Iraq, China launch ‘Oil for Reconstruction’ agreement

By Salam Zidane for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

When Iraqi Prime Minister Adel Abdul Mahdi led a delegation to China in September, Baghdad and Beijing activated an “oil for reconstruction” and investment program. Under the arrangement, Chinese firms work in Iraq in exchange for 100,000 barrels per day.

Iraq has said it needs more than $88 billion to develop and mend its rickety infrastructure after three years of combating the Islamic State (IS).

Speaking to the press, Abdul Mahdi said that, including this new deal, about 20% of Iraq’s daily oil production is being exported to China.

Click here to read the full story.

Weatherford Wins New Business in Iraq

Weatherford International plc (OTC-PINK:WFTIQ) has announced it has been awarded two fully integrated rig contracts and one well services (through-tubing intervention) contract with a multinational operator in one of the world’s largest proven oil fields located in Iraq.

Frederico Justus, President of the Eastern Hemisphere for Weatherford, said:

Weatherford has operated in Iraq since 2006, longer than any other multinational oilfield services provider.

“During that time, Weatherford proved to operators in Iraq that its capabilities across the life of the well reduce costs, enhance safety and maximize production efficiency.

“This experience gave the operator confidence in our ability to execute these turnkey drilling projects in one of their most strategic global locations.

For the next two years, Weatherford will provide integrated services to drill development wells in one of Iraq’s most productive oil fields.

For the next five years, Weatherford will provide in-country support and specialized well services, including workshop services, fishing, milling, water shutoff and zonal isolation.

(Source: Weatherford)

Oil Exports slightly down in September

By John Lee.

Iraq’s Ministry of Oil has announced oil exports for September of 107,276,327 barrels, giving an average for the month of 3.576 million barrels per day (bpd), down from the 3.603 million bpd exported in August.

These exports from the oilfields in central and southern Iraq amounted to 103,010,306 barrels, while exports from Kirkuk amounted to 3,166,848 barrels, and from Qayara 877,196 barrels. Exports to Jordan were 221,977 barrels.

Revenues for the month were $6.345 billion at an average price of $59.149 per barrel.

August export figures can be found here.

(Source: Ministry of Oil)

Baghdad sends delegation to Erbil to Resolve Disputes

By Dana Taib Menmy for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraqi President Barham Salih met separately Sept. 18 with four Kurdistan Regional Government (KRG) leaders — President Nechirvan Barzani, Prime Minister Masrour Barzani, parliament Speaker Rewaz Fayaq and Deputy Prime Minister Qubad Talabani in Erbil, the KRG capital.

The purpose of Salih’s visit was to warn the KRG about the region’s share in Iraq’s federal budget for 2020, scheduled to be passed by the national parliament by the end of the year.

A well-informed source close to the ruing elites in both Baghdad and Erbil told Al-Monitor on condition of anonymity that the Iraqi president — who is Kurdish — cautioned the Kurdish leadership that the federal government in Baghdad will cut the Kurdistan region’s share of budget, including salaries of the KRG employees, if Erbil fails to hand over a portion of its oil to the State Organization for Marketing of Oil. The organization is responsible for selling Iraq’s oil.

Click here to read the full story.

Transparency in Iraqi Upstream Petroleum Sector

By Ahmed Mousa Jiyad.

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

Transparency in the Arab Countries’ Upstream Petroleum Sector- Iraq as case study*

While upstream petroleum sector is either dominant or has significant importance in many Arab economies of MENA region, the transparency of the sector is alarmingly lacking; this is manifested by their “formal” association with Extractive Industry Transparency Initiative (EITI), which is extremely limited and their Resource Governance Index (RGI) and Corruption Perception Index (CPI) that are too poor.

This presentation comprises three parts;

The first part addresses, briefly, the essence of transparency and what it entails:

  • Full disclosure & availability of and accessibility to related Data & Information;
  • Openness, answerability, accountability;
  • Multiplicity of involved, reporting or concerned entities;
  • Objective, Independent & Verifiable Indicators;
  • Transparency is not rhetorical claim; it is evidence-based;
  • Reconciliation of data: Materiality, Identifiably, Measurability;
  • Constitutional Premises (ownership) Right and Rights Based Development- RBD

Also, this part provides a selection of most known international entities specialized in the matter; these are EITI, Natural Resource Governance Institute (NRGI), Transparency International (TI), Publish What You Pay (PWYP) and the Fund for Peace. Each of these entities has its distinct methodology, working procedures and publications. In addition to them, this part refers to the IMF’ Fiscal Transparency Code.

 

The second part exhibits charts on the standing of the Arab countries based on the latest available data and information from three international entities: EITI, NRGI-RGI and TI-CPI.

