Iraq Oil Report

Plus:
• South Korea weighs deals between Baghdad or Irbil
• Iraq oil sales bring in nearly $5 billion in November

Iraq oil produced by the Norwegian firm DNO, via a production sharing contract with the Kurdistan Regional Government, is allegedly being shipped on truck to Iran.

The oil from the Tawke field, from one of the KRG’s first forays into signing oil deals back in 2004, has no official place to go. Iraq’s central government is more than upset with the Kurds for moving unilaterally on developing their oil sector and accusing politicians of impasses to passing national hydrocarbons legislation. So they’ve prevented any oil from contracts signed outside the Baghdad authority from heading to market via state-owned pipelines or Iraqi refineries from processing it.

The Tawke field is in northern Iraq, near the Turkish and Syrian borders. Connecting the field to the northern pipeline already sending crude to a Turkish Mediterranean port, or even trucking it to Turkey, would be the logistical top choice. Turkey’s military action targeting the separatist Kurdistan Workers’ Party along the two countries’ border would prevent any trucks through there.

That’s out of the question regardless, since Turkey views any Iraqi Kurdistan action outside the Oil Ministry in Baghdad, such as controlling, developing and selling oil in the KRG territory, a move toward Kurdish independence. Turkey, the country with the largest Kurdish population, has been the most vocal against any Kurdish autonomy and empowerment. Syria and Iran have also expressed concern, though more muted.

Iran, according to sources of Faleh al-Khayat and Robert Perkins, writing in Platts’ Oilgram News, doesn’t mind getting their oil. DNO says it’s just offering the oil to local buyers and waiting for Baghdad’s approval to sell it elsewhere.

Crude oil produced from the Tawke field in the northern Iraqi region of Kurdistan is being sold by the Kurdistan Regional Government to Iran via truck, informed sources told Platts in late December. …

The sources believe the crude is being sold to third parties, which are selling it on to Iran. ..

A DNO official said December 28 the company was not aware of any oil from Tawke being exported to Iran. …

The sources believe the deal with Iran was negotiated by the KRG to be transported by road tankers across Iraqi Kurdistan for processing at the Tabriz refinery in northwest Iran.

Platts reports that the oil would traverse roads in areas controlled by Jalal Talabani, one of the two Kurdish leaders who dominate Kurdish politics. He’s also president of Iraq. And for Tawke oil to enter Iran, the Revolutionary Guard Corps would need to give the green light.

Also from the article: Tawke, which DNO says can handle 90,000 barrels per day production, began producing in June, averaging nearly 6,900 barrels per day in third quarter 2007.

Iraq’s national and Kurdistan government officials have been trying to work out a deal on controversial issues like the KRG’s deals — they’ve signed more than 20, and passed a regional oil law — and the national oil law.

Oil Minister Hussain al-Shahristani has said he’d approve the first four KRG deals, including Tawke. The KRG wants better terms for the deals they’ve signed, which include such companies as Hungary’s MOL, India’s Reliance, Austria’s OMV, Norbest – a Russian backed firm connected to TNK BP, and U.S.’s Hunt Oil.

The Kurds say the national government has reneged on an agreement on the oil deal and says the Constitution gives the region the authority to develop its own oil sector in a decentralized manner.

Shahristani has called all such activity illegal, and recently started making good on threats to blacklist companies who sign with the KRG.

SK Energy, the top refiner in South Korea and part of a consortium that signed a production sharing contract with the KRG in November, was told last week to choose between moving forward on the project or the ability to keep purchasing Iraqi oil.

The South Korean foreign and energy ministries have been in touch with their Iraqi counterparts in an attempt at damage control, Jane Han reports for The Korea Times.

Iraq is the sixth largest supplier of oil to South Korea.

Iraq sold 1.96 million barrels per day in November, the Oil Ministry said, Ahmed Rasheed reports for ArabianBusiness.com. This brought in $4.94 billion that month alone.

Last year Iraq’s oil sales sent more than $31 billion to the federal coffer. Iraqi production reached an average 2.4 million bpd in November, according to Platts. Improvements in the south and a steady protection of the northern pipeline in recent months have bolstered production and exports.

