bowers, British Consul General in Erbil. This article was originally published by Rudaw, and is re-published with permission by Iraq Business News.

Let me start by asking a question: why is gas less talked about than oil in Iraq? I am not sure why this is the case but it does seem to be true. In fact, the development of Kurdistan’s huge gas reserves is vital to energy security in Kurdistan, Iraq, the region and beyond. I am proud to say that UK energy companies are playing an important role in this.

Kurdistan is blessed twofold on gas: firstly on reserves, and secondly in its proximity to growing markets for that gas; markets that won’t wait. There is a growing and urgent demand for gas-powered electricity in Kurdistan’s neighbouring provinces. Iraqi gas should, of course, first be used to satisfy domestic demand and is great to see KRG reaching out to neighbouring provinces. This is an excellent example of Kurdish and Arab interests coinciding exactly and to the benefit of everyone.

Once domestic demand is sated, the second and growing market is Turkey. Turkey’s booming economy needs a significant amount of extra power every year. Naturally, much of that can be fuelled by Iraqi gas from Kurdistan.

Cementing the recent progress on Turkey-Kurdistan relations through deepened energy co-operation makes obvious strategic and more importantly economic and business sense. Turkey is a great market for Kurdistan and Europe as a whole has an interest in Turkey sustaining its strong economic growth.

But, Europe also has a broad interest in Iraqi gas from Kurdistan. There is a gas shortage in Europe and the gap between supply and demand is likely to increase in the long run. Gas is better for the climate than coal, is less costly initially than most forms of renewable energy and less controversial than nuclear.