As on September 2019 only Mauritania has “meaningful progress” standing with EITI; Iraq was “suspended” since October 2017 due to “inadequate progress” and Yamen was “suspended” on February 2015 due to “political instability”, then in October 2017, Yemen was “delisted” and, thus, could be invited to reapply to the EITI once conditions were again favourable for implementation.

Obviously, the above manifests extremely poor standing (in number of countries and their status) with EITI.

The NRGI’ RGI measures the quality of resource governance in countries that together produce 82 percent of the world’s oil, 78 percent of its gas and a significant proportion of minerals, including 72 percent of all copper. RGI is the product of 89 country assessments (eight countries were assessed in two sectors), compiled by 150 researchers, using almost 10,000 supporting documents to answer 149 questions.

NRGI’s RGI for 2017 (oil and gas only) covers 89 countries and provides their “Score” on a scale of 100 and “Rank” of 89. RGI 2017 classifies the standing of countries according to their scores into: Good (>74); Satisfactory (60:74); Weak (45:59); Poor (30:44) and Failing (<30).

All the 12 Arab countries covered by RGI scored less than 60 out of 100. Countries with Weak score are Tunisia, Kuwait and Oman. Those scored poorly are Qatar, UAE, Bahrain, Egypt, Iraq, Saudi Arabia, Algeria and Yamen. Finally, Libya scored failing.

TI’ CPI 2018 draws on 13 surveys and expert assessments to measure public sector corruption in 180 countries and territories, giving each a Score from zero (highly corrupt) to 100 (very clean) and their Ranks accordingly.

Syria, Yemen, Sudan, Iraq and Lebanon each scored less than 30; Egypt, Algeria, Kuwait, Tunisia, Morocco, Jordan and Saudi Arabia scored over 30 up to 50; Oman, Qatar and UAE scored over 50 to 70.

Since both RGI and PCI are composite indexes, there is strong correlation between Scores and Ranks: low scores are associated with high rank numbers; high rank number means at the bottom of the list.

In conclusion all the standing of Arab countries is alarmingly very poor and disappointing with EITI, NRGI and TI.

 

The third part of the presentation focuses on Iraq as a case study on transparency through its association and experience with EITI.

Briefly, Government of Iraq (GoI) launched (2007/8) the International Compact with Iraq (ICI) in cooperation with the UN and the WB. ICI specifically calls to, “Establish and implement mechanisms to ensure transparency of petroleum sector flows”.

The government publicly announced its commitment to work with all stakeholder groups at the 4th EITI Global Conference in Doha, Qatar, in February 2009, and then made formal commitment to EITI at the Iraq EITI (IEITI) launching conference on 10-11 January 2010; a month later the country was accepted, by EITI Board, as a Candidate.

The first validation report, prepared by EITI’ International Secretariat- IS staff, endorsed by Adam Smith International- ASI, prompted EITI Board to announce, on 12 December 2012, Iraq as “Compliant” country under EITI rules and process. On 3 April 2013, IEITI organized big event in Baghdad celebrating this achievement by Iraq.

A team from EITI-IS visited Iraq during 1-9 April 2017 and held numerous meetings in Baghdad and, also, in Dubai (UAE); IS Report presents the findings and initial assessment of the data gathering and stakeholder consultations and followed EITI usual and unified “Validation Procedures” and applied the “Validation Guide” in assessing Iraq’s progress with the EITI Standard.

Iraq was found to have inadequate progress in implementing the EITI Standard in October 2017. The country status as “compliant member” was suspended and, according to EITI rules, was given a grace period to rectify the shortcomings to achieve at least “Meaningful” progress on all identified requirements.

Why and what went wrong

The presentation highlights and discussed questions relating to why and what had led to such suspension under the following headlines:

  • “Mission accomplished” and sense of complacency; frequency of MSG meetings and attendance curve
  • Wrong understanding of what “compliant” status really means;
  • Focus on “release on time” not on the quality and contents of the IEITI Annual Reports;
  • IEITI Annual report mostly Copy & Paste; most Parts are prepared by MoO/ MIM officials and full of flaws and inaccuracies;
  • Structure & composition of the MSG: dominated by Government representatives, IOCs not active, CSO lack understanding of Extractive Industry and language;
  • Big Secretariat, weak national capacity contribution and complete reliance on the Administrator;
  • Opposing domestic views: useless/invisible; event-base; abused by authorities and two extreme views (Rosy vs. UN full control!):
  • Surprising passivism on Corruption!!!!!!;
  • IEITI itself is a Black Box
  • Limited impacts that led to diminishing international support and lack of funding e.g., NORAD; NRGI: from “priority country” to “Limited engagement” to only in “RGI”;

What are next and the way forward

In this part, the presentation reviewed responses and actions taken by the Iraqi authorities since the suspension: From the initial “muteness” and “passivism” October -2 November 2018,….., to 4 Nov 2018 alerting article; Committees & changes,  …; February 2019 Baghdad Conference; EITI-IS second validation; EITI Global Conference, Paris- June 2019.