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There is one Iraq, but there are also two: the northern, potentially oil-rich region controlled by Iraq’s Kurds, and the rest of Iraq. That, says the Kurdish liaison to U.N. efforts in Iraqi Kurdistan, is how the international community should view it.

“We say Iraq could not be treated as one simple state,” said Dindar Zebari, the Kurdistan Regional Government’s chief coordinator for U.N. activities. “The Republic of Iraq is not only the ministers in Baghdad. We have ministers in Irbil” — the regional capital — “which are sovereign, independent in terms of their policies and in terms of their areas of support.”

Zebari, in an interview with United Press International in the KRG’s Washington office, explained the KRG’s view of its status in Iraq, which he said is being largely supported by the United Nations. Baghdad, however, is a different story.

“The problem in Baghdad is the mentality that has to accept that Iraq is composed of different structures,” he said.

Read the whole story of my interview with Zebari HERE.

The Battle for Basra

Basra, where most of Iraq’s oil is located and sent to market, used to be a bastion of cosmopolitan, educated, forward moving Iraq. Now religious authorities, militias, smugglers and gangs have taken hold.

The head of the provincial council says security committees the government has set up in Basra refuse to cooperate with the provincial police forces. These committees have troops and National Guard corps at their disposal, Abed Battat reports for Azzaman.Meantime, the disparate militia groups have carved out their own ‘fiefdoms’ where irregular gunmen impose their interpretation of law and order and even have imposed a crude system of taxation.

In a second article, Battat reports The police forces charged with security in Basra are no match to the heavily armed militia groups in the southern city, Basra’s police chief said.

From Informed Comment, by Juan Cole:

The police chief of Basra, told the al-Arabiya satellite news channel on Wednesday that a shadowy group calling itself “Commanding the Good and Forbidding what is Prohibited” has recently killed 50 women in the southern port. It is probably a puritanical Shiite group, and it says it objects to make-up (tabarruj or the wanton display of oneself in public). The women killed have been for the most part Muslims (both Sunni and Shiite), though two were Christians.

Sudarsan Raghavan reports on the power struggle between Muqtada al-Sadr’s political/militia faction and that of Abdul Aziz al-Hakim’s Islamic Supreme Council of Iraq:

Today, their struggle is multidimensional, playing out along lines of personality, class and ideology. The contest is a street fight over turf, a tug of war over oil revenues and a battle for control of the shrines. Sadr’s militia has targeted Hakim’s party offices and fought his movement’s armed wing, the Badr Organization. Both militias are widely believed to have operated death squads targeting each other and Sunnis.

Deal making: Kurds and Sunnis, Kurds and Kurds

IraqSlogger.com picks up on the Iraqi media’s take on a deal reportedly reached between the Kurdish political leadership in Iraq and Sunni Arabs. The two have been at odds over the extent of a powerful central government in running the country, especially when it comes to the oil.

Iraqi President Jalal Talabani and KRG President Massoud Barzani, both Kurds and leaders of the two largest Kurdish parties in Iraq, are meeting to discuss relations between the regional and federal governments, the Voices of Iraq news agency reports.

Also note, however, that the formation of the Kurds’ coalition agreement called for a switching of power roles between the two parties, right about now.

I say journalist; You say terrorist

A Pulitzer Prize-winning photographer for The Associated Press is accused by the Pentagon for being a terrorist, and IraqSlogger.com is all over the story of Bilal Hussein.

While the truth of the matter should be the ultimate test of whether the allegations are true, the case is being handled with a Gestapo’s touch.
From the IraqSlogger report:

• Under strong pressure from the U.S. military, the investigating judge closed the case and imposed a gag order. This was requested principally because the U.S. military was concerned about unfavorable media coverage. The Pentagon media strategy involves leaking information as it finds convenient to “friendly new media” (this I take to be wingnut bloggers), but restricting the flow of information to traditional media. The Iraqi judge is fully cooperating with his gag order.

• The U.S. military has assigned a team of five to act effectively as prosecutors in the case. The team is headed by a JAG Captain named Kelvey (or perhaps Calvey). (Says the source: “We recognize, of course, that the U.S. has no authority to prosecute a case in an Iraqi court. That’s one of the reasons that a gag order was essential.”)

