DNO sees bigger oil discovery in Iraq

Shares in DNO jumped by as much as 5.6 per cent in early trade as investors cheered plans to launch production in the first quarter of 2007 despite Iraq's sectarian violence and uncertainties over rights to tap its oil riches.

DNO said the Tawke 2 well in Kurdish-controlled northern Iraq has tested 3,840 barrels of oil per day, confirming a western extension of its Tawke oil discovery.

'Preliminary results from the well indicate increased reserves,' DNO said in a statement.

DNO chief executive Helge Eide said the company would start production at two of its three wells in the Tawke discovery.

'We are now (planning to) start two of the three wells, so it (daily production) would not be far from 10,000 barrels, but we will not say anything exact now,' Eide said.

DNO also said it was in a process of finalising an agreement with the Kurdistan Regional Government to increase its working interest in the production sharing agreement by 15 percentage points to 55 per cent.

In return for the bigger stake, DNO would provide all of the funding of the project costs, the company said.

DNO, whose main production operations are in Yemen, has a market capitalisation of around $1.8 billion.

'The results from Tawke 2 are very encouraging and confirm the robustness of the Tawke development,' Eide said in a statement.

'We are on schedule to achieve our important near term target to produce the first oil from Tawke during the first quarter of next year,' he said.(Source)AlSabah

Iraq central bank to adopt new policy to end inflations' rates

The inflation in Iraqi economy which negatively effected with the security circumstances is resulting due to the show congestion in the real sector which concentrating in supplying fuel and its negative reflections on transport and communications' charges, while the other reason is belonging to the large effect for the total demand on commodities and services in economy.(Source)AlSabah

25 million USD to reconstruct Najaf, Iraq

Sultan said the money is part of allocations the government has set aside “to reconstruct the war-torn cities and town in four Iraqi provinces.”

Najaf, the capital of a province of the same name, was scene of pitched battles in 2004 between fighters of Mahdi Army led by the Shiite cleric Moqtada al-Sadr and U.S. occupation troops. The city was heavily damaged and residents say traces of destruction still linger on. Four other major cities have sustained massive damage in operations by U.S. troops.

Falluja has borne the brunt of these operations. It was al most turned into ghost town when U.S. troops attacked to flush out insurgents.

Samarra and Tal Affar have also sustained large-scale destruction.

Sultan, Najaf’s governor, said the government will deposit the money in the city where the provincial council has drawn a long list of projects to be implemented.

“The Ministry of Finance is determined to open an account in the holy city of Najaf to deposit $25 million which the province’s share of the money allocated for the reconstruction of areas destroyed by wars,” the governor said.

Meantime, Sultan said he visited South Korean embassy in Baghdad where he thank the ambassador for his country’s efforts in rehabilitating Najaf. South Korea is actively taking part in reconstructing the province’s health system has granted Najaf’s health department $1 million.(Source)Azzaman

500 companies from 25 countries participate in international exhibition on the methods of developing agriculture and animal wealth in Iraq

The exhibition will be Organized by, "Bawabat Asharq Al-Awsat Group" and "Assabah Ajjadeed" in collaboration with the Jordanian and Iraqi Ministries of Agriculture under the slogan " green Iraq ", while the country faces challenges, especially in its agricultural sector, which is hoped to be an open market for initiatives and investments.

The agency quoted Jordanian Agriculture Minister Akif Zoubi that "Jordan is trying to re-trade exchange with Iraq, which is the first trade partner to it as it was earlier in the importation of sheep and Iraqi dates and the receive of the Iraqi market for Jordanian agricultural production requirements, vegetables and eggs."

According to official figures, Jordan exported about eighty thousand tons of agricultural products to Iraq in 2005.

The Jordanian minister said : "The government is greatly interested in the policy of developing the agricultural sector due to its essential role in increasing self-reliance, providing food and the preserving the environment; thereby enabling the provision of basic food commodities of animal and vegetable then export them to neighboring and international markets."

On his part, Qais Al-Hamadani, representative of the Iraqi Ministry of Agriculture, said that "Iraq is trying to attract foreign investment especially in the area of agriculture." He said that "the competent authorities in Iraq had provided facilities that may attract investors to establish productive projects."

He added that "Iraq prepared a plan to rebuild the agricultural infrastructure by introducing modern methods in the areas of agricultural research and directing (...) to bolster the economies of peasants and farmers who make up 33% of Iraqi society."

The Iraqi official pointed out to "The risk of water shortages in the rivers of Tigris and Euphrates by building dams and reservoirs on their basins."

