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By John Lee.

The escalating tensions between Baghdad and Erbil have triggered an unprecedented upsurge in applications from wealthy Iraqi nationals for second citizenship programs.

Data collected by Savory & Partners, one of the largest companies in the Middle East that provides citizenship-by-investment programs, shows that compared to the same quarter last year, interest has increased by 300 percent, while applications processed are more than 42 percent higher than last year.

Company founder and CEO Jeremy Savory (pictured) told Iraq Business News:

“The immediate days following the Kurdistan referendum saw a remarkable spike in the number of applicants from Iraq, not only from Kurdish Iraqis, but from all parts of Iraq.

"In the past, the Iraqi passport was very strong ... but over recent years the number of countries which have visa-free waivers has dropped considerably; hence, the need for second passport that enables people to travel to more countries visa free has seen a great spike.

“We have done Iraqi citizenship applications for Iraqi nationals for all the five Caribbean jurisdictions, all of which have been approved by the government. We have done European citizenship applications for Malta and Cyprus for Iraqi nationals, too.”

Iraqis constitute the company’s third largest client group after Syrians and Lebanese, with St. Kitts, Grenada and Dominica in the three most popular programs with an equal demand for all three programs. The company had only one Iraqi rejection in the last six years out of total of close to 800 passports, a rejection rate of less than 1 percent.

The Kurdistan Regional Government (KRG) will immediately pay $1 billion to the Pearl Consortium, including Dana Gas, and its partners to settle a long-running legal dispute.

In a joint press release, the Kurdistan Regional Government and Pearl Consortium announced the "full and final settlement" between the two parties.

Below is the full press release:

Settlement Agreement between Kurdistan Regional Government of Iraq (the “KRG”) and (i) Dana Gas PJSC; (ii) Crescent Petroleum Company International Limited; and (iii) Pearl Petroleum Company Limited (“Pearl”); together (the “Consortium”)

The KRG and the Consortium, together (the “Parties”), signed a Heads of Agreement onc and Chemchemal fields on 4 April 2007 (the “HoA”). Subsequently a dispute arose between them concerning certain matters under the HoA, and they referred this disputeon 21 October 2013 to an arbitration under LCIA case reference number 132527 (the “Arbitration”) for decision by an arbitral tribunal (the “Tribunal”) in London.

The Parties have mutually agreed to fully and finally settle all their differences amicably by terminating the Arbitration and related court proceedings, and releasing all remaining claims between them, including the substantial damages asserted by the Consortium against the KRG; implementing a mechanism for settlement of $2,239 million awarded by the Tribunal to date ; and proceeding with immediate further development of the HoA’s world class resources for mutual benefit as well as the benefit of the people of the Kurdistan Region and all of Iraq.

The agreed settlement highlights are as follows:

• The KRG will immediately pay Pearl a sum of US$600 million.
• The KRG will also immediately pay Pearl a further US$400 million to be dedicated for investment exclusively for the aforesaid further development to substantially increase production.
• Pearl will increase gas production at Khor Mor by 500 MMscf/day, a 160% increase on the current level of production (the “Additional Gas”). The Additional Gas, together with significant additional amounts of condensate, is expected to begin production in approximately two years.
• The balance of sums awarded by the Tribunal ($1,239 million) is no longer a debt owed by the KRG and will be reclassified as outstanding cost recoverable by Pearl from future revenues generated from the HoA areas.
• The profit share allocated to Pearl from future revenues generated from the HoA areas are adjusted upwards to a level similar to the overall profit levels normally offered to IOCs under the KRG’s Production Sharing Contracts. This adjustment reflects the larger investment risks and costs involved in the development of natural gas resources compared to oil developments. After the recovery of costs and a return on investment by the Consortium, 78% of revenues generated from the HoA areas will be for the account of the KRG, and 22% for the account of Pearl.
• The Parties have clarified the Khor Mor block boundary coordinates and the KRG has awarded the Consortium investment opportunities in the adjacent blocks 19 and 20, and added these to the HoA areas, with commitments by the Consortium to make appraisal investments on these blocks, and developments if commercial oil and gas resources are found.
• The KRG will purchase 50% of the Additional Gas on agreed terms to boost the gas supply to power generation plants in the Kurdistan Region. The other 50% of the Additional Gas (250 mmscf/d) will be marketed and sold by Pearl to customers within Iraq or by export, or can be sold to the KRG as well to further boost power generation within Iraq.
• Pearl will also expand its local training and employment programs towards achieving maximum localization and content, as well as supporting local communities through its active Corporate Social Responsibility (CSR) programmes.
• The Parties have exchanged mutual releases, waivers, and discharges in relation to all claims in relation to the Arbitration and related court proceedings.
• The Parties have also amended and clarified the HoA language and terms, including extension of the term of the contract until 2049.

