Iraq lures investors to boost its oil output as OPEC debates cuts

 

By Dmitry Zhdannikov, Ahmed Rasheed and Ahmad Ghaddar | LONDON/BEIRUT

As OPEC gathers in Vienna next month to consider cutting its oil output, a lower profile event in Baghdad on the same day will signal Iraq’s longer term ambition to do precisely the opposite.

Nov. 30 is both the date when OPEC ministers meet in the Austrian capital and the deadline set by Iraqi oil minister Jabar Ali al-Luaibi for international firms to submit bids to help it develop 12 “small and medium-sized” oil fields.

Crude output in Iraq, OPEC’s second largest producer, is already rising dramatically despite corruption, poor infrastructure and the fight against Islamic State. This is complicating OPEC’s efforts to revive prices by making its first output cut since the 2008 global financial crisis.

 

Ministers from the Organization of the Petroleum Exporting Countries are supposed to decide in Vienna which member states will make the cuts under an outline agreement struck last month.

Iraq says it will not reduce output because it needs oil money to combat Islamic State, and Prime Minister Haider al-Abadi offered strictly limited support on Tuesday. “We are prepared to cooperate on the correct basis,” he said. “We want oil prices to increase.”

At around $50 a barrel, crude prices are less than half their levels in mid-2014 and OPEC is seeking a production deal that will last at least six months.

Developing the 12 Iraqi oil fields, which lie in southern and central areas away from Islamic State strongholds, will take longer than that. Nevertheless, fellow OPEC members and rivals need read no further than the terms of the new tender to understand Baghdad’s intentions.

The tender document sets quick output gains as the main requirement to win the contracts. Baghdad also wants maximum revenue, including from selling gas produced as a by-product of the crude extraction, rather than simply burning it off.

After achieving commercial production in the first phase of development, the Oil Ministry’s document says, “in the second phase, the sustainable high production level will be achieved, along with complete utilization of associated gas”.

With oil reserves of 143 billion barrels, Iraq controls almost every tenth barrel of oil in the ground in the world.

Aside from security problems, its crude is as cheap and easy to extract as in Saudi Arabia or Iran, but its energy industry suffered decades of under-investment under Saddam Hussein who was overthrown by a U.S.-led invasion in 2003.

Since then Iraq has signed deals with majors such as Exxon Mobil (XOM.N), BP (BP.L) and Royal Dutch Shell (RDSa.L) to develop its giant fields. Production has almost doubled to 4.7 million barrels per day this year from 2.4 million bpd at the start of the decade.

But the growth has lagged the initial forecasts of production at 9 million bpd by 2018, equal to Saudi Arabia’s. Held back by red tape, infrastructure constraints and difficult contract terms, Iraq is now targeting a more modest 5.5 million to 6 million bpd by 2020.

The oil ministry is in a hurry. “Luaibi’s plan is to boost production as quickly as possible to mitigate damage from lower prices, generate more revenues and have additional crude to repay contractors. This is the best way to keep everybody happy,” a senior official with state-run South Oil Co said.

Another reason for the push to develop smaller fields is that talks with the majors on revising their contracts for operating the giant fields in southern Iraq have stalled. “We can’t just waste time and run round in circles with these tough talks,” said the official, who declined to be named.

Under service contracts awarded since 2003, the oil ministry pays the operators a fixed dollar-denominated fee for every barrel of oil produced. While the model worked well for Baghdad when prices were high, it is now paying the same fees while its revenue from oil sales is significantly lower.

NEW CONTRACT MODEL

An executive from a company bidding for one of the new contracts said that Luaibi wants to leave his mark “by ramping up production quickly”.

Iraq has already pre-qualified 19 companies for the round including giants such as Glencore (GLEN.L), Russia’s Rosneft (ROSN.MM) and the UAE’s Mubadala Oil.

The fields might be small or midsize by Iraqi standards, but they are significant by anybody else’s. Nine of the fields together hold 2.3 billion barrels, equal to the entire reserves of Britain, which currently produces around 1 million bpd.

The new tenders also signal a departure from existing technical service contracts (TSCs), under which some oil producers complained of late payments by Baghdad.

“Luaibi wants to tear apart old contracts and make them work better for Iraq and oil firms. He is telling oil firms: keep investing – we will find a way to pay you,” one of the executives involved in bidding said.

New deals will be awarded based on bilateral and direct negotiations between the oil ministry and oil companies, moving closer to production sharing contracts (PSCs), when companies get a percentage of the oil output instead of being paid a fee for their work.

Their structures are likely to vary, reflecting the differing geologies of the various fields and consequently differing methods of extracting the crude.

“In a country like Iraq with so much diversity in the oil fields, it’s impossible to have one contract system. This is an evolution towards a hybrid Iraqi contract model combining elements of TSC and PSC,” managing director of UAE-based Manaar Energy Group Jaafar Altaie said.

