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Iraq Pipeline Delays Threaten Shell’s Majnoon Output

by admin ~ August 30th, 2012

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.

Russia Consolidates its Position in Iraq Upstream Petroleum

by admin ~ August 28th, 2012

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Iraqi Ministry of Oil confirmed in late July that Russia’s Bashneft had accepted the ministry’s maximum acceptable remuneration fee (MARF) for exploration Block 12, which was offered in the fourth bid round that took place at the end of May (MEES, 4 June). This is in line with what I anticipated in my assessment of the results of the fourth bid round.

This ‘newcomer’ to Iraq post-2003 upstream petroleum would consolidate further the position of the Russian companies and strengthen their presence and role in the country’s oil production. This also manifests clearly a petroleum asset seeking strategy and demonstrates that there has been a learning curve from previous bid rounds.

The Russian position could be consolidated even further if the speculation about the possible entry of another Russian company, Rosneft, materializes – but Gazprom might rock the boat.

Please click here to read Ahmed Mousa Jiyad’s report.

Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway

Iraq to Offer Better Terms for Oil Contracts

by admin ~ August 24th, 2012

Iraq’s Deputy Prime Minister with responsibility for energy affairs, Hussein al-Shahristani (pictured), has reportedly said that Baghdad was considering offering foreign oil firms more lucrative contracts.

According to a report from Aswat al-Iraq, he admitted that the recent fourth auction of exploration blocks had not been as successful as officials had hoped

US to Sell Air Traffic Control Equipment to Iraq

by admin ~ August 23rd, 2012

The US Defense Security Cooperation Agency (DSCA)has notified Congress of a possible Foreign Military Sale to the Government of Iraq for commercially available Federal Aviation Administration Air Traffic Control and Landing System/Navigational Aids and associated equipment, parts, training and logistical support at an estimated cost of $60 million

The Government of Iraq has requested a proposed sale of commercially available Federal Aviation Administration Air Traffic Control and Landing System/Navigational Aids. The system will include an ASR-11 Radar, Autotrac II simulator, Instrument Landing System, and Airfield Lighting System, spare and repair parts, support equipment, personnel training and training equipment, publications and technical documentation, site survey, installation, U.S. Government and contractor engineering and logistics support services, and other related elements of logistics and program support. The estimated cost is $60 million.

This proposed sale will contribute to the foreign policy and national security of the United States by helping to improve the security of a friendly country.

The proposed sale will contribute to Iraq’s continued efforts toward rebuilding their airfield systems at Tikrit Air Base for near-term basing of multiple aircraft. The renovations and upgrades to the airfield and its systems will allow for greater ease in launch and recovery of aircraft and will benefit the overall sustainment of aircraft and affiliated systems over time. This equipment aids Iraq’s continuing reconstruction effort that directly improves Iraq’s ability to control its own airspace.

The proposed sale of this equipment and support will not alter the basic military balance in the region.

The prime contractor is unknown and will be selected through competitive process. There are no known offset agreements proposed in connection with this potential sale.

Implementation of this proposed sale will not require the assignment of any additional U.S. Government or contractor representatives to Iraq.

There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.

This notice of a potential sale is required by law and does not mean the sale has been concluded.

(Source: US Defense Security Cooperation Agency (DSCA))

North Bank Numbers give Hope to Iraqi Economy

by admin ~ August 21st, 2012

The process of capital formation is underway in Iraq, and that is good news for the grass roots economy. At least that’s what stock market-listed North Bank’s latest earnings results indicate.

Iraq’s gross domestic product has been growing at a rapid pace, but that’s mostly due to rising oil production and robust oil prices. The big question is: will oil proceeds help the rest of the economy take off?

In an important development, it appears that people are now confident enough to take their money out from under mattresses and put them in banks. North Bank’s deposits grew a whopping 45 percent in the first half of 2012 to reach ID917 billion, attracting customers with a deposit rate of 7 percent.

This encouraged the bank to increase loans by 27 percent in the first six months of this year. Historically, about 80 percent of the new loans went to companies, with the remainder went to personal and car loans.

With the increase in deposits and reserves, cash also increased to ID612 billion from ID434 billion at the end of 2011, which gives the bank much room to lend more, and start investing in bigger projects.

This is a big deal. Small companies across Iraq are crying out for capital, and if they receive it, growth can be rapid. The country currently produces very little itself, so a raft of light manufacturing and basic services companies could easily spring up and become national champions.