The Parties are very pleased with their settlement and and look forward to working together to maximise the full potential of the HoA areas, for their mutual benefit as well as that of the people of the Kurdistan Region and all of Iraq.

Under the settlement, the people of the Kurdistan Region and Iraq will enjoy additional revenues and improved electricity supply. The Parties believe that this settlement agreement confirms to international investors that the Kurdistan Region of Iraq offers an attractive and secure environment for investment.

H.E. Dr. Ashti Hawrami, Minister of Natural Resources of the KRG, said:

"The companies’ investment and production to date has already delivered substantial benefits for the Kurdistan Region through enabling cost-effective power generation. We are delighted by the outcome of this settlement which opens a new chapter in the relationship between the parties and will take the development of the important natural gas sector to new heights."

Mr. Majid Jafar, CEO of Crescent Petroleum and Managing Director of the Board of Dana Gas PJSC, added:

"We have always expressed our commitment to amicable resolution of matters to enable proper development of the Khor Mor and Chemchemal fields. We are pleased with this definitive agreement which follows constructive dialogue with the KRG and promises to generate significant value for all concerned. The settlement of all debts and restoration of full cooperation gives a positive outlook for further investment and full realization of the enormous resource potential of the HoA areas."

(Sources: KRG, Dana Gas)

The Executive Board of the International Monetary Fund (IMF) has completed the second review of Iraq’s three-year Stand-By Arrangement (SBA), which is designed to support Iraq’s economic reform program and restore fiscal balance over the medium term.

The completion of the second review allows the authorities to draw the equivalent of SDR 584.2 million (about US$ 824.8 million), bringing total disbursements to SDR 1494.2 million about US$ 2109.7 million.

The SDR 3.831 billion arrangement (about US$5.34 billion at the time of approval of the arrangement) was approved in July, 2016 (See Press Release No. 16/321) and the first review was completed on December 5, 2016 ( See Press Release No. 16/540).

As part of the completion of the second review, the Board also approved Iraq’s request for waivers of non-observance and applicability of performance criteria, and modification of performance criteria.

Further fiscal consolidation was achieved in 2016, but at a slower pace than programmed because of weak control of investment expenditure and humanitarian needs. To move the program forward, the authorities are implementing strong corrective measures as prior actions and are committed to further fiscal measures in 2018 to ensure external and debt sustainability.

The Executive Board today also concluded the 2017 Article IV Consultation with Iraq. A respective press release will be issued separately.

Following the Executive Board’s decision, Mr David Lipton, First Deputy Managing Director, issued the following statement:

"The economic policies implemented by the Iraqi authorities to deal with the shocks facing Iraq—the armed conflict with ISIS and the ensuing humanitarian crisis and the collapse in oil prices—are appropriate. In the fiscal area, the authorities are implementing a sizable fiscal adjustment, mostly through retrenchment of inefficient capital expenditure while protecting social spending.

"The authorities are appropriately maintaining the peg of the Iraqi dinar to the U.S. dollar, which provides a key anchor to the economy. Performance under the Stand-By Arrangement has been weak in some key areas, but understandings have been reached on sufficient corrective actions to keep the program on track. Resolute implementation of the authorities’ program, together with strong international financial support, will be key.

"Further fiscal consolidation measures are needed in 2017-18 to keep the program on track. The composition of the fiscal adjustment should be improved over time by increasing non-oil revenue and reducing current expenditure. In addition, reforming the electricity sector and state-owned enterprises will make room for larger and more effective investment expenditure that supports growth and job creation.

"Significantly improving public financial management will be important. Arrears need to be assessed and paid following verification, and expenditure commitment and cash management should be strengthened to prevent the accumulation of new arrears.

