Major Plans to Boost Iraq Oil-Exporting Capacity

By John Lee.

Iraq is reportedly ramping up efforts to expand capacity to pump and export oil.

Ihsan Abdul Jabbar, the director-general of state-run Basra Oil Company, told Bloomberg that Iraq is seeking bids from six companies for a $4-billion project to inject seawater into its southern oil fields, and the country has already received bids from five companies interested in building a processing facility to double output at the Majnoon field to 450,000 bpd.

He added that Iraq is also studying a proposal from a Dutch company to build a 10 million-barrel storage facility and an oil-exporting terminal with a capacity of 2 million barrels a day on an artificial island off the coast.

More here from Bloomberg.

(Source: Bloomberg)

IBBC joins British Chambers of Commerce in boost to UK-Iraq Trade

Iraq Britain Business Council joins British Chambers of Commerce in boost to UK – Iraq Trade

IBBC is delighted to announce that we are officially an international affiliate to the British Chambers of Commerce (BCC). The IBBC is now the official organisation to whom British companies and organisations will be referred by the BCC.

This relationship neatly mirrors our status with the Iraqi Federation of Chambers of Commerce and the Kurdish Federation of Chambers of Commerce and Industry who are close partners of IBBC. Indeed the 5 largest Iraqi chambers, namely Baghdad, Erbil, Basrah, Najaf and Karbala are full members of the IBBC.

The BCC sits at the heart of a business network that spans the length and breadth of the UK, with links to markets across the world, with 52 accredited Chambers in the UK as trusted champions of businesses, places, and global trade.

Chambers of Commerce provide a voice to the business communities they represent, amplifying their priorities and concerns. In every region and nation of the UK, Chambers of Commerce and their members work to improve the local business environment in which they operate.

The Chamber of Commerce network exists to support and connect companies, bringing together firms to build new relationships, share best practice and foster new opportunities.

Christophe Michels, MD of IBBC says:

“IBBC is delighted to have been granted this affiliate status by BCC, as this endorses our role as intermediaries and trade enablers with Iraq for all the work we do with British business in the country. It completes the circle of business with Iraqi companies, as we have an equal position in Iraq, and are thus able to bring businesses in both UK and Iraq together through this unique leverage.”

Dr Adam Marshall, Director General at BCC stated:

“We are delighted to welcome IBBC to the BCC and we look forward together to strengthening relations and business opportunities between the UK and Iraq in the weeks and months ahead.”

(Source: IBBC)

Minister of Oil meets Head of Jinhua

By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has met with Mr Lu Ygiang, the President of the Chinese company Jinhua, and his entourage.

The two parties discussed during the meeting about enforcing the bilateral cooperation and the development of East Baghdad oil field.

The Minister confirmed he was keen to prepare the appropriate work environment for the company, while Mr Ygiang said his company was ready to start work after “the completion of all the procedures“.

Late last year, the Ministry of Oil signed the initial form of the contract to develop the East Baghdad field with Jinhua.

(Source: Ministry of Oil)

Oil Ministry Conf on Development of 11 Exploration Zones

By John Lee.

Iraq’s Ministry of Oil will hold a conference on Thursday 29th March to announce for a new licensing round to develop and rehabilitate 11 exploration zones on the borders of Iran and Kuwait, including one offshore zone on the Gulf.

The conference will be attended by 13 international companies which have purchased the data portfolios, in addition to two companies which intended to buy data portfolios.

These 15 companies will compete for the rights to develop and rehabilitate these exploration zones.

Assim Jihad, spokesman of the Ministry of Oil, said also that the form of the contract will be “service contract with a few modifications”.

(Source: Ministry of Oil)

Shell Sells West Qurna-1 stake for $406m

Shell EP Middle East Holdings B.V. has agreed to sell the entire share capital of Shell Iraq B.V (SIBV), which holds its 19.6% stake in the West Qurna 1 oil field, for $406 million, to a subsidiary of Japan’s Itochu Corporation.