But for now, borrowing is still very difficult. Even North Bank, which is more progressive than many Iraqi banks, is loath to lend for as long as even one year as risk assessment capabilities are underdeveloped.

Although its lending rate may be lower than competitors, comparing North Bank’s 5 percent margins with regional margins of about 4 percent shows that while it is not a long way off the average, it is getting there faster than other Iraqi banks – some of which have 7-8 percent margins or higher.

The hope is that North Bank will move further down the road of lower margins and higher business volumes, and take the rest of the banking sector with it.

Sherif Salem is portfolio manager at Abu Dhabi-based asset manager Invest AD. He manages the Invest AD Iraq Opportunity Fund, as well as helping to manage other equities funds investing in the Middle East and Africa.

Iraq to Increase Basra Light Exports for 2nd Half Aug

by admin ~ August 20th, 2012

Bloomberg reports that Iraq will increase its exports of Basrah Light crude from the Persian Gulf by 6 percent in the second half of August, compared with the previous two-week period.

According to the loading program, Iraq will ship 23 cargoes from the al-Basrah Oil Terminal (ABOT) (pictured), three more than in the first half of this month. Exports will total 35.72 million barrels, or 2.23 million bpd, compared with 2.11 million bpd two weeks earlier.

There are planned to be:

  • 14 consignments of 2 million barrels each;
  • six 1 million-barrel lots; and,
  • one lot each of 715,000, 556,000 and 444,000 barrels.

Iraq Eyes Indonesian Defence Products

by admin ~ August 16th, 2012

Indonesia’s Defence Minister, Purnomo Yusgiantoro (pictured), said on Wednesday that Iraq has expressed interest in buying Indonesian defence products.

The statement came as Deputy Defense Minister Sjafrie Sjamsoeddin visits Iraq, in part to consider ways of boosting cooperation in the defense sector.

“This visit is strictly bilateral and has nothing to do with China or the United States,” the minister added. “This is purely for military cooperation with Iraq.”

Purnomo said Sjafrie met with his counterpart, other military leaders and Prime Minister Nuri al-Maliki, along with deputy prime ministers in the economy and defense sectors.

Iraq Signs Contract with Kuwait Energy for Siba Seismic

by admin ~ August 15th, 2012

raq’s Oil Ministry has signed a contract with Kuwait Energy to carry out a seismic survey at the Siba gas field in Basra province.

Kuwait Energy and Turkey’s TPAO won the Siba contract in October 2010, agreeing to produce 100 million standard cubic feet of gas a day at a price of $7.50 per barrel of oil equivalent.

TPAO has said the partners expect to invest $1 billion in the Siba field

New Iraqi Oil Prices for September

by admin ~ August 13th, 2012

Iraq’s State Oil Marketing Organisation (SOMO) has adjusted its official selling prices for its Basra Light and Kirkuk crude grades for September.

In common with some other countries, Iraq’s oil is priced relative to regional benchmark prices:

  • For shipments to US, contracts are priced are relative to the Argus Sour Crude Index (ASCI);
  • Shipments to Europe are priced relative the North Sea Spot BFOE; and
  • Asian shipmentas are priced relative to the Dubai-Oman crude benchmark, published by Platts, the energy-information division of McGraw-Hill.

The new prices to Europe are as follows:

  • Kirkuk crude to Europe will sell at a discount of $0.65 a barrel relative to the North Sea (Dated Brent) benchmark, compared to a discount of $1.15 previously;
  • Basra Light to Europe will sell at a discount of $2.50 a barrel to Dated Brent, compared to a discount of $3.20 previously.

And to the US:

  • Basrah Light will sell at a $1.50 discount to the U.S. benchmark, unchanged from last month.
  • Kirkuk will sell at a premium of 70 cents, up from a premium of 60 cents last month.

To Asia:

  • Basrah Light to Asia will sell at a discount of 5 cents to the benchmark, compared to a premium of $0.95 last month.

165 New Companies Registered in July

by admin ~ August 10th, 2012

AIN reports that Iraq’s Ministry of Trade has registered 165 new companies in July.

The Director General of registrations at the Companies Department, Feryal Akram Abdullah, told the news agency that:

About 29 offices belonging to foreign companies have been registered as well as five branches for various foreign companies.

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