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By David Rosenberg, for The Media Line. Reproduced with permission by Iraq Business News.

It was just another day in Iraq on July 15.

In the city of Kerbaba; two car bombs killed a total of seven people and wounded 19. An American solider was killed in Baghdad while in another part of the capital an Iraqi policeman was injured by a sticky bomb placed under a vehicle. More bombs wounded soldiers in Samarra and in Mosul.

But July 15 also saw the grand re-opening Baghdad's renowned Al-Rasheed Hotel after a $65 million renovation. Britain’s Harlow International undertook the construction work while Holland’s Kempinski Hotel group will manage it.

"The rebuilding of infrastructure, including palaces and airports, is evidence of the ability of Iraqis to achieve what they want,” Foreign Minister Hoshyar Zebari said at the ribbon-cutting ceremony.

Even as Iraq suffers an upsurge of violence – June alone saw 155 civilians killed in attacks, the most since January – foreign investors are flocking to the country. Dunia Frontier Consultants, a Washington DC-based consulting firm, estimates that foreigners were responsible for $45.6 billion in investments, service contracts and other business in Iraq in the first half of the year. That was double the amount the same time in 2010.

Where others see carnage, chaos and corruption, investors see a potentially oil-rich economy whose population of some 30 million is desperate for housing, roads, consumer products and services.

“What you have is a country that produces oil, which makes it very attractive for the hydrocarbon industry to invest there. It’s a country with a very large population,” Daniel Broby, chief investment officer at London’s Silk Invest, told The Media Line. “The middle class suffered a lot of problems but they are educated and there is a lot of home ownership, so banking and telecommunications industries are very attractive for foreign investment.”

Driven by high energy prices, Iraq’s economy will grow 12.5% this year, according to the International Monetary Fund. Iraq’s Oil Ministry said in June alone petroleum brought in $7.17 billion as exports averaged 2.273 million barrels a day at an average price of more than $105 a barrel.

With the government’s coffers swelling, Planning Minister Ali Al-Shukri told Reuters on Monday Iraq is looking to raise its 2012 investment budget by 50% to as much as 60 trillion Iraqi dinars ($51 billion).

The Iranian Shana news agency reports that senior oil officials from Iran, Iraq and Syria have signed a trilateral deal on gas trade in Iran on Monday.

The deal, reportedly worth 10 billion dollars [12 trillion Iraqi dinars] involves the construction of a 5,000-kilometer (3,100-mile) pipeline to transfer Iran’s gas from the South Pars gas field to Europe via Iraq, Syria, Lebanon and the Mediterranean region. The pipeline will take three to five years to build.

The deal was signed by Iran’s acting minister of petroleum Mohammad Aliabadi, Iraq oil minister Abdolkarim Luaibi [Elaibi], and Syrian oil Minister Sufian Allaw, who visited some South Pars gas field phases following the signing ceremony.

The managing director of the National Iranian Gas Company (NIGC), Javad Oji, said an international consultant would be chosen to determine the appropriate route, as well as a financier.

Oji said the South Pars gas field is a reliable source of gas in comparison to the Nabucco pipeline, adding the field holds 16 trillion cubic meters of recoverable gas reserves and has the potential to provide gas up to 80 years at current levels of production.

Referring to satisfactory negotiations with European countries, NIGC’s managing director said: Currently 80 kilometers of the 56 inch sixth Iran’s gas trunkline (IGAT 6), that is intended to transfer gas to our partners, have been completed and construction of the remaining part is underway and is forecast to be completed in the next two years.

In connection with the development of the new phases of South Pars gas field that is shared with Qatar and Iran’s independent gas fields, Mr. Oji noted that Iran’s gas production capacity would double in the next two or three years while domestic gas consumption is expected to fall following changes to the subsidies law. Eventually, Iran will have the potential to export 200 to 250 million cubic meters of gas per day.

Referring to getting permissions from transit countries, NIGC’ chief said: Up to now more than 20 expertise sessions have been held with Turkey, Iraq and Syria on gas exports via their territories and fortunately all of them have given written permissions on the issue. Switzerland would be the first country in Europe to receive Iran’s gas.

According to Oji the project will be funded in the form of BOO and BOT and up to now 15 European companies have expressed an interest in marketing Iran’s gas exports.