The purchaser will also assume debt of $144 million as part of the transaction. The sale has received the necessary regulatory consent, is expected to complete in the next few days, and has an effective date of 31 December 2015.

Since joining the project in 2009, Shell has enjoyed successful cooperation with its partners in the West Qurna 1 venture, which will continue to be operated by ExxonMobil.

Shell’s Upstream Director, Andy Brown (pictured), said:

Iraq is an important country for the Shell Group, and exiting West Qurna 1 allows us to focus our resources on other assets in our Iraq portfolio. We are grateful for the support of the Iraqi government during the divestment process.

“Shell remains committed to working with its partners to redevelop Iraq’s energy infrastructure by capturing associated gas, through the Basrah Gas Company (BGC) Joint Venture, for domestic and regional consumption.

“This deal maintains the momentum behind Shell’s $30bn divestment programme and is in line with the drive to simplify our upstream portfolio and reshape the company into a world class investment.”

Shell’s other businesses in the country will not be affected by this divestment.

(Source: Shell)

Saudi Arabia looks to Expand its Footprint in Iraq

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

Following Iraqi Prime Minister Haider al-Abadi’s two visits to Saudi Arabia last year, Saudi Crown Prince Mohammed bin Salman is set to visit Iraq soon, according to Iraqi parliamentarian Saadoun al-Dulaimi.

Although neither Riyadh nor Baghdad have officially announced the visit, Dulaimi said in a March 12 tweet that Prince Mohammed will spend two days in Iraq, first meeting with Abadi in Baghdad to “sign agreements,” followed by a visit to Najaf to meet religious leaders.

Saudi Arabia was scheduled to reopen its consulate in the oil-rich city of Basra, which is adjacent to Iran, in March, but this was delayed for administrative reasons. Some reports say that Mohammed may open the consulates in Basra and Najaf, the Shiite religious center that is home to top Shiite clerics, during his upcoming visit to Iraq.

Meanwhile, the Saudi Embassy in Iraq is in the process of setting up the consulate office at the Sheraton Hotel in Basra. The consulate was closed in 1990 in the wake of the Gulf crisis that erupted during the regime of Saddam Hussein, and remained closed as a result of tensions in Saudi-Iraqi relations.

The Saudi kingdom opened a consulate in Erbil, the capital of the semi-autonomous Kurdistan Region of Iraq, in early 2016.

The decisions to expand Saudi Arabia’s diplomatic representation in Iraq come as part of a broader framework to strengthen the official political relations between the two governments. Saudi Arabia is seeking to establish economic and social bridges between the two countries in various fields.

Abdul Rahman al-Shahri, head of the Saudi delegation responsible for the establishment of the consulate in Basra, said that these measures are carried out to “provide services and incentives to both religious pilgrims and economic delegations between the two countries.”

Abdul Aziz al-Shammari, Saudi ambassador to Iraq, said in a statement in January, “Saudi Arabia is mostly interested in developing relations between the two countries in all areas that serve their aspirations.”

In late February, a friendly soccer game was held between Saudi Arabia and Iraq in the city of Basra, the first between the two countries in three decades. The game was attended by Saudi delegations and a large crowd of Iraqi fans.

The media office of Abadi said in a statement March 5 that the prime minister had received a phone call from Saudi King Salman bin Abdulaziz Al Saud, in which the latter pledged to build a soccer stadium in Baghdad for 100,000 spectators. It was later announced that Saudi Arabia would increase the number of seats to 135,000.

The statement said that “King Salman expressed his readiness and commitment to expand the positive relations between Iraq and Saudi Arabia at the economic, commercial, popular and cultural levels, as well as all levels of interest to both countries.”

Saudi companies, most recently the Saudi Basic Industries Corporation, one of the world’s leading petrochemicals companies, have been opening offices in Baghdad and Basra to expand economic exchange between the two countries.

