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Iraq Business Update: July 2008
Dear Reader,
Welcome to the MEC’s latest Iraq Business Update on the major economic developments in Iraq. This month has seen Iraq’s output hit a post invasion high amidst a four year low in violence. Both Barack Obama and Gordon Brown visited Iraq this month and spoke of the importance of economic development while the Iraq Oil Ministry qualified 35 international energy companies to bid for long-term contracts in Iraq. The Iraq government also revealed this month that there is to be a 44% budget boost this year to reach $70billion.
If you would like to learn more about this newsletter or forthcoming events, or would like to suggest an event or article for inclusion in the next edition, please do not hesitate to contact me at inquiries@meconsult.co.uk .
Kind regards,
Caelum Moffatt, Editor MEC International Ltd. Fax: 020 7591 4801 Email : inquiries@meconsult.co.uk
Iraq pledges $100m to rebuild Sadr City slum (30/06/2008) Iraq will spend $100 million to rebuild the east Baghdad slum of Sadr City and create jobs for many of its two million residents, an official said on Sunday. The Shiite slum is a stronghold of anti-American cleric Moqtada Al Sadr’s Mahdi Army. Sadr City was largely outside the government’s control until the truce allowed Iraqi soldiers to deploy.
Iraq fails to sign contracts with global oil majors (01/07/2008) Iraq said on Monday that it had failed to sign technical support deals with global oil majors hoping to cash in on boosting the war-torn country’s extensive but underexploited oilfields. Iraq is still negotiating with Shell, BP, ExxonMobil, Chevron and Total, and a consortium of other smaller oil companies, to develop six oil blocks and two gas fields, Oil Minister Hussein al-Shahristani told a press briefing.
Iraq opens oilfields to international deals (02/07/2008)
Iraq opened its main oilfields to exploitation by international companies yesterday in a first step towards reintegrating its massive reserves into a market hitting staggering prices. Hussain al-Shahristani, the Oil Minister, said that he was keen to use international finance and expertise to allow Iraq to realise its full oil potential, an important step to boosting reconstruction and ultimately ending the violence.
US officials condoned Hunt-Kurd oil deal-documents (03/07/2008)
U.S. officials condoned Hunt Oil Co efforts to obtain an exploration deal with Iraq’s Kurdish regional government, contrary to public statements discouraging it, according to documents cited by a congressional committee. When the agreement was announced in September, it was criticized as undermining efforts to strengthen Iraq central government, which still had no national oil revenue-sharing law. Bush administration officials expressed public concern and denied any knowledge of the contract.
Iraq eyes 44% budget boost to record $70b (03/07/2008)
Iraq’s finance ministry wants to raise its 2008 budget by 44 per cent to a record $70 billion, cashing in on record oil prices to rebuild shattered infrastructure, the government’s spokesman said yesterday. The ministry’s submission of a supplementary budget of $21 billion - on top of February’s 2008 budget of $48 billion - comes as prices for Iraq’s main export oil hits record highs.
Trevi wins $205 million in deals for Iraq drilling rigs (07/07/2008)
A unit of Italy’s Trevi <TFI.MI> will supply 14 oil and gas drilling rigs to Iraq in contracts worth $205 million, it said in a statement on Monday, helping the Iraqi government’s plan to boost oil and gas extraction. Drillmec won an international tender to supply the rigs, which will be delivered within 13 months. The contracts are guaranteed by letters of credit. Drillmec specialises in developing drilling rigs. Trevi specialises in soil engineering, tunnel excavations and special rigs and equipment. Iraq has massive proven reserves but its infrastructure has been badly damaged by sanctions and war.
Iraq and Germany sign economic agreement (07/07/08)
Iraqi Minister of Industry and Minerals, Fawzi al-Hariri, has said that an economic agreement between Iraq and Germany has been signed in Germany to encourage the German private sector to work in Iraq in addition to developing the capabilities of the Iraqi companies so they may attract Germany companies to work together. Al-Hariri visited Berlin last week-end as head of a large Iraqi delegation the mission of which was to bring back to life the Iraqi-German joint committee.
