Custom Search

By John Lee.

KBR (United States) has been selected by ENKA Insaat (Turkey) to provide detailed engineering design services for the Associated Gas Upstream Project Phase 2 (AGUP2), part of the Gas Growth Integrated Project (GGIP) operated by TotalEnergies in partnership with Basra Oil Company (BOC) and QatarEnergy in Iraq's Basra region.

This latest award follows KBR's successful completion of the Front-End Engineering Design (FEED) for the same development, reinforcing its long-standing collaboration with both TotalEnergies and ENKA, and its ongoing commitment to supporting Iraq's energy infrastructure growth.

Under the award, KBR will provide multi-discipline detailed engineering design from its global engineering centres, supporting ENKA's execution of the engineering, procurement, supply, construction, and commissioning (EPSCC) scope for the central processing facility.

The AGUP2 project, scheduled to start in 2028, aims to process oil and associated gas from the Ratawi [Artawi] oil field, raising production to 210,000 barrels per day of oil and 154 million standard cubic feet per day of gas, while contributing to Iraq's low-carbon energy transition and the elimination of routine flaring.

Jay Ibrahim, President of KBR Sustainable Technology Solutions, said:

"KBR has been a trusted service provider in Iraq for more than four decades. This project represents a strategic milestone for Iraq's energy future as it combines gas recovery, power generation, oil field redevelopment, and renewable energy investment. We are proud to continue supporting TotalEnergies and ENKA to drive sustainable growth and reliable energy for Iraq."

(Source: KBR)

By John Lee.

France's Vallourec has been awarded a second contract by TotalEnergies to supply casing, tubing, and associated accessories for the drilling of 48 wells under the Associated Gas Upstream Project 2 (AGUP2).

The project forms a key part of the Gas Growth Integrated Project (GGIP), operated by TotalEnergies in partnership with Basra Oil Company (BOC) and QatarEnergy.

The AGUP2 initiative aims to process oil and associated gas from the Ratawi [Artawi] oil field, increasing production capacity to 210,000 barrels of oil per day and 154 million standard cubic feet per day of gas. It also supports Iraq's goal of eliminating routine gas flaring and advancing a lower-carbon energy future.

The wider GGIP -- a flagship 4-in-1 energy development -- combines gas recovery from three southern oil fields to supply power plants, redevelopment of the Ratawi field, construction of a 1 GWac (1.25 GWp) solar farm, and a seawater treatment plant to support oil operations.

In the first phase, Vallourec delivered approximately 15,000 tonnes of casing and tubing for 30 wells. In this second phase, the company will supply over 30,000 tonnes of premium tubular products, including about 3,000 tonnes of Premium Line Pipe with anti-corrosion coating.

Group Chairman and CEO Philippe Guillemot (pictured) stated:

"We are proud to continue our collaboration with TotalEnergies on this flagship project in Iraq. Since the beginning, Vallourec has been fully committed to supporting TotalEnergies. This new phase confirms the strength of our long-standing partnership and our ability to deliver high-performance, reliable tubular solutions."

(Source: Vallourec)

By John Lee.

Iraqi Prime Minister Mohammed Shiaa Al-Sudani has laid the foundation stone for the Baghdad International Hospital, to be developed by Apex Health, a subsidiary of Qatar's Estithmar Holding [Qatari Investment Holding Company].

Al-Sudani welcomed the Qatari delegation and praised the project as a new chapter in bilateral cooperation, recalling the visit of the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, who announced a package of investments worth between $5 billion and $7 billion (approx. €4.6-€6.4 billion) across multiple sectors.

He emphasised his government's commitment to creating a business-friendly environment by reducing bureaucracy, amending outdated investment laws, and implementing supportive regulations.

Key points from the Prime Minister's remarks included:

• Iraq has opened its doors to reputable international companies, including Qatari Investment Holding.
• The government has taken measures to support the private sector and attract investments exceeding $102 billion (approx. €93 billion).
• Despite regional instability, Iraq continues to pursue an investment-driven growth strategy.
• The Development Road project presents significant opportunities for global investors.
• The health sector remains a top priority, with progress seen through the implementation of the Health Insurance Law and partnerships with US and UK pharmaceutical companies.
• The government is supporting local drug manufacturers, upgrading hospitals, and introducing modern management models through joint operations with renowned medical institutions.