He stressed the need to "the collaboration of international efforts to deal with Iraq's share of the water resources in the two Basins, which poses another challenge to the agricultural sector."(Source)AlWatan

China and Australia are willing to support and develop the Iraqi oil sector

The Oil Minister, Dr. Hussein Shahrastani, said during a press conference held in Baghdad last Wednesday: that his recent visit to each of China, Australia and Japan resulting in the approval of the Japanese government to grant facilitated loans amounting to 3.5 billion dollars to develop the Iraqi oil industry.

He added that the ministry allocated one billion dollars of the loan to be used for developing Basrah refinery and establishing an oil floating port in Basra as well, adding new units for the conversion of black oil to oil derivatives, adding that he met with officials of major Japanese companies specialized in the oil sector to activate all joint activities to serve the interests of the two friendly nations. He pointed out that Japan expressed its willingness to build a large refinery in the city of Nasiriyah, and that China is also ready to support the Iraqi oil sector and implement the contract concluded with it about developing Al-Ahdab oil field as well as modifying it to suit the quality of Iraqi oil, which China wishes to increase its imported quantities, pointing out that Iraq welcomed the increase in the volume of Iraqi oil exported to China because it is considered one of the major international markets in the world oil consumption.

The minister confirmed reaching a preliminary agreement with China to set up a small refinery in Iraq to provide oil derivatives, adding that the ministry will adopt the principle of transparency in future contracts with fine international companies and be base its prospective contracts on the economic benefit of Iraq and not on the basis of political relations exercised the previous regime. During the conference, Ashahrastani tackled the plan prepared by the ministry to raise the level of Iraqi crude oil production to reach (3) million barrels a day at end of this year: (2.250000) barrels from he southern fields, (750) thousand barrels from the northern fields and reach to four and a half million by 2010. The rates of Iraqi oil exports now reach one million and seven hundred thousand barrels per day. He reported that the Oil Ministry also prepared a plan for the provision of sufficient quantities of kerosene for the citizens, that (200) liters will be distributed during for the next few days for each family in preparation for the winter season, assuring the citizens that large quantities of kerosene are available, especially in Baghdad and the ministry is distributing two million liters per day among the population. The minister announced a plan to provide large quantities of liquid gas for the city of Baghdad; since the terrorist are continuously targeting the pipeline of transferring gas to it, the ministry started transferring this material by tanks. The Oil Ministry is working to increase the production capacity of liquid gas in the whole country and invest it properly to meet the needs of the country.

The oil minister confirmed that the oil wealth belongs to all the people of Iraq and that it should contribute to unify the country and not divide or disperse it and no party is entitled to contract with any company or invest the fields located within its region away from the rest of Iraq. He proposed to establish a federal body that includes all segments of Iraqi people specialized in legislating investment laws concerning oil fields and studying contracts for the implementation of these projects. Ashahrastani denied any intention to increase the prices of oil derivatives in the current stage.(Source)AlSabah

Saudi Arabia grants 1.5 billion dollars to Iraq

He stressed the necessity of eliminating the effects of past and enhance the cooperation between the two brotherly nations. They also thanked the Kuwaiti people and government for their support to Iraq in difficult circumstances. Dr. Muwaffaq Rubaie also met with the Prince of Kuwait, Sheikh Sabah Ahmed Sabah, and discussed the issue of Kuwaiti debt on Iraq, reconstruction and cooperation between the two countries in all fields.

Dr. Barham Salih said that the security situation in Iraq will witness some improvement if Syria cooperate with the Iraqi government to work on controlling the border and prevent the infiltration of terrorists.

Saleh said in a joint press conference with the Special Representative of the Secretary-General of the United Nations, Ashraf Qazi, after the preparatory meeting of the International Covenant with Iraq, which was concluded in Kuwait yesterday: that Syria need to work harder, with greater credibility and must be aware of the gravity of the situation in Iraq, and make serious changes to deal with the political and security conditions in Iraq. The National Security Advisor Dr. Muwaffaq Rubaie revealed in another a press conference held on the sidelines of the same preparatory meeting that a senior official from one of the neighboring countries, will visit Iraq during the next few days to find a political solution for the benefit of Iraq on the security level, without mentioning the name of the official or the state. But unofficial sources in Kuwait reported that the official, who intended to visit Baghdad in this regard, is the Syrian Foreign Minister Waleed Al-Mu'allim.

