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Iraq's state-owned North Refineries Company yesterday said it had re-started production at its Baiji oil refinery, and was looking to boost production levels to 80 per cent to make up losses after a shutdown, according to a report from Gulf Daily News. The refinery normally operates at 70pc of its capacity.

An official at the refinery, north of Baghdad, said all production units were operational after it shut down on Thursday due to an electrical fault caused by overloading of the grid.

"We will work with our full efforts to reach an 80pc capacity to compensate what we lost during the shutdown," the official said.

The official said of the three units at the refinery, two were working at 70-75pc of production capacity, while one was at 65pc.

The North Refineries Company, which operates the refinery, has a capacity of 300,000 barrels per day. A senior official at teh company said electricity flow at the refinery was now stable.

(Source: Gulf Daily News)

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Dana Gas PJSC, the Middle East’s largest regional, private sector, natural gas company, has announced its financial results for the quarter ended 30th June 2010.

Revenue from the sale of hydrocarbons increased to AED 428 million, with gross profit reaching AED 179 million. These figures represent increases of 41% and 84% respectively, compared to the same period last year. This is due to strong production growth, amounting in aggregate to 29%, from the Company’s operations in Egypt (where ten fields are now producing) and in the Kurdistan Region of Iraq, where production from the Khor Mor field continues to increase. It is also due to higher market prices for, condensate, LPG and oil during the quarter, as compared to 2Q 2009.

In the Kurdistan Region of Iraq Dana Gas, through its 40% share, produced 1.06 million boe of gas and condensate during the quarter, an increase of approximately 88% over the same period in 2009. The first train of the LPG Plant at Khor Mor is in partial operation, producing gas and condensate. Production of LPG will start later in 2010, which will further increase production.

With regard to the Iraqi operations, Chief Executive Officer, Mr. Ahmed Al-Arbeed, said: "In the Kurdistan Region of Iraq, production continues to grow as we supply gas to meet the demands of the Erbil and Bazian power stations and it remains a source of pride to Dana Gas that this region of Iraq is one of the few with a reliable electricity supply. We are producing gas and condensate through our new permanent facilities and the first train of the LPG plant at Khor Mor will commence LPG production shortly. Consequently, Dana Gas’ growth is set to continue."

Dana Gas should not be confused with the London-listed Dana Petroleum (LSE: DNX).

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The NGO Coordination Committee in Iraq (NCCI) has issued the following statement regarding the $8.7 billion of Iraqi funds that cannot be accounted for:

Last week, the US Special Inspector General for Iraq Reconstruction (SIGIR) issued an audit stating that the Pentagon cannot account for 96 percent of $9.1 billion that was set aside for reconstruction and humanitarian relief in Iraq after the 2003 US-led invasion. While the audit accused the US Department of Defense (DoD), the administrator of these funds, of “lax oversight” and “weak control”—rather than outright fraud—the Iraqi government may attempt to take legal action in the coming months and recover these funds. The missing $8.7 billion is critically needed to improve basic services like water, electricity and food security amongst the most vulnerable Iraqi populations.

The Development Fund for Iraq (DFI) was created in May 2003 by the Coalition Provisional Authority (CPA), the American occupation administration that handled all governmental affairs—including reconstruction and humanitarian relief—in Iraq post-invasion. On 22nd May 2003, the UN Security Council Resolution 1483 recognized the DFI under the following terms:

“The DFI shall be used in a transparent manner [by the CPA] to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq’s infrastructure, for the continued disarmament of Iraq, and for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq.”

Using the CPA as a conduit, the DoD primarily administered the DFI between 2003-2004. When the CPA was disbanded in June 2004, the Iraqi transitional government authorized the DoD to continue overseeing the DFI until December 2007.

In administering the DFI, the CPA and DoD allocated most of the funds to private American companies and contractors to implement reconstruction programmes. In this process, the DoD failed to follow the US Department of Treasury’s guidelines established for all US agencies operating in Iraq. Namely, the DoD did not create required bank accounts for the funds or designate any organization as the executive agent to manage their usage. This “breakdown in controls” made funds vulnerable to “undetected loss” and “inappropriate uses” according to the audit.

Some of the DFI funds were certainly spent in Iraq, yet the extent to which the unaccounted money was lost to waste and corruption is entirely speculative. After the 2003 invasion, “Iraq was awash in cash—in dollars and bills. [There were] piles and piles of money,” said Frank Willis, a former CPA official. More than $12 billion in cash was transferred to Iraq in the first fourteen months. According to Alan Grayson, a whistleblower working with other lawyers to further expose the CPA’s corruption, “American law was suspended, Iraqi law was suspended, and Iraq basically became a free fraud zone.” Another audit of the DFI in 2009 exposed cases of bribery, fraud and money laundering involving several DoD and CPA officials.

