Iraq Oil Report

Plus:
*Doubts linger in Big Oil’s mind over signing time for new deals
*Top energy adviser to Maliki assures the terms are good enough
*Iraq cuts Basra crude price to European buyers
*KBR finishes Persian Gulf platform work
*Much more…

Basra is the key to Iraq — a major city and source of oil, plus where most of trade in and out of the country flows. It’s ports need major work to be modernized as strong storms keep out oil tankers, for example (though the ministry of transportation could allow for larger tug boats to pull in the oil barges). The city is controlled by varying gangs, militias and political parties, not all mutually exclusive. Any party that condemns corruption in Basra is a part of it nonetheless, aiming for a bigger piece of the pie, especially as there is much money to be made from oil and fuel smuggling and, come April, Basra is allowed to become a region of its own, just like Iraqi Kurdistan.

Several senior Iraqi officials said on Wednesday that the government might soon deploy Iraqi Army troops to seize control of this city’s decrepit but vital port from politically connected militias known more for corruption and inciting terrorism than for their skill in moving freight, James Glanz reports for The New York Times.The officials refused to disclose many details but appeared to suggest that this entire southern port city, whose streets have been increasingly torn by violence as the militias vie for power, would be affected. No specific timetable was given for the move.

Iraqi officials say much work is needed to secure and restore the port of Umm Qasr in the oil-rich province of Basra. They charge criminals and corrupt officials have been working together to siphon off wealth while terrorists are sabotaging reconstruction, Daniel Schearf reports for Voice of America.

Iraq is unlikely to sign technical support contracts with oil majors for work on some of its biggest oilfields until the summer, a few months later than Baghdad’s target, oil company executives said on Thursday, Simon Webb reports for Reuters. The deals are designed to boost Iraq’s oil output by around 500,000 barrels per day within a year, adding more than 20 percent to current production of 2.27 million bpd.

Meanwhile Thamir Ghadhban, the top energy adviser to Prime Minister Nouri al-Maliki, says the support contracts are good enough to hook the world’s largest oil firms, Monica Mark reports for Dow Jones Newswires.

For more see United Press International’s Ben Lando’s recent recap of the oil deals.

Iraq has cut the official selling price of its Basra Light crude for April loading by $2.20 a barrel to European buyers and raised prices for the US, Simon Webb reports for Reuters.

KBR today announced that it has successfully completed construction on facilities for the Coalition Forces on the Iraqi Oil Transfer Platforms in the Persian Gulf, according to a company statement.

The United States and Iraq have opened negotiations on a blueprint for relations after the U.N. mandate for the presence of American-led troops in Iraq expires at the end of the year, Alexandra Zavis and Julian E. Barnes report for the Los Angeles Times.The two sides confirmed that their representatives met at Iraq’s Foreign Ministry, but did not provide details about who was present or what was discussed.

Only 28% of the public knows that nearly 4,000 Americans have died in the Iraq war, and attention to the conflict has gradually diminished, a survey by the nonpartisan Pew Research Center found, The Associated Press Reports.

What’s over $100 billion a year in Iraq war costs to a $14 trillion U.S. economy? Not much now, but the tab is growing on a “buy-now-pay-later” plan that threatens long-term problems, Richard Cowan reports for Reuters. Money was not much of an issue five years ago when President George W. Bush led the country into war in Iraq. Instead, all eyes were on allegations, later proven unfounded, that then-Iraqi President Saddam Hussein had weapons of mass destruction and could use them against the United States.
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Plus:
*Iraq Oil Minister confirms crude for cash, int’l agreement may prevent it
*Fire stops Kirkuk flow to Turkey
*Ministry confirms China oil talks
*Oil vs. Electricity ministries
*Oil ready for Jordan, ambassador blames scared contractors
*KBR keeps taking hits
*Much, much more…

Iraq is improving its anti-theft operations guarding oil and fuel from the black market, but an international audit highlights more work to be done, Ben Lando reports for United Press International.
A report by international auditors tasked with keeping an eye on Iraqi oil revenues said “progress has been slow” in installing a metering system throughout the oil sector.