(Source: PMO)

By John Lee.

TotalEnergies, in partnership with Basra Oil Company (30%) and QatarEnergy (25%), has signed the final contracts of the Gas Growth Integrated Project (GGIP) at the Ratawi [Artawi] field in Basra, under the patronage of Prime Minister Mohammed Shia al-Sudani.

The agreements include:

• a joint operating contract between the Ministry of Oil, Basra Oil Company (BOC), TotalEnergies (45%, operator), and QatarEnergy;
• a seawater treatment facility with Hyundai (capacity 7.5 million barrels per day);
• a central oil and gas processing facility with Turkiye's Enka (210,000 bpd and 163 MMscfd of gas); and,
• a gas processing plant with China Petroleum Engineering & Construction Corp (CPECC) (600 MMscfd in two phases).

The Common Seawater Supply Project (CSSP), to be built near Umm Qasr, will substitute treated seawater for freshwater currently drawn from the Tigris, Euphrates, and aquifers, helping to reduce regional water stress and free up around 250,000 cubic metres of water daily for agriculture.

The Ratawi redevelopment, launched in 2023, will raise output to 120,000 bpd in 2026 (phase 1) and to 210,000 bpd in 2028 (phase 2), with no routine flaring. Associated gas will be processed through the 300 MMscfd Gas Midstream Project to supply the national grid, providing electricity to around 1.5 million households. The project also includes a 1,000 MW solar power component.

Prime Minister al-Sudani welcomed the agreements, describing them as evidence of Iraq's improving investment climate. Oil Minister Hayan Abdul Ghani and Qatari Energy Minister Saad Sherida Al-Kaabi attended the signing, alongside executives from TotalEnergies, Enka, Hyundai, and CPECC.

TotalEnergies CEO Patrick Pouyanné said that with all four GGIP components - oil, gas, water, and solar - now launched, the first phase of production is expected in early 2026, employing around 7,000 Iraqis during construction.

Full text of statement from TotalEnergies:

Patrick Pouyanné, Chairman and Chief Executive Officer of TotalEnergies, and His Excellency Saad Sherida Al-Kaabi, Qatari Minister of State for Energy Affairs, Deputy Chairman and Chief Executive Officer of QatarEnergy, met on Sunday, 14^th of September in Baghdad with His Excellency Mohammed Shia al-Sudani, Prime Minister of the Republic of Iraq, and His Excellency Hayan Abulghani, Minister of Oil and Deputy Prime Minister, to announce the start of construction of the Common Seawater Supply Project (CSSP) and the full field development of the Ratawi oil field.

These are the two last major contracts of the Gas Growth Integrated Project (GGIP), led by TotalEnergies (45%, operator) alongside its partners Basra Oil Company (30%), and QatarEnergy (25%).

With these signatures, all four parts (natural gas, solar, oil, water) of the GGIP are now in execution phase. The GGIP, a showcase project for TotalEnergies' multi-energy strategy, aims to sustainably develop Iraq's natural resources to improve the country's electricity supply while contributing to its energy independence and reducing its greenhouse gas emissions.

The seawater treatment plant, a key infrastructure to preserving the country's water resources

The CSSP will be built on the coast near the town of Um Qasr. It will process and transport 5 million barrels of seawater per day to the main oil fields in southern Iraq.

Treated seawater will be substituted for the freshwater currently taken from the Tigris, Euphrates, and aquifers to maintain pressure in the oil wells. The project will therefore help alleviate water stress in the region and is expected to free up to 250,000 cubic meters of freshwater per day for irrigation and local agriculture needs.

Ongoing redevelopment of the Ratawi field, one of Iraq's lowest-emission oil sites

The Ratawi redevelopment was launched in September 2023. Phase 1 aims to increase production to 120,000 bpd and is expected to come on stream by early 2026.

The launch of phase 2 (full field development) will enable to increase production to 210,000 bpd starting in 2028 with no routine flaring.

All 160 Mcf/d of associated gas produced every day will be fully processed thanks to the 300 Mcf/d Gas Midstream Project (GMP), whose construction began early 2025. The GMP, which will also treat previously flared gas from two other fields in southern Iraq, will deliver processed gas into the national grid where it will fuel power plants with a production capacity of approximately 1.5 GW, providing electricity to 1.5 million Iraqi households. An Early Production facility to process 50 Mcf/d of associated gas will start early 2026 together with the Ratawi phase 1 oil production.

