Iraq Oil Report

Plus:
*Iraqi and U.S. dockworkers to stage May Day anti-war strikes
*Shahristani: Iraq to fast-track bidding round, giving majors last chance at TSAs
*Sunni families threatened find refuge in Shiite neighborhood
*Iraq Press Roundup
*Much more…

Higher exports and oil prices are bringing in record revenue for Iraq, but the lack of institutional capacity to spend it on capital projects is preventing further development of the oil and gas sector, according to a report by the U.S. Special Inspector General for Iraq Reconstruction.

The report was critical of U.S. reconstruction efforts and work to help Iraq cut down corruption that, along with the inability to actually contract and spend funds, is preventing Iraqi government officials from being able to spend the funds on projects to enable the country with the world’s third-largest oil reserves to produce and export at its full potential, Ben Lando reports for United Press International.

“Although both crude production and crude exports are above target levels, Iraq is not taking full advantage of higher oil prices,” the report said. “Inadequate investment in the infrastructure hindered production and export gains.”

Iraq has earned $19.4 billion in oil revenues this year through April 20, 2008, nearly half what it earned in all of 2007, according to the U.S. State Department’s Iraq Weekly Status Report.

The SIGIR report said Iraq’s Oil and Electricity ministries may not have spent even half their capital budget; the U.S. Government Accountability Office says there isn’t adequate accounting to verify the extent of the capital expenditures but says it could be in the single-digit percentages. The U.S. State Department, which opts for the higher figure, says it’s now moved from funding capital reconstruction projects to funding efforts to build institutional capacity.

This comes as members of the U.S. Congress are threatening Iraq with legislation that would force it to spend a certain level of its own funds on reconstruction — as well as fuel for U.S. efforts — or take out in loan from the United States.

Read the entire story HERE.

Iraqi and U.S. dock workers will stop work on May Day in opposition of the War in Iraq. Longshormen on the West Coast in the United States, have planned a day-long protest, and now the General Union of Port Workers in Iraq announced a one-hour work stoppage in the ports of Umm Qasr and Khor Al Zubair in southern Iraq.

Iraq will “fast track” the first oil and gas field bidding round this year and wants rounds two and three next year, the oil minister told reporters in Rome, UPI reports.

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

Iraqi leaders emerged from a three-day meeting in Finland asking Irish Deputy Premier Martin McGuinness to lead an international peace mission to Iraq, UPI reports.

Iraqi President Jalal Talabani met First Vice President Adel Adb al-Mahdi Wednesday to discuss security issues and political reconciliation measures, UPI reports.

The Pentagon has suspended a program that fed information about the Iraq war to retired military officers who appeared on U.S. television networks as independent analysts, the Defense Department said, Reuters reports.

A Kurdish idealist returns to Iraq to ‘change attitudes’: Taha Barwari came back to northern Iraqi from Sweden with a mission to inspire young Kurds disaffected by decades of war, Sam Dagher reports for The Christian Science Monitor.

Neighbors aid refugees from Hawr Rajab: an exclusive look at Iraqi solidarity by Alive in Baghdad.

Teams dedicated to the job of rebuilding critical infrastructure in Iraq and Afghanistan, such as rebuilding schools and restoring electrical power, are plagued by low funding, not enough staff and poor leadership, according to a report released by the House Armed Services Committee, Greg Grant reports for Government Executive.

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Plus:
*Internal pipeline explosion affects fuel
*Saddam-era deals with China, India, Vietnam and Indonesia likely to move
*Turkish overtures to Baghdad and Erbil
*Crackdown on smuggling and control of gas stations
*Much, much more…

Iraq oil sales earned $500 million more in March than February because of increased oil prices, despite a slight drop in exports, Oil Ministry data shows.

The average price Iraq oil fetched last month was $95.02 per barrel, up from $89.79 per barrel in February, both below average global prices, which were more than $100 per barrel. Iraq earned $5.6 billion from oil sales in March, Ben Lando reports for United Press International.

According to the U.S. State Department’s Iraq Weekly Status Report, Iraq has brought in $19.4 billion this year through April 20, about half what it earned in all of 2007. This was somewhat offset by a drop in exports by 18,000 barrels per day to nearly 1.92 million bpd last month. Iraq is still at a higher steady export and total production rate than much of the post-2003 timeframe of less than 2 million bpd.

An explosion on a fuel pipeline south of Baghdad on Friday caused a large fire and wounded eight guards, police said, Reuters reports. The pipeline carrying fuel south from Baghdad’s large Doura oil refinery was attacked by a bomb near the town of Iskandariya south of the capital, police said.

Alive in Baghdad provides stunning video and interviews from the Doura refinery.

