Iraq Oil Report

* 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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Plus:
* Total, Shell confirm oil TSA talks over
* Baghdad energy conference postponed to December
* Alleged secret Defense Ministry torture prison found in Basra
* Alive in Baghdad: Shanasheel, Iraqi Traditional Architecture
* Much more

Iraq expects to sign a gas deal with Royal Dutch Shell within a year and negotiations to sign the deal will start soon, an Iraqi oil official said, Hassan Hafidh reports for Dow Jones Newswires. The Iraqi Oil Ministry needs to agree with Shell the terms of a joint venture in which Iraq’s South Gas Co. will possess 51% of the venture and Shell 49%, the official said.

Total confirms its negotiations to develop the West Qurna oil field under a short-term deal to increase production have been halted. “We are disappointed in not being able to successfully conclude these negotiations,” Total spokeswoman Lisa Wyler told The Associated Press in an e-mail, Sinan Salaheddin. “We are committed to working with the Ministry of Oil to consider further development opportunities within the oil and gas industry in Iraq.”

More on Iraq’s new oil deal prerogative by Andrew E. Kramer of The New York Times. The only new information for regular Iraq Oil Report readers is confirmation by oil companies that the short term deals were nixed and this from U.S. Senator Charles Schumer: “I’m glad the Iraqis heard our plea that to do this now would be bad for Iraq and bad for Iraqi-American relations,” Senator Schumer said in a telephone interview on Wednesday.

Schumer went on to tow the Bush administration line of demanding Iraq pass a hydrocarbons law, adding he’ll propose legislation that demands profits from any new Iraq oil deals go to reimburse U.S. reconstruction costs in Iraq.

For more on the genesis of congressional opposition to the deals, read the June 25 “Congress pressing Bush to block, reverse Iraq oil deals,” by United Press International’s Ben Lando.

A first-of-its-kind energy conference in Iraq has been postponed to December because of delays in construction of the new convention center, United Press International reports. Organizers of the Iraq Energy Expo and Conference, to be held at the new Baghdad International Airport Convention Center, announced the new dates of Dec. 3 to 5, adding they don’t think the delay will detract from the event.

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

The British Royal Navy entered Iraq’s only deepwater port in Umm Qasr for the first time since the U.S.-led invasion in 2003, UPI reports.

Iraqi Parliament’s Human Rights Commission has found up to 200 malnourished and disease-stricken Iraqi detainees locked in a secret prison in the southern city of Basra, Mohammed Hamdoun reports for Azzaman. The commission’s spokesman, Amer Thamer, said many of the detainees bore signs of torture. He said the prison is operated by the Defense Ministry and none of the inmates has ever been tried or given access to legal assistance. “We put the blame for the horrific conditions of the inmates squarely on the Defense Ministry,” he said.

Iran supports the work of the United Nations toward safeguarding Iraqi sovereignty but calls for a more active role, the Iranian foreign minister said, UPI reports.

Kurdish lawmakers said they wanted reassurance from the United States that F-16s slated for sale to the Iraqi government would not be used against Iraqis, UPI reports.

Officials with the Iraqi Communist Party met with Iraqi Prime Minister Nouri al-Maliki in Baghdad to discuss the long-term security deal with Washington, UPI reports.

The U.S. troop surge in Iraq brought positive security gains but did not ease the underlying turmoil among rival camps in Iraqi politics, UPI reports. An analysis released Wednesday by the research organization Center for American Progress, based in Washington, says the surge of U.S. troops failed in its primary goal of creating a representative Iraqi central government.

Plans by U.S. strategists in Iraq to hand over authority over the Sunni-led force Sons of Iraq to Baghdad stoke concern over the durability of sectarian calm, UPI reports.

Alive in Baghdad: Shanasheel, Iraqi Traditional Architecture

Iraqi society is quite proud of its different types of architecture and design. Their buildings have evolved and taken different shapes over Iraq’s history.

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Plus:
*Iraq announces five long-term oil field/two gas field contracts up for bid
*Iraqi Kurdistan pans Baghdad’s moves
*Iraq Parliament Oil & Gas Committee demands oversight
*KRG explains oil deal breakdown

The U.S. advisers tasked to Iraq’s Oil Ministry were involved to some extent in the negotiated contracts between Iraq and the major international oil companies. U.S. advisers have been assigned to every ministry since 2003, but the oil sector was particularly shadowy and quiet.