About the question of, "Assabah" on the timetable of the political and economic reforms that have been agreed to take place in the meeting, and whether Iraq possesses the suitable environment for conducting such reforms, the Deputy Prime Minister said that the commitments made by Iraq to the international community of political and economic reforms over the next four years, stem from knowing the requirements of achieving stability in the country, and based on the initiative of the Prime Minister in the national reconciliation and the government's program of action in the coming stage, as well as other economic agreements signed as part of the debt write-off of the Paris Club. He pointed out that Iraq will implement these reforms, which are in the interest of the Iraqi people, according to the vision of the elected government that represents it, with or without the international support. At the same time, he hoped for the international community's serious stand with Iraq to cross it to shore safely.

He pointed out that there are many of the accounts are cleared at the expense of the Iraqi people and the Iraqi leadership is well aware of the gravity of the situation, which can not continue. Everybody must understand that the instability in Iraq will reflect negatively on the whole region, and those who want to manipulate the security of Iraq should reap the consequences. He called on the neighboring countries to assume their responsibilities in this regard and cooperate against terrorism, which threatens the region.

He pointed out that the problem of financial and administrative corruption, is the most important obstacle to the work of the Iraqi government and instigates the security situation in Iraq. He confirmed that among the articles of the Covenant submitted by Iraq to the international community, is to deal with this problem that can not be ignored, uprooting corruption and collaborating with partners in order to achieve all of the aforementioned reforms.

New offers were received during the preparatory meeting of the Covenant and new financial commitments in support of Iraq by the United States, the European Union and Saudi Arabia, which pledged $ 1 billion provided to Iraq in the form of grants, aid and loans, as well as (500) million dollars provided for the private sector in Iraq. He stressed that Iraq would be able to obtain clear commitments from the international community after launching the International Covenant in providing economic support, grants, facilitated loans, debt write-off and canceling penalties from the previous decades, in addition to providing technical assistance and encourage the Iraqi private sector. On his part, Special Representative of the Secretary-General of the United Nations, Ashraf Qazi, expected a broader regional and international participation in the International Covenant with Iraq to be held late this year. He pointed out that the entire world is interested in the stability of the situation in Iraq. Al-Rubaie said, in a speech delivered at the preparatory meeting of the Conference that the conditions are very difficult and, the Iraqi government is still seeking to achieve this goal in addition to national reconciliation. Economic reform as well as international and regional support for Iraq's efforts represents an important element in enhancing the security situation and restore stability in the country.

He pointed out that the Iraqi government has launched the plan of national reconciliation in order to expand the participation of the parties involved in the initiative, regardless of their ideology and policy.(Source)AlSabah

China and Japan keen to develop Iraq oilfields

Hussain al-Shahristani was briefing reporters after a tour of Asia that took in the world's second biggest oil consumer China and its third biggest Japan -- both heavily dependent on imports and keen to secure future energy supplies.

Iraq, which has the world's third largest oil reserves, is in urgent need of billions of dollars in foreign investment after years of sanctions and war crushed the industry.

The Baghdad government is working towards its first foreign oilfield development contract and is readying a legal framework.

All the big oil companies are eyeing deals.

Energy-hungry Asian firms, whose home governments are less concerned about transparency and good governance than the West, are already snapping up oil blocks in Nigeria and Angola and prospecting in Mauritania and Chad.

"The Japanese said they were willing to provide soft loans with maturity of up to 40 years for any amount of money we need to develop the oil industry -- to develop the refineries, exports and production," Shahristani said.

"Right now there is a Japanese loan of $3.5 billion. More than one billion will be spent to develop the Basra refinery. Also on building a floating port and an export pipeline."

Japan recently lost out in developing neighbouring Iran's giant Azadegan oilfield after Tehran grew weary with the project's slow progress. The United States had opposed the deal.

Shahristani said Japanese firms were interested in oilfields in southern Nassiriya.

CHINA TALKS SUCCESSFUL

The minister described talks with Chinese officials as successful.

He said Iraq and China had formed a committee to look again at China's contract, signed with Saddam Hussein, to develop the 90,000 barrels per day Ahdab oilfield in south central Iraq.

The committee, made up of three or four people from each side, will review the articles of the contract to "serve Iraq's interests", Shahristani said. It will meet in November.

"We have agreed to form a joint committee... to review the contract. We will begin discussions."

"The Chinese said they are ready to discuss it. They asked us to tell them which articles are not in Iraq's interest so that we review it," he added.

Ahdab, with an estimated development cost of $700 million, was awarded to China National Petroleum Corp and Chinese state arms manufacturer Norinco by Saddam. The deal was frozen by international sanctions and then Saddam's overthrow.

Shahristani said all oil contracts signed under Saddam would be reviewed by a national committee because the ministry wanted to make sure contracts were to Iraq's benefit.

