Iraq Business News


Trade Minister Wanted on Corruption Charges

By John Lee.
An arrest warrant has been issued for the Iraqi Trade Minister, Malas Abdulkarim al-Kasnazani (pictured), and his brother, on charges of financial corruption.
According to the report from AFP no details on the accusations have been issued, but local media said the Minister is suspected of awarding contracts without tenders to firms linked to his Jordan-based brother Nehru, a wealthy businessman who once had presidential aspirations.
AFP also reports that their father, a Kurd who once ran a militia backed by former president Saddam Hussein to oppose peshmerga rebels, is the leader of the largest Sufi order in Iraq, the Kasnazani order.
The Minister, a political ally of Iyad Allawi, is the highest-ranking official to be targeted in Prime Minister Haider al-Abadi’s crackdown on corruption.
(Source: AFP)

Source: Iraq-BusinessNews.com.

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Moody’s Withdraws Credit Rating on Planned Iraqi Bonds

By John Lee.
Moody’s Investors Service has today withdrawn its provisional rating of (P)Caa1 for Government of Iraq’s planned USD bond issuance.
The issuance rating has been withdrawn following statements made by Iraq’s Deputy Finance Minister that the issuance plans have been put on hold.
The last rating action was in September 2015 when Moody’s assigned the provisional rating of (P)Caa1 ahead of the planned issuance of USD-denominated debt by the Iraqi government in the United States under Rule 144A.
(Source: Moody’s)
(Bonds image via Shutterstock)

Source: Iraq-BusinessNews.com.

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Cabinet Approves 2016 Budget of $91bn

By John Lee.
Iraq’s Cabinet has approved a budget of 106 trillion Iraqi dinars ($91 billion) for 2016.
The figures are based on crude oil output of 3.6 million barrels per day (BPD) at a price of $45 a barrel.
Spokesman Saad al-Hadithi told The Associated Press that Iraq will run with a deficit of 23 trillion dinars ($20 billion), which will be relieved through loans from local and international lenders.
The budget will now go before parliament for final approval.
(Source: Fox News)
(Budget image via Shutterstock)

Source: Iraq-BusinessNews.com.

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UN Provides Shelter for Refugees in Anbar

The UN refugee agency has opened its most recent camp for internally displaced persons in Iraq’s restive Anbar province – host to the largest number of 3.2 million Iraqis uprooted across the country and where more than 250,000 civilians have fled their homes over the past six months.
The new “Marzaki camp is strategically located close to the bridge connecting Anbar and Baghdad provinces so that residents can have access to safety in case conflict lines move closer to the camp,” said Bruno Geddo, Representative of the Office of the UN High Commissioner for Refugees (UNHCR) in Iraq.
Displaced people scattered throughout the area in poor living conditions will now be able to properly settle down and benefit from medical and other services close by in Baghdad,” Mr. Geddo said in a press release issued in the Iraqi capital.
According to the agency, the new camp that opened Monday can provide shelter to some 3,000 displaced Iraqis who have been living in schools, unfinished buildings or staying with relatives around Ameriyat al-Fallujah in Anbar, which has become a safe haven for uprooted Iraqis in the province.
More than 250,000 civilians are estimated to have fled Ramadi since April, with the majority staying inside Anbar province itself living with host families, in informal settlements, unfinished buildings, schools or renting apartments.
Many of those fleeing Anbar are being denied access into Baghdad province due to security-driven restrictions and in recent months, thousands of Iraqis have been stranded for days on the Anbar side of the bridge, often staying in dire conditions without enough food or proper shelter, the agency said.

Source: Iraq-BusinessNews.com.

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IWPR Director found Dead

By John Lee.
The newly-appointed Iraq Director for the*Institute for War and Peace Reporting (IWPR) has been found dead in suspicious circumstances at an Istanbul airport.
Local media reported that British woman Jacky Sutton, aged 50, had missed a connecting flight to Erbil, didn’t have enough money to purchase a replacement ticket, and was found dead in the toilets a couple of hours later. According to some reports, she hanged herself with shoelaces.
Anthony Borden, Executive Director of the Institute for War and Peace Reporting, has cast doubt on this explanation: “Clearly there would have been no issue (with money). It’s really inconceivable. We change tickets all the time,” he said. “She had toys in her bag for the children of staff [in Iraq] … The profile doesn’t strike me as right.
The ex-BBC journalist had been returning from a memorial service in London to for the former IWPR Iraq director, Ammar Al Shahbander, who was killed in a car bomb attack in Baghdad in May.
(Sources: IWPR, Fox News, BBC News, Daily Mail)

Source: Iraq-BusinessNews.com.

