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Iraq and South Korea Strike Deal on Pipelines

by admin ~ November 29th, 2012

Baghdad has undertaken many projects to help develop its economy’s main source of income, oil exportation, along with the help of investors. According to the latest news reports, Iraq has recently signed a multi-million dollar deal with Korea Gas (KOGAS) which describes the construction of two giant gas pipelines within the country’s northern area.

South Korea’s KOGAS – the largest liquefied natural gas import company across the globe – will adhere to several terms stipulated within the contract worth $125.7 million, all of which revolve around the construction of two 110-kilometer pipelines. The new infrastructures shall link the oil-rich city of Kirkuk to the industrial city Beiji, wherein liquid and natural gases shall be transported.

Upon conclusion of this development, which is scheduled for completion by the year 2014, Iraq’s daily oil exportation is expected to increase notably. That being said, this isn’t the first project wherein the state-run oil company played a significant role in Iraq’s energy sector. According to reports, KOGAS is currently developing another western gas field within close proximity to the Syrian border.

In addition, it’s also teaming up with Turkish Petroleum Corporation (TPAO) — one of Turkey’s most important industrial countries — as well as Kuwait Energy to build another gas field within Iraq’s eastern region.

As of today, this Arab nation is currently producing roughly 3.4 million barrels a day, while its daily exports averaged at 2.6 million barrels last month. Much of these production and export statistics are attributed to the fact that Iraq has awarded 15 gas and oil contracts over the past four years. Leaders of this Middle Eastern country also plan on significantly raising their oil production levels to five or six million barrels daily by 2015, and nine to ten million barrels per day by 2020.

On the other end of the spectrum, rumors on Exxon Mobil Corp. say that the oil giant is planning to pull out from its West Qurna Phase 1 project proposed in Basra, which was expected to see the extraction of over 8.6 billion barrels.

Conversely, Deputy Oil Minister Ahmed al-Shamaa said that his ministry wasn’t informed regarding the speculated intentions of Exxon, nor has the oil corporation notified the government about these plans. While several news organizations sent reporters to verify the validity of these rumors, Exxon refused to comment on the matter when interviewed in regards to its speculated intent to leave West Qurna.

Iraq to buy 50,000 Dell PCs for Schools

by admin ~ November 27th, 2012

Thousands of Iraqi schoolchildren are entering classrooms equipped with new Dell technology that will help improve how they access information, and ultimately, work and compete with their peers around the world.

This development is the result of a close collaboration between the Iraqi Ministry of Education (MOE) and Dell, who assessed the complex education system and the local infrastructure prior to agreeing to a multi-phase deployment of 50,000 Dell Optiplex 380 desktop computers and monitors to 4,000 schools benefitting more than 200,000 Iraqi students.

Prior to 1991, Iraq’s education system was one of the best in the Middle East. However, in recent years, international sanctions and import challenges due to conflict have precluded access to classroom technology in Iraq. This disparity has resulted in the country’s Information & Communication Technology (ICT) facilities becoming weak and most teachers have little or no ICT literacy.

Access to technology is a cornerstone of the Iraqi Ministry of Education’s plans to build, restructure and improve the country’s education system. The strategy includes rehabilitating schools damaged by conflict and under-investment, building new schools, updating curricula and academic skills, as well as improving educational policy and departmental management. The Ministry is working to enhance the use of classroom technology by providing teachers with ICT training and certifications.

According to the United Nations Educational and Scientific Organisation (UNESCO), science, technology and innovation are now universally recognised as key drivers of national economic development and contributors to poverty reduction, disease prevention and environmental conservation. Therefore it is critical to the success of Iraq’s future that its youth has access to technology. With nearly 50% of the Iraqi population under 19 years old, the importance is further increased.

“Education of our young is a global equalizer of opportunity allowing children to start on the path to reach their full potential. There is an expanding global education ecosystem with multitude learning opportunities that feed on digitization—but there are still many children who cannot participate because they lack even basic access to technology. Having access to a PC and internet as well as the skill to use them will open up new pedagogical possibilities not the least in the form of the global movement to Open Educational Resources,” said Dr. Jan-Martin Lowendahl, Research Vice President, Gartner, Education Strategies.

“The Ministry of Education is keen to develop Iraq’s education system in line with global standards, and our primary area of concern is technology. We will enable students across Iraq with modern, state-of-the-art facilities, which will serve as a platform for their complete syllabus,” said Mr. Naif Hussen, General Director of Information Technology, Iraq Ministry of Education. “We chose Dell OptiPlex systems because they are cost efficient, powerful and expandable. Most importantly, Dell demonstrated their commitment to our cause through the team’s loyalty and stability over more than three years in working on bringing this project to fruition.”

