Jiyad: Iraq, and the China-Iran Cooperation Program

By Ahmed Mousa Jiyad.

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

Iraq and the China-Iran Comprehensive Cooperation Program

The China-Iran Comprehensive Cooperation Program (CICCP) was signed on 27 March 2021; two days later the CICCP's direct impacts on Iraq began emerging and one of such impacts seems to benefits both Iraq and Iran!!

A few days ago I completed a detailed preliminary assessment of CICCP document. The assessment was written in Arabic entitled "China-Iran Comprehensive Cooperation Program: Tactically Important Strategically Impacting if Implemented", it was circulated widely and posted on many websites.

The assessment uses composite methodology of three researches approaches (Text analysis, SCOR (Strength, Challenges; Opportunities and Requirements) and facts/evidence based) and comprises an introduction, three parts and concluding remarks. Part one provide brief review of CICCP document structure: preamble, articles, annexes, effective date and term of the deal, coordinating and supervising authorities. Part two, provides detailed assessment of eight fundamental topics/ areas of cooperation, from the perspectives of the political economy of bilateral relations and geopolitical considerations. Part three provides the direct official reactions to CICCP from Iraq, USA, Arab Gulf States/Saudi Arabia and Russia.

The political economy perspectives are related to the following basic issues: The first relates to the nature of bilateral relations in terms of sovereign independence or dependency and hegemony; the second is whether the principle of "mutually beneficial" is also equitable; the third concerns the structuring of the Iranian economy on whether the deal will eventually deepens the dependence on the export of raw materials, oil and gas, or introduces the required and desirable structural changes horizontal, vertical and knowledge-based levels; and the fourth is about the financial and banking independence, monetary and currency issues pertaining to funding investments and trade exchange.

The geopolitical considerations were addressed at four levels, starting from the domestic (national for both countries), continental (Asian from China to Syria), regional (West Asia / Middle East) and international levels.

The assessment argues that the timing of signing and announcing CICCP is tactically motivated and important, while its proper and timely implementation could be a game-changer and thus strategically impacting; but, as usual, reality seldom coincides with expectations.

This brief intervention focuses on the direct current evidenced impacts on Iraq. Interested readers are kindly invited to read the Arabic version of my detailed initial assessment through the web-links mentioned at the end of this article.

In a remarkable speed and substance CICCP has already prompted both Iraq and the US to react!

First; after the current prime minister, Mustafa al-Kadhimi, denied, rather harshly, in a press conference on November 18, 2020, the existence of an Iraq-China agreement by saying, 'You know there is no China agreement, why are you promoting these lies?', he returned to authorize, on March 30 - that is, only three days after the signing of CICCP, "to start implementing the Chinese agreement"!!

While I do not find it necessary, now, to discuss what has happened between Iraq and China since the government of Haider al-Abadi, I find it useful to remember the statement by the Prime Minister's Financial Affairs Adviser, Dr. Modhir Muhammad Saleh, on March 29, 2021, that the "Iraq-China agreement" became effective on October 18, 2020, and then he affirmed the "cooperation framework agreement ... and the final accounting and oil annexes were signed on September 23, 2019." So why has not been published to this day any official document on this agreement / cooperation framework agreement, nor any of its annexes or memoranda of cooperation/ understanding related to it!!??

But there is a document at the Ministry of Finance entitled "Export Credit Insurance Cooperation Framework" between the China Export & Credit  Insurance Corporation and the Iraqi Ministry of Finance) dating back to May 11, 2018 (that is, before the date of the agreement signed by former Prime Minister Adel Abdul Mahdi) !!!!

It is worth mentioning that 2021 State Budget Law includes a few infrastructure projects worth 1.803 trillion Iraq Dinnar to be funded, presumably by the above mentioned 2018 framework; since there is no new framework agreement officially published by the Ministry of Finance, nor approved by the Council of Ministers, nor legislated by the House of Representatives/ the Parliament. Moreover, even if such agreement is ratified and activated it utilization will be differed to future state budget for 2022 or even 2023 because of the national election scheduled for October this year.

Apparently, CICCP was a wakeup call for the Iraqi government but it is in reality too late for 2021 budget funding.

But on the other hand, the Iraqi Premier rushed for quick visits to Saudi Arabia and the UAE, immediately after signing CICCP; is there a relationship between the two events? Time will only tell!!!!

