Iraq signs billion-dollar power deals with GE, Siemens

By Simon Webb

Iraq has signed preliminary deals worth billions of dollars with General Electric Co and Siemens for equipment to almost double electricity generation capacity, an energy official said on Saturday.

The deals with GE, Siemens and a third company would be worth a total of $7 billion to $8 billion, Iraq's Electricity Minister Karim Waheed told Reuters.

Years of war, sanctions and neglect have battered Iraq's power grid and the country suffers chronic power shortages. The capital Baghdad receives only a few hours of electricity a day. The deals would mark a big step in the country's reconstruction, Waheed said.

"These deals will help us to end the electricity supply problem by 2012," Waheed said on a private visit to the United Arab Emirates.

Iraq signed a memorandum of understanding (MOU) earlier this month for U.S. giant General Electric to supply turbines to generate 6,800 megawatts of power, Waheed said.

He declined to say how much Iraq would pay GE for the equipment, but said each megawatt would cost between $700,000 and $800,000. That would give a value of between $4.8 billion and $5.4 billion.

The country has signed a second MOU with Germany's Siemens to supply equipment to generate another 2,000 MW, he added. That deal would be worth between $1.4 billion and $1.6 billion.

Baghdad was negotiating with a third company for another 1,000 MW, he said, declining to give further details.

The three deals would enable Iraq to add around 10,000 MW to installed capacity by around 11,000 MW. Damage to the power stations, lack of maintenance and drought mean Iraq's actual power production is well under capacity at around 5,500 MW.

Demand stands at around 11,000 MW, Waheed said.

Iraq plans to approach engineering, procurement and construction (EPC) firms to build the plants once the deals are signed, he added.

While big international companies were still reluctant to send people to work in Iraq, improvements in security had improved Baghdad's chances of attracting companies to undertake the work, he said.

Iraqi oil officials will meet Russia's Technoprom Export on October 12 to review a $124 million deal to repair 400 MW of power generation capacity in the southern city of Basra.

The World Bank will fund the deal, he added.

The deal was one of several frozen after the U.S.-led invasion of Iraq in March 2003. Iraq is also negotiating with Russia's Power Machines to revive another old deal to build two plants with 160 MW of capacity each in Iraq's north, he added.

Iraq signed a deal with GE for three power plants worth $480 million in June.

(Editing by Janet Lawrence)

(Reuters)

Shell seizes Iraq gas investment opportunity

Royal Dutch Shell's joint venture with Iraq to capture flared gas in the south of the country could involve an investment of up to $4bn. The agreement, expected to be formalised in October, will be the first major contract reached by a major western oil firm with Iraq since the US led invasion of 2003.

It is unclear whether the Shell deal is a production-sharing agreement, under which both parties would share profits, or more of a technical services agreement similar to that signed by China in August.

In any event Shell is expected to buy some of the gas due to be processed as Liquid Natural Gas.

China National Petroleum Corporation became the first foreign partner to reach a service agreement with the Oil Ministry involving a $3bn development of the country's Al-Ahdab oilfield but with no revenue sharing involved.

A formal agreement is due to be signed in October between state-owned Southern Oil Company in Basra, which will hold a 51% stake in the latest venture with Shell taking the remaining 49%.

The move is significant both in ecological and economic terms. Gas burnt off during production for safety reasons in Iraq's southern oil fields would be sufficient to meet virtually all of Iraq's current power plant requirements.

Investing in Iraq's energy potential

Others are also investing in the country's energy potential. Iraq holds 3.36 billion cubic metres of proven gas reserves, the world's tenth largest reserves and which are still largely unexploited.

The UAE's Dana Gas is due to start gas production in September from the Khoomor field in northern Iraq, where the company is building a liquefied petroleum gas plant in joint venture with Sharjah-based Crescent Petroleum.

The gas produced is due to flow through a 180-kilometre pipeline to two new power plants in Irbil and Sulaimaniyah together due to produce 1,250 MW of electricity for Kurdistan. Dana has also said that it will spend up to $50m next year on seismic surveys and appraisal wells in northern Iraq's Chamchamal field.

Supplying European markets

In a separate negotiation, Shell is also discussing conducting output tests for the Akkas gas field in central Iraq with the potential to supply European markets via Syria and Turkey.

The company has been conducting negotiations with Iraqi officials for several months in Damascus about gas developments as well as a service contract to develop Iraq's Kirkuk and Missan oil fields.

When the Southern Oil Company contract is signed it will take at least a year to establish the joint venture. However, some field work is expected to start as soon as the agreement is signed.

The Shell venture is considered a turning point by Iraqi officials. Security used to be a deterrent but now companies feel that it has improved and this will encourage others to come in according to Iraq's Oil Ministry.