The SIGIR’s audit brings another alarming issue to light: The DoD is likely holding and spending DFI funds today— at least $34.3 million according the auditors’ rough estimates—although the US is no longer vested with any legal authority to do so. Since 2007, the Iraqi Ministry of Finance supposedly assumed full control over managing the DFI funds. However, the DoD cannot locate most of the DFI funds that seem to have vanished in the Iraqi government’s and Pentagon’s bureaucracies.

The DFI includes Iraqi oil and natural gas revenues, surplus funds from the UN Oil-for-Food Program (1995-2003), and frozen Iraqi assets that were seized from the previous Ba’ath government. The untraceable $8.7 billion derives from the Iraqi people and their government’s resources, rather than foreign donors or the US government. Since the audit’s findings were released, Sabah Al-Saedi, chairman of the Integrity Committee in Iraq’s parliament, has publically suggested that “Iraq should take legal action to get back huge amounts of money [that disappeared from the DFI].” He elaborated that the Iraqi government urgently needs this money “for rebuilding the country and providing services for this poor nation.”

Since the invasion, US funds have provided more than $50 billion for major reconstruction projects in Iraq. Paradoxically, many of the same humanitarian concerns from 2003 persist. Regional experts, such as Patrick Cockburn, still concur that “no country in the world needs more investment [for economic growth and humanitarian operations] than Iraq.” This begs the question: Why was the occupying force charged with overseeing the delivery of major funds earmarked for recovery in the first place?

Iraq now ranks seventh in the 2010 Failed States Index, faces an ongoing power vacuum, and has multiple vulnerable areas in dire need of humanitarian assistance. The Iraqi people continue to await the restoration of their nation’s overburdened national electricity grid, reconstruction of adequate water treatment facilities, and attention to a number of other lingering, unmet basic needs. Tensions in Iraq are still mounting as money fails to translate into tangible results or improve basic standards of living. As usual, it is the Iraqi people who must pay the price for corruption in relief programs, similar to what was experienced during the Oil-for-Food Programme established by another UN Security Council resolution (1995-2003).

This audit’s findings come at a time of waning donor support from nations which were formerly key funders of Iraq’s humanitarian sector, including the US and the United Kingdom (UK). As Mercy Corps and NCCI discussed in a recent joint policy brief, funding shortages are threatening many UN agencies’ and NGOs’ ability to continue or expand long-term humanitarian relief operations in Iraq. The audit further highlights that Iraqis did not receive adequate support for humanitarian relief and reconstruction. Donor support for Iraqi civilians, especially from the US and UK, is not only necessary; it is also an ethical obligation.

Moreover, Iraq needs more than an increase in funding. Future funding should also be characterized by a high level of accountability and transparency. Humanitarian actors must ensure that effective Monitoring and Evaluation (M&E) programmes track financial transactions and assess progress of humanitarian relief operations in Iraq to prevent future mismanagement of Iraqi humanitarian relief funds on such a large scale.

Iraq will produce natural gas in two years, and will become one of the most important gas exporters to Europe, according to a report from Aswat al-Iraq.

As we recently reported, the fate of the three gas fields of Akkas, Mansouriya and Siba will be decided in October.

A source from the Iraqi Oil Ministry told Aswat al-Iraq news agency on Monday that factors such as production levels and costs will be considered in evaluating the bids.

“Iraq will use only about 50% of the produced gas to generate electricity, while the rest will be exported,” the source added.

(Source: Aswat al-Iraq)

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Following last week's announcement that Iraq will import gas from Iran, the country's senior deputy oil minister confirmed on Monday that it has tol Iran that it is ready to allow the transit of Iranian natural gas destined for Syria and Mediterranean countries.

Kareem Al Luaby gave the confirmation to Dow Jones Newswires by telephone from Baghdad, but gave no further details.

Iranian Student News Agency quoted a top Iranian gas official on Sunday as saying that the Iraqi oil and electricity ministers declared that the Iraqi government has permitted Iran's gas transit to Syria and Mediterranean states.

Javad Oji, managing director of the National Iranian Gas Co. said that the project would need a pipeline with a daily capacity of 110 million cubic meters to go through Iraq. This differs from the previously-reported figure of "300 million cubic feet", which is about 8.5 million cubic meters.

Meantime, an Iraqi oil official said that a delegation from the Iranian oil ministry was in Baghdad two weeks ago and met with Al Luaby and other senior officials in the Iraqi oil ministry. The official, however, said that he wasn't informed about the outcome of the meetings.

Earlier, another Iraqi oil ministry official said that such a decision would need to be made by the Iraqi parliament. "In addition to that, we don't have the infrastructure to transit Iranian gas to other countries," he said.

Iraq, which has the fifth highest gas reserves in the region, is trying to hold a bidding round for three major gas fields, with the aim of exporting half of the produced gas. However, international companies have been complaining that Iraq hasn't got the infrastructure to export its gas.

