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Overview

Last week saw considerable violence in Iraq, particularly in Baghdad. There was also a spate of attacks in Mosul and two especially bloody bombings in Karbala. Over 100 fatalities and up to 250 injuries were recorded in total around the country. There was also an increase in targeted shootings in the capital, resuming a trend which appeared to have died for the duration of Arba’een. Two statements have also been made by official organisations over the security environment in the country. While one outlined the positive reduction in attacks on the oil sector in 2010, the other warned that the Iraqi security forces do not have the sufficient capacity to assume responsibility for security without US backing. While efforts to train and prepare the Iraqi police and military will likely increase this year there are concerns that a security gap will emerge after the 31 December US withdrawal deadline. It would be controversial and unpopular for Iraqi politicians to ask them to stay any longer, even if that did prevent a lapse in security.

Regional Violence in Iraq Last Week

North

Levels of violence have risen consistently but very slowly in the two northern provinces of Ninawa and Ta’mim over the last few weeks. The number of security incidents in the region still remains lower than the average seen in 2010. On 24 January an Iraqi contractor was reportedly kidnapped in Mosul and his whereabouts are not currently known. The week also saw two small scale attacks in the usually more quiet Ninawa districts of Ba’aj and Hamdaniyah, although Mosul city remains by far the most hazardous part of the north. Kirkuk and the wider province of Ta’mim continue to see relatively few incidents of violence. Iraqi Kurdistan also remains stable, with very little security concerns being reported in the region. However, personnel should expect possible demonstrations by supporters of the opposition Goran party who are likely to have been inspired by similar unrest in Egypt and Tunisia. The Goran party continues to call for political reform and a reduction of unemployment figures, particularly amongst the youth. As a result, many have sympathies for and similarities to those protesting in Cairo and Tunis. However, unlike many other political groups in Iraq, the Goran party does not have a militant wing of its own and is therefore much less likely to engage in acts of terrorism or militancy to advance its political agenda. Protests have descended into vandalism in the past, but incidents have tended to be highly infrequent and concentrated in small areas. The professional Kurdish security forces will likely be able to contain any unrest and the vast majority of business operations in the region will remain unaffected.

Centre

The central provinces experienced the tail-end of Arba’een violence last week. Two large bombings in Karbala left several people dead, while Baghdad saw a rise in the total number of attacks. The capital also saw a rise in the number of targeted shootings, which were directed against state employees and senior members of the security forces. This type of targeting began to rise in late 2010 but decreased in mid-January after the authorities went on a state of high alert and arrested several people suspected of involvement. It would appear that their efforts only had a temporal impact on the trend, and several more assassinations should be anticipated over the coming weeks. The most devastating bomb attack in the city last week took place in the north-western district of Shu’lah on 27 January, when a car bomb targeted a Shi’ah funeral, killing dozens and injuring over 100. The incident prompted a sporadic protest with survivors and local residents criticising the authorities for failing to protect them. Inspired by protesters elsewhere in the region, and potentially driven by a lack of jobs, services and electricity (especially in the summer) Iraq may see even more urban demonstrations over the course of 2011.

South

The southern region remains relatively quiet when compared to the rest of the country. There were no major incidents reported last week, apart from low level criminality and the arrest of several suspected offenders around Basrah province. AKE personnel on the ground report that security measures have been lessened at checkpoints on key routes. The lack of violence has likely prompted the authorities to direct their resources elsewhere. However, this leaves a potential vulnerability in the event that terrorists attempt to initiate more attacks further down the line. Mass casualty bombings are relatively infrequent in the southern cities, but they do occur. It would therefore appear that one of the greatest risks perhaps is complacency.

John Drake is a senior risk consultant with AKE Group, a British private security firm working in Iraq from before 2003. Further details on the company can be found at www.akegroup.com/iraq

You can obtain a free trial of AKE’s intelligence reports here http://tinyurl.com/245f9rm

You can also follow John Drake on twitter at www.twitter.com/johnfdrake

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South Korea's Hyundai Engineering & Construction has reportedly won a contract worth $219 million to build a 500 megawatt power station near Baghdad, as part of the Iraqi government's efforts to address power shortages, a government spokesman said Wednesday.