"If it is not then we will amend it so that Iraq's interest will be served," he added.

Iraq's crude oil exports in October were between 1.6 and 1.7 million barrels per day, Shahristani said. Iraq exported 1.64 million bpd in September, according to shipping sources. The same sources put October exports a shade above 1.5 million bpd.

Shahristani said October production was 2.3 million bpd and his ministry aimed to boost output to 2.9 million bpd by the end of 2006.

"We are aiming to reach 2.9 million bpd by the end of this year by producing 2.25 million bpd from the south and around 700,000 from the north," he said.(Source)AlSabah

The benefits of Iraq joining the IMF and the World Bank

However, only (11.6) billion dollars of the foreign debts have been quenched as a first stage, and this only makes (7.8%) of the foreign debt. It is a small percentage in return for submitting to the conditions of the economic reform policy, which include:

1- raising support for the prices of fuels and other services.

2- Canceling the ration card.

3- Privatization of the public sector and transfer most of its business to the private sector.

However, the application of these procedures in light of the current circumstances of the country and this speed has serious negative repercussions on the Iraqi society who is suffering already. It is unreasonable to convert a centrally planned economy based on the absolute leadership of the public sector for four decades into a liberal economy based on free market economy, overnight. After the events of 9\4\2003, Iraq suffered from political and economic shocks that are intolerable for a developing country like Iraq.

According to the latest statistics of the Ministry of Planning and Development Cooperation in Iraq, (60%) of the citizens are below the poverty line. So, if the ration card is abolished and subsidies on fuel prices and services are removed, how many will their percentage be? Moreover, the unemployment rate was between (40% - 50%), when taking these measures, the increase would amount to more than that; this means that poverty line will increase and thus increasing rates of crime and corruption since Iraq is considered one of the young population nations whose population pyramid has a broad base and unemployment are concentrated in the younger ages, that (3) out of (4) Iraqis under the age of 25 are unemployed. The concentration of unemployment in this group of age had very dangerous political and social consequences since unemployment is considered a fertile environment for the growth of crime, extremism and violence which emerged strongly to the surface in Iraq, particularly after the events of 9\4\2003 and left serious negative effects on Iraq. There are many examples for such dangerous consequences, like: (the revolution of bread in each of Egypt and Tunisia, and the revolution against raising fuel prices in Yemen, etc.).

Despite all this, we believe that Iraq can achieve benefits when joining the IMF and the World Bank. There will be a genuine development, as the case now in some Gulf countries, Emirates for example, through encouraging investments in vital and important sectors, such as the agricultural, through many inducements like the granting of loans and tax exemption etc... The remaining investments are left free to supply and demand. Since Iraq has natural resources of cheap prices, surely the costs of production will be much less than other countries; therefore, it is possible to manufacture materials then export them. Thus, why do we, now, import cement of bad types when we already have the fine raw materials for manufacturing this material? ö Another benefit of the accession, is that we will get cheap raw materials to help our industry, and we will also import expertise and technology to create developed industry and agriculture.

But what is happening in Iraq now is that some places are built and others are demolished. Therefore, Iraq is at an important crossroads that requires from everyone, especially economic policy-makers in the country, to review the ideological basis and economic theories which they use to form the policies and the applications should be compatible with the concepts of modernization and reform promoted for, and this is one of the biggest economical challenges that we face today.

Thus, the deteriorating reality between the suffering of the society and with the requirements of the economical policy of the State, raise a question: what do we do to walk out of this crisis without a flaw negatively affecting the economic process of the citizen and the state as well?(Source)AlSabah

Many foreign states ready for extending more financial support to Iraq

At a news conference after wrap up of the International Compact with Iraq (ICI) meeting hosted by the State of Kuwait, Saleh said Saudi Arabia expressed readiness for forwarding USD one billion as grants and loans in addition to USD 500 million as facilities to the Iraqi businessmen and private sector.

The US poised ready to extend fresh assistance for the process of reconstruction and bolstering the security potentials and the EU promised extending fresh bundle of donations.

Iraq's infrastructure was ravaged by decades of sanctions and war during the rule of deposed President Saddam Hussein, and by the US-led invasion in 2003 and the violence that followed.

Reconstruction has been hampered by insurgent attacks which forced many projects to be halted and diverted funds away from rebuilding and into increased security, said Saleh.

The oil industry has been hit by frequent sabotage.

This is besides many other pledges still under discussion, he said hoping that the vision will be clearer in the coming few weeks, regarding economic aid as well as making available donations and soft loans, beside the writing off Iraq's debts and the early penalties imposed on Iraq and encouraging the private sector to invest in the war-torn Arab country.