The International Advisory and Monitoring Board report cited improvements in stemming the backdoor flow of oil and fuel, including meters at export terminals and decreasing the fuel subsidy.

The IAMB includes the Iraqi government, Arab Fund for Economic and Social Development, International Monetary Fund, United Nations and World Bank and has since 2003 audited the Development Fund for Iraq — an account of oil and gas revenue and Saddam-era assets held at the Federal Reserve Bank of New York.

Iraq’s oil minister confirms crude in lieu of cash is a major consideration for upcoming contracts, despite U.N. roadblocks, UPI reports. High oil prices and slowly increasing oil production could increase the value of the barter.

A fire in Iraq’s northern pipeline system has stopped oil exports from the Kirkuk oil field to Turkey, UPI reports.

The Ministry of Oil says it has revived talks with the China National Petroleum Corporation (CNPC) over a deal to develop the Ahdab oil field, Alaa Tamimi reports for Azzaman. A ministry source, who did not wish to reveal his name, said the talks have reached “an important stage” and should be finalized in April. UPI reported last week the governor of Iraq’s Wasit province says he renegotiated a Saddam-era oil deal with the China National Petroleum Corp.

A delegation of high level officials from Iraqi State Oil Marketing Organization (SOMO) is set to arrive in Turkey late March to meet Turkish officials to discuss operation of oil fields in Iraq and Turkey, as well as construction of new pipelines and refineries, The New Anatolian reports.

Iraq’s Ministries of Oil and Electricity are at loggerheads; While they bicker, Iraqis seethe, Glenn Zorpette writes in the International Herald Tribune. The executive editor of I.E.E.E. Spectrum, the magazine of the Institute of Electrical and Electronics Engineers, writes a true tale – though perhaps weighted in favor of the Electricity Ministry and the U.S. reconstruction effort, which could be considered mutually exclusive backing – of the lack of joint operations between two of the most important Iraqi ministries.

Iraq’s ambassador to Jordan said security is stopping discounted Iraqi oil from being delivered and said an Iraq-Jordan pipeline is being studied, UPI reports.

The speaker of the Iraqi parliament said in a press conference, in Irbil on Monday, that the Kurdistan region has the right to sign oil contracts with foreign companies, the Voices of Iraq news agency reports. The quotes appear to be taken out of context however, which would be surprising for the typically spot-on VOI. Especially when one considers his call for Arab solidarity in and around Iraq, as Voice of America reports, which may buck the trend of Kurdish autonomy in the oil sector. And he paints a trying picture for the Parliament and their many roadblocks to overcome, The Associated Press reports.

Security, Society, Politics & Economics

Scores of women rallied outside a Baghdad hotel demanding an end to violence and equal social status with men as part of the observations of International Women’s Day, Agence France-Presse reports. “Stop neglecting women. Stop killing women. Stop creating widows,” read a large banner that the women, from various ethnic and religious backgrounds, held at the Babylon Hotel in Baghdad’s central Karada neighbourhood.

The brother-in-law of Iraqi president Jalal Talabani has apologised after threatening to kill a journalist who he said insulted his late father in an article, the latest in wave of official intimidation of the Kurdish press, Mariwan Hama-Saeed reports for the Institute for War & Peace Reporting. Halo Ibrahim Ahmed, the son of the late Ibrahim Ahmed, a famous 20th century Kurdish politician, wrote a letter to journalist Nabaz Goran on February 28 saying, “[I will] kill you, [Goran] even if I have one day left of my life.” The outburst, which has received substantial coverage in the Kurdish press, was the latest in a wave of recent threats and attacks against journalists in Iraqi Kurdistan.

A shortage of staff, equipment, and medical supplies is crippling the local health-care system, Zaineb Naji reports for the Institute for War & Peace Reporting. Five years have passed since the fall of Saddam Hussein’s regime, and the health sector continues to deteriorate daily - eating away at the dignity of people.