The venture also follows a major shake-up of Southern Oil's management structure with Baghdad taking over decision making. The ramifications of this and whether the environment will be safe enough for large-scale engineering work to begin remains to be seen.

(AME Info FZ LLC)

Economic Experts expecting to increase the oil investment in Iraq

A number of German investment companies applied for the establishment of a giant oil refinery in the province of Dhi Qar, and a capacity of up to 150 thousand barrels per day at a time the spokesman Ali al-Dabbagh announced on the government approval on the agreement of principles with Shell to invest the associated gas with oil extraction in the province of Basra, in partnership With the South Oil Company ..
In the meantime, the Oil Minister Hussain al-Shahristani said that Iraq has a fiscal surplus up to 60 billion dollars, indicating his willingness to support any of the investment projects from the oil ministry revenues..

This move comes at a time when Iraq is seeking to develop oil industry in general, demonstrated by the tireless efforts taken by the government to invite the oil giant investment companies to work in Iraq, and that was reflected recently with a giant Chinese company to develop Al Ahdab oil field, as well other investments that might raise Iraqi oil exports during the coming period ..

The Chairman of the Investment Authority in Dhi Qar, Mr. Kazem Ismail Aboudi clarified that a number of German firms submitted their offers to set up oil refinery in the province with a capacity of 150 thousand barrels a day, adding that those companies will invest the oil refinery in the light of an agreement to purchase crude oil from the Iraqi government with a reduction of one dollar for barrel less than the global market price ,indicating that the company's right to sell its product inside and outside Iraq, and Ismail also said that the body aiming to develop the oil industry and signed an agreements with UAE company and Iranian expertise to establish an oil refinery with production capacity of 350 thousand barrels per day .. He pointed out that the process of obtaining permits to start implementation of the project in the coming months.

According to press reports that the Oil Russian Lukoil and American Conoco Phillips, have announced entering their own coalition to win the contract of extracting oil from the West Qurna oilfield II, and Lukoil won a contract in the West Qurna oilfield, which contains 6 billion barrels of oil before 2003.

For his part, the government spokesman Ali al-Dabbagh said the cabinet approved on the prime agreement to extract gas by Royal Dutch Shell company, jointly with the South Oil Company.

He said that Shell submitted a proposal to the Iraqi government to develop natural gas resources in Iraq and plans to supply the domestic market and export .. He said that Iraq, which possesses the third largest oil reserves in the world certainly will give priority to the development of gas reserves in the South that has become a major supplier to Europe.

Iraq has been heavily dependent on oil imports, which constitute approximately 89% of total revenues.. and importing now between 2.5-3 million barrels per day, and has the third largest oil reserves in the world, and the second largest reserves of natural gas in the world ..

Economists expected to increase the volume of oil investment in Iraq in the coming period, especially with the rising demand for crude oil in international markets, stressing the need of the government to seek with the oil ministry to increase the volume of oil production, which provides good financial returns to Iraq.

(Iraq Directory)

IMF agreed to lend Iraq more than 746 million dollars

The International Monetary Fund agreed to lend Iraq an amount of 746 million and 300 thousand dollars. The IMF said in a statement: "The economic prospects for Iraq are improving," adding that "the improved security conditions contribute to increase oil production and exports while diminishing the inflation rates."

The Fund agreed on "a first review of the Fund's program performance to lend Iraq an amount over $ 746 million and 300 thousand dollars, by the commitment of the Iraqi authorities to economic targets in spite of its failure to achieve targets related to salaries and pensions law."

The statement added that further economic progress depends on further improvement of security conditions in Iraq and the safe management of oil revenues and taking the reform measures.

Takatoshi Kato, the Deputy Managing Director of the International Monetary Fund said in the statement: that after several difficult years, the economic prospects of Iraq began to improve, as authorities continue to implement its economic program in 2008.

He added that the increase of salaries for civil employees will be implemented gradually over 2008 and 2009 to avoid causing a very rapid growth of the economy.

(Iraq Directory)

Rain water treatment project in Basra

A local company on Wednesday initiated a project to treat rain water and to maintain sewage stations in Basra province at a cost of almost one billion Iraqi dinars, an official source said.

“The project includes rehabilitation work on rain water networks to prevent flooding during winter…,” an official source from Basra’s sewage department, Engineer Hazem Mohammed, told Aswat al-Iraq

“The project will be financed by Basra’s reconstruction and services support committee and supervised by the local sewage department,” Mohammed noted, adding that the scheduled completion period is four months.

The committee, presided over by the minister of state for parliamentary affairs, Safaa al-Din al-Safi, was set up in synchronization with the commencement of Operation Saulat al-Fursan (Knights’ Assault) in late March.

Basra, 590 km (340 miles) south of the Iraqi capital Baghdad, has an estimated metropolitan population of 2,300,000 in 2008.