"We are delighted today to award the two final contracts of the Gas Growth Integrated Project, in particular the seawater treatment plant which has been long awaited by the oil industry in Iraq. In less than 2 years since the GGIP effective date in August 2023, TotalEnergies and its partners have fully executed their commitment towards the people of Iraq and launched all projects included in the multienergy GGIP projet, the best showcase of TotalEnergies transition strategy. All these projects will bring a significant contribution to the Iraq economy and employ during the construction phase 7,000 Iraqi nationals.," declared Patrick Pouyanné, Chairman and Chief Executive Officer of TotalEnergies. "Furthermore, I am proud to confirm that the first phase of the associated gas, oil and solar projects will start-up as soon as early 2026."

About the Gas Growth Integrated Project in Iraq

In 2023, TotalEnergies launched the multi-energy Gas Growth Integrated Project (GGIP) in Iraq. The GGIP is designed to enhance the development of Iraq's natural resources to improve the country's electricity supply. This 4-in-1 project comprises the recovery of gas that is currently flared at three oil fields in southern Iraq to supply electric power plants, the redevelopment of the Ratawi oil field, the construction of a 1 GWac (1.25GWp) solar farm and of a seawater treatment plant.

(Sources: TotalEnergies, Ministry of Oil, PMO)

By John Lee.

Aspetar, the Orthopaedic and Sports Medicine Hospital in Qatar, has signed a Memorandum of Understanding with the Iraq Football Association (IFA) to provide medical and scientific support to the Iraqi national football team over the next two years.

The agreement grants the Iraqi team access to Aspetar's advanced medical facilities and sports infrastructure, as well as priority use of its services. It also covers sports science cooperation, including performance assessments, training for IFA medical staff, and guidance aligned with international standards. Iraqi teams will additionally benefit from access to training facilities within Aspire Zone to support preparation for domestic and international competitions.

Adnan Dirjal, President of the Iraq Football Association, highlighted the agreement's role in boosting both the technical and medical capabilities of Iraqi teams, stressing the importance of Aspetar's expertise in safeguarding player health and improving performance.

Through this MoU, the IFA joins Aspetar's international network of sports partners, which includes Paris Saint-Germain and the Algeria Football Federation.

(Source: Aspetar)

By John Lee.

Iraq's Minister of Communications, Dr. Hiyam Al-Yasiri (pictured), has met with Ooredoo of Qatar to discuss joint projects aimed at strengthening Iraq's role as a regional and international data hub.

Talks focused on implementing bilateral agreements to route communications traffic via the FIG submarine cable landing station in Al-Faw, managed by Ooredoo, and through border crossings at Safwan (Kuwait) and Arar (Saudi Arabia), extending to Ibrahim Al-Khalil and Faysh Khabur (Turkey) and onwards to Europe.

The Minister and Ooredoo's technical delegation also discussed expanding transit capacity into Iraq and marketing it to local internet service providers (ISPs) through the infrastructure of the General Company for Communications and Informatics.

The move is expected to improve service quality, reduce prices, and leverage Iraq's strategic geographical position as a key link between Gulf states and global networks.

(Source: Ministry of Communications)

By John Lee.

Apex Health, a subsidiary of Qatar's Estithmar Holding, has announced that it has obtained an investment licence from Iraq's National Investment Commission (NIC) to develop a 400-bed private hospital in Baghdad's Al-Zaafaraniyah district (formerly Al-Rashid Camp).

The new facility, to be named Baghdad International Hospital, will be built on a 100,000-square-metre riverside site overlooking the Tigris. It will include 400 beds, 16 ICU beds, 12 operating rooms, and 80 outpatient clinics, and is expected to handle more than 600,000 outpatient visits and over 100,000 inpatient admissions annually.

According to a press release from the company, the hospital will provide advanced medical and surgical services, including open-heart, orthopedic oncology, plastic, neurosurgery, pediatric surgery, and transplant programmes (liver, bone marrow, and stem cell). It will also offer dialysis, neonatal care, and a full continuum of inpatient and outpatient services.