The Kurdistan Regional Government (KRG) has launched a feasibility study into setting up a local bourse, which could act independently of Baghdad, the Middle East Economic Digest reports.“There are still questions over whether to tie the exchange to Baghdad or keep it separate,” says a KRG official. “It will force companies in Kurdistan to be a lot more transparent than they are at the moment. It would be a major cultural shift, but there is a lot of enthusiasm for it.”

Inside Iraqi Politics, a new series by The Long War Journal.

Part 4: Reconciliation via wealth distribution - The fourth installment begins examination of legislative progress, specifically the status of key legislation that distributes the country’s wealth, including the 2008 budget and the oil law.

Part 5: Sunnis’ and states’ rights - The fifth installment reviews further pieces of legislation considered important for stability and reconciliation: the Unified Retirement Law, de-Baathification reform, the General Amnesty Law, the referendum on Kirkuk, the Provincial Powers Act and the Provincial Elections Law.

John Affleck reports for The Associated Press on his first experience in Baghdad.

The Iraq Press Roundup, a recap of Iraq’s editorial pages by UPI’s Hiba Dawood.

America in Iraq

Injuries sustained in Operation Iraqi Freedom and Operation Enduring Freedom have increased not only in severity, but in number, making it more of a challenge to care for the severely wounded, according to a new report in the Journal of Trauma, Injury, Infection and Critical Care. The time period for group 1 is twice as long as that of group 2, but the number of deaths is the same, which means the deaths per month doubled. However, the CFRs are unchanged. Arguably, this is because of the improvements in combat casualty care through experience, training, research, and implementation of effective clinical practice guidelines.

Army Report on Mental Health of Soldiers in Afghanistan and Iraq, produced by the fifth Mental Health Advisory Team, discusses the mental health and morale of soldiers deployed in Afghanistan and Iraq in fall, 2007.

U.S. soldiers at a military base in Iraq were provided with treated but untested wastewater for nearly two years by KBR, the giant government contractor, and may have suffered health problems as a result, according to a report released yesterday by the Pentagon’s inspector general, Dana Hedgpeth reports for The Washington Post.

Here’s the entire Inspector General’s report.

KBR hasn’t fared too well lately. Last week Farah Stockman of the Boston Globe broke the story of KBR skirting U.S. taxes by creating shell companies based in a computer file in a Cayman Islands office building.

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Plus:
*KBR, owner of 2002 rebuild Iraq oil deal, shirks patriotic duty to pay taxes
*Gulf Keystone, partners, start KRG seismic
*Women’s Day in Iraq
*Iraq’s Three Civil Wars
*Iraq assessment to be kept private
*U.S. Ambassador to Iraq Crocker to resign

The head of the Senate Armed Services Committee wants U.S. auditors to investigate the Iraqi government’s spending on reconstruction as both U.S. and Iraqi funds in the rebuilding effort came under fire on Capitol Hill this week, Ben Lando reports for United Press International.

“How much has Iraq and the United States, respectively, spent annually during that time period on training, equipping and supporting Iraqi security forces, and on Iraq reconstruction, governance, and economic development?” Committee Chairman Carl Levin, D-Mich., and member John Warner, R-Va., wrote Friday to the U.S. Government Accountability Office. “We believe that it has been overwhelmingly U.S. taxpayer money that has funded Iraq reconstruction over the last five years, despite Iraq earning billions of dollars in oil revenue over that time period that have ended up in non-Iraqi banks.”

The Pentagon’s head of U.S. Central Command and the State Department’s Iraq coordinator were grilled by members of Congress this week who took the decidedly “blame Iraq” tone — not wholly unwarranted, some say — in expressing frustration with progress in the country five years after the invasion.

The reconstruction is to repair damage caused by the 2003 invasion and resulting war, as well as rebuilding Iraq from harm caused by Saddam Hussein. The funds not in Iraq are in the United States. ….

To read the entire story, click HERE.

The entire letter from Sens. Levin and Warner is at the end of today’s Iraq Oil Report.

Kellogg Brown & Root, the nation’s top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven, Farah Stockman reports for The Boston Globe.