Second, among direct reactions by the US administration and as far as Iraq is concerned relates to Iraq-Iran interests. Just two days after signing the CICCP the U.S. renewed and extended the Iraqi exemption from the practices of maximum US pressure on Iran from 45 to 120 days; a waiver to avoid penalties for buying natural gas and electricity from Iran. This exception entails two positive consequences for both Iraq and Iran: the first is to ensure the continued supply of Iranian gas to generates electricity; this what the Iraqis suffer from its shortages especially the heated summer is on the doorstep, and the second is that Iraq pays Iran's accumulated dues for importing gas and electric power (which constitutes about a third Iraq's production of electricity) as the total of those receivables were mentioned in the 2021 budget, about 1688 billion Iraqi dinars.

Third, another important reaction by the US administration was its quick decision to hold a new round of strategic dialogue with Iraq; the discussions began on April 7, and mainly relate to the issue of US forces remaining in Iraq and the Strategic Framework Agreement signed in December 2008. (This agreement and related matters face strong opposition and many important, influential, legal and judicial challenges, especially after the Trump administration assassinated two leading heavy weight individuals, Abu Mahdi Al-Muhandis (Iraq) and General Qassem Soleimani (Iran), on January 3, 2021 near Baghdad airport).

It is worth noting that energy cooperation is one of the eight topics included in the said strategic framework agreement. Evidence suggests that the previous round of the Iraqi-American Committee for the Coordination of Cooperation in the Field of Energy, which was held, virtually remotely, on January 18 of this year was brief and did not include any important issues or noticeable impacts or new achievements. Hence, it did not attract attention from domestic or external media. Even the two ministries, i.e, Oil and Electricity, that should be directly involved, hardly mentioned anything on their websites on that latest meeting. Will CICCP invigorate Iraqi-American cooperation for the benefit of the energy sector in Iraq?? Who knows, will see!!!

Click here to download the full report in pdf format.

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.

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Iraqi Oil Minister Visits Tatneft HQ

By John Lee.

On a recent visit to the Russian republic of Tatarstan, Iraq's Oil Minister Ihssan Abdul-Jabbar Ismail attended a presentation that the headquarters of the oil company Tatneft.

The Iraqi delegation also visited the Taneco Oil Refining Complex, the Kama Tyres manufacturing plant, and the Nizhnekamsk Truck Tyre Factory.

Nail Maganov, General Director of PJSC TATNEFT:

"Our Company has had a long-standing partnership with the Republic of Iraq. Our professionals have participated in the construction of 700 wells in the West Qurna, North Rumaila and Luheis oil fields, as well as in other projects.

"Tatneft has unique competencies in the Upstream and Downstream, the use of digital technologies in the industry. We are confident that our experience and knowledge could find their application in the Republic of Iraq as well, and we are ready to continue cooperation with our Iraqi partners in areas of interest to them".

(Sources: Ministry of Oil, Tatneft)

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Iraqi PM lays Foundation Stone for $4bn Refinery Project

By John Lee.

Prime Minister Mustafa Al-Kadhimi has laid the foundation stone for the South Refineries Company (SRC)'s new Fluid Catalytic Cracking (FCC) complex at Basrah Refinery.

The project will be built by Japan's JGC Corporation, and will increase refinery capacity by 55,000 barrels per day (bpd).

It will be funded by a loan from the Japan International Cooperation Agency (JICA).

More information here, here and here.

(Sources: Iraqi Ministry of Oil, Office of the Iraqi Prime Minister)

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DNO announces Ramp-Up of Oil Production in Iraq

DNO ASA, the Norwegian oil and gas operator, today reported receipt of USD 54.0 million net to the Company from the Kurdistan Regional Government (KRG), of which USD 35.2 million represents DNO's entitlement share of February 2021 crude oil deliveries to the export market from the Tawke license in Kurdistan.

Of the balance, USD 4.6 million is an override payment equivalent to three percent of gross February 2021 Tawke license revenues under the August 2017 receivables settlement agreement and USD 14.2 million is a payment towards the Company's arrears relating to withheld payment of Tawke license 2019 and 2020 entitlement and override invoices.

Following receipt of the latest arrears payment, the outstanding balance has dropped from USD 259.0 million at the end of 2020 to USD 238.6 million.

DNO operates and has a 75 percent stake in the Tawke license, which contains the Tawke and Peshkabir fields, with partner Genel Energy plc holding the balance.

