Iraq Oil Report

Plus:
*Petrel also says Oil Ministry agrees to payment, ditches Kurdish partner
*Confirmation and details of KRG-South Korea oil investment
*Fields in second oil and gas bidding round discussed
*Kanaqin residents say fight is over oil, future in Iraq
*Alive in Baghdad: Sadr City vs. the Walls
*Food rations to be cut
*Election rules ban some religious images

Iraqi oil and gas deals aren’t just for Big Oil as smaller firms already active in the country are better placed, the head of Petrel Resources said in a statement in which he said the Irish firm has settled payment disputes over a field it is helping develop, Ben Lando reports for United Press International.

“Fears that super-majors would have preferential access to super-giant fields on the basis of no-bid contracts are groundless,” said Petrel Managing Director David Horgan. “There are at least 80 major fields in Iraq, and the advantage is with those players who are knowledgeable and ready to work immediately.”

Petrel in 2005 signed a $197 million contract for design, materials and other services to assist the Iraq State Co. for Oil Projects in developing the Subba and Luhais fields in southern Iraq. Aside from an outstanding bill of $46 million, Petrel faced pressure to let go its partner in the project, the Iraqi Kurd-owned firm Makman Oil & Gas.

Read the entire story: CLICK HERE.

South Korea was granted the lead role in two northern Iraq oil projects and increased interest in six others, UPI’s Ben Lando has confirmed.

The Korean National Oil Corp. has also pledged $2.1 billion in infrastructure projects in Iraq’s Kurdish region as part of the deal, but $1.5 billion will be withheld until oil exports begin.

The state-owned firm will have an 80-percent ownership of the Qush Tappa block PSC and 60-percent ownership of Sangaw South. KNOC was also granted interest in existing production contracts: a 15-percent stake in each of Norbest Limited’s K15, K16 and K17 blocks; a 15-percent interest in block K21; and a 20-percent stake in Sterling Energy Ltd.’s Sangaw North block. It also was given 20 percent more of the Bazian block, of which KNOC is the lead company in a consortium that was granted a 60-percent stake last November.

The agreement was seven months in the making, when a memorandum of understanding was reached between the two sides. In June, contracts for oil stakes were agreed to, as well as an investment project. All of the details were negotiated since then and the deals made official Thursday.

The Iraqi oil ministry held internal discussions this week in a bid to agree on a list of fields to be tendered in its second licensing round, which could be announced as early as mid-October, Iraqi sources told International Oil Daily. So far, 16 fields are on the initial list, which should be finalized in coming weeks.

Iraq’s oil rich town of Khanaqin exposed to ethnic tensions, rival territorial claims similar to Kirkuk, Agence France-Presse reports. In a mirror image of Kirkuk, the Kurdish town of Khanaqin near the border with Iran that holds sizeable oil reserves is being exposed to ethnic tensions and rival territorial claims. Khanaqin has a mixed population of Kurds and Arabs. The Iraqi army has been trying to extend its control over the city, pitting it against peshmerga fighters based there, BBC reports.

National Front for Salvation of Iraq leader vows to fight Islamic Party, Ma’ad Fayad reports for Asharq Alawsat.

Turkish warplanes successfully struck 16 targets in a fresh raid targeting separatist Kurdish rebels in neighboring northern Iraq, a senior Turkish general said Friday, Agence France-Presse reports. Earlier, a local official of Iraq’s autonomous northern Kurdish region also confirmed that Turkish jets had bombed several areas near Qandil Mountains — a major stronghold of the Kurdistan Workers’ Party (PKK) — along the border with Turkey and Iran.

Not even the elevators work now at Baghdad Medical City, built once as the centre for some of the best medical care, Arkan Hamed and Dahr Jamail report for Inter Press Service. One of the ten elevators still does, and the priority for this is patients who have lost their legs — and there are many of them. The rest, the doctors, patients and students at the four specialised teaching hospitals within the building complex, just take the stairs, sometimes to the 18th floor.

This is in a city that had been given dreams of great development five years back, around the time of the U.S.-led invasion. And much of the corporate-led media in the U.S. and Europe still insists that the situation in Baghdad has “improved”.

Alive in Baghdad: After Siege, Wall Sadr City’s New Oppression

After the failure of many security plans proposed by the Iraqi government and US military strategists, a recent plan, hand-in-hand with the so-called “Surge,” was designed. It was a desperate attempt by the US and Iraqi military forces to control the Sunni-Shia militia. At the suggestion of military leaders, the Iraqi and US governments decided to build walls to separate neighborhoods and to control militias and insurgents from entering or exiting any neighborhood without passing a checkpoint.

