Energy and Economic News

Ali Allawi, Iraq's deputy prime minister and finance minister, sat down for an interview with Iraq Oil Report this week. On the oil sector, he gave insight into Iraq's future OPEC strategy, and he expressed uncertainty about the fate of a recent deal to take advance payment from Chinese company ZhenHua in exchange for future oil exports. On the gas sector, he spoke about the future of the Ratawi gas project and potential investment in the Mansuriya and Akkas fields. Speaking to the broader economic picture, he gave a preview of a detailed roadmap the Finance Ministry will soon release as a follow-up to last year's "white paper" on economic reforms. And he discussed the government's efforts to reach an agreement with the semi-autonomous Kurdistan region over the 2021 federal budget. Read the full transcript of the interview on Iraq Oil Report.

Iraq's oil revenues hit a 10-month high in January. Nationwide oil exports declined slightly, from 3.304 million barrels per day (bpd) in December to 3.266 million bpd in January, but oil prices continued to climb. The federal government's average sale price has risen steadily from $41.89 per barrel in November to $47.765 in December to $53.294 last month. Federal oil revenues in January were $4.739 billion, the highest since last February. Read the full story on Iraq Oil Report. And to see detailed data on Iraq's monthly exports, crude grade pricing, field-by-field production, and more, check out the Iraq Oil and Financial Dataset.

Iraq owes major "compensation cuts" to OPEC. The organization's Joint Ministerial Monitoring Committee met this week to take stock of oil markets and the relative compliance of member countries to their quota pledges. Their verdict? Iraq over-produced by a cumulative 626,000 bpd from May to December 2020, according to JMMC data obtained by Herman Wang, reporting for Platts. To make up for it, OPEC now expects Iraq to reduce production further below its nominal quota in 2021, which stands at 3.857 million bpd in the first quarter. (The group is scheduled to meet in early March to decide on potential quota adjustments for the coming months.) Iraq's State Oil Marketing Organization (SOMO) said the country's January output was 3.807 million bpd — 50,000 bpd below quota — which would mean Iraq now owes 576,000 bpd in compensation cuts. Saudi Energy Minister Prince Abdulaziz bin Salman reportedly called out Iraq for its slow progress in addressing its backlog of compensation cuts, saying, "I also hope that Iraq will finish this procedure soon and we will organize a big celebration on this occasion."

Iraq's OPEC cuts could become a domestic political liability. In an interview with the state-backed al-Iraqiya channel, Parliament Finance Committee Chairman Haitham al-Jibouri criticized Prime Minister Mustafa al-Kadhimi's government for being "very negligent when it comes to using its foreign diplomatic relations to restore Iraq’s share" of OPEC production. Echoing points that have also been made by Finance Minister Allawi, Jibouri argued that it's unfair to expect all OPEC members to make output cuts at the same rate, because those reductions will be more harmful to some than others. "Iraq has had to deal with IS and with a strangling financial crisis. Just as Iraq defended the whole world when it came to IS, so the whole world should stand today with Iraq when it comes to these economic circumstances." Jibouri, who belongs to former Prime Minister Nouri al-Maliki’s State of Law Coalition, said that Parliament will add an item to the 2021 budget law "requiring" the government to exert diplomatic efforts to increase Iraq’s quota. The upshot is that, in addition to the direct economic costs, Iraq's efforts at OEPC compliance may be leaving the government vulnerable to demagogic politicians who are trying to manipulate the issue to score populist points — even though OPEC's strategy has helped prices rebound and fueled a surge in oil revenue for its members, including Iraq.

How To Transport Personnel in a Pandemic

A message from FronteraSky:

IOCs and oil service companies need smart, integrated transportation and logistics support now more than ever. FronteraSky has years of experience operating in Iraq, offering a full range of transportation services:

• immigration services;
• work permits, blood tests, security clearances;
• arranging private air transport and charter flights;
• managing every step of covid-19 compliance, from safe
  quarantine to testing;
• medical evacuations.

Whether you are flying to Baghdad, Erbil, Basra, or military installations in Iraq, FronteraSky will make transportation efficient, comfortable, and safe. To learn more about how they can help you, e-mail them at info@fronterasky.com.

And to hear directly from FronteraSky President Carlos Barbosa, read his interview with Iraq Oil Report.

The Aftershocks of the Islamic State

The ramifications of Iraq's war against the self-proclaimed Islamic State (IS) militant group continue to be felt. More than three years after Iraq claimed victory on the battlefield, the country is still contending with both a lingering insurgency and the legacy of violence, loss, and trauma from the war.

Thousands of insurgents continue to threaten Iraq. To root them out, security officials told the Washington Post’s Louisa Loveluck and Mustafa Salim, Iraq still needs intelligence support and training from the U.S.-led coalition. Counterterrorism forces said they have arrested around 350 militants in the past six months during night-time raids and military engagements. The remaining IS fighters are mostly exploiting security gaps in rural areas and launching small-scale attacks, such as targeting power lines or ambushing the Iraqi forces hunting them.

Iraqis mourned some of the victims of the IS group's genocide against Yezidis. A funeral ceremony was held in Baghdad on Feb. 4 for 104 Yezidis killed by IS in 2014, writes Mirza Dinnayi for Al Monitor. The remains were excavated from one of the many mass grave sites surrounding Sinjar Mountain in Iraq’s northwestern Ninewa province. Prime Minister Kadhemi and Iraqi President Barham Salih attended the ceremony in Baghdad alongside diplomats, activists, and survivors and their families. The victims honored at the ceremony were killed by IS in the village of Kojo on Aug. 15, 2014, in one of the IS group's largest and most brutal mass killings.

Iraq seems to be back-tracking on initial plans to close IDP camps across the country. According to Farid Abdulwahed and Samya Kullab, reporting for AP, residents of camps for internally displaced persons (IDPs) are getting mixed signals from the government. Late last year, the government indicated it would close many camps, drawing condemnation from aid groups who criticized the poor planning and preparation and outcry from displaced families who said they were being forced to return to destroyed homes, or would face threats from vengeful tribes. But now Minister for Migration and Displacement Faeq Jabro is reportedly saying there were never any orders to close certain camps, contrary to a letter issued by the ministry’s Ninewa directorate and seen by the AP. As of mid-January, the Jedah 5 camp housed 8,800 people.

Oil Companies Face New Regulatory Hurdles

A message from New Frontiers:

International oil companies, oil service companies, and other contractors in Iraq face a major new compliance challenge. The oil sector has long enjoyed a de facto exemption from some Iraqi regulations, including Ministry of Labor requirements associated with social security and work permits. But in September 2020, the government started enforcing the rules on foreign oil contractors. If they don't comply, companies risk severe consequences — including payment delays, visa problems, and exclusion from tenders.

To learn more about these latest challenges, Iraq Oil Report spoke with Steve Rahola and Mustafa al-Janabi, two key leaders of New Frontiers Business Consulting. For more than a decade, New Frontiers — which is also known by its Kurdish-language name, Asteki Nwe — has been on the ground navigating Iraq's bureaucracy, gaining the experience and relationships necessary to help foreign companies. Read the full interview here.

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