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Dana Gas has announced that its share of the proved plus probable (2P) hydrocarbon reserves at Pearl Petroleum Company's Khor Mor (pictured) and Chemchemal fields in the Kurdistan Region of Iraq (KRI) have increased by 10 percent following the recent certification of reserves by Gaffney Cline Associates ('GCA').

2P Reserves Upgrade

The independently audited report, prepared by Gaffney Cline on behalf of Pearl Petroleum, showed that the total share for Dana Gas (35% shareholder in Pearl Petroleum), is equivalent to 1,087 million barrels of oil equivalent (MMboe), up from 990 MMboe when GCA first certified the fields in April 2016.

This confirms that the fields located in the KRI could be the biggest gas fields in the whole of Iraq. The reserves were boosted in part by the booking of oil reserves in the Khor Mor Field for the first time.

GCA's most recent report confirmed that Dana Gas's share of the Khor Mor and Chemchemal 2P reserves was 4.4 trillion cubic feet gas (2016: 5.3 Tcf), 136 million barrels of condensate (2016: 109 MMbbls), 13.3 million metric tonnes LPG and 18 MMbls of oil, the equivalent of 1,087 MMboe, as compared to 990 MMboe in April 2016.

Dr Patrick Allman-Ward, CEO of Dana Gas, said:

"The Gaffney Cline report has independently confirmed Dana Gas' 2P reserves in our KRI assets at over 1 billion barrels of oil equivalent and our belief that the Khor Mor and Chemchemal Fields will most likely be the biggest gas fields, not just in the Kurdistan Region Iraq, but the whole of Iraq, making them world-class assets. 

"It is also satisfying to see that our auditors have formally booked oil reserves for the first time in Khor Mor. We believe that this is just the tip of the iceberg confirming our estimate of oil resource potential of over 7 billion barrels.

"These additional resource declarations will underpin our future development plans which will provide a reliable source of energy to meet the needs of electricity generation as well as industrial development in the region."

Future Development

Earlier in the year, Pearl Petroleum signed a 20-year gas sale agreement with the Kurdistan Regional Government ('KRG') that will facilitate the production and sale of an additional 250 MMscf/d of gas.

Pearl Petroleum's expansion plan will see output increase to 650 MMscf/day in 2022, and then to 900 MMscf/day by 2023 from the current 400 MMscf/day.

With the price of oil ranging between $60 to $70 per barrel, each of these two new gas production trains will generate between $175 to $200 million to the Company's share of revenue and project's cash flows per annum.

(Source: Dana Gas)

On July 19, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation ^[1] with Iraq.

An improved security situation and the recovery in oil prices have improved near-term vulnerabilities. Large fiscal and current account surpluses—around 8 and 6 percent of GDP, respectively—were recorded in 2018, allowing the government to retire domestic debt and accumulate fiscal buffers. Gross international reserves reached $65 billion by end-2018.

However, post-war reconstruction and economic recovery have been slow. Non-oil GDP rose by only 0.8 percent year-on-year in 2018 in a context of weak execution of reconstruction and other public investment. Overall GDP contracted by around 0.6 percent as oil production was cut to comply with the OPEC+ agreement.

The 2019 budget implies a sizable fiscal loosening that will reverse the recent reduction in vulnerabilities. Current spending is expected to increase by 27 percent year-on-year, in part due to a higher public sector wage bill, while revenues will be dampened by the abolition of non-oil taxes. As a result, the budget is projected to shift to a deficit of 4 percent of GDP in 2019, and reserves are projected to decline.

The fiscal and external positions are expected to continue to deteriorate over the medium term absent policy changes—with reserves falling below adequate levels and fiscal buffers eroded. Although the level of public debt will remain sustainable, gross fiscal financing needs will increase. Non-oil GDP growth is projected to reach 5½ in 2019 but subside over the medium term.

In a context of highly volatile oil prices, the major risk to the outlook is a fall in oil prices which would lower exports and budgetary revenues, leading to an even sharper decline in reserves or higher public debt. Geopolitical tensions, the potential for social unrest in a context of weak public services and lack of progress in combatting corruption pose further risks.

Executive Board Assessment [2]

Executive Directors agreed with the thrust of the staff appraisal. They were encouraged by the recent strengthening of Iraq’s economy but recognized that the country continues to face daunting challenges. Social conditions remain harsh, post-war reconstruction progress is slow, development needs are large, and institutional weaknesses are significant. Volatile oil prices and a difficult regional and geopolitical environment pose additional difficulties.