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands. …

With an estimated $16 billion in contracts, KBR is by far the largest contractor in Iraq, with eight times the work of its nearest competitor. The no-bid contract it received in 2002 to rebuild Iraq’s oil infrastructure and a multibillion-dollar contract to provide support services to troops have long drawn scrutiny because Vice President Dick Cheney was Halliburton’s chief executive from 1995 until he joined the Republican ticket with President Bush in 2000. …

Then, in 2002, the firm received a secret contract to draw up plans to restore Iraq’s oil production after the US-led invasion of Iraq. The Defense Department has said the firm was chosen mainly for its assets and expertise, not its ability to control costs.

Andrew G. Marshall writes for The Center for Research on Globalization a decidedly anti-KBR but detailed nonetheless account of the firm’s role in global strife situations.

Gulf Keystone has started seismic testing in its Iraqi Kurdistan exploration block, the company said in a statement. Gulf Keystone Petroleum International Limited has partnered with Kalegran Ltd, a subsidiary of MOL Hungarian Oil and Gas Public Limited Company and Texas Keystone Inc. on the project.

Iraq, where women once had more rights and freedom than most others in the Arab world, has turned deadly for women who dream of education and a professional career, Dahr Jamail writes for Inter Press Service. Former dictator Saddam Hussein maintained a relatively secular society, where it was common for women to take up jobs as professors, doctors and government officials. In today’s Iraq, women are being killed by militia groups for not conforming to strict Islamist ways.

For the war widows who have moved to the outskirts of Baghdad from all over the country to try to eke out a living, each day is a struggle for survival. “A lot of these women are young - they are not the ‘old ladies’ we’d imagine as widows, as we did in the past,” says one such woman, Suhair, Reuters reports in their series Heroines – The daily life of Iraq’s war widows. Eighty-two percent of the 2.4 million people displaced inside Iraq are women and young children under the age of 12. Many mothers have lost their husbands in the sectarian violence that has torn the nation apart. But in the face of adversity, they are proving to be true heroines. These stories, collected by women’s organisations in Iraq ahead of International Women’s Day on March 8, give a rare insight into how Iraqi widows are helping their families survive while retaining their dignity in times of extreme suffering.

A new National Intelligence Estimate on Iraq is scheduled to be completed this month, according to U.S. intelligence officials, Walter Pincus and Karen DeYoung report for The Washington Post. But leaders of the intelligence community have not decided whether to make its key judgments public, a step that caused an uproar when key judgments in an NIE about Iran were released in November.

Iraq’s Three Civil Wars, by Juan Cole for the MIT Center for International Studies. There’s a war for Basra in the deep south. … Then, there’s a war for Baghdad. … And finally, as if all that weren’t all enough, there is a war in the north for control of Kirkuk.

Turkey rejected a request by Iraqi Kurds to shut down military bases in semi-autonomous Kurdistan region in ‘northern Iraq’, Vatan newspaper reported citing a statement by the Turkish army, Agence France-Presse reports. Turkey won’t withdraw about 2,000 soldiers stationed at the bases in the regions of Bamerni, Batufa, Kanimasi and Dilmentepe until the threat to Turkey’s security posed by Turkey’s Kurdish PKK militants is eradicated, the army said, according to the Istanbul-based Vatan.

Recent statements by U.S. military officials have revived Turkish suspicions about Washington’s true intentions toward the Kurdistan Workers’ Party (PKK), which has been waging a nearly 24 year-old insurgency for greater rights for Turkey’s Kurdish minority, Gareth Jenkins reports for The Jamestown Foundation’s Eurasia Daily Monitor. Although the PKK is included on both the State Department’s and the EU lists of proscribed terrorist organizations, most Turks believe that the United States and Europe are at least sympathetic to the PKK and probably actively supporting the organization.

