DNO Completes $400m Bond Placement

DNO ASA, the Norwegian oil and gas operator, has completed the private placement of USD 400 million of new five-year senior unsecured bonds with a coupon rate of 7.875 percent.

The placement met strong investor demand across international markets and was significantly oversubscribed, leading the Company to upsize the new bond issue from USD 300 million to USD 400 million.

Settlement is expected on or about 9 September 2021, subject to customary conditions precedent, and an application will be made for listing of the new bonds on the Oslo Stock Exchange.

Net proceeds will be used towards refinancing of the DNO02 bonds (ISIN: NO0010823347) and general corporate purposes. In connection with the placement, the Company has agreed to buy back USD 154 million in nominal value of the DNO02 bonds with a call notice for the remaining DNO02 bonds and other details to be announced upon settlement of the new bond.

Pareto Securities AS acted as Global Coordinator and Joint Lead Manager together with Danske Bank and SEB as Joint Lead Managers.

(Source: DNO)

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Japan extends $300m Loan for Basra Refinery

By John Lee.

Japan's Minister for Foreign Affairs, Motegi Toshimitsu, visited Iraq on Saturday, meeting with Foreign Minister Fuad Hussein, Prime Minister Mustafa Al-Kadhimi, and President Barham Salih.

Minister Motegi announced that Japan intends to extend the "Basrah Refinery Upgrading Project (Phase 3)" Yen loan project (up to the amount of 32.7 billion yen) [$300 million], and expressed his hopes that this project would contribute to providing the stable supply of energy and to creating jobs in Iraq. In response, Minister Hussein expressed his gratitude.

Minister Motegi added that he appreciates the publication of the "White Paper for Economic and Financial Reforms", and stated that Japan looks to support Iraq's reform efforts together with the international community through the "Iraq Economic Contact Group."

Both sides also exchanged views on measures to prevent the spread of COVID-19 and means to improve the business and investment environment in Iraq.

(Source: Govt of Japan)

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KRG Bureaucracy Delays DNO Investment

DNO ASA, the Norwegian oil and gas operator, has reported operating profit of USD 61 million in the quarter ending 30 June 2021, its second consecutive profitable quarter since the onset of the COVID pandemic. Revenues totaled USD 184 million, up USD 14 million from the previous quarter, as higher oil and gas prices more than compensated for lower North Sea volumes sold.

Gross operated production at the Company's flagship Tawke license in Kurdistan averaged 110,300 barrels of oil per day (bopd) in the second quarter, of which the Peshkabir field contributed 63,000 bopd and the Tawke field 47,300 bopd. Of the total, 82,700 bopd were net to DNO's interest during the quarter.

DNO's North Sea net production dropped to 9,900 barrels of oil equivalent per day (boepd) in the second quarter, primarily due to planned summer maintenance shutdowns at Marulk and Alve and infill drilling at Ula and Tambar. The Company expects the North Sea contribution to average 13,000 boepd for the year.

In the wake of an ongoing reorganization of Kurdistan's Ministry of Natural Resources, the Company has experienced extended delays to the final approval of its 2021 Tawke field work program and budget as well as to the approvals necessary to fast track early production from the Baeshiqa license. The delays are expected to defer USD 50 million in 2021 DNO net spending in Kurdistan which could have generated up to 15,000 bopd gross production across DNO's three operated fields (Tawke, Peshkabir and Baeshiqa) going into 2022.

With no new wells coming on production at the Tawke field in more than a year, the natural production decline has been partially offset by pressure support from reinjection of over 20 million cubic feet of gas per day from the Peshkabir field in addition to workovers and interventions of existing wells.

"We are eager to invest and produce more oil in Kurdistan," said DNO's executive chairman Bijan Mossavar-Rahmani. "In nearly two decades of operations in Kurdistan, DNO has confronted and overcome multiple challenges and we are well positioned to continue to do so," he added.

In the North Sea, DNO maintains an active drilling program in 2021, including two appraisal wells on previous discoveries and three exploration wells, the first of which has been drilled leading to a discovery. In addition, the Company plans 10 development wells this year.

Recently, the DNO-operated Brasse project selected the Equinor-operated Oseberg facilities as the preferred development host. With total field reserves of 35 million boe and a relatively modest topside construction scope on Oseberg, Brasse has robust project economics based on a 2022 project sanction target.

With an operational cash flow of USD 160 million, an increase of 135 percent from the first quarter, the Company reduced its bond debt to USD 700 million through a USD 100 million partial bond redemption. DNO exited the quarter with a net interest-bearing debt of USD 396 million, the lowest level since yearend 2018.

DNO received USD 159 million in the second quarter from Kurdistan, up from USD 75 million in the first quarter of 2021. Additional payments this week bring the total 2021 receipts from Kurdistan to USD 290 million year-to-date. The arrears built up as a result of Kurdistan's withholding of payment of certain invoices to DNO in 2019 and 2020 total USD 214 million, excluding any interest.