In case of re-instating Iraq “Compliant” status, IEITI still has to take specific necessary measures and actions for real impacts instead of making rhetorical statements; such measures and actions were proposed, justified and discussed during the presentation. The PowerPoint slides are attached herewith.

* Presentation delivered before the 12th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration www.targetexploration.com, Imperial College, London, UK. 18 September 2019. I am very grateful to Target Exploration for sponsoring my participation.

Click here to download the PowerPoint slides presented at the conference.

Mr Jiyad is an independent development consultant, scholar and Associate with the former 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 (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

Oil Exports Slightly up in August

By John Lee.

Iraq’s Ministry of Oil has finalised oil exports for July of 111,706,135 barrels, giving an average for the month of 3.603 million barrels per day (bpd), up from the 3.556 million bpd exported in July.

These exports from the oilfields in central and southern Iraq amounted to 107,520,044 barrels, while exports from Kirkuk amounted to 3,253,665 barrels, and from Qayara 928,947 barrels. Exports through Al-Samoud refinery to Jordan were 3,479 barrels.

Revenues for the month were $6.413 billion at an average price of $57.407 per barrel.

July export figures can be found here.

(Source: Ministry of Oil)

ACWA Power Signs MoU with Iraq Energy Institute

ACWA Power, a Saudi-based developer, owner, and operator of power generation and water desalination plants, has signed a Memorandum of Understanding (MoU) with Iraq Energy Institute (IEI), an independent non-profit policy institute, to collaborate on research development projects and enhance capacity building programs that will contribute to the optimum development of Iraq’s energy sector.

The MoU communicates the commitment of ACWA Power and IEI to partake in both parties’ events, workshops and activities and exchange expertise from consultants and senior management at organised events and forums.

The partnership will initiate professional dialogues and knowledge sharing that will bring about solutions which target challenges facing the region and elevate the private-public investor community in Iraq.

Demonstrating its role in nurturing young talent, ACWA Power will also take a leading role in IEI’s future scholarship programmes that will grant Iraqi students the chance to progress and excel in the energy and water fields in cooperation with other governmental and non-governmental partners.

The MoU was signed by Mr. Yesar al-Maleki, Managing Director of IEI, and Mohamed Fata Nahhas Business Development Manager at ACWA Power in the presence of Mohammad Abunayyan, Chairman of ACWA Power and Mr. Adnan Al Janabi, Vice Chairman of IEI.

ACWA Power Chairman, Mohammad Abunayyan said:

We are pleased to commence collaboration with Iraq Energy Institute and bring our expertise to the Iraqi market.

“The signing of the MoU will certainly bridge to further alliances between ACWA Power and Iraqi energy players and is a robust start of a mutually beneficial relationship built on knowledge and exchange of energy proficiency between the Kingdom of Saudi Arabia and Iraq – which we are proud to lead and are keen to further progress.

(Source: ACWA Power)

TechnipFMC settles Iraq Bribery Case

By John Lee.

Oil and gas company TechnipFMC has agreed to pay more than $5 million to settle an Iraq-related corruption case with the US Securities and Exchange Commission (SEC).

The company is alleged to have taken part in bribery between 2008 and 2013 to secure business from Iraqi state-owned oil companies.

Just last month, the company announced that it would demerge its operations into two separate companies.

The full statement from the SEC can be read here.

(Source: SEC)

Petrel Resources eyes Opportunities in Iraq

By John Lee.

Irish-based Petrel Resources has said that one of its main priorities has been re-building its presence in Iraq.

In its financial results for the six months ended 30th June 2019, the company said:

While challenges remain, the Iraqi government encourages international investors with Iraqi operating experience.  The security situation has dramatically improved since 2018.  Iraq remains exempt from OPEC quotas, and Iraqi oil output has reached 4.7 million barrels of oil daily.

“The next Iraqi bidding round (for exploration of blocks with gas potential) is expected during 2020.  The model contract is expected to be an updated version of the Iraqi hybrid exploration and development contract, incorporating aspects of service contract and production sharing.  These terms are more attractive for international explorers than in prior bid rounds.

“The improving security situation in western Iraq has again made possible field-work on prime western desert exploration blocks, including Block 6, on which we worked from 2002. Similarly, the Merjan oil discovery, by Mobil in 1982, which has recently been packaged with Kifl & west Kifl oilfields, has arisen as a possible development project. 

“The Merjan oilfield and surroundings, on which Petrel operated a Technical Cooperation Agreement in joint venture with Japanese giant Itochu from 2004 through 2007, has recently been covered by 1,000 km sq a 3d seismic survey conducted by the Iraqi Oil Exploration Company.  This enhanced data should further minismise the risks & costs of development.

(Source: Petrel Resources)