Iraq is likely to honor oil exploration and production deals signed by Saddam Hussein with ONGC, CNPC, Pertamina and PetroVietnam, following meetings last week in Amman, Jordan, UPI reports. This follows conflicting information from the ministry, which earlier this week said all pre-2003 oil deals were considered canceled and the fields and exploration blocks would all be put to an open bidding process.

The Iraqi government on Sunday announced plans to crack down on militiamen controlling gas stations and oil distribution in a new move to curb the resources of armed groups, Sameer N. Yacoub reports for the AP. Iraqi Prime Minister Nouri al-Maliki has given instructions to ban the interference or presence of any unofficial people at state-run and private gas stations, refineries and oil distribution centers, according to a government statement.

The unidentified speedboat fails to respond to warnings as it races toward Iraq’s vital oil terminal in the Persian Gulf. A young Iraqi marine radios to the vessel, warning it to turn away: “I will be required to use deadly force.” This confrontation is just a drill — an effort by American, British and Australian officers to prepare Iraq’s tiny navy to defend its waters and the country’s major oil exporting facilities.
But the day when Iraq alone can defend its shores — and protect its critical offshore oil installations — seems remote, Barbara Surk reports for the AP.

Turkish Energy Minister Hilmi Güler had talks with Iraqi Oil Minister Hussain al-Shahristani earlier this week in which the two also discussed the absence of Turkey’s national oil company among 35 companies approved earlier this month by the Oil Ministry to bid for soon-to-be announced tenders to develop Iraqi oil and gas fields, Today’s Zaman reports.

The Kurdistan Regional Government is seeking to attract private finance to add 1,300MW of power generation capacity by 2015 in an effort to meet growing demand. It is planning to add 500MW from thermal power, another 500MW from hydropower and 300MW from gas-fired plants, Karin Maree reports for the Middle East Economic Digest. The plans are in addition to a series of existing projects to add at least 1,650MW of capacity over the next 12 months. The latest schemes could cost several billion dollars in total, with the hydropower plants alone costing up to $1.5bn.

President Masoud Barzani yesterday met Mr David Miliband, the British Foreign and Commonwealth Secretary, to discuss political progress in Iraq, relations with Turkey and Article 140 of the Constitution, according to a KRG release.

The Turkish National Security Council implicitly confirmed recent indications of a shift in Turkish policy towards the Kurds of northern Iraq, in which confrontation and isolation will be replaced by engagement and dialogue, Gareth Jenkins reports for The Jamestown Foundation’s Eurasia Daily Monitor.

Landmines are everywhere in Kurdistan Region. The mines, nearly three for every person in Kurdistan Region, were laid mostly against Kurdish armed movements since the 1960s, more so than at any other time during regional wars over the past three decades, Ako Muhammed reports for the Kurdish Globe. De-mining operations continue but have been slowed due to natural difficulties and lack of military maps of planted mines.

Muqtada al-Sadr is considering setting aside his political ambitions and restarting a full-scale fight against U.S.-led forces, Hamza Hendawi and Qassim Abudul-Zahra report for The Associated Press. A possible breakaway path — described to The Associated Press by Shiite lawmakers and politicians — would represent the ultimate backlash to the Iraqi government’s pressure on al-Sadr to renounce and disband his Shiite militia.

Sadr’s official spokesman, Salih al-Ubaydi, told Radio Free Europe/Radio Liberty analyst Kathleen Ridolfo that he does not expect al-Sadr to order the Imam Al-Mahdi Army to fight government forces.

Iraq’s prime minister said Thursday that all political blocs have agreed to return to the Shiite-led government, Mazin Zahya reports for the AP.

The U.S. Special Inspector General for Iraq Reconstruction this week issued a handful of reports, which can be found HERE and HERE.

The Iraq Press Roundup by UPI’s Hiba Dawood.

Iraqi marriages are a casualty of war, writes Alexandra Zavis in the Los Angeles Times. The number of divorces has doubled since the conflict began. Sectarian tensions and joblessness are among the reasons.

More than 26 former Ugandan security guards in Iraq have petitioned Parliament over “illegal deductions from their salaries and violation of their rights,” Mary Karugaba and Paul Kiwuuwa report for The New Vision.

If you’ve heard it once, you’ve heard it countless times: Governments and corporations turn to private military contractors because it is more cost-effective than using regular military forces. But is it true?, military affairs analyst David Isenberg writes for UPI in his Dogs of War column.

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Iraqi oil exports have dropped by 17,000 barrels last month mainly due to lower output from the northern oil fields of Kirkuk, an Oil Ministry statement said, Azzaman reports.