Directors encouraged the authorities to seize the opportunity presented by the improved security situation and higher oil prices to implement policies and structural reforms aimed at ensuring macroeconomic and financial stability, tackling long-standing social problems, and promoting sustainable and inclusive growth.

Directors emphasized that building a robust fiscal framework is essential to maintain fiscal and macroeconomic stability and strengthen buffers. They encouraged the authorities to adopt a risk‑ and rules-based approach to fiscal policy as part of broader reforms to manage oil revenue more effectively, reduce tendencies for procyclicality, and shift to a more growth-friendly composition of expenditure. Directors supported scaling up reconstruction and development expenditure gradually in line with improving absorptive capacity.

They underscored the need to strengthen public financial management to ensure public spending is appropriately monitored and to reduce vulnerabilities to corruption. In this context, Directors welcomed the newly adopted General Financial Management Law and encouraged its full implementation.

Directors emphasized that gradual fiscal adjustment, including containing current primary spending and boosting non-oil revenues is essential for maintaining fiscal and debt sustainability. They recommended that spending measures should give priority to containing the growth in wage bill and lowering subsidies to the electricity sector. Directors emphasized that the poorest and the most vulnerable must be protected from the adjustment process.

Directors underscored that an overhaul of the banking sector is necessary to maintain financial stability. They encouraged the authorities to restructure the large state-owned banks, enhance their supervision, and implement other reforms to increase financial intermediation. Directors highlighted the benefits of increasing financial inclusion, especially for the SME sector, which has a large potential to absorb entrants to the labor market.

Directors agreed that building public institutions and enhancing governance is key for success, and highlighted the scope for Fund capacity development to support these efforts. They welcomed progress in developing an anti-corruption framework and called for further modifications to the legal regime for combatting corruption coupled with stronger coordination between the relevant government agencies, while continuing to strengthen the framework for Anti-money laundering and combatting the financing of terrorism (AML/CFT). Directors also recommended strengthening Public Investment Management framework to ensure that spending is well directed and that donor funds targeting reconstruction are put to the most efficient use.

Directors looked forward to continued close engagement between the authorities and the Fund in the context of post program monitoring.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm .

(Source: IMF)

By John Lee.

Iran’s gas and electricity exports to Iraq are reportedy expected to reach $5 billion by the end of the current Iranian calendar year, which ends on March 21, 2020.

Mehr news agency quotes the Secretary General of Iran-Iraq Joint Chamber, Seyed Hamid Hosseini, as saying that if Iraq agrees it is possible for Iran to barter the necessary goods in return for the gas and electricity, the Central Bank of Iraq (CBI) "should cooperate in this regard".

(Source: Tehran Times)

NIC Chairman: Iraq is an Attractive Environment for Power Sector

National Investment Commission (NIC) Chairman, Dr. Sami Al-Araji assured, during a word he delivered in Powering Iraq Conference held in Baghdad July.10.19 that Iraq is an attractive environment for capitals in various economic sectors and at the top stands the power sector and that investment laws and regulations contained generous incentives that fertilize the land for the foreign companies to invest in the country.

The conference was attended by Ministers of Oil and electricity, Ministries and Government institutions representatives, Iraqi private sector representatives in addition to Ambassadors of a number of countries.

NIC Chairman stated that the Commission granted a number of investment licenses in power sector a head of which was Bismayah Power station executed by Mass Holding Company with a capacity of 3000 MW and work is proceeding to add 1500 MW, as it is currently covering 60% of Baghdad need for electricity power, while other licenses were granted to implement power stations in the southern part of Iraq with an estimated total capacity of 4500 MW (some of them are achieved and others in their final completion stages).

He also added that NIC is keen to cooperate with other relative ministries and institutions to achieve self- sufficiency in power in all its types including employing the renewable energy to reach this goal. Dr. Sami also praised the role of the local and foreign private sector which contributed to motivating the investment wheel in various strategic and vital sectors like (Oil and Gas, Housing, Industry, Health, Agriculture, and higher education) disseminated all over Iraqi provinces in a way that provided new national income resources.

NIC Chairman invited the Government and the Parliament to issue the legislations that can contribute to implementing the five year and ten year plans laid to guarantee the substantial development, stressing the continuance in NIC program aiming at constructing strategic investment projects that serves the country like the housing project of Bismayah consisting of 100 thousand housing unit.

The conference works also witnessed speeches for Minister of Oil, Minister of Electricity, Representative of the Ministry of Industry and Minerals, Ambassadors of US and UK. the conference was attended by more than 200 businessmen from inside and outside Iraq during which presentations of Ministries of oil and Electricity were presented in the fields of energy and alt- energy and was closed by round tables meetings between the Public and private sectors.