Ali al-Dabbagh, who is also a minister of state, told Dow Jones Newswires after a weekly cabinet meeting: "The cabinet has approved a request by the electricity ministry to build the gas-fired al-Quds [al-Qudus] power station".

Dabbagh said the project is awarded on a turn-key basis, and will be completed within 18 months of the start of work.

Turbines for the project have already been bought by the Iraqi government from General Electric (GE).

Iraq, which suffers from an acute power shortage, hopes to at least double its power generation capacity, which stands at only 6,500 MW, less than half of the country's actual electricity needs.

The ministry has recently opened bids to build seven large power plants across the country that could boost its power generating capacity by 4,000 MW.

(Sources: Dow Jones, Trade Arabia)

Mitsubishi and Royal Dutch Shell (LSE: RDSA) are in talks with Iraq on a possible project to build a natural gas processing plant, with Mitsubishi planning a floating liquefied natural gas (LNG) plant to export some of the gas, according to the Wall Street Journal.

The remaining natural gas will be used in the domestic market, said Ahmed Al-Shamma, Deputy Minister for Refining and Gas Processing at Iraq's Ministry of Oil, on Wednesday.

The comment follows Iraq's oil ministry's remarks in December, in which the ministry said it was hoping to sign a $12 billion deal with Royal Dutch Shell and Mitsubishi to capture gas being flared from southern oil fields in order to help boost the country's power generation.

Al-Shamma didn't say whether the planned floating LNG plant was part of the $12 billion deal.

A spokesman for Mitsubishi said the company was considering producing and exporting LNG from the project, but didn't give details.

Iraq has proven gas reserves estimated at 112.6 trillion cubic feet, the world's 11th-largest, according to the U.S. Central Intelligence Agency's World Factbook, but the population sufferes from severe shortages of electricity.

Iraq produces 1.7 billion cubic feet of gas a day, of which some 700 million cubic feet is flared off.

In December, the Iraqi government said it had invited international specialized firms to build three gas-fired power plants in southern and western Iraq: the 500-MW Najibiyah plant in Basra governorate, a 500-MW Haydariyah plant in Najaf governorate and the 250-MW Akkas facility in the western Anbar province.

Japan recently announced that it will provide longer-term trade credit insurance to Mitsubishi's natural gas project with Shell.

(Source: Wall Street Journal)

Syria and Iraq have reached a final agreement to build two oil pipelines and a gas pipeline between their two countries, and tender invitations will be issued soon, Syrian Oil Minister Sufian Alao [Suffian Alao] (pictured) was quoted as saying on Tuesday.

Alao was quoted by Syrian newspaper Al-Thawra as saying an existing oil pipeline from Iraq to Syria was being repaired.

Platts reports that the pipeline, linking the northern Iraqi oil region of Kirkuk to the Syrian Mediterranean port of Banias, was shut down in the 1970s when relations deteriorated between the rival Ba'ath parties in power in Damascus and Baghdad.

Iraq reopened the line in 2000 to bypass UN sanctions, shipping some 200,000 bpd of Kirkuk crude to Syria, which used the crude in its own refineries and exported an equal amount of its own oil to markets.

The leaky pipeline, which has a capacity to carry 300,000 b/d of crude oil, has been shut since the US-led invasion of Iraq in March 2003, when the main K3 pumping station along the pipeline was damaged by US air strikes.

Alao did not say when work, which has already been delayed since initial agreement was reached to repair the pipeline in 2007, would be completed.

Iraq has said it plans to build three pipelines through Syria for heavy and light oil as well as natural gas to cope with new export capacity once incremental production comes on line from fields being developed by foreign oil companies under long term service contracts.

The heavy oil pipeline would likely transport heavy crude from the northern Qayara and Najmah oil fields, which were awarded to Angola's Sonangol.

The light crude oil pipeline would carry Kirkuk crude oil to Banias.