New data on Iraq oil revenues suggests that country’s government will reap an even larger than expected windfall this year — as much as $70 billion — according to the special U.S. auditor for Iraq, Pauline Jelinek reports for The Associated Press. New figures from Iraq’s government show revenue from exports hit $5.83 billion in December — more than $1 billion over what was previously reported by the government, said Stuart Bowen, special inspector general for Iraq reconstruction.

Platts has an in-depth explanation of the status of Iraq’s oil sector, including security, political and the economic issues at large.

“A delegation of Iraqi state oil marketers (SOMO) will soon visit Kurdistan Region to talk about exporting the region’s oil,” said KRG Prime Minister Nechirvan Barzani in a press conference, The Kurdish Globe reports, who arrived in Baghdad on April 11 for 10 days of discussions with the central government on the oil law, Article 140, and the Peshmarga forces budget.

Residents of a western Baghdad neighbourhood have said militant groups in the area are hunting down women and killing them, and have appealed to parliament to do something, a member of parliament Safia al-Suhail told the U.N. humanitarian office. “Over the past six months 15 women were killed in al-Salam neighbourhood for religious reasons or because they had criticised the militants, or because of their previous affiliation to the Baath Party [disbanded party of ousted President Saddam Hussein].”

The unofficial border point of Haj Omran linking northern Iraq with Iran has been refurbished and turned into an international border crossing, Maher Oghlo reports for Azzaman.

Defense Secretary Robert Gates named his top commander in Iraq, Gen. David Petraeus, on Wednesday to lead U.S. Central Command, responsible for all Middle East operations, including the wars in Iraq and AfghanistanKristin Roberts and Andrew Gray report for Reuters.Gates also named Lt. Gen. Raymond Odierno, recently the No. 2 commander in Iraq, to replace Petraeus as top commander in that war.

The US Senate armed services committee today asked the Pentagon to investigate its practice of courting military analysts on popular TV programmes in order to push positive spin on the Bush administration’s anti-terrorism policy, Elana Schor reports for The Guardian.

Iraq’s Foreign Affairs Minister Hoshiyar Zebari yesterday expelled Akhbar Al Khaleej’s reporter from a Press conference at the Ritz-Carlton Bahrain Hotel and Spa, Gulf Daily News reports. Akhbar Al Khaleej has published many editorials denouncing the invasion of Iraq as a disaster.

The Iraq Press Roundup by UPI’s Hiba Dawood.
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*But Iraq Oil Ministry says not so fast
*All Saddam-era oil deals canceled, to be up for bid
*Iraq to sign two-year deals with Big Oil in June
*Scattered Dreams: Iraq’s Refugees
*$1.5 M for Sadr City
*Iraq Press Roundup

Iraq’s Kurdish region leader said talks in Baghdad on key controversial issues, including the oil law, showed “positive … cooperation and progress,” United Press International reports. Nechirvan Barzani, prime minister of the Kurdistan Regional Government, said in a statement the central and regional governments met in Baghdad “to discuss the mechanism of relations between our two bodies as partners in the governance of Iraq, the advancement of our political process and other various issues regarding the future of Iraq.”

This confirms a report last week by UPI’s Ben Lando that negotiations between the KRG and Baghdad are leading to reconciliation of those deals, though there is still plenty of roadblocks to be cleared.

Iraq’s Oil Minister Hussain al-Shahristani says the deals signed by the KRG are not valid, Marta Falconi reports for The Associated Press. “We do not recognize them,” al-Shahristani said. The draft law requires an open bidding process, and also would establish which foreign countries are eligible to work in Iraq, he said.

All of the oil deals signed by Saddam Hussein have been “canceled” and the companies must bid for the fields again, the Iraq Oil Ministry spokesman says. This appears to be a change in policy, as the ministry had said that four deals still carried legal weight and, although they’d have to be brought in line with the new law, would still be honored, UPI reports. Iraq had contracts with ONGC of India, CNPC of China, Pertamina of Indonesia and PetroVietnam that were considered valid and were reportedly under negotiation.

Shahristani said two-year support contracts with the world’s largest oil firms to boost production in five key fields by 100,000 barrels per day each won’t be signed until June, Reuters reports. He also said that the largest of Iraq’s producing oil fields, as well as the Akkas gas field, will be included in the fields up for bid this summer, but large discovered but not yet producing fields will not.

Italian energy giant Eni is considering investing in Iraq with the expected passage of new legislation on oil revenue distribution, Agence France-Press reports. “It will be possible … to sign contracts in a new legislative framework,” Eni CEO Paolo Scaroni was quoted as saying on the sidelines of an energy meeting in Rome.

Italian rig manufacturer Drillmec has won a $207m order to provide 17 drill rigs to the state-run Iraq Drilling Company, for work in the southern oil fields and the northern Kirkuk region, the Middle East Economic Digest reports.