Iraq looks to more debt waivers after UAE deal (07/07/08)
Iraq seeks debt forgiveness from other Arab states, including Saudi Arabia, following the waiver by the United Arab Emirates of almost $7 billion in obligations, the Iraqi government spokesman said on Monday. "I imagine that the Emirati initiatives will be a push for many countries," Ali al-Dabbagh told Reuters. "We want the others, everyone from Saudi Arabia to the others, to take a similar initiative and for those steps to be courageous."
Iraq signs contracts for new oil refineries (10/07/2008)
Iraq’s Oil Ministry says it is close to signing two contracts to build two new oil refineries in southern Iraq. A senior oil official says he expects the ministry to sign one contract by the end of July or early August. That contract will be for a 300,000 barrel-per-day refinery in Nasiriyah province.
Iraq says petrodollars hold key to peace (14/07/2008)
Finance Minister Bayan Jabr Solagh said on Monday that Iraq’s booming oil wealth holds the key to peace and urged foreign investors to take part in huge projects planned by his war-ravaged country. With state revenues quadrupled since the US-led invasion of 2003 and amid soaring world oil prices, "from my point of view, money is key to peace, it is the main key," Solagh said in an interview with AFP. Iraq’s oil revenues for 2008 are set to jump to more than 75 billion dollars, earmarked for running expenditure and development projects.
T-3 Energy Enters into Middle East JV (15/07/2008)
T-3 Energy Services, Inc. has entered into a joint venture arrangement to be effective September 1, 2008, or such earlier date as agreed to by the parties, with Aswan International Engineering Company LLC. Aswan, who is a member of the Al Shirawi Group of Companies, is located in Dubai and provides manufacturing, repair and remanufacturing of oilfield products for customers operating in the Middle East. The joint venture, which will be named T-3 Energy Services Aswan Middle East LLC ("the Company"), will be operated and controlled by both parties in equal percentages.
$4 billion to construct "industrial areas" near U.S. bases in Iraq (16/07/2008)
A commander of the U.S. army in Iraq on Wednesday revealed that 4 billion U.S. dollar have been allocated to encounter violence indirectly, by encouraging skilful projects near Multi National Forces’ (MNF) bases in Iraq. The plan embraces a wider reliance on local abilities and products to provide those forces’ needs, to improve the national economy, in coordination with the Iraqi government.
Investors flood Iraq with project deals (17/07/2008)
Investors are flooding Iraq’s new government investment agency with proposals worth tens of billions of dollars, the agency’s head told newswire Reuters this week, as violence has dropped in recent months to a four-year low. "If you come in the beginning, you’re going to get cheap labour, support and many privileges, because we want investors. Later, the chances will be less," Ahmed Ridha said in an interview with Reuters and a Lebanese magazine.
Iraqi PM inaugurates new airport in Najaf (20/07/2008)
Iraqi Prime Minister on Sunday inaugurated a new airport in the southern city of Najaf. The new airport is expected to boost the number of tourists to Iraq’s Shiite shrines in Najaf and Karbala. Hundreds of thousands of pilgrims travel to Iraq every year to visit the shrines. Al Maliki has described the airport as an important step in Iraq’s economic development. A military airfield was renovated for the new airport, and several flights were expected to land on Sunday.
Obama’s Iraq Fact-Finding Mission (21/07/2008)
White House hopeful Barack Obama has arrived in Iraq on a fact-finding tour - days after confirming his plans to withdraw US troops. The Democratic presidential candidate says he would get American soldiers out of the country within 16 months of taking charge, should he win the forthcoming election. Mr Obama - who voted against the March 2003 war to topple Saddam Hussein - is part of a Congressional delegation with Senators Jack Reed and Chuck Hagel.
Iraq asks oil majors to shorten service contracts (21/07/2008)
Iraq has asked international oil companies to revise proposals for technical service contracts worth about $3 billion that aim to boost the country’s oil output by about a quarter. The revisions could delay the signing of the six contracts -- worth around $500 million each -- until August or September, an executive at one oil company said on Monday.
The British Prime Minister seeks to improve the investment in Iraq (22/07/2008)
The British Prime Minister Gordon Brown has made a non declared visit to Iraq on Saturday, seeking to build on the improved security situation in the country and the promotion of investments. Iraqi officials said that Brown is having dialogues with Iraqi Prime Minister Nuri al-Maliki in Baghdad.