War-torn Iraq might seem an unlikely place for a small Yardley company to do business, Linda Loyd reports for The Philadelphia Inquirer. Yet, entrepreneur Stephen DeAngelis’ venture, Enterra Solutions L.L.C., a management-consulting and software firm, has a technology that the Pentagon and the Kurdish regional government in northern Iraq say they believe could help revitalize the Iraqi economy, assist once-idle factories to sell their goods, and attract foreign investment. Enterra, which also is doing work for the operator of the Port of Philadelphia, has a $23 million, three-year contract with the Kurdistan Regional Government to create and operate a business-development center in Erbil, Iraq, where foreign investors can come to invest in critical infrastructure industries - banking, telecommunications, agriculture, chemicals, energy and utilities.

In January 2007, President Bush announced that the U.S. would double the number of Provincial Reconstruction Teams (PRTs) in Iraq as part of his plan for a “New Way Forward.” Read the report by Robert Perito of the U.S. Institute of Peace.

U.S. Ambassador to Iraq Ryan C. Crocker is expected to depart from Baghdad in January 2009, soon after the head U.S. military commander plans to leave Iraq, UPI reports.

U.S. soldiers repeatedly deployed to Iraq are at greater risk of having mental health issues, a military study revealed, UPI reports.

Is the rising Dinar an attractive investment? Antoine Blua asks in Radio Free Europe/Radio Liberty. “Every dinar you buy represents a share in Iraq’s bright new future.” That’s how one website selling Iraqi dinars tries to convince potential investors to acquire the currency.

The Honorable David M. Walker
Comptroller General of the United States
441 G. Street, NW
Washington, DC 20548

Dear Mr. Walker:
Nearly five years ago, on March 27, 2003, then Deputy Secretary of Defense Paul Wolfowitz, in testimony before the Defense Subcommittee of the House Appropriations Committee, was asked whom he expected would pay for the rebuilding of Iraq. He answered that “there’s a lot of money to pay for this. It doesn’t have to be U.S. taxpayer money. And it starts with the assets of the Iraqi people …the oil revenues of that county could bring between 50 and 100 billion dollars over the course of the next two or three years…. We are dealing with a country that can really finance its own reconstruction and relatively soon.”

In fact, we believe that it has been overwhelmingly U.S. taxpayer money that has funded Iraq reconstruction over the last five years, despite Iraq earning billions of dollars in oil revenue over that time period that have ended up in non-Iraqi banks. At the same time, our conversations with both Iraqis and Americans during our frequent visits to Iraq, as well as official government and unofficial media reports, have convinced us that the Iraqi Government is not doing nearly enough to provide essential services and improve the quality of life of its citizens.

According to the U.S. Department of State’s Iraq Weekly Status Report for February 27, 2008, the Iraq Oil Ministry goal for 2008 is to produce 2.2 million barrels per day (MBPD). To date through the 24th of February, the 2008 weekly averages have ranged from a low of 2.1 MBPD to a high of 2.51 MBPD, missing that goal for one week only. Exports are over 1.9 MBPD, with revenues estimated at $41.0 billion in 2007 and $9.4 billion in 2008 year to date.

Extrapolating the $9.4 billion of oil revenues for the first two months of 2008 yields an estimate of $56.4 billion for all of 2008. And that figure will probably be low given the predictions for oil prices to continue to rise over the coming year. In essence, we believe that Iraq will accrue at least $100.0 billion in oil revenues in 2007 and 2008.

We request you look into this matter and provide answers to the following questions:

• What are the estimated Iraqi oil revenues each year from 2003-2007?
• How much has Iraq and the United States, respectively, spent annually during that time period on training, equipping and supporting Iraqi security forces, and on Iraq reconstruction, governance, and economic development?
• What are the projections for oil revenue and spending for 2008?
• What is the estimate of the total Iraqi oil revenue that has accumulated unspent from 2003-2007, and the expected estimate at the end of 2008?
• How much money does the Iraqi Government have deposited, in which banks, and in what countries?
• Why has the Iraqi Government not spent more of its oil revenue on reconstruction, economic development and providing essential services for the Iraqi people?

Your assistance in this matter would be appreciated.

Sincerely,

John Warner Carl Levin
Member Chairman

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Iraq’s cabinet has given the green light to the Oil Ministry to sign agreements with international oil companies to help increase the nation’s crude output, a ministry official said Wednesday, The Associated Press reports.