Iraq currently exports its Kirkuk blend crude oil to the Turkish port of Ceyhan, which lies to the north of Banias. There are plans to rehabilitate the existing Kirkuk-Ceyhan twin pipeline system, which has a design capacity of 1.6 million bpd, following a deal with Ankara to extend the transit agreement.

A senior Iraqi official said recently that while the Syrian pipeline option had been discussed for years, there was now movement on the issue with Baghdad seeking foreign investors for the projects.

One of the Iraqi gas fields awarded in last year's gas auction, Akkas, lies in the north near the border with Syria. The field, which is slated to produce 400,000 Mcf/d of gas when developed, has been earmarked as a potential source of exports in the future to the European market, possibly through the Arab Gas Pipeline that carries Egyptian Gas through Jordan, Syria and Lebanon and is being extended to the Turkish border.

Alao referred to plans to build a 56-inch pipeline with capacity to transport 110 million cu m/d of natural gas from Iran's South Pars gas field through Iraq and Syria, where it would link up with the Arab Gas Pipeline.

The agreement with Iran was reached during talks January 20 in Damascus last week with Iranian Oil Minister Masoud Mirkazemi. The two sides signed a cooperation agreement allowing Iranian gas exports through Syria and then on to Europe with the proposed pipeline.

Syria has been ramping up its gas production in recent years to meet high domestic demand. Alao said total gas output last year rose to 10.07 Bcm, up from around 9.1 Bcm/year in 2009. Syria produced an average 27.5 million cu m/d last year.

Because Syria cannot produce sufficient gas domestically, it has to rely on imports to meet rising demand for power generation as it phases out reliance on fuel oil. At present Syria is importing around 1.45 Bcm/year from Egypt but is seeking additional supplies.

Alao said that the electricity sector accounted for 87% of total gas usage, taking 6.704 million cu m/d of the 8.9 million cu m/d of clean gas supplied by gas processing plants.

Oil production rose marginally to a total 140.931 million barrels in 2010, an average of 386,000 b/d, a slight increase over 383,000 b/d produced the previous year, he said.

(Source: Platts)

Iraq’s Kirkuk province resumed power supplies to the national grid on Friday, after a deal that ended a dispute this week over the provision of electricity.

The oil-rich northern province that produces more electricity than it is allocated, announced on Monday that it would stop supplying power to the national network, a decision it implemented a day later.

According to a report from Lebanon's Daily Star, Electricity Ministry officials agreed on Thursday to immediately increase Kirkuk’s quota by nearly 50 percent, which still leaves the province woefully short of 24-hour power.

“Kirkuk has reached an agreement with the Electricity Ministry to reconnect the power stations in the province, and increase the province’s share from 170 megawatts to 250 megawatts,” said Kirkuk's Governor, Abdulrahman Mustafa, at a news conference on Thursday.

He added on Friday that the work of reconnecting the power stations had been completed.

According to a report from AFP, Iraq's northern Kirkuk province said it had stopped supplying electricity to the national grid on Tuesday, in a bold move to force the central government's hand in a dispute over power rationing.

"Kirkuk province has decided to cut the power going out from its electricity stations to other provinces and to keep the power for the province until the ministry of electricity does something about our power cuts," said the province's governor, Abdulrahman Mustafa.

Rizgar Ali, chairman of Kirkuk's provincial council, said the procedure of separating from the national grid was completed on Tuesday evening.

He complained that nothing had been done about the electricity situation in Kirkuk.

"Unfortunately, we didn't see any political step or intention from the government to help our people," he told AFP.

National Deputy Electricity Minister, Aamer al-Duri, earlier described the cuts as "illegal" as he said a ministry delegation had been sent to Kirkuk on Tuesday to try to resolve the dispute.

"Kirkuk is not the only province which suffers from power cuts," he told AFP. "It's the same for all provinces like Baghdad, Nineveh and others."

A Turkish energy company signed a deal with the Iraqi government on Thursday to build a power plant at a cost of $445.5 million [521 billion Iraqi dinars].