Apex Health is already active in Iraq, managing Al Nasiriya Teaching Hospital in Dhi Qar and Al Imam Al Hassan Mujtaba Teaching Hospital in Karbala. CEO Joseph Hazel said the new project demonstrates the company's confidence in the Iraqi market and commitment to supporting healthcare transformation in the country.

Estithmar Holding CEO Juan Leon added that the development aligns with the group's international growth strategy and will deliver added value to shareholders.

(Source: Estithmar Holding)

By John Lee.

As part of its external relations and financial coordination strategy, Iraq's Cabinet has authorised the Minister of Finance, or a delegated representative, to negotiate and sign draft agreements aimed at avoiding double taxation and preventing tax evasion with China, Qatar, and the Czech Republic.

The Ministry of Foreign Affairs will prepare the required authorisation documents on behalf of the Republic of Iraq and submit them for the Prime Minister's signature.

(Source: PMO)

By John Lee.

The National Investment Commission of Iraq has announced the start of the third round of discussions on the draft Agreement for the Encouragement and Protection of Investments between Iraq and the Czech Republic.

The meetings, held in Prague on 22-23 July, follow the recent visit by Prime Minister Mohammed Shia' Al-Sudani to the Czech Republic and are part of Iraq's efforts to strengthen economic ties and promote mutual investment. The discussions aim to foster a sustainable economic partnership, facilitate technology transfer, create jobs, and support economic development.

The Iraqi delegation was led by NIC Chairman Dr. Haider Muhammad Makiyya, accompanied by the Iraqi negotiation team. The Czech side was led by Martina Matušová, alongside the Czech negotiation team. Iraq's chargé d'affaires in Prague, Mr. Hussein Al-Safi, and his deputy Mr. Samer Jamal also attended.

In his remarks, Dr. Makiya highlighted legislative and procedural reforms that have transformed Iraq's investment environment in recent years, citing a significant rise in both local and foreign investment activity. He officially opened the round of talks, describing the agreement as a milestone in deepening bilateral economic cooperation.

Over two days, the parties engaged in in-depth discussions and advanced the drafting of key provisions. Further rounds of negotiation are planned, with the final version of the agreement to be submitted for formal approval under Iraqi law.

On the second day, Czech Deputy Finance Minister Tomáš welcomed the progress and expressed optimism for future talks. He praised Iraq's recent reforms and confirmed that the Czech Ministry of Finance, through its representative at the OECD, would support efforts to improve Iraq's international investment rating. Iraq's total investment volume has reportedly reached $99 billion.

Tomáš also acknowledged Iraq's recent investment agreements with Qatar, Saudi Arabia, and the UAE as encouraging signs of a stable and investor-friendly environment.

(Source: NIC)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

"Ten-year Anniversary & a First Visit to Iraq"

The market, as measured by the Rabee Securities U.S. Dollar Equity Index (RSISX USD Index), was down 4.8% for the month and 1.1% for the year, following increases in 44.8% and 97.2% in 2024 and 2023 respectively.

Iraq, then and now

June marks the ten-year anniversary of the AFC Iraq Fund, launched June 26^th, 2015, a year after it was conceived amidst the perfect storm of ISIS's take-over of the city of Mosul, threatening Iraq's breakup, and the crash in oil prices piling on the misery by adding its potential bankruptcy in the process. It seems almost fitting that, yet another perfect storm was marking its ten-year anniversary, in which the Israel-Iran war, brewing for over 18 months, risked igniting a much-feared wider regional war that could have engulfed Iraq. However, unlike then, the storm dissipated in 12 days, or at least for the time being, as both antagonists have sought ways to end it, that seems to have been found through a U.S. mediation made possible by an orchestrated and symbolic attack on an empty U.S. military base and sealed in a theatrical ceasefire announcement.

However, while the risks of the Israel-Iran war erupting once again are real, Iraq and its economy are very different from ten years ago, helping it to weather the war's worst consequences, and to continue with its economic transformation. As discussed here over the last few years, especially in the outlook for 2025 in "What Next After Two Gangbuster Years?" Iraq's economy is undergoing a long-term economic transformation brought on by two key dynamics, which are in the early stages of driving this transformation. The first of which is the cumulative positive effects of the relative stability that the country has enjoyed over the past few years, that provided a stable and predictable macroeconomic framework for businesses to operate in and to plan for capital investments on a scale not seen in the prior decades. While the second is the significant structural fundamental developments accelerating the adoption of banking and bringing about a transformation of the sector and its role in the economy.