Food rations in Iraq will likely decline due to the country’s slumping grain produce and rising food prices worldwide, the Iraqi Trade Ministry says, UPI reports.

The Iraqi Parliament banned the depiction of clerical leaders but not the use of religious symbols in passing the provincial elections law, leaders said Friday, UPI reports. The law includes a provision that allocates 25 percent of the seats to women and a prohibition on the use of mosques, pictures of clerical leaders and government institutions during the campaign season.

A parliamentary committee on displacement and migration demanded the Iraqi government allot US$4 billion in next year’s budget to meet the needs of more than four million internally displaced persons (IDPs) and refugees, the U.N. humanitarian affairs office reports. “We asked the government last year to allocate 3 to 5 percent of the oil revenues in the 2008 budget to cover the needs of IDPs and refugees as they represent a big segment of the Iraqi people and are going through harsh conditions,” Abdul-Khaliq Zankana, a lawmaker and head of parliament’s displacement and migration committee, told IRIN on 24 September. “But unfortunately this call was ignored,” Zankana said.
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Plus:
*Progress on another joint venture, this time for oil drilling
*What the passage of an election law means
*Iraq Press Roundup

An Iraqi oil ministry spokesman says Iraq and China will finalize a US$3 billion oil agreement next week. Assem Jihad says a Chinese delegation will visit Baghdad to sign the deal, The Associated Press reports.

The contract to develop the Ahdab field in southern Iraq is one of four Saddam-era contracts that the Oil Ministry has said it will uphold but renegotiate the terms per the new government’s oil prerogatives, as United Press International’s Ben Lando has reported.

According to the AP story: the contract will let China’s biggest oil company develop the field for 20 years. It’s expected to produce up to 25,000 barrels per day after three years and eventually reach 125,000 barrels per day.

However, this is the first test of Iraq’s pledge of oil transparency, and if the contract terms aren’t proven publicly, there’s no way to verify how much Iraqis will gain, or lose, in the deal.

Another joint venture between an Iraqi state-owned oil company and multinational firm is moving along in the planning stages. the AP reports “At the moment we are at an advanced stage in negotiations and it is all going well,” said James Milton, a London-based spokesman for the company. Ramco Energy Plc owns 32.7 percent of Mesopotamia Petroleum. Two senior Iraqi oil officials this week confirmed the talks, and said similar negotiations are underway with Saipem, an Italian oil services company.

The Iraqi officials said the proposed deals would involved the state-owned Iraq Drilling Co., and that tentative agreements were expected at the end of this year. One of the officials, who holds a senior position in the Iraqi company, said discussions started a year ago and were taking place in neighboring Jordan and Turkey, in addition to Italy.

The officials also said the Iraq Drilling Co. was upgrading its equipment with the purchase of 24 new Italian-made rigs in two contracts worth about US$311 million. The company intends to increase drilling capacity from 30 to 200 wells a year in order to to meet Iraq’s five-year goal of increasing crude oil production from nearly 2.5 million to 4.5 million barrels per day.

Such keen overseas interest in Iraq’s oil prompted two Iraqi reporters on The New York Times in Baghdad to launch into a heated late-night discussion about whether oil had actually been good or bad for Iraq throughout its recent history. Ali Hameed and Atheer Kakan agreed to reprise that discussion in front of a microphone, hosted by Stephen Farrell.

Iraqi’s Upcoming Elections

Iraq’s parliament today approved the remaining article 24 of the provincial elections law that was partially approved on 22 July except for the provisions relating to elections in Kirkuk, Reidar Visser on historiae.org explains in better depth. He said the article was an Iraqi-U.N. draft, delaying a Kirkuk vote and allowing for a committee (2 each of Kurds, Turkomen, Arabs and 1 Christian) to write a report by end March 2009, off which an Iraqi Parliament Kirkuk special elections law for will be based. If that doesn’t work, then the Iraqi prime minister, president, speaker of parliament and U.N. will decide what to do next. Visser also explains the political context of the provincial elections turmoil, and argues it was a win by the “nationalist centralists” over the “federalists” – NOT to be confused with the debate waged in the early stages of the founding of the United States as U.S. politicians like to mistakenly compare it to.