The deal between Turkey’s Calik Enerji and the Iraqi Electricity Ministry is for the construction of the 1,250 megawatt al-Hayrat [Khayrat?] plant in Karbala.

Calik Holding CEO, Ahmet Calik, and Iraq’s Deputy Electricity Minister, Salam Kazzaz, penned the agreement in a ceremony in Baghdad with the participation of Iraqi Deputy Premier for Energy, Hussain al-Shahristani, and Turkey’s Ambassador to Iraq, Murat Ozcelik.

Speaking at the ceremony al-Shahristani said the al-Hayrat plant would be biggest in Iraq when completed in two years time, adding that the plant would create 500 new jobs.

Al-Shahristani said the Iraqi government would open more tenders for the construction of two power plants in Mosul.

(Source: Turkish Press)

The chairman of Wasit [Wassit] council’s media department has said that the council has called on its citizens not to pay their electricity bills because they are too high.

The economic commission in the federal Council of Ministers directed the ministry of electricity last year to gradually increase the cost of consumer electricity in order to encourage the Iraqi public to be more responsible in their domestic consumption.

The head of Wasit’s media department, Al-Dahabi, told AKnews that the new prices were not commensurate with the income of most households in the province and so the recently distributed bills have been returned to the ministry unpaid.

Dahabi said that the council had received a number of complaints from electricity consumers as the domestic rates had doubled, and were not considered to correspond to the poor levels of service that Wasit citizens receive.

“The council will discuss this issue during its next meeting,” he said, then coordinate with the Ministry of Electricity to come up with a pricing formula “that doesn’t overburden the Iraqi citizen.”

Iraq plans to increase the country’s capacity to 27,000 megawatts over the next four years requiring an annual investment of between $3bn to $4bn.

(Source: AKnews)

Japan is ready to boost cooperation and projects in Iraq’s energy sector including rebuilding Iraqi nuclear reactor(s), Hussain Shahristani, Iraqi deputy prime minister for energy,has  told reporters.

Shahristani reportedly said after his meeting with the Japanese Economy, Trade and Industry Minister, Akihiro Ohata, in Baghdad, "we discussed the issue of reconstruction of the nuclear reactor(s) in Iraq... and the Japanese expressed their interest in that. Iraq will study the possibilities of developing its peaceful nuclear industry."

A joint statement was issued after the meeting calling on the two countries to reinforce economic cooperation in areas including postwar reconstruction, oil development and electricity generation in Iraq. Feasibility studies have already started to build an electricity generation station in Iraq, according to the statement.

Additionally, Japan will send a trade delegation to Iraq next month to discuss cooperation in the energy and transportation sectors.

This is the first visit to Iraq by a Japanese Cabinet minister since the Democratic Party of Japan (DPJ) took power in September 2009. Arab diplomats in Tokyo told PanOrient News that the DPJ "has not given Arab countries the attention they used to get from Liberal Democratic Party."

The Ministry of Electricity in Baghdad, in cooperation with consulting firm Parsons Brinckerhoff (PB), will present Iraq’s Long Term Electricity Master Plan at a 2-day conference in Istanbul on 1st and 2nd February, 2011.

The 2010 – 2030 Long Term Master Plan, prepared by joint teams from Parsons Brinckerhoff and the Ministry of Electricity's Planning and Studies Department, provides a long term road map for the future expansion of Iraq’s electricity program. The Master Plan Conference will present the findings and recommendations of the master plan report. Attendees will have the opportunity to interact with Ministry of Electricity and Parsons Brinckerhoff teams to discuss the latest issues facing the power sector in Iraq.

The Master Plan Conference has been organised in partnership with the US Embassy-Baghdad and is open to all interested parties.  Registration and attendance is free. More information and registration details are available at: http://www.iraqelectricitymasterplan.com.

Jeff Larkin, project director for Parsons Brinckerhoff’s role on the master plan, comments, “Development of this master plan has been a huge joint effort on the part of both PB and the Ministry of Electricity and has resulted in a detailed and comprehensive study and analysis of the many issues facing the power sector in Iraq. I’m confident the conference will be informative and constructive for attendees.”