(Source: NIC)

Health, sport, nature: Key sites in Mosul reopen after damage by ISIL

Al Rabee Primary Healthcare Center, the Al Muthana Sport and Youth Center and the East Mosul Nursery Plantation were officially reopened today by the Government of Ninewa, following their rehabilitation by the United Nations Development Programme (UNDP).

“While a lot of work remains to be done in Mosul, the opening of these three projects shows the strength and resilience of the city – one that’s well on its way to recovery after experiencing immense hardship under ISIL’s control,” says UNDP’s Resident Representative in Iraq, Zena Ali Ahmad.

“Al Rabee is one of 24 healthcare centers and hospitals rehabilitated by UNDP in Mosul and provides critical healthcare services to communities across the city,” she says.

“The Al Muthana Sport and Youth Center is an opportunity to reengage our youth. Sport and organized youth actives go a long way in keeping young people feeling healthy, recognized and valued, so this facility is extremely important.

“And plants produced by the Nursery will not only beautify the city, but they also hold great symbolism – representing new life and restored hope for the people of Mosul.”

Rehabilitation of Al Rabee Primary Healthcare Center was funded by the United Arab Emirates (UAE) and furniture for the Center was provided by a financial contribution from Poland. Rehabilitation of both the Sport Center and Nursery Plantation was supported by The Netherlands.

“The completion of these sites wouldn’t have been possible without the generous contribution of our donors. We’re extremely grateful to the UAE, Poland and The Netherlands for their continued support to stabilizing Iraq,” adds Ms Ali Ahmad.

Approximately 827 stabilization projects have been completed or are underway by UNDP in Mosul, including restoring water and electricity networks, rebuilding educational institutions and healthcare facilities, providing employment for locals to clear rubble from streets, and rehabilitating 15,000 houses.

About the projects

Al Muthana Sport and Youth Center is a public sporting facility and a hub for organized youth activities. At 6700m2, it includes multi-purpose courts for basketball, volleyball, tennis and handball. Under ISIL’s occupation it was used as the militant group’s primary training base.

East Mosul Nursery Plantation is the main source of plant supply to government departments. The area covers 56,000m2 and consists of greenhouses, net shades, open spaces and admin buildings. Prior to ISIL’s occupation, the nursey would produce 250,000-300,000 plants per year.

Al Rabee Primary Healthcare Center is one of the largest in West Mosul. Before ISIL’s occupation, the Center served some 500 patients per day in a catchment area of about 39,000 people. Today it receives about 100 patients per day, however this number is expected to increase as more people return home.

(Source: UNDP)

JICA (Japan) and UNDP Partnership Agreement to Accelerate the Projects for Socio-Economic Development in Iraq

Japan International Cooperation Agency (JICA) and UNDP announced a renewed agreement and commemorated the 10th anniversary for their partnership to accelerate the implementation of socio-economic infrastructure projects in Iraq to improve the economic recovery and living condition of Iraqi people in key sectors such as electricity, water and sanitation, oil, irrigation, transportation, industry, health and communication. The GoI welcomes the reinforced partnership between JICA and UNDP.

Since 2008, JICA has signed 31 loan agreements, total amount of which is JPY 830 billion (equivalent to USD 7.7 billion), with Iraqi Government for economic and social infrastructure projects and programs in Iraq to improve daily lives of Iraqi people. In order to ensure accountability, transparency and efficiency in project implementation, the Government of Iraq (GoI) and the Government of Japan/JICA jointly established a monitoring mechanism called Monitoring Committee (M/C) in 2008. UNDP has undertaken the supporting role to assist and advise the M/C based on the partnership agreement between JICA and UNDP.

Under this partnership, UNDP has been working alongside JICA and the Government of Iraq (GoI) on project monitoring and capacity development. UNDP identifies bottlenecks pertaining to project implementation, providing analyses and recommendations for action on cross-cutting issues to the M/C to accelerate project implementation.

The M/C is the longest continual committee in the GoI system as the 43rd M/C Meeting was held on 4th July 2019 in Baghdad with Iraqi ministries to update the progress and find the solutions for challenges that the projects face in order to accelerate the project implementation and deliver the public services to the Iraqi people.

The GoI, JICA and UNDP reconfirm all parties’ continual efforts to enhance this tripartite collaboration mechanism to expedite the improvement of national strategic infrastructures, which will contribute to better public services as well as to the private sector development for more and better job opportunities.

(Source: UN)

Germany's Siemens has received an order to supply the key components and long-term power generation services for the 840-megawatt (MW) Maisan combined cycle power plant in Iraq.