(Source: DNO)

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Iraq Borrows $360m to Reduce Gas Flaring

The International Finance Corporation (IFC), a member of the World Bank Group, is investing in Basrah Gas Company (BGC) to support one of the largest gas flaring reduction projects in the world, helping to improve energy access, prevent associated greenhouse gas (GHG) emissions and support a more resilient, sustainable energy sector in Iraq.

BGC is an Iraqi joint venture created to treat and process associated gas that would otherwise be flared. The project is expected to increase BGC's processing capacity, thereby avoiding more unnecessary flaring and associated GHG emissions by around 10 million tons per annum. It will support Iraq's transition to a lower carbon path and improve access to a domestic energy source, helping the country meet its growing power needs.

IFC is the lead arranger of the five-year, $360 million loan to BGC.

Ihsan Abdul Jabbar Ismail, Minister of Oil for Iraq, said:

"Signing the loan agreement reinforces the collective efforts to increase investment in associated gas flaring reduction using world-class technologies. It is in line with our objectives of turning flared gas into cleaner valuable energy and reducing the impact of the Green House Gas emissions on the environment.

"This loan opens new horizons for cooperation and collaboration that serve common purposes and interests, reiterating Iraq's commitment to increasing investment in associated gas flaring reduction and to achieving the objectives set by the Paris Agreement."

Malcolm Mayes, BGC Managing Director, said:

"We are delighted to have successfully signed this loan with IFC, the first loan facility of its kind in the energy sector in Iraq-a milestone to be proud of.

"The agreement demonstrates the strength of Iraqi companies and their ability to attract funding and trust from international banks. The intent of this five-year loan is to support BGC's growth project and turn the otherwise wasted flared gas into much needed energy for the country. Our strategy is in alignment with the government of Iraq's vision to power Iraqi homes with electricity and create a more sustainable energy industry."

Sérgio Pimenta, IFC Vice President for the Middle East and Africa, said:

"This pioneering project has the potential to deliver significant environmental and economic benefits, including lower GHG emissions and increased fiscal revenues, and will improve energy access and lower costs for Iraqi citizens.

"The project comes after years of hard work and strong cooperation by all parties involved. We hope that it will send a strong signal to other investors and help drive more private investments to tackle climate change and support inclusive growth in Iraq."

IFC's investment comprises a $137.76 million loan for IFC's own account, a $180 million loan in which participations were syndicated to eight international banks (Bank of China, Citi, Deutsche Bank AG, Industrial Commercial Bank of China, Natixis, Sumitomo Mitsui Banking Corporation, Société Générale and Standard Chartered Bank), and a $42.24 million loan through IFC's Managed Co-Lending Portfolio Program, a platform that allows institutional investors to participate in IFC's loan portfolio. The loan is without recourse to or guarantees from any of the shareholders.

Iraq is endowed with significant reserves of natural gas, mainly produced as a byproduct of legacy oil extraction. However, in the absence of adequate infrastructure to capture and process it, about 70 percent of all natural gas produced in the country is flared. Capturing associated gas for subsequent use can help Iraq reduce overall emissions.

The project benefits from long-standing engagements of the World Bank Group in Iraq's energy sector. Iraq joined the Global Gas Flaring Reduction initiative in 2011 and committed in 2013 to eliminate all routine natural gas flaring by 2030.

(Sources: IFC, Iraqi Govt)

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The Dutch Disease and Iraq’s Foreign Exchange Rate

By Dr. Zeki Fattah, for The Iraqi Economists Network (IEN). Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Dutch Disease and Iraq's Foreign Exchange Rate

Economists who studied the reasons for the low per capita growth of GDP in developing countries that rely on revenues from abundant natural resources, (called 'resource curse'), found it was actually caused not by high exchange rates, but by wrongly conceived economic policies over a long period of time.

We will visit this point again at the end of the paper. Meanwhile, and until recently, monetary economists in Iraq explained the fall in the Dinar exchange rate against the Dollar (a change within the expected norm) as a passing event caused by falling oil prices, and trepidation in the markets in the wake of COVID-19.

This explanation whilst went some way toward dampening the need for currency devaluation for a while, it didn't help the Iraqi Government to raise the cash it needed to meet its obligations. Recently, the Government had to reduce the Dinar exchange rate against the Dollar considerably to increase the Dinars it receives from the Central Bank in exchange for the Dollar it receives mainly from oil exports.

Please click here to read the full report.

(Source: IEN)

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IBBC Webinar: Causes and Cures for Iraqi Corruption

Corruption Worse Than ISIS: Causes and Cures for Iraqi Corruption

The Iraq Britain Business Council (IBBC) is delighted to invite you to the public launch of Professor Frank Gunther's new paper on corruption in Iraq on Monday 26th of April from 1pm - 2pm BST.

Following the presentation of the paper there will be comments from Dr Renad Masour, Chatham House, and Maya Gebeily, AFP. The ensuing discussion will be moderated by Shwan Aziz Ahmed from the IBBC Advisory Council.

