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Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

Abu Dhabi National Energy Company (Taqa), Exxon, WesternZagros

Action Calls:

• Erbil-Baghdad escalation continues: Not likely to blow up now, but watch for indications that red lines are being crossed.
• Taqa doubles down in Kurdish region: One sign of faith in Kurdish future. Will it pay off like WesternZagros?

Headlines:

• VP Hashemi Leaves Kurdistan for Qatar, KSA Visits: His return could signal of KRG strength and defiance.
• Potential Violence Looming after Attempted Hit: Reminder that Arab street can target Kurds too.

Calendar Events Discussed:

• April ? - proposed date for National Reconciliation Conference
• April 20 - Rewritten contract terms expected for 4th Oil and Gas Auction

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.

Sources in Baghdad have told Iraq Business News that Exxon Mobil has decided to abandon its contract at the giant West Qurna-1 oilfield in Southern Iraq, in favour of pursuing its interests in Iraqi Kurdistan.

In recent days the Iraqi Ministry for Oil has claimed to have received a second letter from Exxon in which it says it has "frozen" its contracts with the Kurdistan Regional Government (KRG); the KRG, on the other hand, denies that this is the case, and has described Baghdad's claims as "rubbish".

Exxon CEO Rex Tillerson said earlier last month that the company was committed to both exploring in Kurdistan, as well as to expanding its West Qurna output.

If this latest rumour is true, it would be a huge blow to the government of Nouri al-Maliki, and could jeopardise the planned 4th round of energy licences due to be auctioned at the end of May.

Exxon is the lead contractor at West Qurna-1, with a 60% stake, while Shell has 15% and the remaining 25% belongs to the Iraqi state.

The Financial Times reports that Iraq’s central bank has tightened its clampdown on its sales of dollars, amid fears that buyers are using them to launder money and skirt international sanctions on neighbouring Iran and Syria.

The bank unveiled new rules on Monday to force customers to prove their identities by supplying tax records and import licences. Its deputy governor, Mudher Salih Kasim, told the FT, “Iraq is liberal and the two countries next door are under sanctions. You can see the consequences are very bad: this is spillover.”

The Iranian rial is now trading at 16,000 to the dollar, versus 12,500 in December.

Demand for dollars is as high as $400m and $450m a day, more than double some estimates of the legitimate need, may be due to criminality and Iraqi middle men settling debts on behalf of clients in Iran and Syria.

The new rules will compel all commercial buyers of dollars at the central bank’s near-daily auctions to produce tax clearance certificates and, from 30th June, papers to prove they are allowed to import the goods they say they are using the money to buy.

In February, the central bank asked dealers to submit cheques rather than cash, in order to identify currency buyers, but this largely failed because purchasers were simply hiring third parties such as “porters from the street” to open bank accounts on their behalf.

One currency dealer told The National, "I don't have the right to ask my client what he is going to do with the dollars when he takes it from my shop. It's almost impossible to track where the money is going, because the currency has been taken to the street."

(Sources: Financial Times, The National)

Advertising Feature

Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

BP, ExxonMobil, Total, WesternZagros

Action Calls:

• Stakes rise as GoI courts BP in Kirkuk: Definite escalation, but let's hope it stays war of words. Watch Kurdish peshmerga around Kirkuk.
• WesternZagros climbs 18% on oil find: Reminder of WZR's promise, trading around core position to profit from volatility.

Headlines:

• Arab League summit a qualified success: AL summit concludes without significant security breach, strengthening Maliki.
• National conference date proposed: Most likely stillborn, but if it gains traction, something may be afoot.

Calendar Events Discussed:

• This week - Arab League summit aftermath
• April 5 - proposed date for National Reconciliation Conference
• April 20 - Rewritten contract terms expected for 4th Oil and Gas Auction

Click here to access the report, or to add your email address to Dunia's mailing list to receive the Iraq Market Tracker via email.

The Iraqi oil ministry is said to be still considering whether to allow Exxon Mobil to bid in the country's 4th energy licensing auction, lifting a ban that was imposed because of the deal it struck with the Kurdistan Regional Government (KRG).

"We are going to discuss this matter in the ministry and, God willing, we will take a decision," oil minister Abdul Kareem Luaiby [Luaibi, Elaibi] told reporters on Thursday.

Iraq's Deputy Prime Minister for Energy, Hussein al-Shahristani, said last month that Exxon would be banned from taking part in the country's latest licensing round, which is scheduled for May.

Luaibi confirmed an earlier statement that Exxon had sent a written letter to Baghdad on 5th March that it was suspending its operations in the Kurdistan region, but Kurdish officials have denied that Exxon has frozen its work in Kurdistan.

Exxon has so far made no public comments regarding the suspension of its work in Kurdistan.

(Sources: Reuters, Dow Jones)

The Oil Ministry expects that Iraq's crude oil reserves will double, the ministry's official spokesman said on Wednesday.