"Measures to bolster financial sector stability include strengthening the legal framework of the Central Bank of Iraq, restructuring state-owned banks, and eliminating an exchange restriction and a multi-currency practice. Measures to prevent money-laundering, counter the financing of terrorism, and strengthen the anti-corruption legislation also need to be implemented.

"Implementation of the budget-sharing agreement with the Kurdistan Regional Government would put both the federal government and the Kurdistan Regional Government in a better position to address the shocks to the Iraqi economy."

(Source: International Monetary Fund)

By John Lee.

United States President Donald Trump has signed a new executive order banning people from six mainly Muslim countries: Iran, Libya, Somalia, Sudan, Syria and Yemen.

Unlike the order signed in January, which was blocked by the courts, this new order removes Iraq from the list, but imposes additional vetting for Iraqis.

Importantly, green card holders are not barred from entry, and immigration officials will have the authority to issue waivers on a case-by-case basis.

With regard to Iraq, the order states:

"Iraq presents a special case.  Portions of Iraq remain active combat zones.  Since 2014, ISIS has had dominant influence over significant territory in northern and central Iraq.  Although that influence has been significantly reduced due to the efforts and sacrifices of the Iraqi government and armed forces, working along with a United States-led coalition, the ongoing conflict has impacted the Iraqi government's capacity to secure its borders and to identify fraudulent travel documents.  Nevertheless, the close cooperative relationship between the United States and the democratically elected Iraqi government, the strong United States diplomatic presence in Iraq, the significant presence of United States forces in Iraq, and Iraq's commitment to combat ISIS justify different treatment for Iraq.  In particular, those Iraqi government forces that have fought to regain more than half of the territory previously dominated by ISIS have shown steadfast determination and earned enduring respect as they battle an armed group that is the common enemy of Iraq and the United States.  In addition, since Executive Order 13769 was issued, the Iraqi government has expressly undertaken steps to enhance travel documentation, information sharing, and the return of Iraqi nationals subject to final orders of removal.  Decisions about issuance of visas or granting admission to Iraqi nationals should be subjected to additional scrutiny to determine if applicants have connections with ISIS or other terrorist organizations, or otherwise pose a risk to either national security or public safety ...

"Additional Inquiries Related to Nationals of Iraq.  An application by any Iraqi national for a visa, admission, or other immigration benefit should be subjected to thorough review, including, as appropriate, consultation with a designee of the Secretary of Defense and use of the additional information that has been obtained in the context of the close U.S.-Iraqi security partnership, since Executive Order 13769 was issued, concerning individuals suspected of ties to ISIS or other terrorist organizations and individuals coming from territories controlled or formerly controlled by ISIS.  Such review shall include consideration of whether the applicant has connections with ISIS or other terrorist organizations or with territory that is or has been under the dominant influence of ISIS, as well as any other information bearing on whether the applicant may be a threat to commit acts of terrorism or otherwise threaten the national security or public safety of the United States."

The full executive order can be viewed here.

It comes into effect on 16th March.

• IMF disburses about US$617.8 million following completion of first review of Iraq’s reform program
• The IMF-supported program includes measures to protect the poor, enhance financial sector stability, and curb corruption
• Significantly improving public financial management will be important

The Executive Board of the International Monetary Fund (IMF) has completed the first review of Iraq’s three-year Stand-By Arrangement (SBA), which is designed to support Iraq’s economic reform program and restore fiscal balance over the medium term. The Board also completed financing assurances review under the SBA.

The SDR 3.831 billion arrangement (about US$5.34 billion at the time of approval) was approved in July, 2016. The Board’s approval enables the disbursement of SDR 455 million (about US$617.8 million).

As part of the completion of the first review, the Board also approved Iraq’s request for a waiver for the non-observance of the continuous ceiling on new external arrears, and request to modify performance criteria.

The Board also approved the request for a waiver of applicability for end of September targets of four performance criteria on the floor on gross international reserves (GIR) of the Central Bank of Iraq (CBI), the ceiling on net domestic assets (NDA) of the CBI, the ceiling on the stock of outstanding arrears to international oil companies and the ceiling on the stock of gross public debt, as well as a request for the rephasing of the arrangement.

