Iraq oil could provide $3,500 per citizen

Veteran analyst Dale Steffes said his estimate was based on an oil price of $60 a barrel, $10 a barrel production costs, and the assumption that 10 million Iraqis would be old enough to qualify for a share of their country's oil wealth.

Iraq produces 2.2 million barrels of oil a day and exports 1.5 million barrels, according to the Iraq Study Group Report issued earlier this month.

Estimates for current average annual income in Iraq vary widely, but top out at around $1,500 a year.

Steffes, who has been urging the distribution of Iraqi oil money in his reports since 2004, said in an interview the best way to administer the program may be to give the money to those who register to vote and maintain a bank account, thus promoting social involvement and stability.

"Once people understand that the money is coming to them, they will want to protect that income stream and have some kind of government that can settle disputes," he said.

Opponents say distributing the money would be difficult due to logistical and corruption problems, but the idea has picked up advocates as the United States looks for ways to stop the chaos that has followed the 2003 invasion that toppled Iraqi leader Saddam Hussein.

In an op-ed piece in Monday's Wall Street Journal, two U.S. senators, Democrat Hillary Rodham Clinton and Republican John Ensign, urged President George W. Bush to form an "Iraq Oil Trust" modeled on the Alaskan Permanent Fund which gives Alaskan citizens a share of revenue produced from that state's oil fields.

"A distribution of revenues to all Iraqis would mean they have a greater incentive to keep the oil flowing, help the economy grow, reject the insurgency, and commit to the future of their nation," Clinton and Ensign wrote.(Source)AlSabah

Central Bank denies determining the price of the US dollar against the Iraqi dinar

A source in the Bank indicated that the number of banks participating in this auction amounted to 10 banks between governmental and private.

Stressing that the auction came to 1422 iraqi dinars to the dollar, and the quantity sold by the bank was fourteen million and '830' thousand dollars, while the quantity purchased by the bank was one million dollar.

The source added that the quantity sold in cash to banks and customers amounted to eight million and '820' thousand dollars, while the quantity sold for remittances outside Iraq reached six million and ten thousand dollars.

On the other hand, an official source in the Iraqi Central Bank denied rumors on the bank seeking to determine the rate of the dollar against the dinar at one thousand iraqi dinar.

Stressing that the issue of determining the exchange rate of the dollar against the Iraqi dinar is not possible, now, for two reasons: first, the reserve capacity of the bank is not absolute, and second is the factor of the price increase.

He added: observing the general trends point to higher prices in return for a lack of improvement, which makes the dollar reduction to this value impossible at the present time, in addition to the limited financial capabilities of the Bank.

He explained: that the significant decline in the dollar, directly after the fall of the previous regime, was caused by the flow of billions of dollars to Iraq and distributing them among employees as well as opening exchange and restrictions. He pointed out: that at the present time and because of the deterioration of security and the high rate of inflation, the devaluation of the dollar is not expected at all.

It is noteworthy that some economists pointed out the Bank have sought to reduce the price of the dollar against the Iraqi dinar through the monetary policy which it follows in the opening of the daily auction for treasury remittances.(Source)AlSabah

Raising interest rates is to strengthen the Iraqi dinar

But he indicated "transfers and distributions will be made so that the new budget will cover all sectors of the Iraqi people to avoid the mistakes that happened in last year's budget, and the confusion that happened in the implementation of investment projects".

After the economic committee meeting under the chairmanship of Vice-President Adel Abdel Mahdi, the Iraqi minister revealed that "new conditions are put to punish the parties who fall behind in the implementation, then withdraw the funds that have not been spent and convert them to the implementation of large projects in the country".

Regarding the amendments to the salaries of governmental employees at the beginning of next year, Azzubaidi announced: "400 million dollars have been allocated to make the necessary adjustments to the salaries of the employees. The increases would range between 50 and 70%, and each employee will get the increase he deserves, starting from the beginning of next January".

Azzubaidi pointed out that 2007budget "will be set at the rate of 1260 dinar to the dollar and 50 dollars per barrel of oil with the production of 1.7 million barrels a day". He explained that the Iraqi Central Bank "started raising interest rates from 12 to 16% now", pointing out that there are no immediate plans to continue raising interest rates.

He explained that the aim of raising interest rates is "to strengthen the Iraqi dinar, and curb the inflation of 56% now, as well as strengthening the confidence of Iraqis in the local currency iraqi dinar".(Source)AlSabah

Iraqi officials reached a tentative agreement on the oil law

Iraq is in great need for foreign investment to revive its shattered economy, which relies heavily on revenues from oil exports, especially that the country has the third largest oil reserves in the world.

Sources close to the negotiations said that Prime Minister Nuri al-Maliki, "agreed on" the draft law which is awaiting the political approval and the adoption of the Cabinet.

The source added that the law calls for the formation of a national council of oil headed either by the Prime Minister or the Deputy Prime Minister and has the right to reject deals of oilfields.

A source said that "regions will negotiate within the framework of specific standards and models of investment determined by the Federal Council of oil and gas ... In the presence of a representative of the Council".

He added, "If a contract is rejected but the region insisted on it, a body of independents experts will be appointed for arbitration".