Andrew E. Kramer of The New York Times reports a few of the U.S. advisers have told him of their involvement.

In their role as advisers to the Iraqi Oil Ministry, American government lawyers and private-sector consultants provided template contracts and detailed suggestions on drafting the contracts, advisers and a senior State Department official said.

It is unclear how much influence their work had on the ministry’s decisions.

Shell, BP, Chevron, Total, ExxonMobil, BHP Biliton, Dome and Vitol have all been negotiating technical support contracts with the Oil Ministry since late last year. The companies would get paid a set price for a set service: technology, equipment and training. Iraq’s oil sector needs of this, after decades of war, sanctions and Saddam Hussein ruined the once prominent domestic oil industry. And it needs help in making quality deals, as Iraqi experts were thrown out for political and religious affiliation or taken out by the violence.

The deals have not been made public, including their terms and price tag, and until that happens the quality of the return to Iraqis cannot be evaluated thoroughly. Even the details on the oil fields involved – Kirkuk, Rumaila, West Qurna, Zubair, Subba & Luhais and fields in Maysan province – are just now being released. Each field is to increase production by 100,000 barrels per day within the two year contract life, adding to the 2.5 million bpd produced in Iraq currently – a high since 2003.

The U.S. government has claimed it is not connected with negotiations, just offering advice when asked, and says the contracts are private sector matters.

USG policy since 2003, however, has been an advocate of free market and private sector leads in Iraq’s economy.

But Iraq has not concluded, if even conducted, the all important discussion as to what their oil industry should look like. Particularly, what the role of the international oil industry should be. Without that, any oil deals signed – be it by the Kurdistan Regional Government or Baghdad – will be controversial and face claims of illegitimacy, especially if the contracts are negotiated behind closed doors and not in a bidding process, and if the powerful oil unions don’t consent to the program.

Adding in the large oil companies who ran Iraq’s oil sector as their backyard playground in the first 40 years of Iraq’s oil life is another complication.

These deals, and those signed with the KRG, have not set well lately with members of Congress, Ben Lando reported last week for United Press International.

Iraq will offer seven oil and gas fields to international oil company development, Oil Minister Hussain al-Shahristani announced, to be awarded later this year or early next year.

These differ from the technical support contracts, which are limited in time and scope, and were not transparent, though the ministry claims the deals will be made public.

The bidding round, however, is supposedly going to be completely open, though the round of tenders has not been included in the Oil Ministry’s website, where oil sector tenders are usually cataloged.

The fields are Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and the Maysan fields. Maysan comprises three fields, Bazargan, Abu Gharab and Fakka, and the Oil Ministry said they are open to foreign firms for long-term development contracts, Ahmed Rasheed reports for Reuters. Two gas fields, Akkas and Mansuriyah, were also opened.

Taken together, the short-term and long-term contracts will open the door to major international involvement in the OPEC member’s oil sector for the first time in nearly four decades.

The Iraq Petroleum Co., a selection of the world’s largest oil companies from the 1920s through 1960s, had exclusive rights to explore and develop (or not develop, if they saw fit) Iraq, and had control over how much of the funds returned to the country.

The nationalization that began in the early 1960s and was completed a decade later is still considered a proud point in Iraq’s history, and international oil companies and their government supporters are viewed warily at best.

The Iraqi Parliament’s Oil & Gas Committee is demanding it reviews all oil contracts signed in Iraq.

Mustafa al-Hashemi reports for Azzaman the deputy of the committee, Abdul-Hadi al-Hasani, says that without a new oil law, the committee must vet oil deals.

Iraq is moving forward on developing the post-2003 oil sector using regulations remaining from before the war. Although the constitution called for new legislation for the hydrocarbons sector, that draft law has been stuck in political deadlock. The old law gave the Oil Ministry much sway, after Saddam Hussein shut down the Iraq National Oil Corp. in one of his political consolidation moves.

The Kurdistan Regional Government has also signed dozens of negotiated oil deals with international oil companies to explore for and develop oil in its three northern provinces, inluding a handful just last week,and Baghdad has demanded oversight in weak ebbs and flows of statements.

The KRG says the 2005 Constitution authorizes its moves, though Shahristani has called them illegal and the two sides have often butted heads over oil development rights.

For more on the KRG deals, read “Wildcatters in Controversial Northern Iraq Deals Optimistic,” by UPI’s Ben Lando.