The United States on Wednesday welcomed the passage of a long-delayed provincial election law by the Iraqi parliament, saying it showed the country’s fledgling democracy was making progress, Agence France-Presse reports. The law passed by the Iraqi parliament on Wednesday sets a January 31 deadline for provincial elections in 14 of the country’s 18 provinces. Members of parliament agreed to a compromise that will exclude not only the disputed northern oil province of Kirkuk but also the whole of the northern Kurdistan region from the new legislation.

Few of the hundreds of thousands of Iraqis forced to flee their homes have registered to vote in upcoming ballot, Zaineb Naji reports for the Institute for War & Peace Reporting. Ahmed Al-Kubaisi, a 25-year-old teacher who fled Baghdad for Ramadi in July 2006 after his brother was killed, said he has little faith in the politicians’ pledges, despite receiving help from a Sunni political party, the People of Iraq, led by Adnan Al-Dulaimi. The party helped him to find affordable housing and food aid, the kind of assistance that has won over some displaced voters in Baghdad and Ramadi. But Kubaisi says that he and his family will not vote in the provincial elections. “The political parties are responsible for all that has happened, all of the sectarian problems and violence,” he said.

Security and Society

American soldiers accidentally shot and killed the leader of a local U.S.-allied Sunni group Tuesday after coming under attack in a volatile area north of Baghdad, the military said, Kim Gamel reports for AP.

Read what Iraqis read: the Iraq Press Roundup by UPI’s Alaa Majeed.

Final deal still far down the road

Iraq’s Oil Ministry has inked an initial agreement with Royal Dutch Shell to establish a company aimed at utilizing natural gas currently being burned off in Basra province, Ben Lando reports for United Press International.

The Heads of Agreement, as Shell officials describe it, is a preliminary legal step to an eventual joint venture with the South Gas Co., one of the state-owned oil and gas firms controlled by the Oil Ministry.

“We’ve in the very, very early days at this stage,” said Shell spokeswoman Kirsten Smart. She said the prospective venture is looking solely at gas being flared in Basra province, not increasing gas production via upstream exploration or development of gas reserves not associated with oil. The venture would handle an increase in associated gas as oil production increases.

“Currently there’s enough there that we believe in time it could supply the domestic market and over time supply exports,” Smart said. “The domestic power supply is the initial focus.” The lack of fuel is blamed in part for a lack of electricity in the country. …

Aside from developing its gas industry, Iraq is also struggling to work out how international oil companies will be allowed into the domestic oil and gas sectors. Iraq nationalized in the 1960s, which is still popular with its citizens. The debate over the role of the international oil industry is partly the reason a draft new oil and gas law is being held up in Parliament. …

Very few details of the Shell deal have been released, which doesn’t bode well for Iraq’s pledge of transparency in the oil and gas sectors.

But the ministry still has time.

“The focus will now be on reaching a final agreement and begin to establish a plan to develop Iraq’s future infrastructure and to develop markets, both domestic and for future export,” said Shell’s Smart. “The preliminary development activities such as engineering studies and asset surveys will commence shortly, and carry on until and after the joint venture company is formed.

“Various Iraqi and international contractors are already on the ground in Iraq working for other companies. We have an agreement with a contractor to complete the asset survey work for us. Other contractors, local and international, will be employed as we progress.”

A timeline for this process has not been announced.

Smart played down reports this will cost Shell upwards of $4 billion annually.

“It’s too early to talk about figures at this stage,” she said. “In terms of next step is preliminary development activities, feasibility studies and asset surveys, and that will commence shortly.”

She said it’s envisioned that “South Gas Co. will provide assets and Shell injects equity.”

Read the entire story HERE. (Note: UPI now requires registration, though reading is articles still is free.)

* Repairs following storms in south and northern bomb successful

Plus:
*Maliki reportedly asks British for energy help
*Parliamentarians displeased with Electricity Minister
*Iraq preps record budget for 2009
*Cholera epidemic spreads
*Reidar Visser on the Democratic Party’s Iraq plan

Iraq has resumed oil exports following a storm that shut in the southern port of Basra and the completion of repairs to the bomb-damaged northern pipeline that carries crude from the northern Kirkuk fields to the Turkish Mediterranean port of Ceyhan, Eric Watkins reports for Oil & Gas Journal.

Iraq asked Britain on Thursday for technical support in its oil industry, Prime Minister Nuri al-Maliki’s office said, Agence France-Press reports. In talks with the visiting minister of state for energy, Malcolm Wicks, the premier also sought closer bilateral economic ties, including greater British investment, a statement said.