Turkey allows Iraqi oil export restart after payment (23/07/2008)
Turkey allowed Iraq to restart around a fifth of its oil exports on Tuesday after halting the flow for a day pending the payment of a $100 million debt. Iraq pumps around 430,000 barrels per day (bpd) of its nearly two million bpd of oil exports through its northern pipeline to Turkey’s Mediterranean port of Ceyhan. Turkish state pipeline operator Botas ordered the restart to loadings from Ceyhan on Tuesday after Iraq paid half the debt, a senior Botas source said.
Iraq to give Baghdad $3 billion facelift (23/07/2008)
Iraq has set aside $3 billion to reconstruct Baghdad over the next three years, an official said on Wednesday, with a focus on poor overcrowded Shi’ite areas once ruled by militiamen and gangsters. The money will be spent on projects including housing, hospitals, schools and other infrastructure, Tahseen al-Sheikhli, a civilian spokesman for Baghdad’s security plan, told a news conference. Prime Minister Nuri al-Maliki wants to consolidate recent security gains with investment to provide jobs for the country’s legions of unemployed. Sheikhli did not say when the work on the projects will begin. "The prime minister has been clear that this year is the year of reconstruction and services ... not just military, political and security operations," Sheikhli said.
Sadr City, a traditional stronghold of anti-American Shi’ite cleric Moqtada al-Sadr’s Mehdi Army, and the neighbourhood of Shula, another poor Shi’ite area, will receive special attention, Sheikhli said. Sadr’s political movement provided many of the scant social services that were available in the district.
In June, Sheikhli announced that $100 million would be spent on redeveloping Sadr City and another $50 million in Shula. It was not clear if this money is included in the Baghdad three-year redevelopment plan. Iraq’s infrastructure is in tatters after years of wars of sanctions and Sheikhli said $30 billion was required to completely rehabilitate Baghdad, and $400 billion for the whole of Iraq.
Iraq’s banking sector eyes growth as violence drops to four-year low (23/07/2008)
Iraq’s banking sector is showing signs of growth as violence has dropped to a four-year low, with lending, deposits and electronic transfers up sharply in recent months, US embassy statistics show. The volume of loans issued by private banks in February jumped by almost half to $755 million compared with October, and the value of letters of credit outstanding in March more than doubled to $189 million versus October.
Iraqi exports increased in 2007 by 40% compared with the previous year (26/07/2008)
Today it was announced in Baghdad about the Iraqi exports increase in 2007 by 40% over the previous year 2006 and the advisory body for reconstruction approved 5 huge projects to implement in a number of governorates of $ 80 million dollars. The Central Agency for Statistics and Information Technology, in Ministry of Planning and Development Cooperation announced today that Iraq’s total exports in 2007 of crude oil and petroleum products and other commodity materials achieved an increase of 40.6% compared with the year 2006.
Pentagon eyes $1.5 billion aircraft sale to Iraq (28/07/2008)
The Pentagon has proposed selling to Iraq six Lockheed Martin Corp <LMT.N> C-130J cargo aircraft and related equipment and services valued at up to $1.5 billion. Along with the six "Super Hercules" aircraft, the Iraqi government has requested 24 engines built by Rolls-Royce Group Plc <RR.L>, the Pentagon’s Defense Security Cooperation Agency said in a notice to Congress dated on Friday and made public Monday. The Iraqi Air Force plans to use the C-130J to support its troops and for humanitarian relief operations, the congressional notification said. The estimated cost is $1.5 billion, the notice said.
Jordan plans regional railway, oil link with Iraq (28/07/2008)
Jordan is seeking $6 billion from international donors to build a railway link with its neighbours and plans to import Iraqi crude oil by rail, the transport ministry said on Sunday.The railway would link Jordan’s Red Sea port of Aqaba in the south with the Syrian border, through Amman and then the industrial city of Zarqa, the ministry said in a report carried by the official Petra news agency. Covering more than 1,000 kilometres, the railway would also link the Saudi and Iraqi borders with Jordan’s northern city of Irbid as well as the northeastern towns of Mafraq and Azraq. The report recommended that Iraqi crude oil be carried via rail, scrapping plans to build a $260 million pipeline between the two countries.