Though the KRG has typically kept quiet on the Baghdad oil moves, it has now released a report it commissioned comparing its production sharing contracts with Shahristani’s six technical support deals.

The KRG report called the TSCs “disastrous,” according to a KRG statement.

For the full report by oil legal regime expert Dr Pedro van Meurs, click here for the PDF.

The study said Iraq would lose hundreds of billions of dollars over time due to the PSCs.

The contracts have not been published, but Ashti Hawrami, Iraq’s Kurdistan Regional Government natural resources minister, insists everything needed to know about what’s in the dozens of contracts signed between the KRG and international oil companies is in the public domain.

In a recent interview with United Press International’s Ben Lando from his office in Erbil, the capital of the KRG, Hawrami explained the breakdown of contract ownership by the companies and how much control the government has in the contract.

Spencer Swartz reports for Dow Jones Newswires that recent negotiations in Baghdad over the oil law didn’t make any progress.

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*Big Oil deals with Baghdad are the target
*As are Hunt Oil and other KRG deals signed with U.S. firms
*Plus, Iraq to establish Maysan oil company
*And, Alive in Baghdad

U.S. congressional leaders are pressing the Bush administration to block deals to be signed between the Iraqi federal government and the world’s largest oil companies and to cancel deals between the Iraqi Kurdish region and smaller U.S. oil firms.

Sens. Charles Schumer, D-N.Y., John Kerry, D-Mass., and Claire McCaskill, D-Mo., want the United States to dam negotiations on contracts the senators claim will, in part, further sectarian fighting.

United Press International’s Ben Lando has also obtained a letter from Senate Committee on Armed Services Chairman Carl Levin, D-Mich., to President Bush’s national security adviser Stephen Hadley, asking the administration to press Hunt Oil and other U.S. companies to cancel their oil deals with the Kurdistan Regional Government of Iraq.

The Iraqi Oil Ministry is negotiating two-year, technical support contracts — also being called technical service contracts — with Shell, BP, ExxonMobil, Chevron, Total, BHP Billiton and a consortium led by Anadarko. The deals, the scope and price of which have not been made public, are presumed to be worth $500 million each and provide technology, training and equipment to six key oil fields in Iraq, according to past ministry statements.

Each field would increase production by 100,000 barrels per day. The companies would likely not send any workers to Iraq. Shell, BP, Exxon and Total were part of the Iraq Petroleum Co., which controlled Iraq’s oil sector for decades before being kicked out in the 1960s and 1970s.

“We can confirm that negotiations between Shell and representatives of the Ministry of Oil regarding technical service agreements are ongoing. However, we regard further details as confidential,” said Shell spokesman Adam Newton, adding the company has no comment on the senators’ demands.

“If the Iraqi government decides it wants international oil companies to partner with them in developing their resources, ExxonMobil would be interested in participating,” said Exxon Manager of Upstream Media Relations L.A. D’Eramo. “Consistent with our long-standing global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate. With that noted, at this time it would be premature to discuss specifics about any potential opportunity with Iraq.”

“We have a memorandum of understanding with the Iraqi government whereby we have provided free technical advice,” said Anadarko Manager of External Communications John Christiansen. “However, we do not intend to pursue additional interests at this time.”

The other companies couldn’t be reached or couldn’t provide comments before the article was published.

CLICK HERE for the entire must read article.

From other media:

“Iraq is a sovereign country, and it can make decisions based on how it feels that it wants to move forward in its development of its oil resources,” said White House spokeswoman Dana Perino, Anne Flaherty reports for The Associated Press. “And if that means that our companies here in the United States can compete and win business, then that’s for them and the Iraqis to decide,” Perino added. “But I don’t think the federal government of the United States needs to get involved.”

Iraq’s oil ministry has finished negotiations with oil majors on six short-term oil service contracts and hopes to sign the deals during the next month, Ahmed Rasheed reports for Reuters.

Iraq’s Cabinet has decided to establish a new oil state-owned company to manage and develop massive oil and gas resources in the southern oil-rich province of Maysan, the oil minister said Tuesday, AP reports. The announcement was made as government forces are cracking down on Shiite militias in the Maysan capital of Amarah, promising to boost the quality of life there now that the gunmen no longer rule the streets. Oil Minister Hussain al-Shahristani said the Maysan Oil and Gas Commission would be split off from the Basra-based Southern Oil Company and reorganized as an independent company.

Alive in Baghdad: Brigadier General Discusses Triangle of Death