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A U.N. official said on Tuesday the Iraqi government has made ‘very slow’ progress in its efforts to properly monitor how much oil it is exporting, refining and storing, Daniel Bases reports for Reuters.

Iraq’s majority Kurdish and potentially oil-rich area in the north has survived a summer of Cholera, but the region’s health minister warns of more outbreaks, Ben Lando reports for United Press International.

Norwegian independent oil producer DNO said on Friday that its share of production from a oilfield in northern Iraq rose to 5,882 barrels per day from 2,632 barrels in October, Reuters reports. DNO won’t have anywhere to send the oil, however, unless the Kurdistan Regional Government and Baghdad reach some sort of a deal. The two sides met this week but sources say nothing substantial has come from the meetings. Read more in Monday’s Iraq Oil Report.

Iraq’s Kurdish officials reluctantly accepted a UN proposal calling for a six-month extension to implement Article 140 of the Iraqi Constitution in mid-December, despite warnings from Kurdish lawmakers that failure to implement the article would be considered a direct violation of their rights under the constitution, by Kathleen Ridolfo in Radio Free Europe/Radio Liberty.

Iraq’s teachers and healthcare workers, like the oil unions earlier this year, are demanding the government take action on improving working conditions, by Ben Lando for UPI.

Suffering, Oil, and Ideals of Coexistence, by Reidar Visser at Historiae.org: Among the numerous fallacies that have become widespread in analyses of today’s Iraq is the notion that the Shiites of the country are unified in demanding the establishment of a sectarian federal entity, a Shiite super-state.

Women are being killed by militia groups in southern Iraq for not conforming to strict Islamic ways, the police say. And, increased threats from militia groups is driving many women away from their homes, reports Ali al-Fadhily for Inter Press Service.

This issue was a major part of the presentation given by Hashemiyya Muhsin Hussein, the leader of Iraq’s electricity workers’ union, at the recent International Federation of Chemical, Energy, Mine and General Workers’ Unions’ Women’s World Conference.

“There is a great deal of women working in this sector. During the war between Iran and Iraq, the men left for the front and so women replaced them on a wide scale, which is why there are so many of them now,” she said.

People write slogans on the walls of the markets and other public places against women, against women who work and against women who do not wear the veil. The simple fact of working is dangerous for a woman. But many women have no alternative, because of their financial difficulties. Yes, the fact that I am a woman has made things very difficult as well, but I didn’t want to give up and so I fought for this position, even though I received death threats against myself and even against my son.”

The Iraq Press Roundup by UPI’s Hiba Dawood.

The strengths and weaknesses in the latest Department of Defense report on Measuring Stability and Security in Iraq, by Anthony H. Cordesman at the Center for Strategic and International Studies. It sees valid reporting of many areas of progress, but also clear warnings that major risks and problems remain.

In the same way that awakening councils in Sunni cities have declared war against Al Qaida, some political elements in Shiite cities have established awakening councils to address militia elements and the growing Iranian influence, Iraqi politicians said, Basil Adas reports for Gulf News. Interesting how this could play out, considering numerous groups, already with their own militias, accuse each other of ties to Iran. It will likely not be pretty.

Plunder of Heritage: What happened to Baghdad’s Museum of Archeology is a paradigm of the whole disaster that the US-led invasion of 2003 brought down on the heads of the Iraqi people, an Editorial in Arab News: The Americans knew what they were doing as well. The single official facility around which they threw a security cordon immediately after they entered the city was the Iraqi Oil Ministry. They therefore made their priorities clear from the very start.

“Suppose Iraq invaded America. And an Iraqi soldier was on a tank passing through an American street, waving his gun at the people, threatening them, raiding and trashing houses. Would you accept that? This is why no Iraqi can accept occupation, and don’t be surprised by their reactions,” says “The Imam,” a young man from a mixed Sunni-Shia family, as he explains the genesis of the insurgency in Iraq and its exponential growth, a review of the new documentary Meeting Resistance by Dahr Jamail, author of the new book Beyond the Green Zone: Dispatches From an Unembedded Journalist in Occupied Iraq.