Saudi Arabia is focusing its attention on Basra because it is the richest city in Iraq with the country’s largest oil fields and gateway to the Persian Gulf. It is also the most populous city after Baghdad, is adjacent to the Iranian border and home to an overwhelming majority of Shiites who share the same tribal and ethnic origins with Saudi tribes. In addition, many Saudi and Basra families are linked through marriage.

Saudi Arabia is also receiving Shiite figures who are viewed as independent of Iran. These include Sadrist movement leader Muqtada al-Sadr, who visited Saudi Arabia last year and met with King Salman and Prince Mohammed. He was warmly received amid much fanfare.

Saudi news sites, most notably Al-Arabiya, are refraining from criticizing supreme Shiite cleric Ali al-Sistani, because his views are independent from those of Tehran and has broad influence among Iraqi Shiites.

All this has been a matter of concern for Iran, which has allegedly mobilized parties to raise banners in Basra condemning the opening of the Saudi Consulate and the various economic and sporting activities.

The State of Law Coalition led by former Prime Minister Nouri al-Maliki, who is close to Iran, opposes Saudi Arabia’s opening of a consulate in Najaf.

Iraq is seemingly determined to pursue rapprochement and cooperation with Saudi Arabia, and is organizing regular visits by political, economic and media delegations. These included Abadi’s visit to Saudi Arabia last October, during which the memorandum of establishment of the Saudi-Iraqi Coordination Council was signed to develop relations between the two countries.

Interior Minister Qasim al-Araji also visited Saudi Arabia last year, and Abadi insisted on receiving Saudi delegations even if they were not high level. In February, for instance, he received the Saudi media delegation that visited Iraq at the invitation of the Iraqi Journalists Union.

In October, Saudi Arabia resumed its flights to Iraq after 27 years, and it opened in October 2017 its border crossing in southern Iraq to expand economic travel and increase tourist and religious travel between the two sides.

The first initiatives to expand relations between the two countries were directly sponsored by the United States with Secretary of State Rex Tillerson attending the meeting of the establishment of the Saudi-Iraqi Coordination Council in Riyadh in October.

The Iraqi-Saudi rapprochement appears to take place in the context of the new US policy that followed the support garnered by President Donald Trump from the US allies in the region to form a united front to counter Iran’s rise in the Middle East.

Saudi Arabia has seemingly made great progress in achieving rapprochement with Iraq and expanding its areas of influence within the last year. Such rapprochement is likely to get stronger should Abadi manage to keep his seat for another term in the elections scheduled for May.

IBN Welcomes New Expert Blogger

By Padraig O’Hannelly.

This week at Iraq Business News, we are delighted to welcome a new Expert Blogger to our ranks:

Elena Kornienko (pictured), has more than 15 years of professional experience in contracts, procurement and tendering in various roles from demand-identification to contract close-out.

She has worked on major international oil and gas projects, including the Sakhalin-1 and Sakhalin-2 fields in Russia, and Iraq’s West Qurna-2. Now based in Dubai, she provides consultancy services to the oil and gas industry.

Elena is a fluent English and Russian speaker, and a graduate of the Moscow State University of Commerce, holding a degree in Economics. She also graduated with distinction from the School of Business Administration at Portland State University and holds a CIPS diploma.

You can read her first blog here, and we look forward to reading more of her perspectives on procurement and tendering in Iraq over the coming weeks and months.

KRG, Pearl agreement to boost Electricity Generation

The Kurdistan Regional Government (KRG) and Pearl Petroleum have signed an agreement to increase production of gas from the Khor Mor field later this year, to boost much needed electricity generation for the people of the Kurdistan Region and Iraq as a whole.

The 10-year gas sales agreement will enable gas production from Khor Mor field to increase by 25% later this year, from 320 million cubic feet per day currently to 400 million cubic feet per day.

Dr Ashti Hawrami, KRG Minister of Natural Resources, said:

“We are pleased to see the further commitment of expansion and investment by the companies and the anticipated growth in gas supplies will make a positive contribution to the growing domestic needs for more electricity.”