With resumption of payments, the partners have stepped up drilling of new wells at Peshkabir and workovers of existing wells at Tawke in 2021, raising gross operated license production from an average of 110,300 barrels of oil per day (bopd) in 2020 to 110,900 bopd in January, 112,000 bopd in February, 113,100 bopd in March and 115,500 bopd month-to-date in April.

(Source: DNO)

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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.

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New Contracts for Iraqi Drilling Company (IDC)

By John Lee.

The Iraqi Drilling Company (IDC) has announced its intention to conclude contracts with Chinese and American companies operating in Iraq to drill and rehabilitate dozens of oil wells in the country.

The company indicated it is about to start drilling 20 wells in the Nasiriyah field in Dhi Qar, which are included in a long-term plan with the Dhi Qar Oil Company (DQOC) to advance the oil sector, due to be completed in over two years.

After the relative relaxation of the impacts of the coronavirus, the Iraqi Drilling Company resumed its negotiations with the international companies developing oil fields in the country and their counterparts affiliated with the Ministry of Oil in the provinces, in preparation for signing the postponed contracts with the aim of enhancing Iraq's energy capabilities.

The drilling and rehabilitation contracts, hoped to be concluded soon, include drilling 37 wells in the Zubair field for the Italian company ENI, the main operator of the field, and starting discussions with BP, the main contractor in the Rumaila field, to develop the giant field west of Basra.

This is in addition to the near signing of a contract to drill 43 wells in Majnoon field with the Basra Oil Company (BOC), which is the third largest oil field in the world, with reserves of 6.12 billion barrels.

The Iraqi Drilling Company has completed all its preparations to sign a contract with the Central Oil Company, to drill 27 wells in the East Baghdad field, and it continues its discussions with the Maysan [Missan] Oil Company (MOC) to sign a contract for drilling 22 wells in the Bazargan field as well as rehabilitating another 150 wells and a contract to operate a number of drilling towers and rehabilitation of a large number of wells in the Kirkuk fields with the North Oil Company (NOC).

(Source: Govt of Iraq)

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Shamaran Buys Up Bonds

By John Lee.

ShaMaran Petroleum has reported in connection with the Company's 12% senior unsecured bonds due 2023 (ISIN: NO 001082645.6) that the Company has purchased Bonds in the market at commercially attractive rates.

As a result, Bonds in the principal amount of $4.95 million have been retired.  The Company's Bond amortization payment due in December 2021 has accordingly been reduced by 33%.

Dr. Adel Chaouch, President and Chief Executive Officer of ShaMaran commented:

"We are very pleased that, as a result of continued sustained production in the Atrush field and the first quarter 2021 increase in oil prices, the Company has been able to utilize its free cash to make purchases in the market as permitted by the January 2021 amendment to our Bond terms. 

"ShaMaran is committed to reducing its debt obligations and looks forward to making another positive report to the market at the end of the next quarter."

(Source: ShaMaran Petroleum)

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Dhi Qar Protests: PM Replaces Governor

By John Lee.

Iraq's Cabinet held its weekly meeting on Tuesday under the chairmanship of Prime Minister Mustafa Al-Kadhimi.

The Prime Minister addressed the developments in Dhi Qar province, and confirmed that, following consultations with key stakeholders, a new governor has been appointed to run the province and his name will be announced shortly.

He told the Cabinet that an advisory council will be appointed in Dhi Qar, reporting to him, and that he he will follow up on a daily basis with the new governor and the council on all matters related to the reconstruction of Dhi Qar.

He also indicated that the results of the investigation into the violence during the recent demonstrations in Dhi Qar will be announced.

(Source: Govt of Iraq)

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Iraq passes $89bn Federal Budget Bill

By Joe Snell for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Iraq passes $89 billion federal budget bill

The budget confronted issues of unemployment, currency devaluation and non-oil revenues and was passed as lawmakers prepare for October's general election; the challenge is implementation.

Click here to read the full article.

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Iraq to Exploit Massive Natural Gas Reserves

Iraq Moves To Exploit Its Massive Natural Gas Reserves

Writing in Oil Price, Simon Watkins says that despite Iraq's huge potential gas resources, it has made little progress on developing this potential either for associated or non-associated gas.

But last week, a heads-of-agreement deal was announced with Total, to work jointly on four major projects that include developing the associated gas sector.

Click here to read the full story.

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