He said the ICI in itself includes reciprocal commitments by the Iraqi government and its international partners.

Saleh underlined that the Iraqi government led by Nouri Al-Maliki is serious on implementing a reform program and the Political National Security Council has set a timetable for national reconciliation besides other legislations to address the political, security and economic complications.

He admitted that the current stage in Iraq is harsh and difficult but cooperation of the international community is needed to combat terrorism and extremism.

Iraq, he went on, shoulders the problems of the whole region and scores are being settled by many parties within the Iraqi arena, and hopefully Iraq will be moving soon to the security and stability stage.

To a question he said the importance of the security factor should not be marginalized and the efforts should be doubled because security of Iraq is in the end result the security of the whole region.

To a question posed by Kuna he admitted the spread of corruption in his country that hinders the reform process and stirs the security conditions.

Saleh said, his government has a tough timetable to push reforms that included a recently-passed investment law. The government set a target to cut unemployment by at least 15 percent, he said.

"The International Compact represents a carefully-drafted roadmap to clarify how can Iraq with the help of its international partners, achieve economic self-sufficiency in the medium term," he stressed.

To succeed, Iraq needs progress in three areas, "political reconciliation ... achieving security and stability in all regions ... and achieving economic growth and prosperity." But Iraq won't be able to achieve any of the goals under the compact without generous international support.

ICI's preparatory group included the UN, US, UK, United Arab Emirates (UAE), Kuwait, World Bank, International Monetary Fund (IMF), European Union (EU), Arab development funds, Islamic Development Bank (IDB), France, Germany, Italy, Japan, Saudi Arabia, South Korea and Spain. (Source)Kuna

Eleven Iraqi banks agree to launch a specialized company to finance special projects

About this project, applied for the first time in Iraq, the banking expert, Izz al-Din Muhammad Abid, said: this Company is complementary to the Iraqi Company for Banking Guarantees which was established a short while ago with a total capital of three and a half million dollars. It aims at enhancing the obtainment of small, medium-sized and minor enterprises in Iraq on loans from private banks, in addition to supporting the use of modern practices of credit and international banking standards in granting loans to small and medium-sized enterprises. All of this is to support the continuing economic growth in Iraq, and especially the support and development of the private sector. Giving small and medium-sized enterprises this importance stems from the fact that they share the spirit of individual initiative; that is, starting a project by an individual to improve his standard of living. It should also be noted that these projects constitute a significant proportion of economic activity for many countries in the world, whether they were developing or developed; they also constitute a high proportion of enterprises that widely contribute in developing the economies of these countries, especially the developed ones. Such projects, generate self-employment and jobs and participate in helping the important groups in the labor market, as well as having several important advantages like: working with simple, low-cost and local materials within a limited area, as well as working with primary skills and techniques; in addition to the possibility of easily adapting to the new circumstances in the market and the rapid response to its needs. Finally, they contribute in the rehabilitation or changing infrastructures and equipment; such as inventing agriculture and construction tools or producing essential services commodities in times of crisis. In response to a question concerning the establishment of this Company to study the conditions of projects in Iraq, and the possibility of exposure to profit or loss, Izz al-Din, explained that in spite of facing small and medium-sized enterprises for numerous problems and challenges, especially in times of unstable security, but, and as much as it concerns the banking system, the main problem facing them is cash funding for the establishment and support of these projects. Thus, the foundation of the Iraqi Company for Banking Guarantees, in the time being, forms the mainstay of such projects, in order to assist them in obtaining loans from Iraqi private banks to participate in the capital of the Company, in addition to helping those banks through the utilizing the amount of the guarantee for the development of managing loans and their risks. The Company is owned by (11) Iraqi banks supported by the Iraq Central Bank due to its important part in deepening the role of the Iraqi market. The guarantee amounts differ according to the type of risks associated with them; they could reach 75% of the value of the original loan, which ranges from $ 5000 to $ 25000. The company's operations are based on developing institutions and building the financial capacity of banks and the Company itself when marketing and the applying the program of loans guarantee. The Company's activity will cover all of Iraq by the network branches of the banks involved in such comprehensive coverage. It will assist small and medium-sized enterprises to enter the world of credit in all Iraqi provinces. The Company will provide loans with a high level of quality for the productive, service, agricultural and commercial projects throughout guaranteeing the banking loans offered by the participating banks. Accordingly, we can say that the company achieved a step or steps forward on the way of developing and modernizing the Iraqi banking system.(Source)Al-Sharq Al-Awsat