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Block 9 Reaches Production in Record Time

Kuwait Energy has announced that the consortium comprising of Kuwait Energy (60%) as the operator, Dragon Oil (30%) and the Egyptian General Petroleum Corporation (10%) has commenced oil production from Faihaa-1 well in Block 9, Iraq.
The Faihaa-1 well is located in Block 9 field, which is situated in the hub of Iraq’s oil industry in the Basra Governorate, in Southern Iraq.
Production has begun from the Faihaa-1 well in the order of 5,000 bpd on 32/64 inch choke.
Sara Akbar (pictured), CEO of Kuwait Energy, said:
We are proud to have begun production in record time after making the discovery last December, which demonstrates the feasibility of executing such a fast track project in world record time in South Iraq.
“This would not have been possible without the cooperation and full support of the Iraq Ministry of Oil, the South Oil Company, the Block 9 Joint Management Committee (“JMC”) Chairman and its members, the support of our partners, Dragon Oil and the Egyptian General Petroleum Corporation, and the diligent and determined Kuwait Energy team in Basra and Kuwait.”
(Source: Kuwait Energy)

Source: Iraq-BusinessNews.com.

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Parliamentary Finance Cmte: The Need for More Accuracy, Transparency

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

The Finance Committee of the Iraqi Parliament: The Need for More Accuracy and Better Transparency

The Finance Committee of the Iraqi Parliament sent formal communication/ letter (number 738 dated 8 October 2015) to the Minister of Finance regarding “Export of Southern Oil”.
The FC Letter refers to “statistics on oil export volume according to production areas” that was done by the “research department” of the Parliament.
The following is the translation of FC Letter contents:

  • Total export from the southern oil during the first nine months of this year was 755 million barrels; giving a monthly average of 83.8 million barrels and total production of 1005.6 million barrels for the entire 2015. This total represents oil production by “national efforts” and from “bid rounds”;
  • Total export from the southern oil during 2007, before bid rounds, was 556 million barrels; hence the difference is 449.6 million barrels;
  • If the “price” of the southern oil is $40 a barrel, then what we get from the bid rounds in 2015 is: [40*449.6=17984] million US dollars;
  • It was mentioned during our meeting with you [4 October 2015] at the Finance Committee that IOCs due entitlements for the bid rounds is $21 billion in 2015; meaning we pay ca. $3billion more than what we earn from these bid rounds.

The Letter ends by requesting clarification from the Minister and what he is going to do in addressing this matter for this year and forthcoming years.
Unfortunately and regrettably, the above submission by the FC suffers from very serious inaccuracies, factual errors, lack of information and knowledge of the main contractual provisions governing the bid rounds and confused understanding of the nature of upstream petroleum development.
Please click here to download Ahmed Mousa Jiyad’s full report.
Mr Jiyad is an independent development consultant, scholar and Associate with 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@online.no, Skype ID: Ahmed Mousa Jiyad).

Source: Iraq-BusinessNews.com.

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Genel Energy Lowers Guidance

Genel Energy issues the following trading and operations update. The information contained herein has not been audited and may be subject to further review.
Murat Özgül (pictured), Chief Executive of Genel, said:
“The third quarter of 2015 has been a turning point for Genel. September’s payment for exports, coupled with local sales, has stabilised the receivable owed to us by the Kurdistan Regional Government. An October payment for Taq Taq and Tawke is set to be received imminently.
“With total exports from the Kurdistan Region of Iraq again hitting record levels, and pipeline uptime improving, we have confidence in the KRG’s commitment to make regular payments for oil exports.”
FINANCIALS

  • Revenue for Q3 2015 of $77 million, with total revenue for the first nine months of 2015 of $276 million
  • In the third quarter of 2015, the Company received cash proceeds of $45 million, which included domestic Kurdistan Region of Iraq (“KRI”) sales proceeds and the September 2015 export payment of $24.5 million. The receipt of the September payment led to cash balances increasing by $7 million in the period to $481 million at 30 September 2015
  • A further payment for Taq Taq and Tawke exports of $24.5 million is expected imminently
  • Q3 2015 local sales proceeds of $20.5 million reflect Genel’s ability to divert production into the local market at short notice during periods of export pipeline downtime
  • Total cash proceeds from KRI domestic and export sales for the first nine months of 2015 were $95 million
  • In Q3 2015, crude oil realisations averaged $37/bbl, a 52% decrease on Q3 2014, due to the impact of lower global oil prices
  • Pipeline export realisations for Taq Taq and Tawke are estimated by Genel at $40/bbl and $35/bbl respectively. These figures assume a sales discount at Ceyhan relative to Brent, quality differentials for Taq Taq and Tawke, pipeline tariffs, handling fees, and contingencies. Taq Taq deliveries to the Bazian refinery realised an estimated $40/bbl. Once export payments normalise, Genel will seek to reconcile these estimates with the Kurdistan Regional Government (“KRG”)
    • Taq Taq domestic market sales realised $42/bbl
    • Tawke domestic market sales realised $28/bbl

KURDISTAN REGION OF IRAQ OIL PRODUCTION

  • Net working interest production and sales for Q3 2015 averaged 86,100 bopd, an increase of 23% on Q3 2014 oil production
  • Production and sales by field for Q3 2015 were as follows:


Production and sales by field for the first nine months of 2015 were as follows:

  • Flexibility in our activity programmes allowed for expenditure at Taq Taq and Tawke to be tailored to reflect the delay in export payments. As a result, Taq Taq and Tawke production has declined from the peaks reached in Q2 2015. In October to date, Taq Taq has produced at an average gross rate of 107,000 bopd and Tawke 142,000 bopd
  • The Company’s 2015 production guidance is accordingly revised to 85-90,000 bopd (from 90-100,000 bopd) and 2015 revenue guidance narrowed to $350-375 million (from $350-400 million) assuming a Brent oil price of $50/bbl in Q4 2015
  • The receipt of predictable export payments in line with PSC entitlements would allow Genel to deliver the investment required to increase production
  • At Taq Taq, completion and commissioning of the second central processing facility, which has planned capacity of 90,000 bopd, is on track for year-end 2015
  • Production from Taq Taq and Tawke is not constrained by pipeline capacity

KRI GAS OPERATIONS

  • On 22 September 2015, Genel completed the acquisition of OMV’s 36% operated stake in the Bina Bawi field. The consideration comprised an upfront payment of $5 million. A contingent payment of $70 million is payable once gas production exceeds agreed threshold volumes from the Miran and Bina Bawi fields. A further contingent payment of $75 million is payable two years after the date of the second payment
  • Genel continues to make progress towards converting the detailed term sheets on the proposed upstream production sharing contract amendments and gas supply agreements into fully termed documents. These are still expected to be signed before year-end 2015
  • ING Bank has been appointed to act as financial advisor on the midstream debt financing, which is targeted to be in place by the end of 2016, with a final investment decision to be taken shortly thereafter

CAPEX AND BALANCE SHEET

  • Capital expenditure of $23 million was incurred in Q3 2015, the majority of which was spent on the Taq Taq and Tawke development programmes. Capital expenditure for the nine months ending September 2015 totalled $116 million
  • 2015 capex guidance is revised to $150-175 million (from $150-200 million), due to optimisation of KRI activity on the back of delayed export payments
  • The net receivable with the Kurdistan Regional Government is estimated at $409 million at 30 September 2015 (from $378 million at 30 June 2015)
  • Net debt at 30 September 2015 stood at $211 million (from $216 million at 30 June 2015)
  • On the assumption that further export payments are broadly in line with that received in September, the Company does not expect further significant increases in the receivable in 2015

AFRICA EXPLORATION

  • Drilling on the CI-508 licence (Genel 24% working interest) offshore Côte d’Ivoire is set to commence towards the end of 2015 on the Aigle prospect. The well, which is targeting significant oil prospectivity in stacked Cretaceous reservoirs, will take approximately 50 days to complete at an estimated future cost of $10 million net to Genel, which will largely be payable in 2016

Source: Iraq-BusinessNews.com.

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IBBC Autumn Conference: Iraq in the Global Marketplace

9th-10th November 2015, Church House and Eversheds HQ, London

The Iraq Britain Business Council (IBBC) is delighted to invite you to the IBBC Autumn Conference to be held on the 9th November at Church House and on the 10th November in the Eversheds Headquarters in London.
Day 1 in Church House, Westminster, will focus on Iraq in the Global Marketplace. Topics will include Iraq’s regional context, governance, attracting international investment, oil and gas, and women in business.
Baroness Nicholson of Winterbourne, IBBC Executive Chairman, will be hosting a post conference reception for all the delegates that evening.
Day 2 will be hosted by Eversheds. There will be sessions on due diligence to enter Iraq’s market and presentations by the Iraqi and British Chambers of Commerce. Both days will benefit from the participation of delegates from all of Iraq’s governorates.
Our confirmed speakers include Tobias Ellwood MP, UK Minister for the Middle East, *Mrs Hamdiya Al Jaff, CEO of the Trade Bank of Iraq, Dr Jana Hybášková, former EU Ambassador to Iraq, Dr Salih Husain Altamimi, Iraqi Ambassador to UK, and Ilkka Uusitalo, Former Head of EU External Relations. Andreas Meletiou, CEO of Iraq Operations Standard Chartered Bank, Dr Anne Kerr, Director of Mott McDonald, Hans Nijkamp, Vice President and Country Chairman for Shell in Iraq, Tawfiq Tabbaa, Managing Partner at Eversheds, Toby Chinn, Associate Director for Control Risks, Michael Douglas, CEO of SKA International, Jim Bowden, BD Director of KBR, Charles Walker, Director of Zaha Hadid Architects, and Philip Usherwood, CPO of BP in Iraq.
IBBC members Eversheds, SKA International Group and Severn Glocon Group will be sponsoring the event.
Day 1 registration fee is £1000 and Day 2 is £250. IBBC members and other partner organisations are entitled to discounted rates. Please use the online booking and payment facility in this website, or contact our staff on london@webuildiraq.org and tel: for advice and help.
We look forward to seeing you at the Autumn Conference!
You can download the conference flyer by clicking here:*IBBC Autumn Conference Flyer-Nov 15
(Source: IBBC)

Source: Iraq-BusinessNews.com.

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