Custom Search

President Hassan Rouhani has called for Iran and neighbouring Iraq to expand their gas and electricity dealings and boost bilateral trade to $20 billion, state TV reported, despite difficulties caused by US sanctions against Tehran.

“The plans to export electricity and gas and hopefully oil continue and we are ready to expand these contacts not only for the two countries but also for other countries in the region,” Rouhani said after a meeting with visiting Iraqi Prime Minister Adel Abdul Mahdi, in remarks carried by state television.

In March, the United States granted Iraq a 90-day waiver exempting it from sanctions to buy energy from Iran, the latest extension allowing Baghdad to keep purchasing electricity from its neighbour.

“We hope that our plans to expand trade volume to $20 billion will be realised within the news few months or years,” Rouhani said. Iranian media reports have put the current level of trade at about $12 billion.

Rouhani expressed hope that work on building a railway linking the two countries, would begin within the next few months.

The railway project was part of deals reached during Rouhani’s March visit to Baghdad, meant to underline that Tehran still plays a dominant role in Iraq despite US efforts to isolate Iran.

Iran and Iraq fought a devastating 1980-88 war but the 2003 US-led invasion of Iraq that ousted Saddam Hussein prompted a long Sunni Islamist insurgency during which Iran’s regional sway rose at the expense of the United States.

Iraq on Saturday closed its Sheeb border crossing with Iran to travellers and trade until further notice, Iraqi security sources said, as flooding continues to submerge villages in southwestern Iran.

US President Donald Trump reimposed sanctions on Iran’s energy exports in November, citing its nuclear programme and meddling in the Middle East, but has granted waivers to several buyers to meet consumer energy needs.

Iraq relies heavily on Iranian gas to feed its power stations, importing roughly 1.5 billion standard cubic feet per day via pipelines in the south and east.

(Source: Middle East Monitor)

(Picture credit: Shana)

Iraqi Parliament Speaker Mohammed al-Halbusi said he hopes the United States will keep waiving sanctions on energy imports from neighboring Iran, noting that the Arab country will need to purchase electricity from the Islamic Republic for three years.

In November last year, Washington granted a 45-day waiver on electricity to the Arab country and extended it by 90 days in December after US President Donald Trump’s administration reimposed sanctions on Iran in May, following walking out of the 2015 Iran nuclear deal.

Earlier this month, the US State Department extended the 90-day waiver for the second time to let Iraq continue energy imports from Iran. The original exemption granted in December expired on March 19.

“Hopefully this waiver will be extended until Iraq can stand on its feet economically,” said Halbusi at the US Institute of Peace on a visit to Washington, where he met senior officials, including Vice President Mike Pence.

Iraq is the biggest importer of electricity from Iran. It needs more than 23,000 megawatts of electricity to meet its domestic demand but years of war following the 2003 US invasion have left its power infrastructure in tatters and a deficit of some 7,000 megawatts.

“After these three years, maybe we can see Iraq as economically independent and we won't need to import power or electricity from a foreign country. Maybe we can address this issue after three years," he added, Press TV reported.

At a press conference held after his speech, Halbusi warned Washington of the negative effect of “any hasty, uncalculated step to adopt policies and procedures against countries in this region.”

The electricity shortfall in the war-torn country is especially acute in the sweltering summers, which led to violent protests in Basra in September and turned into a national crisis.

Iraq’s electricity demand is expected to increase again this summer and any cuts in Iranian supplies are set to trigger more protests and reignite unrest, destabilizing the Arab country.

In addition to natural gas and electricity, Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, and air conditioners.

(Source: Tasnim, under Creative Commons licence)

The United Nations Development Programme (UNDP) is rehabilitating 15,000 houses in West Mosul, bringing the total number of houses in its stabilization portfolio to more than 30,000 – the largest of its kind in Iraq.

The project in West Mosul covers 29 neighbourhoods that were hardest hit during the fight to liberate the city from the Islamic State, including the Old City where the militants declared their caliphate. It will enable 90,000 people to return home.

“This rehabilitation project is a critical step for families wanting to settle back into their homes in Mosul after three years of turmoil and hardship,” says Head of UNDP’s Stabilization programme, Dr. Mohammed siddig Mudawi.

“We know it works. Through our successful projects in Ramadi and Fallujah, as well as Bartella and Bashiqa in the Ninewa Plains, we’ve witnessed first-hand the transformative impact that our housing rehabilitation work has had on communities,” he adds.

Priority for housing is given to the most vulnerable – female-headed households, households run by a minor, people living with a disability, and households where the breadwinner has not had employment in the last three years.

Essential elements such as rebuilding and plastering walls, securing windows and doors, undertaking electrical work and restoring sanitation are incorporated into the rehabilitation, plus additional items for people living with a disability, such as ramps and seated toilets.

Neighbourhoods were selected in consultation with the provincial government and Mayor’s office based on numbers of returnees and level of damage sustained. All housing repairs are agreed to by the homeowner and the local Muktar prior to commencement, and work is monitored by government-appointed committees.

Rehabilitation of the first group of houses will be complete by end of March. The entire project is scheduled to be completed by November 2019.