Basra, a Shiite province with 20 percent of the population are Sunnis, is the cradle of the first civilization of Sumer. It has the seven main Iraqi ports. The first built in Islam 14 A.H. (After Hegira), the city played an important role in early Islamic history.

The area surrounding Basra has substantial petroleum resources and many oil wells. The city’s oil refinery has a production capacity of about 140,000 barrels per day (bpd).

The only Iraqi outlet to the sea, Basra is in a fertile agricultural region, with major products including rice, maize corn, barley, pearl millet, wheat and dates as well as livestock.

A network of canals flowed through the city, giving it the nickname “The Venice of the Middle East” at least at high tide.

The only Iraqi outlet to the sea, Basra has the commercial ports of Iraq.

(Voices of Iraq)

$62 million projects approved – planning ministry

The Planning Ministry’s strategic authority for reconstructing Iraq approved projects at a total cost of $62 million, a statement from the national media center said on Tuesday.

“The authority chaired by Planning Minister Ali Baban agreed, during its 45th meeting, projects for the agriculture, water sources, education, health, municipalities ministries in Iraq’s Kurdistan region,” the ministry said in a statement received by Aswat al-Iraq.

“The ministry finances some projects through loans presented by other countries and international organizations,” the statement added.

(Voices of Iraq)

Many countries compete on investment in Iraq

Investment Authority disclosed competition of many developed countries to execute huge projects in the country, it include US, UK, France, UAE, Saudi Arabia and other countries, the Authority Chief, Ahmed Ridha, said.

Iraq received investment's bids of about $ 74 billion during past six months, as the country's budget devoted big allocations to develop Basra's airport, Baghdad international airport and holy city of Najaf, while there's project to build tourism city in Kut, Ridha said.

(Al-Sabaah)

Arab Economic Report : Iraq Memiliki Cadangan Minyak dan Gas Sama Dengan Jumlah Total Negara - negara Kaya Minyak Dunia

Arab Economic Report: Iraq possessed oil and gas reserves equivalent to the total oil rich countries in the world

The Arab Economic Report for 2008 issued in Beirut recently, described that Iraq possessed stockpiles of oil and gas equivalent to the total oil-rich countries in the world, praising the economic policy implemented by the government, despite the complex security situation in the country.

The report reviewed by the Arab General Federation of Commerce, Industry and Agriculture Chambers, the stock mineral wealth of Iraq, stating that Iraq "possessed reserve of oil and gas equivalent to total oil countries indispensable," praising the government's economic policy that "works in spite of the complex security conditions, to develop the local economy and improve the standard of living of the population ",
According to the report, which is consisted of 450 pages, that the "Iraq contains 530 geological complex of the large oil reserves," and provides that "there were 115 places dug so far, and their gas reserves are estimated at 311 billion barrels of oil, in addition to 415 places undiscovered, that reserves are estimated to be more than 215 billion barrels. "

The report addresses the gas wealth of Iraq, noting that the Iraqi oil ministry, "announced during the first half of 2007, the discovery of gas field stretching from Nineveh province in northern Iraq to Al Qa'em in the West region of the country, and south to the border with Saudi Arabia."

The report considers this field, "the largest in the country," adding that "EU countries had shown great interest in this field because of its closeness to the continent of Europe, especially in the framework of the joint gas pipeline project linking Jordan Egypt, Syria, Turkey, leading to the States of the European continent."

The report on the other side, handled with government actions in dealing with the economic sector, noting that it "works in spite of the complex security conditions, to develop the local economy and improve the standard of living for the population, through the creation of administrative and legislative frameworks and infrastructure required to activate the work of the private sector and attract foreign investment , Particularly in the current affluence resulting from higher oil prices in international markets."

The report indicates that "most of the reforms undertaken by the Government to control inflation and the restructuring of banks and developing the local private sector."

(Iraq Directory)

The improvement of security conditions in Iraq encourages foreign investment

The Iraqi economic community believed that the investment in Iraq will increase in the coming period, in the light of international companies started to study the possibility of investment in various sectors.

It is striking in this context a plan revealed by the Iraqi Oil Ministry for the construction of an airstrip for the helicopters at its headquarters to facilitate the arrival of delegations and international companies, which will start work soon in the development and rehabilitation of the oil sector.

And what enhances the expectations of these communities , the improvement in the security situation which gave the Iraqi government a greater opportunity to persuade companies to contribute in construction and reconstruction campaign, which Iraqi officials believe it needs to be developed from scratch.

A source in the Iraqi «National Board for Investment» stated that it agreed with local and international companies on implementing many projects in Iraq and granted the necessary permits, and the discussions are continuous with the German company's branch of «Mercedes-Benz» for cars and trucks in Egypt to build a branch in the province of Diwaniyah to produce Small buses. Also negotiations continue with the British - Dutch «Shell» oil company and «British Petrleom» to build oil refinery and ethylene production of urea and other petrochemicals.

