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Iraqi oil production jumped by over 100,000 barrels per day (bpd) in February, pushing the country further from OPEC expectations. Nationwide output averaged 4.15 million bpd, up from 4.03 million bpd in January, according to an Iraq Oil Report analysis based on data collected from each producing field in both federal Iraq and the Kurdistan region. The country is still producing nearly 1 million bpd below its historical peak rate of production, and the Oil Ministry is making moves to bring more capacity online. For more details on which fields are surging, read the full story on Iraq Oil Report.

Do you need data? Iraq Oil Report collects hundreds of data points every month covering field-by-field oil production, northern and southern oil exports, refined fuel, electricity, government spending, and more. Click here for a free sample of the Iraq Oil and Financial Dataset.

Kirkuk's strategic importance in Iraq comes from both its huge oil reserves and the composition of its population, which consists of several different ethno-sectarian identity groups. These factors have made for a combustible geography. In the past, insurgents and militant groups have sought to exploit territorial disputes, unresolved historical grievances, and mistrust by perpetrating violence and reducing confidence in the ability of the state to provide security and resolve problems through a fair political process. In the aftermath of the war against the self-proclaimed Islamic State (IS) militant group, the security challenges have continued: insurgents have been able to hide in rugged terrain; some locals in remote areas have been intimidated or coerced into collaboration or silence; and security forces have not had the manpower or the coordination required to establish a deterrent presence in territories where unresolved political disputes have left contested boundaries of control. As the head of the Kirkuk Joint Operations Command (JOC), Lt. Gen. Saad Ali Aati al-Harbiya has been responsible for overseeing security in the province — until last week, when he was transferred to the Joint Operations Command in Baghdad. Days prior to his reassignment, he spoke with Iraq Oil Report in Kirkuk about the ongoing efforts of Iraqi security forces to fight insurgents, improve coordination among rival security services, and win the trust of locals. Read the full interview here.

Fitch has revised its outlook on Iraq’s long-term foreign currency issuer default rating (IDR) to Stable from Negative, and affirmed the IDR at "B-minus," according to a March 24 update. The change came after a smaller than expected decline in foreign reserves, and higher oil prices. The update from Fitch made clear that policymaking in Iraq remains "hamstrung by political-economic dynamics" but said that the dinar devaluation and white paper on economic reforms had indicated some potential for measures to put Iraq on a more sustainable financial footing. The rating is constrained by commodity dependence, weak governance, high political risk, and an undeveloped banking sector, said the company; but the new, more optimistic rating is also supported by the high level of foreign currency reserves and low interest on government debt. Fitch puts the forecasted budget deficit at 5 percent of GDP in 2021, down from 16.5 percent of GDP in 2020.

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.

International News

The U.S. and Iraq will hold "strategic dialogue" talks in April to clarify the future role of the U.S.-led anti-IS coalition in Iraq, according to Reuters. White House Press Secretary Jen Psaki said in a statement that "the meetings will further clarify that coalition forces are in Iraq solely for the purpose of training and advising Iraqi forces to ensure that ISIS cannot reconstitute." Psaki also said that the dialogue will be an opportunity to discuss "our mutual interests across a range of fields from security to culture, trade, and climate." To the extent that U.S. President Joe Biden's team will begin to pivot from the previous administration's Iraq policy, any changes are likely to become more clear during the course of the upcoming dialogue.

Iranian proxy power is declining in Iraq. So says The Economist, reporting on a perceived change in public sentiment in Iraq: whereas Iran was a steadfast protector during the IS war, now many Iraqis see it as a would-be occupying power. One sign of this shift is Prime Minister Mustafa al-Kadhimi's push against Iranian political influence, including complying with U.S. sanctions against Iran (even if he has also shied away from direct confrontations with Iran-backed armed groups). The report also notes that Iran-backed armed groups, while still prominent, have lowered their profile and are splintering without the guidance of Iranian Gen. Qassim Soleimani. Such developments are real and consequential. But the report also appears to make an assumption that the most recent ebb in Iranian influence signals that the tide might keep on receding. In fact, Iran's sway in Baghdad comes from its economic influence as a trading partner, its geostrategic importance as a regional power with a shared border, and the vacuum created by the corruption and dysfunction of the Iraqi political class. As long as these factors continue to exist, Iran is likely to prove resilient in Iraq — a useful ally to some, and an overbearing neighbor to others.

More National News

Hospitals are witnessing a new wave of the pandemic. In an op-ed for The Independent, MSF's project coordinator in Baghdad, Omar Ebeid, writes about how the pain of the second wave of Covid-19 is hidden from people who crowd the streets in Baghdad. Almost half of the critical and severe patients admitted to the MSF hospital were admitted in the last month alone, and new cases are now reaching 5,000 per day. 'To cope with the influx we have expanded [our hospital] from 36 beds to 51, but the mortality rate remains frightening. On a single day recently, despite the best efforts of our team, seven patients died," he writes. The first peak of the pandemic lasted from July to November, and the number of cases only briefly went down in December and January before rising again from February, according to MSF. Ebeid says the current, limited supply of vaccines is "totally inadequate." He writes that more needs to be done to get vaccines into arms, and that Iraq should be considered a priority globally for vaccination efforts.

Iraq received 336,000 doses of the AstraZeneca covid-19 vaccine, according to the Ministry of Health. The doses arrived via the COVAX facility, designed to provide equitable access to vaccines across the globe, writes Holly Johnston for Rudaw. The arrival is the second vaccine delivery following 50,000 Sinopharm vaccines donated to Iraq by China. A UNICEF and WHO statement said the AstraZeneca doses were due at the end of February but arrived later than expected due to production delays and global vaccine shortages. Health Minister Hassan al-Tamimi said the doses will go to health facilities in Baghdad and the Kurdistan region. The ministry also said that Iraq has signed a deal with Pfizer for 1.5 million vaccines, and that a further COVAX consignment is expected.

Saddam-era laws are being used to silence government critics. Ibrahim al-Sumeidi was arrested at his house after criticizing politicians over revisions to the Supreme Court law in a private online conversation that was later published, according to Ammar Karim, reporting for AFP. Sumeidi, who was released on Sunday by a Baghdad court, faces charges of insulting state institutions based on the 1969 penal code and could face as much as seven years in prison. He is also facing accusations of defamation from the Defense Ministry. The head of the Journalistic Freedoms Observatory, Ziad Ajelli, told AFP that the laws of the former regime should be repealed. Following Sumeidi’s arrest, politician Ammar al-Hakim wrote online that "opinion-makers are facing assassinations, arrest, and abductions aimed at silencing them."

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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