Approximately 800 stabilization projects have been completed or are underway by UNDP in Mosul, including restoring water and electricity networks, rebuilding educational institutions and healthcare facilities, and providing employment for locals to clear rubble from streets.

Photos of the West Mosul housing project are available here to download. Contact Fay Daoud on the details below if you would like to use any photos.

(Source: UNDP)

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

How will US sanctions affect Iran-Iraq economic relations?

The Trump administration is giving Iraq a few more months to continue buying oil and electricity from neighbouring Iran before the United States enforces sanctions against Tehran.

After years of conflict, Baghdad now relies heavily on Iran for goods and services.

And Iranian President Hassan Rouhani is visiting Iraq to solidify ties between the neighbours, trying to convince them to defy the US president.

Al Jazeera's Natasha Ghoneim reports from Baghdad:

By John Lee.

The National Investment Commission (NIC) has announced a new investment opportunity in Iraq:

• Production of tubular and lattice steel poles for electricity, General Company for Communications Equipment and Power

(Source: National Investment Commission)

(Picture: Business opportunity word cloud, from ibreakstock/Shutterstock)

Pearl Petroleum Company Limited, the consortium led by Crescent Petroleum and Dana Gas of the UAE, has signed a new 20-year Gas Sales Agreement (GSA) with the Kurdistan Regional Government (KRG) to enable production and sales of an additional 250 MMscf/day that the consortium aims to produce by 2021 as part of their expansion plans in the Kurdistan Region of Iraq (KRI) in order to boost much needed local domestic electricity generation.

Pursuant to the Settlement Agreement reached between the parties in August 2017, this new gas sales agreement was signed on 19^th February 2019 by Dr. Ashti Hawrami, Minister of Natural Resources on behalf of the Kurdistan Regional Government, and Mr. Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, on behalf of Pearl Petroleum.

All approvals for the agreement, including by the the Kurdistan Region Council for Oil & Gas Affairs and the Board of Pearl Petroleum, have since been granted, with  project work now under implementation.

The Kurdistan Gas Project was established in 2007 as Dana Gas and Crescent Petroleum entered into agreement with the Kurdistan Regional Government (KRG) for certain exclusive rights to appraise, develop, produce, market, and sell petroleum from the Khor Mor and Chemchemal fields in the Kurdistan Region of Iraq (KRI).

Production from the newly built plant in Khor Mor began just 15 months later, in October 2008. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders, and with OMV, MOL, and RWE joining the consortium subsequently with a 10% share each.

The $700 million expansion underway at the Khor Mor plant will include the addition of two new production trains at the Khor Mor plant, as well as drilling of new wells with plans to raise production from the current 400 MMscf/day to reach 650 MMscf/day by 2021 based on this latest GSA, and then to 900 MMscf/day beyond that by 2022.

This follows the 30% production increase from debottlenecking throughput at the Khor Mor plant, which brought current total production to 106,000 barrels of oil equivalent per day (boepd), making it the largest regional private sector upstream gas operation in Iraq today.

Gas sales commenced late in 2018 under a gas sales agreement signed in January of that year, and all payments have been received in a timely manner in full, which gives confidence for the investment and expansion plans currently underway by the Consortium. The Kurdistan Gas Project, which recently commemorated 10 years of continuous production, supplies natural gas from the Khor Mor field by pipeline to power plants in Bazian, Chemchemal and Erbil, as well as LPG and condensate, which are sold in the local markets.

In August 2017, Pearl Petroleum reached a full and final settlement with the KRG of the arbitration between them, including settlement of past receivables and committing to expand their investment and operations in the region. These expansion plans include the multi-well drilling program currently underway in both the Khor Mor & Chemchemal fields, as well as installation of additional gas processing and liquids extraction facilities. The fields are operated jointly by Crescent Petroleum and Dana Gas on behalf of Pearl Petroleum.

Total investment in the Kurdistan Gas Project to date exceeds $1.6 billion, with total cumulative production of over 260 million barrels of oil equivalent (boe), delivering billions of dollars in fuel cost savings and wider economic benefits for the Kurdistan Region and Iraq as a whole. That impact will continue to grow as production capacity expands in the coming years.

Dr. Ashti Hawrami, Minister of Natural Resources of the Kurdistan Regional Government (KRG) said:

"This agreement is an important step for us as we deliver improved services to the people of the Kurdistan Region of Iraq through enhanced electricity generation from the increase in gas production by the Consortium. The Kurdistan Region holds significant reserves of gas and the KRG is committed to playing a positive role in the growing gas and electricity needs of Iraq and the region."

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

"This gas sales agreement opens a new chapter in the expansion of the Kurdistan Gas Project that will see a further investment of over $700 million in coming years to expand production up to 900 MMscf/day, further fueling the Region's economic growth and development. We look forward to developing the significant resources from these important fields, for the benefit of the Kurdistan Region and all of Iraq."

Dr. Patrick Allman-Ward, CEO of Dana Gas, added:

"Dana Gas and our partners in Pearl Petroleum are particularly proud to be investing further in the gas sector of the Kurdistan Region of Iraq, delivering a reliable source of cleaner energy, and supporting local economic development.  The continuing receipt of payments in a timely manner gives confidence for our continued investment commitment as we enter our second decade of production."