Iraq's equity market's performance has mirrored the country's tribulations and its ongoing transformation, in which its pre-ISIS peak in January 2014, was followed by a brutal seven-year bear market with the RSISX USD Index down 25.4% in 2014, 22.7% in 2015, 17.4% in 2016%, 11.8% in 2017, 15.0% in 2018, 1.3% in 2019, and 5.4% in 2020 -for a cumulative decline of 66.6%; followed by a recovery of 21.4% in 2021, a decline of 3.8% in 2022, an increase of 97.2% in 2023, and a further increase of 44.8% in 2024. Underscoring the early stages of the market's recovery, is that the RSISX USD Index only surpassed its 2014 peak over a decade later in October 2024.

Rabee Securities U.S. Dollar Equity Index

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, monthly data as of June 30^th)

Iraq, as seen through a visitor's eyes

My friend and colleague, Thomas Hugger, CEO of Asia Frontier Capital's (AFC), visited Iraq at the end of May, and with me, embarked on a tour of the country that included business visits to companies such as the Bank of Baghdad (BBOB), and Baghdad Soft Drinks (IBSD), the Iraq Stock Exchange (ISX); cultural tours starting with Baghdad's old districts (Mutanabbi Street, Mustansiriyya Madrasa, Al-Shawaka), and its modern districts; the ancient cities of Babylon, Ctesiphon, Ur; the Marshes; the meeting point of the Tigris and Euphrates rivers forming Shatt Al Arab at Al-Qurnah,; and Iraq's third largest city Basra. This month's report will review our visit to the ISX, the Bank of Baghdad, and focus on one of Iraq's best consumer companies, Baghdad Soft Drinks, and its state-of-the-art production plant, the largest of its kind in the Middle East. Other parts of the tour will feature in the upcoming market reports over the next few months.

This was Thomas' first visit to Iraq, 13 years after AFC started investing in the country. Arriving in Baghdad at 00:30 in the early morning, he was greeted by the driver of "Al-Mosafer Taxi", who took him to a hotel in the neighbourhood of Arasat Al Hindia, in Karada. For Thomas, having just concluded an investor tour in Uzbekistan, arriving on Turkish Airlines from Istanbul, the experience was no different than almost any country among AFC's investable universe that he has travelled to, in such a contrast to the usual Iraq travel advice warnings of the dangers, that are still reflecting Iraq's dark days of conflict that ended years ago. Thomas notes: "Airport immigration was relatively quick and simple: Most foreigners can now apply for an E-visa online and just before going to the immigration counter simply pick up their visa after the helpful staff at the E-visa counter take their mugshots. The airport is still tiny for such an economy, and I assume that a new passenger terminal will be added in the future. I was also impressed by the quality of the brand new three-lane highway leading from the airport to the city centre of Baghdad. Despite the late time of 01:30 am, there was still some traffic. Judging from the style of driving, I would not be surprised that a future Formula-1 driver will be coming soon from Iraq! The emotional and visual highlight though was the crossing of the Tigris River which splits Baghdad into its western part, Karkh, and its eastern part, Rusafa."

The next day, we visited the Iraq Stock Exchange (ISX), situated in the Alwiya area in Karada, in Rusafa, which fortunately happened to be the last trading day of the month, as it allowed us to watch the market's close on the floor of the exchange, after a meeting with the CEO of the Stock Exchange. With the advent of electronic trading in 2009, most investors migrated from watching and trading at the exchange to brokers' offices. However, old habits die hard, and a number of regulars still come to the exchange's floor to meet, gossip, and trade. We chatted with some of them and joined them like two old timers fixated on the trading screens.

At the Iraq Stock Exchange (ISX)

(Source: AFC Research)

May ended on a strong note with heavy activity in some of the leadings stocks such as Asiacell Communications (TASC), Baghdad Soft Drinks (IBSD), Bank of Baghdad (BBOB), Mansour Bank (BMNS), and the National Bank of Iraq (BNOI), in which the five accounted for over 90% of the trading value on the last day of the month -the day ended up among the highest turnover days of the year, at over one and a half times the year to date's average daily trading value. These five companies' market leadership stems from the high quality of their business models, quality of management, and multi-year earnings growth, especially over the last two years, as highlighted last month. All five companies are major constituents of the Rabee Securities U.S. Dollar Equity Index.

