Custom Search

By John Lee.

The First Deputy Chief Executive Officer of Russia's Gazprom Neft has said that the company plans to boost oil production at Iraq's Badra oil field from 65,000 barrels per day at present to 115,000 bpd "in the next year".

Vadim Yakovlev told the St. Petersburg International Economic Forum (SPIEF) on Thursday that production may increase further to 170,000 bpd.

According to TASS, it was reported earlier that Gazprom Neft plans to fully compensate its Badra project costs in 2018.

The oilfield development project is designed for 20 years with an optional 5-year extension.

(Source: TASS)

By John Lee.

The Chief Executive of Russia's Lukoil has said he expects further investment in Iraq, now that the country "actively repaying" the international oil companies for their investment in the country.

Vagit Alekperov (pictured) told Reuters:

"Iraq is very actively repaying the operators. The situation has changed dramatically.

"We know about the IMF talks and we know that the IMF makes it conditional for Iraq to pay back the contractors.

"We hope they pay back all debts by November so we can start a new investment cycle before the end of the year. Our long-term Iraqi production goal remains intact - 1.2 million barrels per day. Iraqi fields have huge potential."

Lukoil is producing 0.4 million bpd in Iraq and if it did triple output at the West Qurna field, the country would be able to produce more than 5 million bpd.

(Source: Reuters)

By John Lee.

Russian oil company Lukoil has announced that, in the first quarter of 2016, the Group received 2.6 million tonnes of compensation crude from Iraq's state-owned South Oil Company as cost compensation within the West Qurna-2 project (in the first quarter of 2015, the Group received 2.3 million tonnes of compensation crude oil).

It also attributed the increase in the company's international production to higher production at West Qurna-2.

Lukoil gave the following summary of the company's involvement in project:

On 12 December 2009, a consortium of a Group company and Statoil won the tender for development of the West Qurna-2 field in Iraq, one of the largest crude oil fields discovered in the world, with estimated recoverable oil reserves of 12.9 billion barrels (1.8 billion tonnes). The service agreement for West Qurna-2 field development and production was signed on 31 January 2010 and then ratified by the Ministry cabinet of the Iraq Republic. After Statoil withdrew from the West Qurna-2 project in May 2012, the parties of the project are Iraq's state-owned South Oil Company and a consortium of contractors, consisting of a Group company (75% interest) and Iraq's state-owned North Oil Company (25% interest).

The Group launched the "Mishrif Early Oil" stage on the West Qurna-2 field and reached the planned production of 120 thousand barrels per day in March 2014. According to the service agreement, costs are compensated after this level of production is achieved and maintained during any 90 days within a 120-day period. In June 2014, we met this term and from the second quarter of 2014 started to receive cost compensation. The project's target production level is 1.2 million barrels per day and the total term of the contract is 25 years.

Accounting for the cost compensation within the West Qurna-2 project in the Group consolidated statement of profit or loss and other comprehensive income is as follows. The crude oil sales revenue is recognized after the Iraqi party has approved the actual invoice for the spending quarter. The invoice total amount depends on crude oil production volumes and the market prices for crude oil during the period. It also includes our remuneration fee. Subsequently, crude oil purchases based on actual crude oil shipments by the Iraqi party against its debt for cost compensation are recognized in Cost of purchased crude oil, gas and products. This crude oil is either sold to third party customers or delivered to our refineries. After realization of these products, respective sales revenues are recognized.

The West Qurna-2 project's summary is presented below:

The following table summarizes the amount of capital and operating cost recognized, compensation crude oil received, costs yet unrecovered and remuneration fee.

The Group is exposed to various risks due to its operations in Iraq. Management monitors the risks associated with the projects in Iraq and believes that there is no adverse effect on the Group's financial position that can be reasonably estimated at present.

By John Lee.

Iraq has taken over from Russia as Turkey's biggest market for citrus fruits.

In 2015, Russia took $90.52 million worth of the product, while so far in 2016 Iraq has taken citrus fruit to the value of $84.54 million.

(Source: Fresh Plaza)

(Picture Credit: Layth Mahdi)

By John Lee.

The secretary of Iran's Cement Industry Employers Association has said that Iraq has promised to remove its ban on the import of Iranian cement.

Fars news agency quotes Abdolreza Sheikhan as saying that following several meetings between Iranian and Iraqi officials, Baghdad promised to give priority to Iranian exports, once general ban on cement import is removed.

He said Iraq's cement demand is currently met from domestic production.

Iran's cement and clinker exports fell by 20 percent in the Iranian year ended March 20, and stood at 15 million tons.

Iraq had previously accounted for 60 percent of Iran's cement exports.

Last year Baghdad increased tariffs on Iranian cement from $4 to $13.

Iran currently exports cement to some 24 countries including Azerbaijan, Turkmenistan, Afghanistan, Russia, Kazakhstan, Kuwait, Pakistan, Qatar, Turkey, the United Arab Emirates, Georgia, Oman, India, and China.

Last year, Sheikhan warned that Iran is gradually losing its domestic and foreign cement markets.

"Cement supply and demand is not balanced in the market and this has created problems for producers," he said.