As part of its work in the KRI, Pearl has implemented a corporate social responsibility program to support local communities, including providing school supplies, drinking water treatment, generators and fuel enabling 24-hour electricity for local villages, mobile medical units, and youth sports facilities, as well as financial support for 1,000 orphans from the Chemchemal area in partnership with a local charity Foundation.

These initiatives are assisting the local communities in improving their standard of living, health, well-being, security and stability and the development of human capital.

(Source: Dana Gas)

The Iraq Energy Institute (IEI) has issued its 2018 Annual Report, entitled "Riding the Oil Markets, Iraq’s Economy in Transition".

In its summary, the IEI says:

"Iraq’s fortunes are once again highly dependent upon oil prices following a period where the government succeeded in stabilising expenditures, on the basis of IMF conditionality.

"This period was of course accompanied by the 2014-2017 war against the self-declared “Islamic State,” when Iraq was struggling through an existential conflict. During this difficult time, Iraq’s fundamental stability, on virtually every metric, was supported by the success of its energy sector.

"On that basis, 2018 carried good news for Iraq, not only due to rising oil prices. This report outlines some of the areas where oil and gas have truly contributed to energizing Iraq’s economy, looking at increasing gas utilization in southern Iraq, which now carries the real potential to alleviate Iraq’s electricity crisis.

"We examine growing cooperation between the Federal Government and the Kurdish Region of Iraq in the energy sector, which is increasingly based on a firmer legal footing with the passing of the 2019 budget law, which could in theory usher in a new era of Baghdad-Erbil relations."

Please click here to download the full report.

(Source: IEI)

By John Lee.

The National Investment Commission (NIC), along with investment commissions in the provinces, granted 257 investment licenses during 2018.

According to a statement from the NIC, this represents a combined investment of more than 8 billion dollars in the Iraqi economy.

Four of these licenses were issued for strategic projects at a cost of more than 3 billion dollars.

Of the total of 257 licences, 88 were granted directly by the NIC, and these were spread over 12 sectors as follows: Trade sector, 21 investment licences; Entertainment sector, 1 investment licence; Telecommunication sector, 1 investment licence; Education sector, 6 investment licences; Services sector, 4 investment licences; Sport sector, 4 investment licences; Agriculture sector, 3 investment licences; Housing sector, 8 investment licences; Tourism sector, 4 investment licences; Health sector, 6 investment licences; Industrial sector, 16 investment licences, Electricity sector, 14 investment licences (2 for power stations, 12 for charging).

The source pointed out that the number of licenses granted by the investment commissions in the provinces other than the provinces of Kurdistan Region was (169) investment licenses. – 12 investment licenses for Anbar- 66 investment licenses for Baghdad- 10 investment licenses for Holly Karbala- 26 investment licenses for Wasit- 32 investment licenses for Muthana- 15 investment licenses for Kirkuk.

(Source: NIC)

UK Export Finance (UKEF) will support a €30.2 million contract for the refurbishment of Al Mussaib power station in southern Iraq, the UK government has announced.

The support will enable the rehabilitation of a 320 megawatt (MW) turbine, that will help improve the overall efficiency and output at the power station.

Al Mussaib power station, located close to Baghdad, is one of the main providers of electricity for the city. Increasing its output will help secure the supply of basic electricity to Baghdad residents.

Minister of State for Trade and Export Promotion, Baroness Fairhead (pictured) said:

"I am delighted that UK Export Finance is supporting the first phase of the refurbishment, which will have such a significant impact on the supply and security of electricity in southern Iraq.

"The demand for UK expertise on complex projects like this highlights the UK’s leadership in this sector and I am delighted that UK Export Finance is supporting projects that will have such a direct impact on improving the country’s infrastructure and the lives of the Iraqi people.

"I encourage likeminded businesses to get in touch with UKEF to learn more about the kind of financial support we can provide."

This announcement follows the agreement between the governments of the UK and Iraq signed in March 2017, which re-affirmed the UK’s commitment to Iraq’s continued economic development.

Darren Davidson, Managing Director – Power Generation Services, Power & Gas, Siemens UK said:

"The refurbishment of the Al Mussaib power plant will be hugely important both for the citizens of Baghdad and for our international business. UKEF’s support demonstrates the UK government’s commitment to improving Iraq’s infrastructure and the UK’s energy sector."

(Source: UKEF)

GE Power has announced that it has provided an advanced 9E gas turbine to Iraq's Al Qudus Power Plant.

The company will also service up to seven GE 9E gas turbines at the facility throughout 2019, including maintenance, supply of parts and rehabilitation.

GE is installing the new gas turbine at the site and it is expected to generate up to an additional 125 megawatts (MW) of electricity.

The service agreement will enhance the reliability of operations at the plant, helping to maintain a stable supply of up to 875 megawatts (MW) of power over the course of the coming year.

GE employs up to 300 people in Iraq, with offices in Baghdad, Basra and Erbil.

(Source: GE)