The chairman of the U.S. Senate Armed Services Committee said on Tuesday he may try to require Iraq to spend more of its oil revenue on reconstruction instead of investing the money in foreign banks, Richard Cowan reports for Reuters.

A Chicago fundraiser charged with angling kickbacks from state contractors has been accused of a $1.5 million bribe for an Iraqi electricity security deal, United Press International reports. He allegedly paid it through his new company called Companion Security to Iraq Electricity Minister Aiham al-Samaraie, a classmate of Rezko at the Illinois Institute of Technology two decades ago.

Iraq will continue its policy of hiring locals to protect new oil and gas infrastructure, especially pipelines, its oil minister said, UPI reports. Such a policy, along with construction of better security infrastructure around pipelines, is assumed responsible for increasing production and exports in Iraq’s northern infrastructure.

A one-man producer of power: Ibrahim Kazim is a brilliant producer of electricity in the Balakayati area, Kamal Chomani reports for The Kurdish Globe. With 24-hour-a-day power, hydroelectricity in Choman district keeps its residents warm or cool, all year long. Ibrahim Kazim, 34, from the region’s Choman district near the Iranian border, never finished high school. Nevertheless, he has provided power for 65 villages in the district by producing hydroelectricity.

In March 2003, shortly after the United States invaded Iraq, women’s rights and gender equity were mentioned as symbolic issues for Iraq’s new national agenda. However, as the overall situation in Iraq began to deteriorate after the invasion, the focus on women was lost in the problems and violence facing the country as a whole. When it came time to transform symbolism into action by articulating support and solutions for the most pressing national issues, women’s issues were considered an afterthought at best, a distraction from the “real” issues at worst, according to the new report Stronger Women, Stronger Nations which decries the state of women’s rights in the new Iraq.

Women are Terrorised in Basra
Since the US invasion of Iraq in 2003, militias have been circulating in Basra, Iraq’s second largest city, killing and torturing those seen to be an obstacle to the establishment of an Islamist state. Ambulance drivers know that more than 15 women are killed each and every month. Most are mostly professional women.

The point to the killing and violence is to keep women home and to restrain their participation in political and social life. The Iraqi Women’s League calls for the following actions to be taken to stop the violence:

1. Send an international fact-finding mission to Iraq that is organized by the UN High Commission for Human Rights. Such a mission should investigate crimes against women, help the Iraqi authorities identify the perpetrators, and to stop the crimes;
2. Reveal the criminals and those backing them, and bring them to justice;
3. Disclose the outcome of the investigations;
4. Take measures to safeguard personal freedoms that are constitutionally guaranteed;
5. Take deterrent measures to ensure the safety of citizens and protect their lives; and
6. Act firmly to improve the conditions of women and facilitate their involvement in the reconstruction process.

A Kurdish academic who served as Iraqi labour minister in the 1970s was gunned down near the disputed northern oil city of Kirkuk today, police said, Thomson Financial reports.

The conflict between Sahwa forces and the Iraqi government in Diyala has resulted in more power for the Sahwa. Tensions rose in early February when men dressed in Iraqi security personnel uniforms kidnapped two women. Their naked bodies were found later, Ahmed Ali and Dahr Jamail report for Inter Press Service. Before and after that incident, Sahwa forces have accused the police chief of Diyala province Ghanim al-Qureyshi of allowing Shia militiamen and death squads to operate with impunity against Sunnis.

Read Iraq’s editorial pages in the Iraq Press Roundup, by UPI’s Hiba Dawood.

Inside Iraqi Politics, a new series by The Long War Journal.

Part 2: A Look at Executive Branch Progress — examines the efforts by Iraq’s executive branch to improve services and achieve reconciliation, including an in-depth profile of the Iraqi Implementation and Follow-Up Committee for National Reconciliation and the Baghdad Services Committee, special bodies appointed by Prime Minister Maliki.

Tomorrow – Part 3: Examining the Iraqi legislative branch.

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