Iraq’s Industry & Minerals Ministry signed two joint venture deals at a Dubai conference this week Trevor Lloyd-Jones reports for Business Intelligence Middle East. “We are making all of Iraq’s state-owned enterprises available for partnerships with the private sector,” Hariri said. Asked about whether the security situation was still at the early stages to enable the flow of investment to go ahead, the Minister said that the challenges within Iraq were still considerable, but on the other hand the rewards were sufficiently high to attract international companies.

War News Radio explores the crisis of internally and externally displaced Iraqis five years after the war began.

General David Petraeus, in testimony before US congressional committees last week, portrayed Iraqi Prime Minister Nuri al-Maliki’s late March offensive in Basra as a poorly planned effort that departed from what US officials had expected, Gareth Porter reports for Asia Times online. What Petraeus, the US commander in Iraq, did not reveal is that Maliki was deliberately upsetting a Petraeus plan to put US and British forces into Basra for a months-long operation to eliminate the Mahdi Army from the city.

The civilian spokesman for Iraqi military operations aimed at securing Baghdad said the government set aside $1.5 million for basic services in Sadr City, UPI reports.

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

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Iraq’s central and Kurdish region governments have reached a deal on an oil law, including a method for weighing the validity of the oil deals the Kurds have signed with foreign firms, the top government spokesman told United Press International.

Ali al-Dabbagh said an agreement has also been made on the classification and funding for the Kurds’ security forces, the Peshmerga, which will become a battalion within the Iraqi Ministry of Defense. And he said the sides agreed to allow the U.N. process for determining the future of oil-rich Kirkuk and other disputed territories to play out.

“There is an understanding between the central government and the regional government for the oil law,” Dabbagh said in a telephone interview from Brussels, where Iraqi Prime Minister Nouri al-Maliki is meeting with EU officials. Maliki’s governing coalition has seen defections and opposition growing over the past year. Dabbagh said political parties have recently pledged support, and meetings in Baghdad with top Kurdistan Regional Government officials have led to “a new atmosphere.” …

The February 2007 oil law draft establishes a federal oil and gas council that would serve as a policymaking body. Dabbagh said the council would decide national versus local control over oil and gas fields and exploration blocks, as well as the legitimacy of the KRG oil deals.

“This is going to be reviewed and is going to be checked whether they are workable with the new law or not,” he said. “If not they should be amended in order to have them matching with the new regulation of the oil law.”

He said a revenue-sharing law and legislation reconstituting the national oil company and reorganizing the Oil Ministry will “be passed simultaneously (with the oil law) and as a sort of compromise package.”

There are still issues to iron out before an agreement is finalized, he said. …

CLICK HERE to read the entire story.

Here’s a pdf file of the February version of the law.

Shares in Norwegian oil and gas producer DNO soared on Wednesday on the news, Wojciech Moskwa and Joergen Frich report for Reuters. DNO shares initially jumped by as much as 24 percent on media reports — later denied by Iraq’s oil ministry — of a completed deal for Baghdad to honour oil contracts signed by the Kurdish regional government.

The United Nations will suggest a formula next month to resolve conflicts on several disputed areas in Iraq that could serve as a template for the future of Kirkuk, Paul Taylor reports for Reuters. Staffan de Mistura, the U.N. special representative in Iraq, said he would propose options by May 15 for deciding under which authority to put four disputed locations, not including Kirkuk. He declined to identify them but said they would set an example. “This could show how Kirkuk could be handled. It is certainly a template for similar and other bigger problems,” he told reporters after talks with NATO and European Union officials.

Meanwhile, the European Union said on Wednesday it was close to clinching a preliminary energy pact with Iraq as part of the bloc’s efforts to reduce its heavy dependence on Russian oil and gas, Mark John reports for Reuters.

For more:
EU Hungry for Iraq Gas and Oil and Iraq-Turkey-U.S. Gas Talks Begin both by UPI’s Ben Lando.

Iraq’s Iskandariyah power plant runs on raw crude and at less than half capacity, but the country’s demand “is so great” there’s no time for maintenance, UPI reports.

The Iraqi government announced the creation of 2,000 jobs, half of which are in Basra, to help remove land mines in the country, UPI reports.

Conditions needed for Iraqi refugees and internally displaced people to return to their homes don’t exist, a U.S.-based refugee committee said Tuesday, UPI reports. “All relevant actors should discourage returns until the violence subsides and people can receive adequate assistance and protection,” Refugees International said in a report on Iraqi refugees and internally displaced people. “In particular, the government of Iraq should not use returns as an indicator of success in stabilizing the country.”
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