The Unified Iraqi Coalition on Thursday demanded Electricity Minister Karim Wahied to resign after his failure in running the ministry, a lawmaker from the UIC said, Voices of Iraq reports. “The UIC demanded the electricity ministry to resign during a meeting held today to save his face because his inability to provide electricity during his post,” Abd Ali Lafta said. Karim Wahied is one of the UIC minister in al-Maliki’s government.

Iraq’s Finance Ministry on Wednesday said that the country’s 2009 budget will stand at a record at $78.88 billion, The Associated Press reports. Ministry spokesman Adnan Abdul-Rahman said the budget was based on an average oil price of $80 a barrel next year. Abdul-Rahman added that $60.26 billion will go to operational expenses, while $18.62 billion will go to investment and improvements in infrastructure. The budget is expected to be the largest ever submitted.

There is growing frustration in Washington that Iraq is not spending more of its own money to stabilize and rebuild the country, Bill Rogers reports for Voice of America. High oil prices have earned Baghdad billions of dollars, and some in the U.S. Congress say Iraq should be using more of that money to pay for its own reconstruction.

The looming crisis: Displacement and security in Iraq, a new report from the Brookings Institution, which says that lost in discussions of the military surge, the pace of troop drawdowns, and political benchmarks are millions of displaced Iraqi women, children, and men. Their plight is both a humanitarian tragedy and a strategic crisis that is not being addressed.

During the last 24 hours 35 new cholera have been reported, bringing the total confirmed cases to 161, according to the U.N. Office of Humanitarian Affairs.

The big problem with Democrats when it comes to policy on Iraq is that they either focus exclusively on withdrawal (and thereby close their eyes entirely to the mistakes of the Bush administration in shaping Iraq’s political system between 2003 and 2008), or they engage with questions regarding choice of political system but do so in a manner that is even less in harmony with Iraqi traditions than Republican policy is, writes Reidar Visser of the Iraq-focused website historiae.org. (Visser is also a research fellow at the Norwegian Institute of International Affairs.)

The Iraq Press Roundup by United Press International’s Alaa Majeed.

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Plus:
*Oil Ministry to explain oil and gas bidding to companies in London next month
*Karbala sees 13 power projects
*Finance Ministry agrees to worker demands
*Recap of weekend violence highlights troubled future
*Artists transform the blast walls
*Exploring Al-Qaida in Iraq and the Awakening’s fate
*Much more

A bomb blast on an oil pipeline last Wednesday was the cause of a halt in Iraq’s northern oil exports since then, but flows should resume in the next 24 hours, the North Oil Company said, Ahmed Rasheed reports for Reuters.

Oil exports have dropped dramatically in recent days, to about 900,000 barrels per day, which means exports from the south have been hampered as well, though the cause is not known.

Read more on pipeline security in this June 13 article by United Press International’s Ben Lando.

The Associated Press is reporting dust storms prevented northern production.

International oil companies bidding on Iraqi oil and gas fields will meet with top Oil Ministry officials next month in London, Ahmed Rasheed reports for Reuters. At the Oct. 13 London meeting, Oil Minister Hussain al-Shahristani will unveil the model contracts, which the oil deals will be based on, as well as release of technical details the companies will need to bid for and, if chosen, develop the fields. Reuters reports the oil fields up for grabs are Rumaila, Kirkuk, Zubair, West Qurna 1, Bai Hassan and Maysan (Bazargan, Abu Gharab and Fakka) and the Akkas and Mansuriyah gas fields. A second set of fields will be bidded on later this year or early next year.

Thirteen electricity projects have been scheduled for implementation in the holy Shiite city of Karbala at a cost of over one million dollars, the city’s mayor said on Saturday, Voices of Iraq reports.

Iran and Iraq will establish three free trade zones along their borders, the Tehran Times reports, with a special focus on fuel and energy sectors.

Iraqi workers and the Ministry of Finance have reached a tentative deal following wage cuts and other moves that prompted worker protests. According to U.S. Labor Against the War, a U.S. based union group which works closely with Iraq’s workers: “the Iraqi government reversed its order to cut wages by up to 30% and eliminate many industrial labor benefits. The authorities agreed to direct negotiations with the representatives of the workers.”

Iraq does not need any financial aid from the United States, the government spokesman said, in the wake of criticism from some U.S. politicians that Washington is paying too much towards Iraq’s reconstruction, Mohammed Abbas reports for Reuters. Ali al-Dabbagh was rebutting criticism leveled by members of U.S. Congress that the United States has paid enough in Iraq reconstruction and other costs. Iraq has actually paid more for reconstruction than the United States, and there are questions as to how much of the U.S. $48 billion was not misspent or gone missing altogether, let alone the usefulness of the projects paid for.