Afterwards, we left to visit the Bank of Baghdad, but not before visiting the beautiful Church of Our Lady of Salvation, which is located right across the street from the stock exchange. Our Lady of Salvation is an Assyrian Christian church that survived terrible attacks during Iraq's darkest years of civil war, particularly the attacks in 2004 and 2010. In 2010, there was a twin attack that started at the ISX and was followed by another at the Church with an attack at Sunday Mass. The attackers clearly aimed for maximum damage as Sunday is also the first day of the business week, and so the death toll was 52 worshippers at the church, and four guards at the ISX. In a spirit that is typical of Iraqis, the ISX family went to work the next day as if nothing had happened.

The Church of Our Lady of Salvation

Bank of Baghdad's head office

(Source: AFC Research)

We met Bank of Baghdad's outgoing CEO, who successfully managed the bank's turnaround from mid-2016, and its resumption of growth as highlighted in "Banks and the Predictability of Earnings". After discussing the banking scene in Iraq, he introduced us to the incoming CEO, who shared his strategic plans for the development of the bank in the near future. Afterwards, we had lunch at one of the best grill houses in Iraq, Zarzour on the National Theatre roundabout, and enjoyed a feast of kebab, tikka, liver, hearts and kidneys. Iraqi red meat grills are almost always made of domestic lamb, which are accompanied by high amounts of fat: kebabs have up to 20% of fat content; tikka, liver, hearts and kidneys come with cubes of fat; and for those who want more, restaurants serve skewers of fat cubes as a stand-alone item.  Local sheep breeds are mostly Awassi, followed by Arab and Hamdani sheep, which are broad-tailed breeds with fat tails -they are so prized that successive governments have prohibited their export.

Lunch at Zarour, the National Theatre Roundabout

(Source: AFC Research)

In the evening, we went on a walkabout on one of the liveliest streets in Baghdad, Yarmouk district's "Four Streets", in the Karkh side of Baghdad. Being a Thursday, which is the last of the Iraqi work week, it was full of people, of all walks of life, brimming with energy, movement and whose lively conversations filled the space. Not satisfied with just one grilled meat feast a few hours earlier, we enjoyed another tasty grilled dinner, repeating the same choices, in one of the many restaurants left and right of the buzzing street where entire families walked by or drove in their SUVs, most of which were brand new.

Four Streets, Yarmouk, Karada, Baghdad

(Source: AFC Research)

On Baghdad, Thomas notes: "I noticed that the western part of the city is seeing a lot of construction activity since I assume this part is newer and was therefore less developed a few years ago compared with the eastern part of the city which is very crowded and overbuilt with mostly two to three stories buildings and hosting the older residential and commercial aeras including the historical centre "Olds Rusafa" which is dating back over 1,000 years. I had the feeling that the construction boom and urbanisation of Baghdad were just starting. I was impressed by some huge mixed property developments (residential combined with retail space) -something which could be easily also found in any other place like in the U.A.E., Kuwait, or Qatar. The traffic early in the morning was easy, but later in the day became much more congested, leading to traffic jams into the evening hours (or early morning the next day). It was striking for me that most of the cars seem to be quite new (with the exception of the many yellow taxis) and also that the Dodge "Challenger" is used as a family car in Iraq and seems to be very popular with the local drivers. I was also surprised to learn that the gasoline price in Iraq is about USD 0.65 (850 IQD), which is certainly much cheaper than in Europe, but considerably higher compared with other oil-producing countries."

Construction activity in Baghdad

(Source: AFC Research)

The tour of Iraq's last day ended in Baghdad, with a visit to Baghdad Soft Drinks' (IBSD) head office and its world-class production plant in Al-Za'franiya on the outskirts of Baghdad, which is the largest and best of its kind in the Middle East. IBSD is Iraq's main PepsiCo franchise and has grown organically by expanding the Pepsi Cola line, and strategic acquisitions such as that of the Aquafina (mineral water) licence holder "Ynabee' Al Zawraa Company". As of 2024, IBSD has 15 Pepsi production lines, three Aquafina water production lines, and five juice production lines, with total production growing by about 14% year over year. Complimenting these, were milk products that were introduced in 2024, and a refrigerated hall for milk storage was completed, that while an insignificant part of IBSD's business, nevertheless, Rabee Securities notes that is "... a positive development supporting the expected growth in milk sales" -much like in the rest of the Middle East, fresh milk consumption is on the rise.