Higher Education and the Future of Iraq: The past record, current condition, and potential of Iraq’s higher education sector, a new report by Imad Harb, senior researcher at the Emirates Center for Strategic Studies and Research, published on the website of the U.S. Institute of Peace.

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A new Pentagon report says the Iraqi Oil Ministry’s ability to administer its capital budget is slowly improving, Ben Lando reports for United Press International.

The report, “Measuring Stability and Security in Iraq,” released Tuesday by the U.S. Defense Department, said the ministry spent 36 percent, or $727 million, of its $2.4 billion capital budget through Nov. 1.

Iraq’s ministries, and especially the all-important Oil Ministry, have been criticized for an inability to put allocated money to use. The Oil Ministry in 2006 spent around 3 percent of a $3.5 billion capital budget.

The report also jumps on the increasing ability to produce and export oil, despite corruption.

As for electricity delivery, Iraqis are receiving more than last year, but obstacles remain.

The report, which can be found here, is measurably optimistic, but leaves one wanting for answers. For example, polls it cites have confusing end notes explaining necessary context like margin of error, and lack information on methodology and confidence. That is necessary to gauge if the poll is worthy of front page headlines or two ply. Also, there is no raw data available to back up claims of decreased violence and attacks.

More on the report from Nancy A. Youssef in McClatchy Newspapers.

Iraq hopes to call the first open tenders to develop its vast oil fields at the beginning of 2008, the country’s deputy oil minister said Tuesday, Hassan Hafidh reports for Dow Jones Newswires.

The Turkish invasion and bombing of northern Iraq has made quite an impression. Last night, during an Eid reception for reporters at the Iraq embassy in Washington, Ambassador Samir Sumaida’ie called out Turkey for not addressing their Kurdish issue, and thus allowing it to spill over to Iraq.

He said Iraq is an example of being inclusive, ensuring Kurds are given the same rights as all other citizens, and if Turkey wants to get to the root problem of the separatist Kurdistan Workers Party, it would do the same.

Bloomberg’s Viola Gienger and Camilla Hall have that as well in their recap of events.

It may not be over, however, as a spokesman for the Peshmerga, the Kurdish military, says it will “defend thier citizens,” Elena Becatoros reports for The Associated Press.

The United Nations has expressed concern that the Turkish shelling has displaced citizens in Iraq.
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Basra’s Changing Hands

Iraq’s oil capital, Basra, is now officially under control of Iraqi forces. The British have “controlled” the area since 2003.

Control is relative, however, since under British occupation Iraq’s main rivalries have been allowed to foster competing militia violence and, along with other armed groups and gangs, turn the oil and fuels black market allowed by Saddam into the black market virtually condoned by political parties from Basra to Baghdad.

On Sunday, however, Britain handed control to Iraq.

Babak Dehghanpisheh has more for Newsweek.

There wasn’t much fanfare: a handful of government officials, including National Security Adviser Mowaffaq Rubaie and Basra Governor Mohammed Waeli were on hand. British foreign secretary David Miliband flew out for the occasion, and Maj. Gen. Graham Binns, the commander who marched troops into Basra in spring 2003 (a coincidence he said was “especially poignant”), presided over the official handover. “Basra security forces have demonstrated that they are capable,” Binns said. He explained that the Brits are now “guests in your country and will act accordingly.”

But the Brits aren’t quite packing their bags yet. The 4,500 British troops currently in the province will stay on to give the Iraqi security forces backup through next spring, when they will drop down to 2,500. On paper, it doesn’t appear that the British soldiers will be seeing more combat. Prime Minister Nuri al-Maliki would have to sign off if they were to provide backup for Iraqi forces in battle. In reality, though, it probably won’t be long before the Coalition troops are called up to fight: the rivalries between various Shiite groups have spilled over into bloody street fights several times this year. The violence in Basra has dropped noticeably in recent months, but the city is hardly secure. The official handover ceremony today was held at the Basra airport, which is miles away from the city center.

Also:
Britain bows out of a five-year war it could never have won, Patrick Cockburn reports for The Independent.

For a little too-upbeat gloss over the issue, read David Axe’s report in the Washington Times.

Uncertainty follows the Basra exit, Paul Wood reports for the BBC.