The source noted that the company is currently negotiating with «Wood - McKenzie» Global Advisory to open branches in Baghdad, Basra and the Kurdistan region, and that the British company «Avinias Capital» expressed their willingness during the meeting, which gathered them with the President of construction body « Wasit international airport » (200 km south Baghdad). And the British «Crest Petroleum» Company has expressed its interest in constructing a gas city in Basra, according to the latest global designs, and is expected to invest burning gas to generate 1,280 megawatts of electricity.
The «National Board for Investment» had received six offers from international companies to generate electricity in different parts of Iraq and the Iraqi government has to buy the production and sells it at a subsidized price for citizens.

The head of the National Authority for Investment , Mr. Ahmed Redha said that the volume of investments made by the Board which is newly founded (in December of 2007) amounted to 74 billion dollars, distributed among the various infrastructure in Iraq such as factories and refineries and the development of airports and marine facilities, through local and foreign investors equally.

He noted that among the advantages of the investment law for foreign investors, tax exemptions, which extends nearly 15 years if the foreign investor has an Iraqi partner, which would trigger domestic capital and labors will gain broad experience.

(Iraq Directory)

Iraq's budget growing rapidly

Iraq's 2009 budget will be approximately US$75 billion.
By Aiyob Mawloodi

The draft of the 2009 budget is complete and is expected to approved by the Ministerial Council, and then be submitted to the Iraqi Council of Representatives for final approval. There are claims that the parliament will most probably approve it in this month.

The Iraqi Deputy Minister of Finance, Fazil Nabi, says that though the exact amount of the 2009 budget is not fixed and is subject to change; still it is clear that it will be higher than both the main and the supplementary 2008 budgets. He says that the budget is more 90 trillion Iraqi Dinars (approximately US$75 billion)

Members of the Finance Committee expect that the Ministerial Council will submit the draft budget to Parliament by the end of this month, which is an effort to avoid delays in the final approval of the budget. Previous years' delays in the budget approval had been blamed for seriously hurting the economy as a whole, and especially public sector investment projects and the welfare of Iraqis.

"Due to the fact that preparing, approving, and implementing 2008's budget was done very late, we faced some problems with the ministries, and they became the basis for any complaints against the Finance Ministry," said Nabi in an interview with a local Kurdish news agency. "Therefore, we tried to accelerate the process this year, and we sent the project to the Ministerial Council earlier so that they could approve it and send it to Parliament for their approval as well."

While the 2008 budget, including the supplementary budget totaled at US$70 billion, and 2007 budget was even less, the 2009 budget is expected to be much higher than those of the previous years.

Economic experts believe that the main reason behind this tangible increase is mounting oil prices in the global markets at a time when oil is the major source of Iraq's revenues. Some official statistics suggest that more than 70% of the Iraqi government's revenues come from exporting oil.

The Finance Ministry official announced that the draft has been complete since last week, but the Minister has not yet signed it. Hence, the figures are not yet final figures and subject to change both by the Minister and by the Ministerial and Representatives' councils. However, the changes, if any, won't be that significant and are to be approximately the same as they are in the first draft.

There are hopes that the budget will get the final approval by the Presidential Council before the beginning of next year.

Another issue related to the budget is Kurdistan Region's share of it. This has been the major issue in the previous years' budget preparation and approval processes. According to an agreement among different political groups in the country and based on the Permanent Constitution, Kurdistan Region has a 17% share of Iraq's total budget. This has been resisted severely by many political groups, especially in Parliament. Some groups were trying hard to reduce this share and became serious roadblocks in the way of approving the region's share. And this very issue was the main reason behind the delays in approving the 2007 and 2008 draft budgets.

However, there are hopes that this won't be a serious problem for the 2009 budget. Nabi says that 17% is already allocated for Kurdistan in the draft budget. He believes there will not be any problems regarding this issue neither in his ministry, nor in the Ministerial Council. If there is to be a problem about the issue, it will be in the parliament, but is should neither be that serious.

Kurdistan Regional Government's (KRG) budget was mainly spent on wages and little remained for investment purposes, a fact that negatively affected the economy of the region. This problem led to a mandate by the regional Ministerial Council to reduce the number of public employees to save some money for reconstruction and development purposes. Assuming that Kurdistan is to get the 17% fully, then the region's budget will be uniquely high. Bearing in mind that wages and consequently the operational budget is expected to be less than that of previous years, it is normal to expect a much higher investment budget in the next year.

However, the question remains whether this budget is utilized efficiently and invested in necessary and important projects, or wasted with minor projects and through corruption.

(Kurdish Globe)