America and Al Qaida: Filmmakers David Enders and Rick Rawley explore the Sawha, or Awakening, and its role in fighting Al Qaida.

Roundup of violence that foreshadows in Iraq:

At least 31 people were killed and 60 wounded in a car bomb attack on Friday in the center of the predominantly Shiite town of Dujail, north of Baghdad, according to Iraqi police officers in Dujail and in the provincial capital, Tikrit, Sam Dagher reports for The New York Times. A policeman in Dujail, about 35 miles north of Baghdad in Salahuddin, a mainly Sunni Arab province, described a scene of mayhem and destruction that had become less common as violence had dropped countrywide in recent months. In another attack on Shiites on Friday, two people were killed and 12 were wounded when a suicide bomber detonated his explosives-laden vest among prayergoers in the town of Sinjar in the northern province of Nineveh, the American military said. Sinjar lies in an area of the north that is disputed by Kurds, Sunni Arabs and a Kurdish-speaking sect known as Yazidis.

Eight Kurdish pesh merga soldiers were killed in a roadside bombing in a disputed part of eastern Diyala Province on Saturday, adding to tensions with the Iraqi government and local Arabs over the Kurds’ presence in the area, Dagher reports in a separate article for The Times. Among the dead in the bombing, in the town of Khanaqin, was the senior pesh merga commander for the area, according to the local police chief, Col. Azad Issa. The bomb, which went off as the Kurdish force was patrolling.

Strip of Iraq ‘on the Verge of Exploding’, Amit R. Paley reports for The Washington Post. Kurdish leaders have expanded their authority over a roughly 300-mile-long swath of territory beyond the borders of their autonomous region in northern Iraq, stationing thousands of soldiers in ethnically mixed areas in what Iraqi Arabs see as an encroachment on their homelands.

Iraq’s Deputy Prime Minister Barham Salih, a Kurd, met with powerful non-political Shiite leader Ayatollah Ali al-Sistani at his home in Najaf, Mina Al-Oraibi reports for Asharq Alawsat, to discuss the heightened tension between the Kurdish and Shiite led parties leading Iraq’s government.

A Sunni Arab leader of a citizen patrol group in Baghdad who had been a proponent of reconciliation in his neighborhood was assassinated over the weekend, Sam Dagher reports for The New York Times. The killing of the leader, Fouad Ali Hussein al-Douri, a Sunni mosque imam who directed a group of about 65 guards in the Jihad neighborhood in western Baghdad, is the latest in a string of attacks on members of the so-called Awakening Councils. Relations between the Awakening Councils and the Shiite-led government have become increasingly strained.

Iraq: Violence is down – but not because of America’s ’surge,’ Patrick Cockburn writes in The Independent. If fewer US troops and Iraqis are being killed, it is only because the Shia community and Iran now dominate.

The Murder of Gift Givers in Iraq, by McClatchy’s Nicholas Spangler and Hussein Kadhim:

The Iraqi TV crew brought the gifts that had come to be the trademark of their reality show: some basic household appliances and a delicious supper to break the Ramadan fast for a family of little means.

They’d done it many times before. But this episode didn’t get made. Gunmen seized four of them from their vehicles, hauled them down the street and executed them.

The show is called Your Iftar on Us, after the Arabic word for the evening feast, and it airs on the privately-owned Sharqiya network. It didn’t have much in the way of production values but it had a wide following. People watched it because it made them feel good.

“The people were so happy to see us,” said the host, a young woman named Farida Adel. She was speaking Saturday, hours after everything went bad, when Sharqiya broke into its regularly scheduled programming and showed her alone on the screen. “All of them invited us inside their houses. They were so happy that we’d come to Mosul,” she said.

The Bush administration is pushing through a broad array of foreign weapons deals as it seeks to rearm Iraq and Afghanistan, contain North Korea and Iran, and solidify ties with onetime Russian allies, Eric Lipton reports for The New York Times. From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005.

Iraqi artists turn concrete blast walls into murals of hope in this power point presentation.

Parliament on Sunday suspended legal immunity for secular Sunni lawmaker Mithal Alusi, opening him up to possible felony charges for traveling to Israel last week to participate in an international counterterrorism conference, Nicholas Spangler and Mohammed al Dulaimy report for McClatchy Newspapers.

More than 12,000 Iraqi refugees have been admitted into the United States this fiscal year, according to a press release from the State Dept. and Dept. of Homeland Security.
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