"Apart from this pipeline, Iraq is willing to take 20 million cubic meters of gas per day from Iran for a 5 to 10 year period pending development of its own oil and gas fields", Oji told reporters.

(Source: Shana)

The passing of control of the Development Fund for Iraq (DFI) to the Iraqi government may make the assets vulnerable to seizure.

A lawyer for Kuwait Airways told Bloomberg in an interview that “the class of assets against which we can seek enforcement has expanded.”

Christopher Gooding (pictured), a partner at London-based Fasken Martineau, said:

“Despite pleas to the contrary, Iraq is an extremely rich country ... Its trading assets are available worldwide, and it remains our intention to seize Iraqi assets whenever and wherever they are available.”

Iraq amassed about $130 billion in debt under Hussein; it owes Kuwait about $21 billion and carries a significant debt to Qatar and Saudi Arabia. It continues to pay into the UN compensation fund.

“For anyone with unpaid debts with Iraq, this is a very significant development,” Stephen Fietta, a solicitor at Volterra Fietta in London, said in an interview.

Most legal jurisdictions recognize the ability of creditors to seize debtors’ assets as a means of debt enforcement. A sophisticated creditor may be able to track Iraqi cargo and try to seize it as it enters a port, or upon its discharge, he said.

“The risk might be minimized if the legal title was transferred by the Iraqi government before the oil was shipped,” Fietta said. “So there are ways around this, but the constant risk of seizure and enforcement can become a real headache for sovereign debtors, just as for private ones.”

(Sources: Bloomberg, UPI)

Kuwait's Arabian Beverage Company (ABC), which distributes water, juice and dairy products in the Gulf region, plans to boost production and also aims to penetrate the Iraqi market this year, according to Reuters.

The company, owned by Kuwaiti conglomerate Bukhamseen Holding [Bukhamsin], founders of Kuwait International Bank and Abu Dhabi listed First Gulf Bank, wants to creatae a strong base in the region as it competes with rivals such as Kuwaiti Danish Dairy Company and Saudi's Al Marai Company.

ABC will double its water production capacity to 240 million units per year to feed demand in the Gulf market and also increase its fleet to about 800 trucks in three years, Elie Abdo, ABC's deputy general manager for business development told Reuters.

'Currently we have around 420 distribution trucks in Kuwait, Saudi Arabia, Bahrain and Qatar... and for the next three years we will stay focused on this region,' Abdo said.

On the Iraq foray, Abdo said ABC had entered the Iraqi market shortly after the US led invasion in 2003, but through a different brand name and distributors based there.

'Now we plan to penetrate the Iraqi market in October this year through the ABC brand...and that operation alone could need up to 500 trucks for distribution,' he revealed.

(Source: Reuters)

Kuwait’s Zain is considering several tender offers to manage its telecoms network in Iraq and will likely award the contract in the next few weeks, a company spokesman has said.

According to Reuters, Zain refused to name bidders for the managed service agreement, but said there were at least three, with international players such as Nokia Siemens Networks, Huawei Technologies and Ericsson likely candidates.

As a specialist, the winner will be better able to improve network quality, the spokesman said, while Zain can focus on marketing, sales and improving customer service.

The Iraqi government has criticised Zain and other providers for patchy coverage, but Zain blames reception problems on military jamming as security forces try to prevent militants from detonating bombs. In some areas, Zain also relies on generators to power its infrastructure.

Zain’s 12 million subscribers in Iraq make it the market leader, but it faces stiffening competition from AsiaCell, part-owned by Qatar Telecom (Qtel), and Iraqi Kurdistan-based Korek Telecom.

(Source: Kipp Report)

Citigroup and Bank of Baghdad have announced a strategic partnership which offers corporate clients, with major business presence in Iraq, a seamless cash management solution and other relevant banking services.

The client offer encompasses account services, domestic and international payments and collections, liquidity management and electronic banking solutions, backed by a comprehensive customer service and streamlined documentation processes.

This key partnership leverages Citi's state-of-the-art global cash management platform, as well as Bank of Baghdad's franchise and extensive branch network. The partnership also gives Bank of Baghdad, a subsidiary of Kuwait's Burgan Bank, access to Citi's global network across more than 107 countries for cash management solutions and other banking services.