IBSD's consistent earnings and revenue growth since 2011, were negatively affected twice in these years. The first business decline was in 2014, following the fall of Mosul and the ensuing conflict, but growth soon resumed in 2015. The second was in 2021-22 when its profit margins took a hit from the significant price rises of commodities, in particular aluminium and sugar, as brought on by the double whammy of the disruptions to supply chains in the wake of the emergence from Covid-19's induced lockdowns, and of the invasion of Ukraine. These higher expenses, while negatively affecting profit margins, were temporary and one-off in nature,  the high year-over-year cost increases moderated significantly and eventually declined; while sales momentum continued to accelerate supported organically by its strong product line-up, as well as by the line-ups from is recent acquisitions -a point made in "Winter Flash Floods" when discussing IBSD, and other top companies following their sharp prices drops in late 2021. The consequences of the cumulative positive effects of the relative stability that the country enjoyed is evident in the acceleration in growth of the last two years. The company's confidence about its future was evident in its latest dividend declaration, at the end of June, in which it increased the cash payout from 0.29 to 0.36 IQD per share, or an increase of 24.2%, resulting in a dividend yield of 7.5%.

IBSD's revenues and earnings margins 2011-2024

(Source: Rabee Securities, company filings, AFC Research, annual data as of 2024)

What is noteworthy, and part of the attractiveness of the Iraq investment story, is that despite the market's strong performance over the last few years, valuation disparities continue to offer investment opportunities.  A case in point is IBSD's valuation disparity with emerging market PepsiCo, and Coca-Cola bottlers (table below) as an example of Iraq's value proposition, and a demonstration of AFC's investment thesis of arbitraging the delta between Iraq's real risk and perceived risk -while a disparity should exist given different market sizes, and other market dynamic differences, yet surely not on such a scale.

Table: Bottler comparisons

(Source: Bloomberg, data as of July 4^th)

On the company, Thomas notes: "We were able to visit the impressive plant factory of Baghdad Soft Drinks in Al-Za'franiya on the outskirts of Baghdad. The plant manager showed us around various buildings where Pepsi, mineral water, and other soft drinks were produced and packaged. The bottling lines did not differ from any soft drink bottling plant in a developed country. Almost all of the machinery was from Germany and hardly any people were doing manual work (except for the forklift drivers moving around the huge piles of bottles or cans) since most of the jobs are computerised or done by robots. Needless to say, the factory was spotlessly clean. We also saw workers from Turkey installing the newest machinery from Germany for the new production lines".

IBSD Production Plant

(Source: AFC Research)

We were taken there by Wassim Al Jzrawy, the CEO of Karmal Brokerage, a colleague and a friend with whom the relationship goes back to 2013, when work first started on the Iraq investment thesis. The visit continued thereafter by touring through Ishtar Sheraton Hotel, sandwiched between the picturesque Tigris River, and "Firdos Square" which became world famous on April 9^th, 2003, when the toppling of Saddam Hussein's statue at that time was shown live on CNN. The hotel is currently undergoing a major refurbishment to meet the strong demand for hotel rooms in Baghdad, as the country's stability, subsequent rebuilding and its booming economy are attracting foreigners, particularly regional businesses investors seeking economic opportunities -or "Go East, young person", a modern day version of "Go West, young man" in the U.S. in the 19^th century, that embodied the massive economic opportunities during the westward expansion in the U.S. So much so, that planes arriving today in Baghdad from Amman, Istanbul, Dubai, or Doha, (some of which have multiple daily flights now), are normally full irrespective of the time of arrival. Increasingly, the inflow of tourists, with the potential economic implications to cater for them, is taking place, as will be covered in the travel reports of our tour of historic Iraq.

View from Ishtar Sheraton Hotel

(Source: AFC Research, left Ishtar Sheraton Hotel, top right Rusafa, bottom right Karkh -both as viewed from the roof of Ishtar Sheraton)

Firdos Square, Karada, Baghdad

(Source: AFC Research, as viewed from the roof of Ishtar Sheraton)

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.