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In June 2010 Iraq Oil Report had two stories about locals in southern Iraq who opposed the government’s new oil deals. In Dhi Qar, tribal leaders stopped an oil exploration company from doing their work, and threatened them with violence if they didn’t give them money for using their land. Sheikhs also asked Malaysia’s Petronas, which won an auction for the Gharraf field in Dhi Qar in December 2009, to pay them as well.

In southern Iraq, marsh Arabs claimed that oil companies were encroaching on their property and forcing them out. The Arab Marshes Revival Committee also said that their territory was being polluted by petroleum projects. As development steps up on Iraq are other oil fields, more Iraqis may begin protesting.

The first demonstrations actually began last year in Wasit province. There the China National Petroleum Corporation (CNPC) won the first post-Saddam oil contract for the Ahdab field. Shortly after the foreign company began work, farmers started destroying equipment and demanding compensation for damages to their land.

One news story said that the locals caused up to $1 million in damages. They also complained that the company had not hired any locals for jobs as they had hoped. As a result, CNPC actually shut down operations for a month until the government deployed more security for them.

Iraqi’s Oil Ministry has signed twelve oil deals in the last two years. It’s hoping that they will dramatically boost exports, which account for 90% of the government’s revenue, and provide jobs and development as well. The 2010 budget will also pay provinces that produce oil $1 per barrel.

Some Iraqis are not satisfied with these promises, and are taking matters into their own hands by protesting against encroachments upon their property, and threatening international oil companies unless they are paid directly.

This could cause problems for the Oil Ministry’s plans, and may ironically lead the government to crackdown on its own people to develop the country’s greatest resource. This is an issue that needs close attention as the work on the petroleum fields unfolds.

The Central Bank of Iraq (CBI) dollar sales went up to reach $182.444 million in its daily auction Tuesday, compared to $82.740 million in the previous session.

“The demand hit $4.690 million in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $177.754 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

( Aswat Al Iraq )

Iraq is unlikely to have room to cut interest rates further in 2010, which will see only modest growth, and the government should look to boost the economy by attracting more private capital, a central bank official said.

The Gulf nation, battered by decades of war, economic sanctions and underinvestment, saw growth excluding its key oil sector dip to 4 percent of gross domestic product last year from 10 percent in 2008.

Mudher Kasim, a senior advisor in the central bank, said he did not expect the 4 percent figure to be bettered this year, and that centralised economic planning was acting as a structural brake on growth.

“We have created an environment for stabilisation, but we have to create the environment for development. Stabilisation without development is nothing,” he said. “Unless Iraq enhances investment projects, I think the (economic) situation is very difficult.”

Kasim, who participates in the central bank’s monthly policy meetings, said core inflation, which in Iraq excludes fuel, slowed to 3 percent in April and was likely to remain within the bank’s single-digit target range for the rest of the year.

Subdued inflation gave Iraq leeway to cut base rates by 100 basis points to 6 percent in April, but Kasim said he did not expect further cuts this year, though rates might rise. Interest rates are largely viewed as symbolic in Iraq, whose economy outside the state sector and crude oil production is mostly informal, serving more as a guide to bank rates than a direct monetary mechanism.

The exchange rate for the dinar currency is determined by the central bank at regular currency auctions. Iraq is starved of investment and the process of rebuilding a nation that is still emerging from the shadow of a 2003 US-led invasion to topple Saddam Hussein has been slow.

The economy is still largely disconnected from the global financial system and is dominated by oil, with exports from the third biggest stock of reserves in the world accounting for more than 95 percent of state revenues. Kasim said it was important for the next government to change the country’s current economic model and focus more on leveraging corporate investment by developing private-public partnerships.

“The problem in Iraq is that 90 percent of the wealth of the nation is in the hands of the government. So centralism always dominates the mindset everywhere,” he said. “This (public-private partnership) is the best model for Iraq. I think the next government should take this model, otherwise there is no solution.” Iraq is in a political vacuum after a March 7 election which produced no outright winner, but a high court certification of the results earlier this week means electoral blocs can now begin serious negotiations to form a government.

The current administration has said it is open to PPPs and is considering awarding the country’s fourth mobile phone license to an entity jointly run by the state and the private sector. The state is by far the biggest employer in Iraq, although unemployment is high and currently sits at 18 percent.

The Central Bank of Iraq (CBI) dollar sales went down to reach $82.740 million in its daily auction Thursday, compared to $110.862 million in the previous session.

“The demand hit $2.650 million in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $80.090 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

( Aswat Al Iraq )

The Central Bank of Iraq (CBI) dollar sales went down to reach $110.862 million in its daily auction Wednesday, compared to $121.220 million in the previous session.

“The demand hit $1.970 million in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $108.892 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

( Aswat Al Iraq )

The Central Bank of Iraq (CBI) dollar sales went down to reach $121.220 million in its daily auction Tuesday, compared to $146.493 million in the previous session.

“The demand hit $2.170 million in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $119.050 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

( Aswat Al Iraq )

28 May 2010 - Upstreamonline.com

Iraq is considering holding a third oil auction for some of its supergiant fields, such as Kirkuk and East Baghdad, if there is enough interest from foreign players, Oil Minister Hussain Shahristani said today.

Shahristani told Reuters that Iraq could hold a third bidding round for more of its oilfields that were auctioned before but were not awarded if there are at least three companies interested in developing them.

Shahristani said that a final deal for a gas joint venture with Shell will be sent to cabinet for approval "today or (the) start of next week" after it has been approved by the Cabinet's energy committee.

The Central Bank of Iraq’s (CBI) dollar sales went down to reach $118.416 million in its daily auction on Thursday, compared to $135.430 in the previous session.

“The demand hit $60,000 in cash, covered at an exchange rate of 1,183 Iraqi dinars per dollar, and $118.356 million in foreign transfers outside the country, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

( Aswat Al Iraq )

The Central Bank of Iraq’s (CBI) dollar sales went down to reach $135.430 million in its daily auction on Wednesday, compared to $155.700 in the previous session.

( Aswat Al Iraq )

Basra, 23 May 2010 - Gulf Daily News

Iraq expects crude output from its southern oilfields, Rumaila, Majnoon and West Qurna Phase One, to reach about 2.1 million barrels per day (bpd) by the end of this year, the head of South Oil Company (SOC) said yesterday.

State-run SOC gave the estimates after international firms presented development plans and started issuing tenders for work in the supergiant fields, company head Dhiya Jaafar said.

Iraq, in desperate need of cash to rebuild after years of economic sanctions and underinvestment, has opened its vast oil reserves and some untapped fields to global oil companies.

It struck major deals in two auctions last year in a bid to raise its production capacity to Saudi Arabian levels of 12m bpd in seven years from 2.5m bpd now.

The potential workload in Iraq is unprecedented in the history of the oil industry.

Jaafar said the output target from Rumaila - the backbone of Iraq's oil production - is expected to hit 1.085m bpd after July this year from 1.065m bpd now, and a more than 10 per cent increase in production by the end of the year.

That would take the total production level from the field to about 1.2m bpd.

BP and China's CNPC signed a 20-year development contract last year to lift output at Rumaila, which has 17 billion barrels of estimated crude reserves.

"In Rumaila ... starting from the month of July, there will be obvious increases," he said.