Steve Donovan, Head of Global Transaction Services, Middle East & Pakistan at Citi, said:

"We are delighted to announce this partnership with Bank of Baghdad which is in line with our commitment to Iraq as well as our strategy to bring the right capabilities to our clients through our own global network or through partnerships with prime local banks. This alliance certainly creates a win-win situation for our mutual client base."

Dr. Younes Brouche, Executive Vice Chairman at Bank of Baghdad said:

"Bank of Baghdad has had a long standing and successful relationship with Citi. It brings together our bank's extensive network in Iraq, our product suite and service excellence with the global reach of Citi. We look forward to working with Citi to provide valued clients with bespoke solutions to help them with their operations in Iraq."

Eduardo Eguren, Chief Executive Officer at Burgan Bank Group, said:

"We are pleased to announce this winning partnership. Bank of Baghdad is a fast growing member of Burgan Bank Group and has successfully placed itself as one of the major players in Iraq. This partnership will indeed add value to both Bank of Baghdad's and Citi's clients as well as to Burgan Bank Group clients."

Citi has been in the Arab World for nearly 50 years and views the region as critical to its global franchise. It currently offers full scale corporate banking services across ten Arab countries including Egypt, UAE, Lebanon, Jordan, Tunisia, Morocco, Algeria, Bahrain, Qatar and Kuwait as well as Pakistan. Its consumer banking services cover UAE, Egypt, Bahrain and Pakistan, while it maintains close relationships with high net worth clients in the region through the Citi Private Bank.

(Source: Zawya)

Clyde & Co has been appointed by Lukoil Mid-East Ltd to support them in their development of the West Qurna-2 field in Iraq. With recoverable reserves of 43 billion barrels West Qurna is the second largest oil field in the world.

This is a landmark project for Lukoil, representing as it does a planned production capacity of 1.8 mbd by 2017. This equates to more daily production than Libya currently achieves as an order of magnitude indicator. With planned investment levels of US$4.5bn over the next 3 to 5 years, and a total investment projection of US$30bn, the scale of this project for Lukoil is clear.

Commenting on the selection of Clyde & Co, Director of Legal Affairs for Lukoil Mid-East, Nikolay Isaakov said: "We are pleased to have selected Clyde & Co for a place on our panel of outside law firms for work in connection with Lukoil's operation of the West Qurna-2 field in Iraq. Clyde's major presence in the Middle East and their experience in Iraq, together with their oil and gas expertise, made them an obvious choice for us. We look forward to working with the Clyde's team on this important project."

With first oil projected for 2013 Lukoil and its IOC partner Statoil have an aggressive time table in place. As one of the world’s largest untapped oil fields, the second phase of West Qurna has known reserves of 12.9 billion barrels, and was awarded to Lukoil by Iraqi Ministry of Oil following a lengthy and keenly contested bidding process. The continuing development of this vital national asset, is indicative of the continued improvement in the national oil industry of Iraq.

The Iraqi unit of Kuwait telecoms firm Zain is planning to spend $100m this year as part of its plan to expand throughout the entire Kurdish region over the next five months, its chief executive said yesterday.

Emad Makiya, CEO of Zain Iraq, the country’s biggest mobile phone operator, said the firm planned to extend its services to “every remote village” in the semi-autonomous northern area after officially launching operations in its three main cities on Wednesday. It started initial operations in Iraqi Kurdistan in October.

“The roll out has been completed for phase one. We’re starting phase two very soon. The whole investment is going to be in the neighbourhood of $100m for Zain in the Kurdish region,” he said. “Currently we are covering the metropolitan cities of Dohuk, Sulaimaniya and Erbil, and the connecting highways between the three governates and the rest of Iraq.”

Makiya said phase two involved getting vendors to help Zain extend services around the region and said the ground work for this would start in May. Iraq did not have a mobile phone market under the rule of Saddam Hussein, but the industry has boomed in the past eight years after the 2003 US-led invasion that toppled him.

Zain, with 12 million subscribers, competes with AsiaCell and the Iraqi Kurdistan-based Korek; it expects to add up to 18,000 new subscribers a month from Iraq’s Kurdistan Region.