The sources added that the Minister of Oil, the Central Bank Governor, representatives from each region and experts in the fields of oil, finance and the economy will be members in the Council.

The source said "the government of Kurdistan, accepted the review of its existing contracts to be consistent with the law".

The issue of contracts is important for the future of Iraq since reaching a solution for the benefit of the regions would transfer authority over these valuable resources to the Shiites, who represent the majority, and the Kurds whose lands include the largest oilfields in the country.

The Sunni minority, which dominated the country in the era of Saddam Hussein till the invasion led by the United States in 2003, fears that this solution will leave them nothing.

The sources said, "Contracts would not apply unless they are approved at by the council within a period of 60 days".

The sources said that the law calls for the conversion of the two Iraqi oil companies, turning into a holding company that has its own production units for managing the different areas of the sector.

According to the law, the oil policy will be determined at the central level and the Oil Ministry will be restructured and transformed into a control body; and all oil revenues will be deposited in one national account.

The sources quoted Iraqi officials saying that the law will be referred to Parliament for ratification by the end of December; however, the legislation is likely to be issued early next year because of the holydays.(Source)AlSabah

Tabatabai said that they amounted to 8,422 billion iraqi dinar; that is 1,052 billion iraqi dinar in a session

However, he pointed out that the current situation is temporary and exceptional; therefore, the performance must be maintained consistently, as illustrated by general indicators, which confirms that the development in performance continues to be a salient feature in the march of the market.

Tabatabai added in a press statement: that the investment law being not activated, its members are not appointment and working by it has not started, created a great disappointment among investors in the Iraqi bourse, particularly that efforts have been made by workers in the bourse to update its performance; electronic equipment and supplies are being installed and Stock Exchange rooms are being organized for this purpose. He added that such electronic boards are used for the first time in Iraq...

Tabatabai expressed his hope that many factors will help the investments by shareholders better than it is now. In the forefront of these factors is the security situation.

Tabatabai pointed out that the number of shares that have been circulated in the month of September amounted to 4,212 billion shares, at an average of 527 million shares in a session, registering an increase of 54, 9% on last August. As for the volume of transactions in the month of September, Tabatabai said that they amounted to 8,422 billion dinar; that is 1,052 billion dinar in a session; and the number of contracts executed in the same month, increased to reach 2928 contracts for the month of August.

Tabatabai also stated that the banking sector is the main engine of the market, as this sector has achieved greater relative importance.(Source)AlSabah

Austrian Airlines launches regular flights to Iraq

The company said in a statement that "the plane landed as scheduled on December 11 in Arbil International Airport", adding that flights take off on Monday and Friday.

Austrian Airlines, which is partially owned by the State, announced in January that it will launch regular flights to the capital of Kurdistan Region, but backtracked on the plan after a month after reviewing the situation.

Austrian Airlines was the first European airlines that began services to Sarajevo and Pristina after the end of the war in former Yugoslavia.(Source)AlSabah

A plan to raise oil industry in Iraq

He added that among suggested recommendations to increase exports is reacting of Iraqi National Oil Company's law to achieve best administration of oil activities and acceleration issuing needed laws at field of oil wealth and investments to ensure participation of world companies to develop productivity abilities and increase exporting within a system balance between state's goals and achieve best conditions for investment and competition.(Source)Al-Sabah

Japan to provide USD 710 million loan to Iraq

The loans carry an interest rate of 0.75 percent and must be repaid over 40 years, including a 10-year grace period, and will be offered through the government-affiliated Japan Bank for International Cooperation, the ministry said in a statement.

Of the amount, JPY 50.05 billion (USD 430.4 million) will be used for the construction of a pipeline to export oil from the southern Iraqi city of Basra. The remaining JPY 32.59 billion (USD 280.2 million) will be used to stabilize power transmission across the nation.

The loan is the latest batch of the up to USD 3.5 billion worth of low-interest loans which Tokyo pledged for Iraq at the international donors' meeting in October 2003 in Madrid. Japan, a key donor to Iraq, has pledged to provide Iraq a total of USD 5 billion in aid for its reconstruction for a four-year period from 2004 to 2007, including USD 1.5 billion in grants.(Source)Kuna

Dollar demand reacts downward in Iraqi central bank auction of iraqi dinar

The central bank covered all bids from banks at $8.820 million in cash and $6.010 million in transfers abroad, all at 1,422 iraqi dinars to the dollar, two iraqi dinars less than the previous session.

Ten banks participating in Sunday’s auction offered to sell one million dollars at 1420 iraqi dinar to a dollar.(Source)Aswat Al Iraq

268 companies registered last month in Iraq

A source in the ministry said in a press statement: "The companies were distributed as follows: 257 limited liability companies, seven companies for individual project and four joint companies".

He added: «that the limited companies registered were: business companies, travel and tourism, construction, buying and selling of foreign currencies, different services, escorts and protections, industry, transport, aviation, agencies of agricultural production, consulting and investments, pilgrimage and minor hajj, in addition to other activities in multiple aspects of trade, transport, communications, Internet, transportation, protection and other contracting works".

The source explained: "The companies registered with the individual activity, were distributed among, trade, construction, transport and services". He continued: "The activities of the joint companies registered concern, industry, construction and trade". (Source)AlSabah