CITIC Construction Co., Ltd., the Chinese engineering procurement and construction firm building the plant, and Iraqi developer MPC, part of Raban Al-Safina for Energy Projects (RASEP) awarded the contract valued at more than EUR 280 million to Siemens.

The independent power project is expected to deliver first power by March 2021 and enter full combined cycle mode by early 2022. The plant will supply sufficient electricity to meet the needs of more than three million Iraqis, while also supporting the industrial sector.

The Siemens scope of supply includes two SGT5-4000F gas turbines, oneSST5-4000 steam turbine, and three SGen5-2000H generators, along with the SPPA-T3000 control systems, transformers and related electrical equipment, and the fuel gas system.

Saadi Saihood, Chairman of Raban Al-Safina Group, said, "Maisan combined cycle power plant project will be one of the unique projects in a series of power generation projects in Iraq's history that will stand out due to its combining innovative German technology with an experienced Chinese EPC service provider. We are confident that such a strong team will enable us to deliver a successful project that will benefit millions of Iraqis."

"Iraq is undergoing an economic transformation, and as the country embarks on a series of ambitious infrastructure projects, efficient and reliable electricity will be essential to powering this development," said Dietmar Siersdorfer, CEO of Siemens Middle East and UAE. "With a presence in the country that dates back more than 100 years, we are proud to support the generation of half of Iraq's power supply. We are also committed to providing vocational training for up to 1,000 Iraqis in order to develop a pipeline of talented local employees who can contribute to the new Iraq."

The Maisan combined cycle power plant in Iraq will add 840 megawatts to the grid and provides a reliable power supply for more than three million Iraqis.

"This project will mark an important power generation milestone in Iraq. The state-of-the-art power island that will be installed by Siemens, including the latest technology of F-class gas turbines, will turn the Maisan power plant into the most efficient gas-fired combined cycle power plant in Iraq. This is very critical for the economics of the long-term operations and the effective utilization of fuel," said Karim Amin, CEO of Power Generation at Siemens Gas and Power. "In addition, the long-term service agreement is designed to ensure increased efficiency and maximum availability of the power plant while also providing technical training for local Iraqi staff on the operation and maintenance (O&M) front. This will support skills development and knowledge transfer to the Iraqi people."

Siemens will also utilize its Power Diagnostics Services (PDS), part of the Omnivise Digital Services portfolio. The company's PDS solution combines asset data with industry expertise to deliver information that allows faster and accurate predictive analysis for effective decision-making. This enables improved operational planning to increase availability, mitigate risks, and optimize operational costs.

Siemens and the Ministry of Electricity of the Republic of Iraq recently signed an implementation agreement to kick off the actual execution of the roadmap for rebuilding Iraq's power sector. As part of the implementation agreement, the two agreed on the awarding of contracts valued at approximately EUR 700 million for phase 1 of the roadmap. This includes the EPC construction of a 500 MW gas-fired power plant in Zubaidiya, the upgrade of 40 gas turbines with upstream cooling systems, and the installation of thirteen 132 kV substations as well as 34 transformers across Iraq.

(Source: Siemens)

By John Lee.

The World Bank will reportedly lend a total of $200 million to Iraq for upgrades to its electricity grid.

According to Basnews, the agreement was signed by Finance Minister Fuad Hussein and Yara Salim, a representative to the World Bank.

"There will be attempts to address the problem of power supply in Basra province and surrounding areas in collaboration with the World Bank," the Iraqi minister added.

Iraq is expected to implement the projects within five years, and repay the debts in ten to 15 years.

(Source: Basnews)

By John Lee.

The Cabinet held its regular meeting in Baghdad on Tuesday under the chairmanship of Prime Minister, Adil Abd Al-Mahdi.

The Cabinet approved a series of recommendations from the Ministerial Economic Council to support the growth of Iraq’s cement industry and to ensure that production capacity continues to meet domestic demand. No details of the recommendations have been announced.

It also approved a loan agreement between the Republic of Iraq and the International Bank for Reconstruction and Development (IBRD) for what it described as an "electricity services reconstruction and enhancement project".

According to a governmengt statement, it also approved a recommendation from the housing consultative group that investors in housing projects need to complete a percentage of the planned building work before they are allowed to own the land.

(Source: Government of Iraq)

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Basra protests build in Iraq as sub-standard services persist

In an exclusive interview with Al-Monitor, Iraqi Minister of Electricity Luay al-Khatteeb talked about the situation of Iraq’s electricity sector amid tense US-Iran relations.

He discussed the waiver timeline that Washington granted Baghdad to keep buying Iranian gas and mentioned his fear that some parties are politicizing the electricity sector in Iraq.

Click here to read the full story.