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Iraqi banks are too small to be useful to international companies, resulting in major investment projects being impeded, Iraqi Electricity Ministry Spokesman Musab al-Mudarres told AKnews on Tuesday.

“Iraqi banks cannot provide financial guarantees to foreign companies because their capital is below the guarantees expected by corporations", he said.

"The Ministry of Electricity has submitted a request to the Council of Ministers about the need to facilitate banking transactions involving well-known foreign banks in the guarantees."

(Source: AKnews)

Iraqi Prime Minister Nouri al-Maliki will travel to China this week in a bid to attract Chinese investors to Iraq, an advisor to the PM told AKnews on Tuesday.

Ali al-Mousawi said that Maliki will head a trade delegation, following an official invitation from the Chinese government.

Mousawi said Chinese companies are already heavily engaged in investment in Iraq, “but research shows that China is interested in entering in Iraqi market in a much more significant way. This put the onus on Iraqis to coordinate with Chinese companies…especially in the energy sector.”

He added that the visit will not focus purely on economics: “China is a permanent member of the Security Council and is influential in the formation of international decisions, so politics will inevitably come up.”

China is heavily involved in several sectors in Iraq, including electricity, water, manufacturing and, most significantly, oil. In June, China’s largest oil company China National Petroleum Corporation (CNPC) opened the first major new oil field in Iraq in 20 years at al-Ahdab in southern Iraq.

(Source: AKnews)

Shell and Mitsubishi signed a final draft agreement with Iraq on Tuesday for a deal worth between $12 billion and $17 billion to capture flared gas at the southern oilfields.

The long-awaited deal still needs the approval of Iraq's cabinet, Oil Minister Abdul-Kareem Luaibi [Elaibi] said in a statement.

The Iraqi government will hold 51 percent of the venture, while Shell will hold 44 percent and Mitsubishi the rest.

The joint venture, to be called Basra Gas Company, will be vital to Iraq's plans to boost electricity production to keep up with demand that is double the rate of supply.

"The execution of the deal will open the door for Iraq to export liquefied natural gas to the international market," Ali al-Khudhier, head of state-run South Gas Co. said in a statement.

Iraq is losing 1 billion cubic feet per day of gas throughflaring, mostly from the south. It would use the gas produced under the Shell project in the domestic market to help meet the rising demand for electricity and export the surplus.

Iraqi officials have previously said the initial plan for the 25-year project includes setting up a liquefied natural gas project at a later stage, to export any excess gas with a maximum capacity of 600 million cubic feet of gas per day.

LNG is gas chilled to liquid form for shipping to export markets on specially designed tankers.

The venture would help Iraq capture more than 700 million cubic feet per day of gas being burnt off at three southern oilfields -- Rumaila, Zubair and West Qurna I.

Reuters reports that the initial signing took place behind closed doors without media coverage despite last-minute confusion over whether it was going to happen.

Two sources told Reuters on Sunday the oil ministry had scheduled the signing for Tuesday, but then on Monday the ministry retracted an invitation it had sent earlier to the press and said the signing would be delayed without giving a reason.

But an Iraqi oil source and another source close to the deal told Reuters earlier the contract had been initialled on Tuesday morning.

The project faced legal snags and some political opposition in the past since an initial pact was struck in 2008.

A renegotiation of gas pricing and other legal issues were the latest reasons to delay finalising the deal, an Iraqi oil official close to the talks told Reuters on condition of anonymity.

"The Oil Ministry wanted the gas prices to be subsidised, while Shell and Mitsubishi were asking for global market prices," said the official. "Iraq eventually agreed to increase prices for the gas that would be purchased from Basra Gas Co."

"The tough thing was to get Shell to definitely agree to the terms, and as this was done and it was initialled, then the cabinet will pass it," said Samuel Ciszuk of IHS Energy.

Shell said in a statement that it was "very pleased the Basrah Gas Company Joint Venture agreements have been initialized" and that the oil company will now "look forward" to Cabinet approval.

(Sources: Reuters, Wall Street Journal, Associated Press)

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)