(Source: Trend)

By Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

On the night of April 30, the crowd that stormed the Green Zone gathered in the Great Celebrations Square inside the zone and chanted “Iran Out Out” and “Qasem Soleimani … Sadr is a divine person,” in reference to Shiite cleric Muqtada al-Sadr.

This indicates that feelings and political stances hostile to the policy that Iran has adopted in regard to Iraq since 2003 have been revived among the Shiites.

It is understandable that hatred for Iran prevails within the Iraqi Sunni community, due to sectarian considerations that are influenced by the current sectarian conflict in the region. Hatred for Iran, based on the Arab nationalist considerations hostile to Persian nationalism, which prevailed under the rule of Saddam Hussein, is also understandable.

Yet, what happened in Celebrations Square points to the unique reasons behind the feelings that prevail among the Shiites, which are supposed to be on the side of the Iranians in the current conflict.

The emergence of this new political stance away from the sectarian affiliation is an important development in the Shiite community’s political awareness, which has been a result of the Iranian bias and arrogance in dealing with the Iraqi issue after the fall of the Baath regime.

The criticism of the Iranian stances by Iraqi Shiite religious and political leaders is growing. On March 8, 2015, Ali Younesi, President Hassan Rouhani's adviser on ethnic and religious minorities affairs, said that Iraq is a part of the great Iranian civilization.

In response to these remarks, the spokesman for Iraq's top Shiite cleric Ali al-Sistani, Sayyid Ahmad al-Safi, said on March 13, 2015, "We are proud of our country, our identity, our independence and our sovereignty. While we welcome any help offered today from our brothers and friends in our fight against terrorism and thank them for it, it doesn’t mean that we would ignore our identity and independence in any way. For we are writing our history with the souls, wounds and blood that our sons from all constituents and ethnicities shed during the battles against terrorism.”

By Simon Kent.

A think tank has estimated that the so called Islamic State have suffered another major blow to their finances, losing another 30% of their income in the course of a year. The news comes after reports in January that the group slashed the salaries of fighters by over half.

In that respect, it may actually be good news for the group that they are suffering a manpower shortage.

Initially, many analysts and news reporters speculated that the group had huge income from local sources in the Summer of 2014, even in the absence of foreign terrorist financing.

For example, for a long time Coalition jets did not target ISIS controlled oil infrastructure, which was in part manned by "civilians". But as it became obvious that this was a major source of their cash (as much as $1.5 million per day in the summer of 2014) the Coalition hit ISIS oil hard, decimating their funds and dropping warning leaflets to oil workers to evacuate.

Then greater attention was turned to banks operating on the fringes of ISIS controlled territory, as well as other financing such as remitters. It now appears that loopholes have been gradually closed off in the shady world of money laundering and using the Dark Web to raise funds.

As such, the report by IHS inc. now puts ISIS income at around $50 million per month, a pathetic sum considering there are at most 6 million people in ISIS controlled territory. Additional ISIS financial losses have also come from a loss of territory, and Russian and US aerial bombardment,  which has helped liberate Palmyra and Ramadi.

This has decimated the areas they can collect taxes in and confiscate property, but ISIS territory has also suffered catastrophic economic collapse from war and being shut out from international trade.

It is certainly an interesting report: at the beginning of last year, IBN blogger Robert Tollast argued that ISIS was on a losing streak, perhaps an over optimistic prediction at the time. But as time goes by, that is looking increasingly to be the case.

(Source: Foreign Policy.)

By Simon Kent.

Iraq's Ministry of Defence has announced that a delivery of three SU-25 ground attack aircraft have arrived in the country for the fight against the so called Islamic State.

The Russian made SU-25, known by its NATO code name "Frogfoot," is a slow moving but heavily armed ground attack jet, and several are already in service in the Iraqi Air Force.

(Source: UPI)

By John Lee.

Iraq's Ministry of Oil quotes a report by Rystad Energy as saying that Iraq has the world's third-lowest-cost crude oil.

Kuwait came in lowest at $8.50 per barrel, with Saudi Arabia at $9.90, followed by Iraq at $10.70.

Fourth place went to UAE at $12.30, and Iran took fifth place with $12.60.

The United Kingdom was the most expensive at $52/barrel, followed by Brazil at $49 and Canada at $41.

The US cost averaged $36, and Russia $18.

(Source: Ministry of Oil)

By John Lee.

KRG Minister Falah Mustafa met with Russian Ambassador to Iraq Mr. Ilya Morgunov and Russian Consul General in Kurdistan Mr. Viktor Simakov on Sunday to discuss strengthening bilateral ties and challenges facing Kurdistan and the wider region.

Minister Mustafa and Ambassador Morgunov reviewed ways of strengthening bilateral cooperation between the Russian Federation and the Kurdistan Region in various fields.

Minister Mustafa briefed the Ambassador on the ongoing security, financial, and humanitarian challenges facing the KRG and requested continued support from the Russian Federation.

Ambassador Morgunov affirmed the commitment of his government to continue to provide military and humanitarian assistance to the Kurdistan Region.

He stressed that the international community has a shared responsibility to support the region in the fight against ISIS, as it poses a serious threat to international security and peace.

(Source: KRG)