Iraq’s economic reform program supported by the SBA aims to address the urgent balance of payments need, bring spending in line with lower global oil prices, and ensure debt sustainability. The program also includes measures to protect the poor, strengthen public financial management, enhance financial sector stability, and curb corruption. Iraq will require the support of the international community to implement these policies.

Following the Executive Board’s decision, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the Board, issued the following statement:

“The economic policies implemented by the Iraqi authorities to deal with the shocks facing Iraq—the armed conflict with ISIS and the ensuing humanitarian crisis and the collapse in oil prices—are appropriate. In the fiscal area, the authorities are implementing a sizable fiscal adjustment, mostly through retrenchment of inefficient capital expenditure while protecting social spending. In the external area, the authorities are maintaining the peg of the Iraqi dinar to the U.S. dollar, which provides a key anchor to the economy.

"Performance under the Stand-By Arrangement has been mixed; however, understandings have been reached on sufficient corrective actions to keep the program on track. Resolute implementation, together with strong international support, will be key.

“The revised fiscal program in 2016 and the draft budget in 2017 are aligned with the SBA. The composition of the fiscal adjustment should be improved over time by increasing non-oil revenue and reducing current expenditure, including the payroll and pension payments, and reforming the electricity sector, subsidies, and state-owned enterprises, in order to make room for larger but more effective and efficient investment expenditure that is conducive to growth.

“Significantly improving public financial management will be important. Arrears need to be assessed and paid following verification, and expenditure commitment and cash management should be strengthened to prevent the accumulation of new arrears.

“Measures to bolster financial sector stability include strengthening the legal framework of the Central Bank of Iraq, restructuring state-owned banks, and eliminating exchange restrictions. Measures to prevent money-laundering, counter the financing of terrorism, and strengthen the anti-corruption legislation also need to be implemented.

“Implementation of the budget-sharing agreement with the Kurdistan Regional Government would put both the federal government and the Kurdistan Regional Government in a better position to address the shocks to the Iraqi economy.”

(Source: IMF)

By Simon Kent.

The US House of Representatives have voted to place special visa requirements on anyone who has visited Iraq, Iran, Sudan or Syria after March 2011.

The regulations--in effect from the date of the beginning of the Syrian uprising, come in the wake of the Paris attacks and relate to concerns over individuals who may be involved in terrorism.

What this means is that anyone in this category now has to apply through the formal visa screening process, which will affect any Iraq Business News readers who have visited Iraq on business.

There are currently 38 nations where citizens do not require a visa to enter the US, what is known as the "visa waiver program" (VWP). Under new legislation, VWP nations will be required to share more data with the US about terror suspects.

(Source: BBC.) 

By John Lee.

Shell expects to resume production at its Majnoon oilfield in Iraq in the first quarter of 2013, Arne de Kock, commercial general manager for Iraq, has told Reuters.

The company then expects to lift output to 175,000 bpd by March or April, this being the level of production required for it to start recovering costs under its contract with Baghdad.

According to documents seen by Reuters, Shell has asked Iraq for a waiver to start recovering costs if Majnoon, which shut for maintenance on June 26, does not meet its first commercial production target by year-end.

"The vast majority of Majnoon is greenfield," de Kock said, meaning a new field development requiring new facilities. "Getting all of that heavy equipment into place is far more cumbersome and is causing some delays."

Shell is waiting for construction of a new 79-km (50-mile) pipeline by the Iraqi government to move the crude oil it produces at Majnoon to storage sites.

"The pipeline is not progressing as fast as we would like," said de Kock.

(Sources: Reuters, Sharecast)

By John Lee.

Delays in the construction of an Iraqi pipeline threaten to stall production at Shell's Majnoon oilfield for at least three months, forcing the field to miss a 2012 target of 175,000 barrels per day, reports Reuters.

In February, production at Majnoon was 54,000 bpd, Shell says, but averaged only 18,600 bpd for the first quarter of this year, far below the planned year-end target.

Production at the field was around 45,000 bpd when the company took over in 2010; Shell has since spent around $1 billion, and planned to invest another $1 billion in 2012.

It has asked Iraq for a waiver to start recovering costs if Majnoon does not meet its first commercial production target by year-end - a contract requirement before costs can be retrieved, according to documents seen by Reuters. "This principle will reduce significant investment risk," the document said.