CLAWING BACK MARKET SHARE

Iraq has long said it believes it was cut out of the market in the 1990s, when the government of Saddam Hussein was under international sanctions, and hence it has lost its market share to rival OPEC producer Saudi Arabia.

Officials say that as Iraq tries to retake its second city of Mosul from Islamic State, it should get the same exemptions from OPEC output restrictions as Iran, Nigeria and Libya, whose crude production has been hit by conflict and sanctions.

“We are fighting a vicious war,” Luaibi said this week.

Veteran oil watcher and founder of Petromatrix consultancy, Oliver Jakob, says a third of OPEC’s member states are now pleading special circumstances for why they should not accept output caps. As a result, Jakob has come up with a new way of spelling out the OPEC acronym: the Organisation of Producers Exempt from Cuts.

(Writing by Dmitry Zhdannikov and Ahmad Ghaddar; editing by David Stam

http://www.reuters.com/article/us-iraq-oil-idUSKCN12Q1YY

Iraqi priests resurrect cross in Christian town nearly recaptured from ISIL

 

Iraqi priests resurrect cross in Christian town nearly recaptured from ISIL
Father Amar and Father Majid erect a cross – with the help of Christian militiamen – on the roof of the heavily damaged Church of the Immaculate Conception in Qaraqosh, Iraq, on October 25, 2016. Florian Neuhof for The National

October 26, 2016

QARAQOSH // Iraqi army Humvees roar through the arid plains of Nineveh province, kicking up immense clouds of dust as they follow the dirt track that winds its way to the front. Among the rugged war machines is a white SUV, which seems in a particular hurry to reach its destination.

In the car sit two priests, dressed all in black and wearing clerical collars, and a few men clad in army fatigues, clutching old Kalashnikovs. They are on their way to Qaraqosh, Iraq’s largest Christian town, where the Iraqi army is fighting to expel the last ISIL fighters.

Qaraqosh fell to ISIL in August 2014, shortly after the insurgents shocked the world by taking control of nearby Mosul. With the operation to liberate Mosul and end ISIL’s reign in Iraq well under way, the areas surrounding the northern city are slowly being reclaimed by the army and the Kurdish Peshmerga. Amongst them is Qaraqosh, whose 50,000 inhabitants fled to Iraq’s autonomous Kurdish region when the extremists seized the town.

Qaraqosh has not been fully secured yet. The insurgents are still holding on to some of the outskirts. Sniper fire and mortar rounds continue to harass the Iraqi soldiers and even the threat of suicide car bombers has not been banished.

But this has not deterred Father Amar and Father Majid, who both hail from Qaraqosh, from returning to their hometown. After navigating the gently rolling plains, the convoy reaches the town’s fringes, where it passes tanks and Humvees of the 9th Armoured Division, and pulls up next to an abandoned hospital.

ISIL has ransacked the building, taking all of its surgical equipment and even stripping the computers of their memory chips. Part of the complex has been destroyed by a fire and a discarded police uniform lies at the entrance of the guard room, suggesting a tale of panicked escape as the militants closed in.

The priests are visibly shocked by the destruction around them.

“This hospital served the people from more than fifty villages. Hundreds of people came here every day. Now you can see what happened,” says Father Amar, clearly struggling to keep his composure.

The convoy continues, rolling past facades scarred by bullet holes and punctured by tank shells. On the broad road leading into town, an engine block and mangled car frame lie not far from the shattered hull of a Humvee. According to Iraqi high command, ISIL has already launched well over a hundred car bombs at the Iraqi and Kurdish forces in its desperate defence of Mosul. Some of them detonated in Qaraqosh where 18 soldiers have been killed in the fighting and around 80 wounded, according to Major Mohammed, who heads the field hospital behind the front line.

A large structure moves into focus on the left: the Church of the Immaculate Conception is the biggest in Qaraqosh, drawing in 3,000 people for Sunday mass before ISIL came to town, according to Father Amar.

The extremists seem to have taken pleasure in desecrating the holy site: wooden rows of seats have been tossed over, the mezzanine floor housing the organ has been torched, and the altar and interior walls are charred. ISIL graffiti is scrawled on the columns supporting the cental part of the building known as the nave.

“It is a big shock to see it this destroyed. I cried,” Father Amar says after taking in some of the damage.