Read the paper here

Register Here

Speakers:

Frank R. Gunter is a Professor of Economics, a Senior Fellow at the Foreign Policy Research Institute, and a retired U.S. Marine Colonel. After receiving his Doctorate in Political Economy from Johns Hopkins University in 1985, Frank joined the faculty of Lehigh University where he teaches Principles of Economics, Economic Development, and the Political Economy of Iraq. He has won four major and multiple minor awards for teaching excellence. Based on his two years in Iraq as an economic advisor to the US Government, Frank wrote The Political Economy of Iraq: Restoring Balance in a Post-Conflict Society (Edward Elgar Publishing, 2013). This book was published in both English and Arabic and was selected as an "Outstanding Academic Title" by Choice magazine. His most recent work, "Immunizing Iraq Against al Qaeda 3.0" (Orbis, 2018, Vol. 62, No. 3, pp. 389-408), discusses the possible economic causes of political instability in Iraq. Frank is married with three children and his family shares their Pennsylvania home with over 4,000 books.

Ms Maya Gebeily is a reporter with Agence-France Presse based in Baghdad, where she covers Iraqi politics, security, economics, and societal developments. Before this posting, Maya spent three years at AFP's Beirut bureau covering the Syrian conflict. She covered Lebanon and Syria at local Lebanese news website NOW News, and have reported as a freelancer out of Beirut, Istanbul, and the Kurdish region of Iraq in recent years.

Dr Renad Mansour is a senior research fellow and project director of the Iraq Initiative at Chatham House. He is also a senior research fellow at the American University of Iraq, Sulaimani, and a research fellow at the Cambridge Security Initiative based at Cambridge University. Renad was previously a lecturer at the London School of Economics and Political Science (LSE), where he taught the international relations of the Middle East and, from 2013, he held positions as lecturer of international studies and supervisor at the Faculty of Politics, also at Cambridge.

Moderator:

Abdul Aziz (Shwan) A. Ahmed, is the immediate past Chief of Staff to Deputy Prime Minister Dr Fuad Hussain and before him Deputy Prime Minister Dr Rowsch Nouri Shaways. As Chief of Staff he oversaw an office of 70 including 5 Director Generals,  covering the portfolios of Politics, Economics, International Partnerships, Media & Public Relations and Finance & Administration. In this position he has been at the heart of the Iraqi Government for the past 10 years actively participating in the work of several administrations. From 1997 to 2009 Shwan had a distinguished career at UNDP in several countries with his last posting being the Head of UNDP office in Puntland/Somalia from 2006 to 2009. He managed his own engineering business in Iraq from 1993 to 1997 and worked for the Ministry of Industry from 1987 to 1993. He graduated from the University of Technology in Baghdad in as Systems and Control Engineering in 1983. Shwan is happily married with three adult children. He is of Baghdadi Kurdish and Finish origin and is fully fluent in Arabic, Kurdish and English.

Media Partner:
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Invitation to IBBC Members’ Introduction Webinar







Dar Al Handasah has provided consultancy services to more than 950 clients in 60 countries, and has handled projects involving a total investment cost of over US$ 300 billion. Through these projects, we participate actively in the development of our societies. With a permanent staff of 9,850 and over 4,000 successfully completed projects, DAR has in-house expertise and experience to cover a wide range of engineering fields.

AlBilal Group was Founded in 1993 by Mr. Akeel Abdul Razzak, AlBilal Group has for more than two decades operated across diverse development sectors including Oil & Gas, Power, Water and Infrastructure. The years that followed the tenuous security, socio-political and economic dynamics in Iraq, AlBilal Group emerged as a preferred and a reliable partner to international development agencies and companies such as USDoD, USACE, Black & Veatch, and Washington International in support of the Iraq's re-construction and development programs.

The National Bank of Iraq (NBI) was founded in 1995 as a publicly traded, private sector company, offering comprehensive banking services to individuals and businesses in Iraq. As a result of the Bank's success and to fuel future growth, its paid up capital was increased from the initial 400 million IQD (USD 361,000) to IQD 250 billion (USD 215 million) in December 2013. In 2005, Capital Bank Jordan acquired majority shares (61.85%) in NBI, allowing the Bank to expand its business offerings, strengthen its global footprint and help promote financial inclusion across the country.

The post Invitation to IBBC Members' Introduction Webinar first appeared on Iraq Business News.

Iraqi Cabinet approves New “Alternative Energy” Power Plants

By John Lee.

The Iraqi Cabinet has agreed to approve a recommendation from the National Investment Commission (NIC) for the Ministry of Electricity to proceed with an investment project for the construction of seven "alternative energy" power plants.

The new power stations are to be built in Karbala, Wasit, Babylon, and Al-Muthanna provinces.

(Source: Govt of Iraq)

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Iraq, Iran to launch Joint Investment Fund

By John Lee.

Iraq and Iran are to launch a fund to finance joint ventures between the two countries.

In his closing remarks to the Iran-Iraq Economic Conference on Wednesday, Iran's Minister of Energy Reza Ardakanian said

"The proposal to establish a joint venture fund to support the private sector of the two countries was approved."

The conference also discussed plans to establish a branch of Tehran University of Medical Sciences in Iraq.

(Source: Iranian Ministry of Energy)

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