Iran holds the world's second largest reserves of gas. But plans to develop LNG schemes have been hit by the reluctance of Western oil companies to invest in them because of the sanctions imposed by Western countries on the country because of its attempts to acquire nuclear energy.

(Source: Dow Jones Newswires)

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The spokesman of the Kurdistan Regional Government (KRG) rejected  remarks made by the Iraqi Oil Minister, Hussein Shahrestani, on Sunday about illegal oil trade through the Kurdistan Region.

Shahrestani called on the KRG to justify its position regarding exporting  oil to Iran, in a statement made to the Arabic radio channel Sawa.

"In accordance with our contract with Jordan, Iraq can send the country 10,000 barrels of oil per day, but we have not negotiated any contracts with  Iran,” Shahrestani told radio Sawa.

The oil minister has also asked the Iraqi government to audit the  Region’s customs records.

In response to Shahrestani's remarks, KRG Spokesman Kawa  Mahmoud rejected the accusation saying, “The KRG’s actions are  transparent and conform to the law”.

(Source: AK News)

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The Diyala State Company for Electric Industries has set out a new program to rehabilitate and renovate its operations.

For this purpose it signed contracts worth 2 billion Iraqi dinars [$1.7m] with suppliers for the provision new equipment.

A source in the company said that many contracts will be completed in between 2 and 7 months, including installation of new transformers from the Nasr State Company for Mechanical Industries and from the Al Safaya Jordanian Company for General Trade.

(Source: Al SumariaTV)

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French energy infrastructure firm Alstom signed a memorandum of understanding with Iraq on Wednesday to build a power plant in southern Iraq, which is suffering a severe electricity shortfall.

According to a report from AFP, Alstom is also set to renovate an existing power plant in the city of Najaf that it built 35 years ago.

"Patrick Kron, chief executive officer of Alstom, today (Wednesday) signed a memorandum of understanding with the Minister of Oil and Electricity, Hussein al-Shahristani ... for the development and modernisation of Iraq's electricity infrastructure," Alstom said.

The company has agreed to build a 1,200 MW power station between Najaf and the southern port city of Basra, and to rehabilitate a 180 MW plant in Najaf that it built in 1975.

The agreement also provides for training of Iraqi engineers and technicians.

A source with knowledge of the agreement said the new plant is likely to cost between 1.5 and 2 billion US dollars [1.8 trillion and 2.4 trillion Iraqi dinars].

"We hope to build up the electricity sector in Iraq which has been badly damaged in recent years and meet the country's growing electricity needs," Prime Minister Nouri al-Maliki, who attended the signing, said in a statement.

The statement said the company would begin talks with national and local officials in the coming weeks "for the practical implementation of these projects."

Iraq's daily power generation averages 8,000 megawatts, while demand in temperatures that have hit 54 degrees Celsius (130 degrees Fahrenheit) is typically more than 14,000 megawatts, forcing the use of unpopular rationing.

Only those with access to their own generators and fuel have been able to refrigerate foodstuffs or air-condition their homes around the clock.

Oppressive summer heat has triggered protests in several cities across the country, including in Basra.

Maliki has warned that two more years of shortages lie ahead as there is no quick fix to the problem, which worsened dramatically in the wake of the US-led invasion in 2003.

(Source: AFP)

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On Tuesday, Basra Council discussed projects which will be implemented in 2011, according to a head of the reconstruction committee.

The projects are in several budgetary categories and have a total value of 286 billion Iraqi dinars ($240m).

“The council made a comprehensive assessments of all projects for 2011 in the areas of health, electricity, education, water and other services sectors, as part of the budget to develop the region,” Mustapha Attiya told Aswat al-Iraq news agency.

“The total cost of these projects is 286 billion Iraqi dinars,” he added, without giving more details.

(Source: Aswat al-Iraq)

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Iraqi President Jalal Talabani met with an Iranian official on Sunday to discuss bilateral economic relations and ways to expand trade between the two countries, according to a presidential press release.

“Talabani welcomed Ali Agha Muhammadi, the economic assistant to the first vice president of Iran, and his accompanying delegation, and expressed Iraq’s keenness on furthering bilateral ties with neighboring Iran at the political, economic and cultural levels,” read the release as received by Aswat al-Iraq news agency.

The president expressed “Iraq’s appreciation of the government and people of the Islamic Republic of Iran for their support for Iraq in its strife against dictatorship and Iraq’s moving to a new stage of independence, stability and freedom”.

Muhammadi, for his part, “reiterated Iran’s wish to further friendly ties and cooperation with Iraq, particularly in the economic field”.

The Iranian official said there are ample opportunities for investment in Iraq, namely in the transport and electricity spheres.

(Source: Aswat al-Iraq)

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