Top Energy Stories

The Oil Ministry is moving to shift some of the financial burden associated with its OPEC-related production cuts onto international oil companies. Under the current contract structure, IOCs must be compensated for unused production capacity when the government orders cuts. But under its new plan, the ministry would scale back its obligations. Several industry officials told Iraq Oil Report the details of the plan and predicted it would become a point of friction between the ministry and oil companies. The ministry's apparent willingness to contravene key contract provisions could also send a chilling message to prospective energy sector investors at a time when Iraq needs billions of dollars' worth of foreign financing for projects to boost domestic gas, electricity, and fuel supplies. Read the full story here.

Khalid Hamza Abbas is the new leader of the Basra Oil Company. Oil Minister Ihsan Ismaeel elevated Abbas from assistant director general to acting director general as part of a reshuffle of senior leadership positions in the Oil Ministry and its subsidiaries, which also included changes at the Iraq Drilling Company and the Oil Ministry Training Directorate. The moves come after Ismaeel appointed himself president of the yet-to-be-re-established Iraqi National Oil Company, which would operate separately from the Oil Ministry and be in charge of all state-owned companies. Read about all the key leadership changes here.

Oil traders are reporting a sharp increase in Iraqi oil exports scheduled for October, according to Bloomberg. The increase in spot cargoes is another data point suggesting Iraq is increasing production and exports, despite pressure from OPEC to make further cuts in compensation for breaking quota in May, June, and July. Although Iraqi exports continued a downward trend in August, production actually began to rebound by 160,000 bpd, according to an Iraq Oil Report analysis based on data gathered from the country's producing fields. If and when those increasing volumes begin to result in higher exports, the market is likely to take notice — and that attention could also bring unwelcome scrutiny from OPEC members, led by Saudi Arabia, determined to enforce full compliance.

National News

The U.S. has halved the length of its latest sanctions waiver granted to Iraq. Back in May, when Mustafa al-Kadhimi became prime minister, the Trump administration signaled its approval by granting a 120-day waiver, enabling Iraq to continue importing Iranian gas and electricity without triggering disastrous economic penalties. After a successful White House visit in August, many Iraqi leaders anticipated a quick renewal. But the new waiver granted this week will be valid for just 60 days. The shorter duration reflects the Trump administration's desire to retain leverage in promoting prospective energy deals with American companies, as well as rising anger over persistent rocket attacks on the U.S. Embassy in Baghdad and roadside bombings against convoys supplying U.S. military positions around Iraq. Read the full story here.

Kadhimi's honeymoon with the U.S. is ending. The shorter waiver is one sign. Another sign came in the form of a confrontational phone call between U.S. Secretary of State Mike Pompeo and Iraqi President Barham Salih, in which Pompeo reportedly voiced his displeasure over the unabated attacks, threatening to close the U.S. Embassy in Baghdad and take direct military action against Iran-backed paramilitary groups. The call caused a stir in Baghdad. Falah Fayyadh, the head of the al-Hashid al-Shabi (Popular Mobilization) commission, issued a statement against paramilitary groups targeting U.S. positions and ordered some high-profile leadership shakeups. Hadi al-Amri, the head of the Badr Organization, also condemned the attacks. While Pompeo's threats have spurred some action, Michael Knights of the Washington Institute warns that the U.S. should avoid a diplomatic nuclear option with Baghdad. "Shuttering the embassy is the exact outcome that every Iran-backed militia dreams of achieving," Knights writes. "It would be a propaganda victory of epic proportions for Tehran and its proxies, undercutting all of the progress achieved in Iraq since Soleimani and Muhandis were killed." Instead, Knights advocates for the U.S. to help Kadhimi launch a campaign to remove paramilitary groups from the International Zone — an incremental but meaningful step to reduce their influence in the capital.

Insurgents from the self-proclaimed Islamic State (IS) group are still exploiting a security vacuum in northern Iraq, finding safe haven in the gaps between areas controlled by the federal government and the semi-autonomous Kurdistan Regional Government (KRG). In more than a dozen interviews with security officials, Iraq Oil Report found the Iraqi Army and Kurdish Peshmerga still cannot agree on mechanisms for coordinating their security operations. What’s more, tensions are rising between Peshmerga and Hashid paramilitaries in Diyala province. Read the full story here.

As the secretary general of the KRG Ministry of Peshmerga, Jabar Yawar has grappled with such rivalries for years. In an interview with Iraq Oil Report, Yawar spoke about the ebb and flow of security coordination with federal forces over the past decade, as well as the politicized structures that prevent cohesion within Kurdistan's security apparatus. He also talked about which areas of Iraq are currently most vulnerable to insurgent attacks. Read the full interview here.

Iraq has joined the COVAX alliance. The initiative, co-organized by the WHO, an international vaccine alliance known as Gavi, and the Coalition for Epidemic Preparednes Innovations (CEPI), aims to ensure fair procurement of a future COVID-19 vaccine between richer and poorer nations. By participating, Iraq is guaranteed access to enough doses of a coronavirus vaccine — whenever it might become available — to inoculate 20 percent of its population. In the meantime, people are becoming infected and dying at alarming rates: on Friday, Iraq reported 4,593 new daily cases, with 22 percent of tests coming back positive. In total, 8,867 people have died. Read the full story here.

Iraqi medics are suffering acutely during the pandemic. Not only do they work in a crippled healthcare system, but now some families of coronavirus victims are blaming doctors and nurses. Attacks on health care workers are increasing, reports Amina Ismail for Reuters. According to the Iraqi Medical Association, they are suffering verbal and physical abuse, and even stabbings. "All the doctors are scared. Every time a patient dies, we all hold our breath,” the 47-year-old director of Al-Amal Hospital in the southern city of Najaf said, after he was physically assaulted by relatives of a COVID-19 victim. With doctors also succumbing to the disease and Iraq’s financial crisis meaning new medical greaduates aren’t being hired into the public health system, many doctors are frequently working 12 to 16 hour shifts, meaning they are more likely to make mistakes in prescriptions and treatment.

Interview of the Week

Ala Talabani, a member of the federal Parliament from the Patriotic Union of Kurdistan (PUK) political party, says residents of Iraq's semi-autonomous Kurdistan region are losing patience with their leaders over failures to pay public-sector employees. In a Sept. 19 interview with state-run Iraqiya TV, Talabani said the KRG had "made a mistake" in recent years by believing it could achieve economic independence via its oil revenues and forego budget support from Baghdad. At the same time, Talabani also suggested that KRG leaders have been too soft in their approach to negotiating with Baghdad:

The question being asked by the Kurdish citizen — we in the parties don't seem as if we are sharing in the problems of the simple citizen — the foremost of which is the simple right to receive a salary. I work 30 days, or maybe now less [because of coronavirus] — why don't I receive my salary? Or, why do I receive it cut by 20 percent? Now they are talking about 40 percent, even.... When a regular citizen asks this question, I need to give them an answer. The question — and it's in our minds, too — is: where's the problem? How many governments in the federal system have we participated in? We've had a president, a deputy prime minister, a deputy speaker of Parliament, a minister of finance, and sometimes we've had critical influence, in determining whether this or that prime minister would or would not go, or who would be appointed prime minister. The decision was up to the Kurds. The Kurds are important in the equation. But at the same time, we complain that we have issues with Baghdad. Outstanding issues, whose resolution has been long delayed.... We've reached the point where, is the problem in the person? In their performance? Or in the laws and the constitution, and the loopholes in the constitution that let everyone interpret the constitution as they like with regards to budgets and revenues and the like? Or is the problem that we've been too nice? Yes, we've been too nice.

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