"The definite crude oil reserves (143 billion barrels) will double ... due to the ministry's activities in exploration and Iraq's oil licences," Aasem Jihad told Aswat al-Iraq news agency.

"We hope that Iraq's fourth round of oil exploration licences would increase the reserves," he added.

International companies have been invited to compete for the rights to explore for oil and gas in 12 blocks to be auctioned in May.

(Source: Aswat al-Iraq)

The Iraqi Oil Ministry will issue the final draft contracts for the next round of energy-exploration rights on 20th April 20, according to a report from Bloomberg.

Companies that were pre-selected to bid in the two-day May 30 licensing round have until today (Thursday) to comment on the preliminary drafts, Abdul Mahdy al-Ameedi, the director-general of the licensing department said, told the news agency on Wednesday.

The licensing round has been repeatedly delayed to allow more time for companies to make remarks and changes so that the agreements are more attractive for investments.

Iraq is auctioning 12 exploration blocks, seven for oil and five for gas, according to the ministry. They contain 29 billion cubic meters of gas and 10 billion barrels of crude, Oil Minister Abdul Kareem al-Luaibi [Elaibi] said.

(Source: Bloomberg)

ExxonMobil has reportedly asked the Iraqi central government to give it a few more days to decide whether or not it will cancel an exploration deal with the Kurdistan Regional Government (KRG).

Baghdad has asked the U.S. giant to choose between the KRG deal and the existing contract with central-government to develop the 370,000 barrels-a-day West Qurna 1 field, which has proven reserves of 8.7 billion barrels.

In the meantime, Exxon has been excluded from Iraq's fourth oil-and-gas licensing auction, scheduled for May. Exxon has also reportedly been barred from a contract worth up to $10 billion to build a joint water-injection project in southern Iraq.

"[Exxon] has asked the Deputy Prime Minister to give it some more days in order to decide its stance on the contract it signed with Kurdistan," Faisal Abdullah, a spokesman for the Iraqi Oil Ministry, told Dow Jones Newswires.

The Iraqi government has sent Exxon three letters asking it to choose between between the deals.

"The central government is waiting for Exxon to respond to our letters and on the light of Exxon's response, Baghdad would take a decision," Abdullah said.

(Source: Dow Jones)

Oil giant BP is reported to be in talks with Iraq to boost output from the Kirkuk oilfield in the north of the country.

Bloomberg, citing sources at the Middle East Economic Survey (MEES), says BP officials will meet with Iraq’s North Oil Company (NOC) within weeks to discuss increasing capacity at Kirkuk from about 260,000 barrels per day (bpd) to as much as 700,000 bpd over the next five years.

Oil Minister Abdul Kareem Al- Luaibi [Elaibi], met with BP executives in London on 22nd February after the company expressed an interest in the field.

"We envisage BP doing something similar to Rumaila at Kirkuk," said an Iraqi oil executive. He was referring to a $30 billion BP-operated project to develop Iraq's biggest oilfield, located in southern Iraq.

Reuters reports that production at the 77-year old field had been as high as 900,000 bpd in 2001 after years of injecting water and dumping unwanted crude and products into the field.

But the UK oil major downplayed the possibility of taking on a mega-project at Kirkuk.

"We are not aware of any proposals for the development of Kirkuk or any other fields," a BP spokesman told Reuters. "We would of course consider opportunities for further investment in Iraq as we would opportunities elsewhere in the world."

The problems at Kirkuk forced the NOC to issue a tender late last year to rehabilitate the ageing field, but industry sources say the process went nowhere.

Iraq put Kirkuk on the block in its first postwar oil auction in 2009. A consortium led by Royal Dutch Shell offered to boost flows to 825,000 b/d for a fee of $7.89 a barrel, but Baghdad insisted on payment of $2 a barrel.

(Sources: Reuters, Bloomberg)

The past seven days have been exceptionally good for the oil industry in Iraq.

The big news for many was the announcement that WesternZagros Resources has struck oil at its Mil Qasim-1 exploration well in Kurdistan; and if you don't know where Mil Qasim is, and what fields are in the same area, you can find it on this very useful oilfield map.

Shares in Gulf Keystone Petroleum (GKP) have hit new highs on Monday as the company confirmed to the markets that it intends to seek a full listing on the London Stock Exchange. They've since dropped back 25%, which may be good news for anyone still wanting to jump on that train.

Meanwhile, the Ministry of Oil has reportedly yielded to pressure and sweetened the terms of the 4th round energy contracts, currently scheduled for May.

And as we continually point out here at Iraq Business News, all sectors  the economy are expected to benefit from the increased activity in the energy sector and the revenues it will bring to the country; Iraq's Central Bank has made some very exciting projections for growth over the coming years.

Whatever sector of the economy your business operates in, Upper Quartile and AAIB are here to help you. For more information please contact Gavin Jones or Adrian Shaw.