“A whole generation of Iraqi children have had very limited exposure to technology for nearly a decade,” said Dave Brooke, General Manager, Dell Middle East. “Dell is honoured to have a role in helping to rebuild the country’s education system and introducing the power of technology to Iraqi children.”


Iraq To Settle $500M Airline Dispute With Kuwait By 2013

by admin ~ November 27th, 2012

Although the Iraqi invasion in Kuwait ended 22-years ago, the aftershocks are still felt today, especially on the invader’s end. The two neighboring countries’ airlines had long been in a dispute over damage dealt to the Kuwait’s airlines during the war back in 1990. Kuwaiti officials recently announced that Iraq will be made to pay a total of $500 million to put an end to the issue once and for all.

Kuwait’s Emir Sheikh Sabah al-Ahmad Al-Sabah signed a royal decree, which ratifies the settlement, stating that Baghdad will pay $200 million during the first six months of next year. As for the remaining $300 million, it will initially be deposited into a special bank account, and eventually transferred to Kuwait Airways Corp.

This deal took place within Kuwait City, and has gotten many feeling enthusiastic with the “rift” between both countries finally out of their way. The total amount to be paid by Iraq is said to be less than half of what the Iraqi government really owes Kuwait, as ten airplanes and numerous aircraft parts were pillaged by Iraq’s military forces as they seized the airport. According to reports, the total value of all of the airline’s plundered goods amounted to roughly $1.2 billion, which makes the half-billion dollar settlement appear much more reasonable.

Kuwait’s decree shall be effective the same day it’s published. Moreover, according to an Iraqi foreign ministry statement, the decree “cancels all restrictions and complications in rebuilding Iraqi Airways and it is now free to buy new planes and build a fleet.”

After the Iraq-Kuwait war, all flights between both Arab nations were immediately cancelled. It was only till earlier this year that authorities allowed direct flights from Iraq to Kuwait, and vice versa, to resume. The move to honor the final settlement shall further improve relations between the two countries, thereby making it easier for both Middle Eastern neighbors to come to terms for other concerns brought into the picture by the war which began a couple of decades ago.

That being said, the seven-month Iraqi occupation has accrued damages in all forms, thereby prompting Kuwaiti leaders to seek $20 billion for war compensations, as well as $16 billion in debt. Ironically, some of the speculated reasons as to why the Iraq-Kuwait conflict began in the first place was tied to Iraq’s inability to pay its $80 billion debt – used to finance the Iraq-Iran war – to Kuwait.

Iraq Pushes for Stronger Links with Japan

by admin ~ November 26th, 2012

Iraq’s Undersecretary for Policy Planning, Labeed Abbawi, met Japanese Ambassador Yokota to discuss aid for the reconstruction of Iraq.

Ambassador Yokota expressed pleasure over the Japanese participation in the Baghdad International Fair.

Undersecretary Abbawi stressed Iraq’s determination to help Japanese companies to overcome the difficulties they face, and said Iraq wants to increase Japanese investment and competition in the Iraqi market.


Iraq Military Beefs Up Air Power

by admin ~ November 25th, 2012

Iraq, rumored earlier to be spending $4.2 million for Russian MIG-29s, recently sealed a purchase order for eighteen American F-16 fighter planes. This is the second batch of U.S. aircraft ordered by the Iraqis who are asking the Americans to step up their delivery. The first batch of F-16s that Iraq ordered consists of thirty-six planes.

Notably, F-16s are a lot more expensive than the MiG-29s which are more popular, more impressive-looking, and Russian deliveries of these planes are faster than the Americans’ F-16. Besides these purchases, Iraq has also acquired twenty-eight Czech combat trainers with air-to-air missile and bomb-carrying capability. These planes, four of which are expected to be delivered next year, are also capable of forcing errant airliners down.

The second batch of Iraq’s F-16 purchase costs $128 million each. What Iraq is acquiring from the U.S. are the Block F-16Cs called F-16IQ, which have unique equipment configuration. The purchase price includes not only spare parts, maintenance equipment and facilities, but also training and tech support. A wide range of ammunitions are likewise included.  Packaged with the deal are: 40,000 rounds of 20mm auto-cannon ammo, 150 Sparrow radar-homing missiles, and 100 Sidewinder missiles.

In addition to the Sidewinders and Sparrows, Iraq is also acquiring more than 500 smart bombs, along with LITENING and Sniper targeting pods. With its U.S. aircraft purchases, Iran hopes to have six squadrons of F-16s armed with the latest weapons and equipment. Significantly though, the U.S. is not supplying the Iraqis with the latest Sidewinder version or the AMRAAM which replaced the Sparrow in the U.S. arsenal. Apparently, the U.S. distrusts Iraq having the latest armament because of the widespread corruption in the country and suspected Iranian spies.