The field has been shut for maintenance since 26th June, but lagging development could put off completion of the new pipeline until the first quarter of next year, according to a Shell document filed with the oil ministry.

"A key concern ... remains the uncertain delivery of the First Commercial Production (FCP) pipeline," said the official letter sent by Shell's managing director of Majnoon.

In June of last year, along with its partner Petronas, Shell awarded Dubai-based Dodsal Group a $106m contract to lay a 79-km (50-mile) pipeline from the Majnoon field to a crude storage depot near Zubair, but the oil ministry rejected the deal on costs and handed the project to an oil ministry affiliate; officials say the pipeline is not now expected to be finished until March 2013.

China Petroleum Pipeline (CPP) was contracted recently to build part of the line.

Drilling at Majnoon is also said to be moving at a slow pace, with only three wells completed since a contract for 15 wells was awarded in August 2010.

(Source: Reuters)

(Picture: Majnoon, June 2012)

The Executive Board of the International Monetary Fund (IMF) completed the second review of Iraq’s economic performance under a program supported by a Stand-By Arrangement (SBA) on Friday. Completion of the second review makes an additional SDR 297.1 million (about US$471.1 million) available for disbursement, bringing the total resources currently purchased by Iraq under the SBA to SDR 1.069 billion (about US$1.7 billion).

The Executive Board also approved a waiver of applicability of the end-December 2010 performance criteria on the central government fiscal deficit and on the central government spending bill, for which data is not yet available. The Executive Board furthermore approved an extension of the SBA by five months to July 2012, and a rephasing of access under the SBA to match disbursements with Iraq’s balance of payments financing needs.

The SBA was approved on February 24, 2010 (see Press Release No. 10/60) for SDR 2.38 billion (about US$3.77 billion). The SBA supported program aims to ensure macroeconomic stability and provide a framework for advancing structural reforms in Iraq.

Following the Executive Board’s discussion on Iraq, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:

“Iraq has maintained macroeconomic stability under difficult external and internal circumstances, while making efforts to rebuild key economic institutions. Inflation has remained subdued, and the exchange rate has remained stable. The 2011 budget aims to accelerate investment in public services and infrastructure, and accommodates higher social safety net provisions to support those in need. Iraq’s rehabilitation needs remain large and the higher investment spending is essential to help create a vibrant private sector that provides employment opportunities for Iraq’s large labor force, thus helping to reduce poverty. At the same time, a strong emphasis on ensuring the quality of public spending will be important.

“Decisive efforts to rebuild key economic institutions and improve governance will be critical for private sector development. The formation of the new government and the expected increase in oil production in the coming years offer an opportunity to do so while maintaining macroeconomic stability. Further strengthening public financial management encompasses the introduction of an automated financial management and information system and improvements in cash management which would eventually culminate in the establishment of a single treasury account. Establishing a framework for oil revenues to succeed the Development Fund for Iraq should help ensure continued accountability and transparency. In the financial sector, moving ahead with the financial and operational restructuring of the two largest state-owned banks and enhancing the central bank’s supervision capacity will contribute to creating a financial sector that can provide essential services to the private sector.

“Iraq continues to make progress to conclude debt agreements and resolve outstanding claims under terms comparable to the 2004 Paris Club Agreement.”

(Source: IMF)

According to a report from Press TV, Iran and Iraq's Kurdistan may agree a visa waiver scheme to facilitate cross-border travels as part of a program of increased cooperation between the two sides.

To facilitate cross-border travel for both Iranians and the citizens of the Kurdistan region in northern Iraq, and to encourage trade and cultural interchange for both sides, Iran and the Kurdistan Regional Government are considering a scheme to eliminate any visa requirements for travelling purposes, Press TV's correspondent in Erbil reports.

Iraqi Kurdistan's Prime Minister Barham Salih visited Iran recently in an effort to further enhance bilateral relations.

On 10th Jan, Salih met with Iranian Parliament Speaker, Ali Larijani, and other senior Iranian officials for talks aimed at boosting political and economic ties between the two sides.

According to the report from PressTV, during the meeting, he also expressed gratitude for Tehran's efforts in establishing peace and security in Iraq.

(Source: PressTV)