Makiya said Zain had formally appealed against a $262m fine imposed by Iraq in January for breaching its license. Iraq’s Communications and Media Commission (CMC) last month said it had fined Zain for putting 5 million SIM cards in the local market without permission.

Zain had said it was surprised by the penalty and said the licence fee it had paid Iraq allowed it to build a network, use the spectrum and issue a range of SIM card numbers. “We’re fighting it legally. We’ve already submitted our legal explanation to the CMC and to the hearing committee and we’re waiting for the results,” Makiya said. “We are fully confident that this should be resolved in an easier manner than resort to the law.”

He said Zain was also in talks with AsiaCell — which earlier this month said it had stopped interconnection with subscribers of the “unlicensed lines” — to get the lines reconnected. The Iraqi government has criticised Zain and other providers for patchy coverage, but Zain blames reception problems on military jamming as security forces try to prevent militants from detonating bombs.

Makiya said operating in the Kurdish region was easier, particularly because it was safer than the rest of Iraq. “There is no interference over there like you have here in Baghdad because the region is very secure,” he said. The lack of jamming and the better infrastructure network in the Kurdish area should also improve the quality of calls, he added.

(Source: The Peninsula Qatar)

Iraqi mobile operator AsiaCell has threatened to sue Kuwait-based telecoms provider Zain, after it allegedly distributed millions of unlicensed SIM cards, hitting AsiaCell's market share.

It has also disconnected several million Zain Iraq subscribers whose lines have not been fully licensed by the Communications and Media Commission (CMC).

AsiaCell, in which Qatar Telecommunications Co (Qtel) has a 30 percent stake, states that the CMC requested that all telecom companies immediately discontinue their interconnection with unlicensed lines under threat of litigation. Based on these directives, Asiacell has disconnected these lines to avoid legal ramifications.

Asiacell says it retains its legal right to demand compensation from Zain for distributing millions of unlicensed SIM cards, thus significantly damaging Asiacell’s market position by hindering its ability to supply the Iraqi market with the necessary amount of SIM cards and forcing Asiacell to reuse old lines for some of its offers.

Moreover, it claims Zain’s actions have resulted in limiting the number of lines available to Asiacell, which has stunted the company’s ability to launch new offers that benefit Iraqis in various provinces.

In February, the CMC fined Zain $262 million for putting 5 million SIM cards into the local market without permission, in breach of its licence. Zain said it would appeal against the fine.

Reuters reports that on Tuesday, Zain said in a statement that it was "seeking discussions with AsiaCell" on the issue. "Based on signed agreements and recognized international practices, we remain very confident of our legal position, and we hope that this matter will soon be resolved amicably, so that customers of both mobile operators are properly reconnected."

The Iraqi government has criticised Zain and other providers for patchy coverage. Zain has blamed reception problems on military jamming as U.S. and Iraqi security forces try to prevent militants from detonating bombs.

Zain, the Gulf region's third-biggest telecoms firm by market value, competes with Korek, based in Iraqi Kurdistan, and AsiaCell.

Zain, which has around 53 percent market share in Iraq, won a 15-year licence for $1.25 billion in 2007. It was fined $18.6 million by Iraq for poor cellphone service in 2009.

It had more than 12 million subscribers at the end of 2010 and expects to add up to 18,000 a month after it began service in the semi-autonomous northern Kurdish region.

In June 2010, AsiaCell had 8 million subscribers or almost 38 percent of a market with 70 percent penetration.

(Sources: Reuters, AsiaCell)

Qatar Telecom (Qtel) has announced significant growth last year in its Iraqi Asiacell operations.

Following on from the strong subscriber growth achieved in 2009, Asiacell has continued to increase its subscriber base this year leveraging its country-wide network.

Asiacell's total subscriber base at 31 December 2010 stood at 8.1 million (FY 2009: 7.4 million). At the same time, Asiacell has delivered a number of significant enhancements this year to both its infrastructure and its service line.

These efforts combined have resulted in Asiacell delivering revenue growth in 2010 of more than 26.4% to QR5.1bn (FY 2009: QR4.0bn). EBITDA also increased, growing 21.2% year-on-year to end 2010 at QR2.6bn (FY 2009: QR2.2bn), a significant achievement in what remains a challenging and competitive marketplace.