Iraq hopes to eventually have six F-16 squadrons, along with the latest weapons and equipment. At the earliest, the first squadron is expected to be ready by 2016. Iraq’s air power build-up will result by the end of the decade in a new air force with 24,000 personnel and several hundred aircraft, most of them non-combat types.

The eagerness of the Iraqis for F-16s is partly fueled by the aircraft’s excellent track record in Iraq’s neighbors Turkey and Jordan. Currently, Iraqi air force missions are mostly for reconnaissance and transport. It was three years ago when Iraq acquired its first combat aircraft, which included Mi-17 helicopters capable of firing unguided rockets and three Cessna Caravan 208s with Hellfire missiles and laser designators.

A Guide to Doing Business in Iraq: Part Three

by admin ~ November 22nd, 2012

Iraq has certainly achieved significant strides in attracting foreign investments via tax moratorium and other incentives. The government is also addressing other issues, such as ownership of land by foreigners. Still, there are some concerns that a company wanting to tap the potentials of the Iraqi market should address; some of them are quite basic but nonetheless crucial.

Visa Requirement

Aliens working in Iraq for foreign companies are now subject to visa procedures following the signing of the Status of Forces Agreement. Before this agreement was in force, U.S. government contractors seeking entry permits get automatic approval.

But now, visas have to be secured from an Iraqi embassy prior to a trip to the country. It can take weeks or even months to obtain the visa. The process of application can be expedited though with an endorsement letter from an Iraqi trade official, like a commercial attaché, or authorities from such agencies as the National Investment Commission and the Kurdistan Regional Investment Commission.

Contractual Obligations

Iraq has a centuries-old legal system that revolves on long-established practices and traditions. Under Saddam Hussein, this system badly deteriorated, and even more so during the recent conflict. Some modern concepts have been introduced with the assistance of the U.S. and other coalition countries.

However, much still needs to be done for Iraq to adopt international standards, particularly on business regulations and resolving contract disputes. To help protect their interests, it is important for foreign companies to incorporate in their contracts arbitration and forum selection clauses whenever possible.  It should also be kept in mind that Iraq has yet to be a signatory of the New York Convention, the treaty which ensures that foreign arbitral awards are enforced.

Government Corruption

As in operating in many developing countries, corruption in government is one critical issue that foreign investors have to address in Iran. Informatively, the country is near the bottom ranks of the Corruption Index compiled by Transparency International. There are a number of ways that government corruption can impact upon the business operations of foreign firms in Iran. For example, there are instances when local s partners are forced upon the foreign companies. Issues often occur on full payment of the goods that the foreign firms delivered.

In particular, U.S. companies should be wary of engaging in practices that could be interpreted as violating the U.S. Foreign Corrupt Practices Act (FCPA). It would be wise for American companies with businesses in Iraq to have their business development personnel well-versed on the nuances of the FCPA.

Gas Flaring Costs Iraq $5m a Day

by admin ~ November 20th, 2012

Azzaman reports that the flaring of associated gas from the country’s producing oil fields, particularly in Basra, is costing the country $5 million a day.

But there is good news, according to Dhia al-Mawsawi, the Director-General of South Oil Company, who said there should be no flaring of gas in Basra by the end of 2013.

He said his company was in talks with Shell for an agreement to build the facilities to process the country’s associated gas and turn it into domestic fuel.

Iraq only process 400 million cubic meters of its total output of associated gas estimated at more than 1100 cubic meters, while it imports large volumes of natural gas from Iran.


A Guide to Doing Business in Iraq: Part Two

by admin ~ November 20th, 2012

Companies convinced of the many business opportunities in Iraq can establish a toehold in the country via a representative trade office. As this facility develops the business of the company it represents, it can be elevated into a branch office or a corporate entity can be organized to fully explore possibilities in the Iraqi market. Sustained business growth, however, can only be achieved with a certain degree of mastery on other issues affecting foreign companies in Iraq.

Foreign Investment Incentives

In a marked departure from the policies of the overthrown Saddam Hussein government, Iraq now encourages foreign investments. The country enacted in 2006 its National Investment Law which provides incentives to foreign investors. This law, among other things, provides equal treatment between foreign investors and domestic capitalists. Companies that invest in Iran, however, should first comply with certain requirements before incentives are granted. Primarily, they must apply for project-specific investment license and have this approved by the national or regional investment commission. The incentives include a 10-year moratorium on taxes and a three-year tariff exemption on imported projects requirements. The licensed firms can also hire foreign workers and are assured of full repatriation of profits. Those foreign investors with projects in the Kurdistan region receive a few added incentives.