As part of a final settlement of arbitration in August 2017, Pearl Consortium, which is led by Crescent Petroleum and Dana Gas, committed to expanding their investment and operations in the region.

The companies plan a multi-well drilling program in the Khor Mor and Chemchemal fields, as well as installation of new gas processing and liquids extraction facilities. The overall aim is to increase gas production by a further 125% within two years, to 900 million cubic feet per day.

KRG also welcomes Dana Gas and Crescent Petroleum’s expansion of their local training and employment programs, as agreed in the arbitration settlement. The companies employ close to 500 full-time local personnel representing over 80% localisation, and have training programmes to increase this figure further.

See also the Dana Gas press release on the Gas sales agreement (external link)

(Source: KRG)

Procurement in Iraq: Cinderella or Superman?

By Elena Kornienko.

Little did I know back in 1999 when I got my first job in procurement on the Sakhalin-2 project which became one of the mega projects in oil and gas industry not only in Russia but also worldwide.

I was young, ambitious and also very naive about what years later became my biggest passion. Procurement, Purchasing, Supply Chain – various organizations use different names for this function, but the truth about it is very simple – we do impact the production of our companies as a Superman hero, and also are treated internally as a Cinderella.

My first boss worked very hard – we could see him already in the office when we arrived. He was the last one to leave and always spent at least one weekend day at his desk catching up with all the requisitions, purchase orders and expediting reports. It was the first offshore platform in Russia, with nternational standards and a limited presence of contractors and suppliers who could help us, the Procurement team, to deliver goods and services to our internal client, the Production team.

I started working with a strong believe that no matter how hard you work, how many hours you spend in the office, how many phone calls and emails you do every day, there will be always someone to blame Procurement for a delay.  Our cruel “stepmother” and jealous “stepsisters” from the Production and Drilling teams constantly mistreated us by giving more and more unrealistic requisitions. Perhaps it was not that bad, but it felt like we are given impossible tasks.

Years later I realized that this was not bad treatment of the Procurement team, but rather a challenge for us to rise and shine. This challenge was accepted by us as we knew that there would not be a Fairy Godmother to make a change. The change has to come first from understanding that tne Procurement function brings the value for all levels of the organization.

Today’s focus is on sustainability as well as ethical and environmental factors, and the supply chain organization needs to ask itself “why” questions before any action. Why procurement makes this decision and why it is important to the organization. Why its sourcing strategy is like that and not anything else. Why the company spends that money on procuring goods or services. Why, why, why…. I will be answering these and so many other questions related to procurement in the blog articles here at Iraq Business News.

However, lets get back to the question “Is Procurement a Cinderella or a Superman?”. It is no secret that Iraq’s economy is dominated by the oil sector and most of the oil exploration and production is done by International Oil Companies (IOCs). It is estimated that on average between 70% and 80% of a company’s spend is related to procurement activities for purchasing of goods or services. That is quite impressive, right? And of course, the procurement process is regulated by the internal procedures.

It is questioned wherever regulations governing public procurement in Iraq apply to procurement procedures of the IOCs in relation to their subcontracts or not. And while it is debatable if procurement regulations and instructions are applicable to subcontracts or not, IOCs follow their internal procedures to govern the procurement process. What not everyone realizes is that procurement procedures always have room for improvement.

Very often the whole procurement process – from demand identification up to contract award – is quite lengthy and not always transparent to potential contractors. In the articles to come we will be reviewing all processes related to procurement and how they are applicable to IOCs operating in Iraq.

Elena Kornienko has more than 15 years of professional experience in contracts, procurement and tendering in various roles from demand-identification to contract close-out. She has worked on major international oil and gas projects, including the Sakhalin-1 and Sakhalin-2 fields in Russia, and Iraq’s West Qurna-2. Now based in Dubai, she provides consultancy services to the oil and gas industry. Elena is a fluent English and Russian speaker, and a graduate of the Moscow State University of Commerce, holding a degree in Economics. She also graduated with distinction from the School of Business Administration at Portland State University and holds a CIPS diploma.