Stephen Fidler in The Financial Times quotes a London-based Iraq expert that it wasn’t the security situation in Basra that led to the British leaving, but rather the new British prime minister’s election pledge and the increase in militia threats.

The Shia militias in Basra are better armed than Iraqi forces, Kim Sengupta writes in The Independent.

A Basra Factbox, by Reuters.

The Future of Oil Rich Kirkuk

Apparently KRG Prime Minister Nechirvan Barzani has ok’d a six-month extension of the referendum deadline, AFP reports.

Iraq’s constitutional review committee wants its mandate extended to the end of next year to deal with Kirkuk and other constitutional issues, including a number which are oil related, United Press International reports.

More on Iraq’s Oil

The Tribulations of Iraq’s Oil Industry Due to the Ambiguity of the Constitution, the new column by Walid Khadduri in Al-Hayat.

Among the many humanitarian and political crises that Iraq is currently experiencing, there is a vital economic problem that will have a negative impact on the country’s economic course over the foreseeable future. This problem is having an affect today, and it is represented by the vagueness surrounding the constitutional articles that deal with the management of Iraq’s oil and gas resources. …

We hope that the dispute between the Oil Ministry and the Kurdistan Region will be sent to the Iraqi Constitutional Court to be settled as soon as possible, to reduce the resulting losses. We also hope that Iraq’s political parties will find the necessary courage to put the country’s interest ahead of narrow calculations and review these articles before their consequences spread and millions of dollars are lost annually due to disputes that will arise, and that have already started to surface.

The one-word answer to sky-high oil prices: Iraq has the third-largest oil reserves in the world – if its government could agree on how to share oil revenues, David R. Francis writes in The Christian Science Monitor.

Iraq sells 6 million barrels of Kirkuk oil to Total and Exxon Mobil and will begin 3-month deals worth 300,000 barrels per day beginning in January auctions, Iraq Directory reports.

The Iraq-Syria pipeline will be running in two years, Syrian officials said during talks in Damascus, the International Herald Tribune reports.

More from UPI.

Iraq is expanding its long war-hampered oil tanker industry, UPI reports.

Fears of attack grow amid Iraq’s booming oil production, Richard Beeston reports for The Times Online.

Iraq’s Economy

Trains from Baghdad to Basra have restarted, Al-Sabaah reports.

An Iraq-Iran train route has been finalized, the Voices of Iraq news agency reports.

Society, Security & Politics

There are now 5 million Iraqi orphans, anti-corruption board reveals, Voices of Iraq reports.

Turkey has started shelling northern Iraq again in the so-far failed hunt for leaders of the separatist Kurdistan Workers Party, or PKK.

Turkey’s Today’s Zaman reports on the bombings Sunday, which apparently didn’t kill the PKK leader.

More also from Sabrina Tavernise in The New York Times.

Beef between Turkey and Iraq escalated to a pitch so deafening that Turkey’s prime minister came to Washington for talks days before making a decision on letting loose the military. Turkey says Iraq, and specifically the Kurdish leadership in the north, turn their cheek to the PKK, which Ankara says is using bases in northern Iraq mountains to hideout and plan attacks in Turkey.

Bradley Brooks reports for The Associated Press about Iraqi complaints its sovereignty was violated, and U.S. admission it was notified of the attacks prior to the launch.

A powerful awakening shakes up Iraqi politics, Trudy Rubin writes for The Philadelphia Inquirer about the arming of Sunni tribes against al-Qaida, which she calls “a dramatic new element on the Iraqi scene.

Aiman al-Zawahri, Osama bin Ladin’s second in command, has warned against “traitors” in insurgency, and specifically is targeting the Awakening councils, Lee Keath reports for The AP.

Iraqi President Massoud Barzani says he will not sign a controversial and restrictive KRG press bill, Voices of Iraq reports.

Rivers of Basra…Pollution and unfulfilled promises, Voices of Iraq reports.

A millennium after Najaf first became a magnet for Shiite pilgrims, leaders here are reimagining this city, long suppressed by Saddam Hussein, as a new hub of Shiite political and economic power, not just for Iraq but for the entire Middle East, Alissa J. Rubin reports for The New York Times.

Iraq enjoys more security but reconciliation still a dream, Deutsche Presse-Agentur reports.

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