It would be advisable for foreign companies with an eye on Iraq to have a local tax consultant. The country’s tax laws, antiquated as they are, can be quite ambiguous. As a general rule, an income tax is imposed on locally derived earnings of all Iraqis and non-Iraqis living in the country. Also, taxable income under Iraqi law is defined as the net profit from commercial operations or from activities that are commercial in nature. A standard 15 percent is imposed on income of joint stock companies and limited liability companies, a levy that underscores the importance of carefully which corporate structure to choose in organizing a foreign corporation in Iraq.

Land Ownership

Like in most Middle East countries, Iraqi law prohibits foreigners from owning land in the country. This traditional prohibition is, nonetheless, somehow circumvented by allowing long-term leases for foreign companies. Some relief maybe on the horizon regarding this land ownership restriction as the Iraqi government is considering the adoption of a policy similar to that of the Kurdistan region. The foreign investment guidelines in the three northern provinces which constitute this region allow land ownership foreigners.

Total Says Unclear if Iraq Wants it to Exit Halfaya

by admin ~ November 19th, 2012

The chief executive of French energy giant Total, Christophe de Margerie (pictured), has said that it is not clear if Iraq wants the company to withdraw from the Halfaya oilfield due to its dealings in Iraqi Kurdistan.

Total recently acquired a 20 percent interest in the Taza oil exploration block there from Canada’s ShaMaran Petroleum for $48 million in cash, plus a reimbursement for costs incurred from 1st April until the closing date. An exploration well is currently drilling at the block, approximately 80 kilometers southwest of the city of Sulaimaniya.

In late July, Total acquired a 35 percent interest in two oil-exploration blocks in Kurdistan — Harir and Safen — from Marathon Oil.

Following Total’s entry into Kurdistan, Iraq’s Deputy Prime Minister, Hussein al-Shahristani, told reporters in Baghdad that it must end its dealings with the semi-autonomous region or sell its stake in a major southern oil field, Halfaya, according to a report from Agence France Presse. He did not specify the time by which Total needed to make a decision.

Asked about whether Total was told to withthraw from Halfaya, Mr. de Margerie said:

It has not been very clear. At least we took it as not very clear … It is true it has been in the press that the Iraqi government made some statements about the fact that Total will have to choose between Kurdistan and the south but for the time being we have decided not to choose.

Total hopes the current situation will simply deflate, allowing it to remain in Halfaya and keep its assets in Kurdistan, said the person familiar with the matter


A Guide to Doing Business in Iraq: Part One

by admin ~ November 18th, 2012

While the business climate in Iraq has yet to fully stabilize, there are a lot of business opportunities in this country for companies who want to have a head start in this emerging market. The security risk in Iraq has been reduced substantially, as emphasized by Iraqi Prime Minister Nouri al-Maliki who visited the U.S. in July to encourage American investments to his country.

Businesses can establish a beachhead in Iraq through participation in the rebuilding of infrastructures in the country as well as in the development of the various sectors of the Iraqi economy. Bearing in mind that the country has the world’s second largest oil reserves can indeed convince many intrepid businessmen to invest in Iraq.

Several factors, of course, have to be thoroughly considered before launching a business venture in the country. Gaining an insight on current conditions prevailing in Iraq will help an individual investor to determine if their business ventures will thrive in Iraq. Let us wade through on some primary guideposts on doing business in Iraq.

Iraqi Laws

Foreign companies and individuals in Iraq are now subject to all legal and regulatory policies of the country. Companies operating in the country under U.S. government contracts or under contracts with other coalition countries formerly enjoy absolute immunity from Iraqi laws. This privilege, however, has been abolished when the Status of Forces Agreement took effect. Besides being subject to criminal and civil liability, foreign companies must comply with Iraq’s business regulatory measures, such as tax laws, entry and exit procedures, licensing, vehicle registration, among other government policies.

Trade Representative Office

Registration of a trade representative office is one quick and simple approach to establishing business presence in Iraq. Foreign firms in search of government contracts usually take this approach. A trade representative office enables a company to negotiate contracts with the various government ministries. The registration procedure only entails filing certain forms, assigning a country manager, and payment of a nominal fee. Bidding on a contract for projects in most ministries don’t need further licensing, and should a contract be awarded, the representative office can simply be elevated into a branch office.

Corporate Options

Having an Iraqi branch office enables a company to conduct commercial activities in the country. As in a representative office which can only undertake business development activities, a branch office also has certain restrictions. A wider business playing field can be achieved by setting up a corporate entity, for which there are many options. The favored choice for most foreign entities is either a joint stock company or a limited liability company.

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