Audit finds millions wasted in Iraq reconstruction contract (28/07/2008)
Millions of dollars were likely wasted on a 900 million dollar army contract to build courthouses, prisons, police and other security facilities in Iraq, an audit released Monday has found. The audit by the congressionally appointed Special Inspector General for Iraq, Stuart Bowen, found that the contractor, Parsons Delaware Inc., completed only about a third of 53 planned construction projects.
Former Bush advisor mulls Iraq oil business: report (29/07/2008)
A former Pentagon advisor who was an early advocate of invading Iraq has been looking into entering the potentially lucrative oil business there, The Wall Street Journal reported Tuesday. Citing documents outlining a possible deal and people close to the negotiations, the Journal said Richard Perle has been looking into drilling in the Kurdistan region of Iraq, near the city of Erbil.
Foreign firms still reluctant to invest in Iraq’s oil sector (30/07/2008)
Foreign firms are reluctant to invest in the country’s service contracts which the Oil Ministry is currently negotiating, Iraqi oil officials and experts said. Iraqi oil officials say they doubt whether any of the firms expressing a willingness to sign service contracts will start work in earnest once they win the deals. Generally, foreign majors are not as keen to enter into oil service deals unless they have some form of guarantee that they will be given preferential treatment with more lucrative contracts concerning the development of new fields.
Iraq’s rebuilding planned at nearly $120 billion (30/07/2008)
Iraq’s coffers are bulging with oil money, yet some Baghdad residents go without electricity for much of the day and others get drinking water tainted with sewage. "They don’t need more money," said Stuart Bowen, special inspector general for Iraq reconstruction. "But they are having a difficult time, apparently, spending the money that they have." Bowen Wednesday is releasing his quarterly report to Congress on efforts to rebuild Iraq’s shattered nation — a program now expected to spend $117.79 billion.
Dana Gas and Crescent Petroleum announce establishment of 461 million square feet site for Kurdistan Gas City (31/07/2008)
Gas Cities LLC, a joint venture between Dana GasDana GasDana Gas PJSC, the Middle East’s first and largest regional private-sector natural gas company, and its partner Crescent PetroleumCrescent Petroleum, announced today that the 461 million square foot site for the Kurdistan Gas City has been officially assigned by the Kurdistan Regional Government (KRG), for development by Gas Cities LLC, following extensive surveys that have been completed on potential sites within the Kurdistan Region of Iraq. The groundbreaking ceremony of the Kurdistan Gas City will take place on the 21st of September, 2008 in the presence of the Prime Minister of the Kurdistan Regional Government of Iraq, His Excellency Mr. Nechirvan Barzani, and several Ministers, dignitaries and heads of prospective local as well as international industry leaders.
124 contracts signed, 30 to follow- construction committee (31/07/2008)
Basra’s Construction Support Committee on Wednesday said that has signed 124 contracts with companies in accordance with high standards of conduct, noting that 30 other contracts are on the way. "Until Wednesday, Basra’s construction committee has signed 124 contracts with local companies that have been selected to implement projects in 11 sectors: health, municipalities, education, universities, communications, water, electricity, sewage, water resources, sports, and youth," the committee’s secretary, Tareq al-Mousawi, told Aswat al-Iraq - Voices of Iraq - (VOI). Headed by the minister of state for parliamentary affairs, Safaa al-Din al-Safi, the committee was set up in synchronization with the commencement of Operation Saulat al-Fursan (Knights’ Assault) in late March and was given $100 million in donation from Prime Minister Nouri al-Maliki.
Iraq’s output hits post-invasion high (31/07/2008)
Iraq’s daily oil production is at its highest level since the March 2003 US invasion, in large part thanks to improved security, a new US audit says. A $34 million security system of ditches, berms, fences and concertina wire - all guarded by Iraqi forces - has stopped attacks since July 2007 on the pipeline running from Kirkuk in the north to a major refinery in Baiji, in central Iraq, Stuart Bowen, the Defence Department’s inspector general for Iraq reconstruction, said. Read entire article @ |
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