In the courtyard of the administrative complex behind the church stand mannequins set up by ISIL for target practice. Thee walls on all four sides have been sprayed with bullets, and spent cartridges litter the floor. The insurgents used the church to store weapons and ammunition, says Major Fuad Jassem of the 9th Division.

 http://www.thenational.ae/world/middle-east/iraqi-priests-resurrect-cross-in-christian-town-nearly-recaptured-from-isil?utm_source=twitterfeed&utm_medium=twitter

Council of Nineveh: 73 brigade arrived just 4 km from the center of Mosul in and he and 7 km Ptlkev

 

a wish

Since 10/26/2016 18:57 pm (Baghdad time)

Special – balances News

Confirmed the Nineveh provincial council member Luqman Rashidi, Wednesday, that the security forces imposed a security cordon to spend Tilkaif fully in the northern axis, noting that after the liberation of 7 km band separating 16 from the nearest to the center of Mosul neighborhood and 4 km axis and that.

He said Rashidi, L / balance News / “The Brigade 73 in the band 16 managed to besiege spend Tilkaif fully and imposing tight security cordon while able to edit the Elimination surrounding villages.”

He added that “the security forces in the band 16 are now working to break into Tilkaif in the coming hours,” noting that “the security forces will be at 7 km from Mosul, Tall Afar after the liberation.”

He explained Rashidi, said that “Brigade 73 in the band 16 at the center and it’s within the southern axis away from Almasal center 4 km”, pointing out that the Peshmerga will stop when he Tilkaif with Brigade 73 will storm the connector from the northern axis. ”

Media announced military cell, today, edit village “row Aromated” south of Mosul from the control of the organization Daesh Alarhabiy.anthy 29/33 h

http://www.mawazin.net/%D9%85%D8%AC%D9%84%D8%B3-%D9%86%D9%8A%D9%86%D9%88%D9%89-%D9%84%D9%88%D8%A7-73-%D9%88%D8%B5%D9%84-%D8%B9%D9%84%D9%89-%D8%A8%D8%B9%D8%AF-4%D9%83%D9%85-%D8%B9%D9%86-%D9%85%D8%B1%D9%83%D8%B2-%D8%A7%D9%84%D9%85%D9%88%D8%B5%D9%84-%D9%81%D9%8A-%D9%88%D8%A7%D9%86%D9%87-%D9%887%D9%83%D9%85-%D8%A8%D8%AA%D9%84%D9%83%D9%8A%D9%81

 

 

Warning Daesh from the use of chemical weapons in Mosul, the US military commander confirms that the battle will be short

 

Wednesday, October 26, 2016 19:45
Warning Daesh from the use of chemical weapons in Mosul, the US military commander confirms that the battle will be short

BAGHDAD / Uz..cd Baghdadi, spokesman for the International Alliance Against Daesh in Iraq, Maj. Chris Parker, on Wednesday, that the resistance Daesh getting stronger the closer the fighting in Mosul, while UN official warned Daesh use of chemical weapons in the battle.

 

Parker said in a statement, according to the transportation agency Reuters, that “the resistance Daesh getting stronger, the more the Iraqi forces advanced from Mosul.”

While Liz Grandi, coordinator of the United Nations Humanitarian Coordinator in Iraq, said that “it is possible occurrence of a mass exodus, possibly within the next few days,” she said. “It is, at worst, it is likely to seek Daesh to the use of chemical weapons primitive to deal with the attack expected to Mosul.” .

While stressing the commander of US forces in Iraq, Gen. Stephen Townsend, said that “Iraqi forces are advancing on several fronts towards the local city of Mosul, capital of Nineveh province to release it from the grip of the terrorist organization Daesh.”

Townsend said, “The battle of Mosul will be shorter than the battle to liberate the Syrian tenderness from the control of the militant group” .anthy 21 / m

http://albaghdadianews.com/security/item/103606-bGdnE-Ll-AYObgDAL-DAIyo-AYOkG%D8%A9-KnLnANn%D8%A9-Jn-AkLNZHk-NjASD-AkjNAb-AkALEnKn%D8%A9-nTKD-BAl-AkLIEK%D8%A9-YObKNl-jZHnE%D8%A9.html

 

 

Allawi: Maliki and Najafi have returned to their posts as Vice-President of the Republic

 

Wednesday, October 26, 2016 15:37
Allawi: Maliki and Najafi have returned to their posts as Vice-President of the Republic

BAGHDAD / Baghdadi Uz..cd president of the National Coalition, Iyad Allawi, on Wednesday, the return of Nuri al-Maliki and Osama al-Nujaifi to their positions as Vice-President of the Republic.

 

Allawi said in a televised interview I followed / Baghdadi News /, that “al-Maliki and Najafi have returned to their posts as Vice-President of the Republic,” noting that “will resolve his decision to return to office after a meeting with President of the Republic will collect Fuad Masum on Thursday.”

It is said that the Federal Court considered the decision to sack the Vice President of the Republic is unconstitutional.

The Prime Minister Haider al-Abadi issued a decision in the past to sack Deputy Prime Algmehorah.anthy 21 / m

Last modified on Wednesday, October 26,2016 15:55

 

A meeting of defense ministers of Turkey, America and France in Brussels

 

 

Turkey
By Roudao 22 minutes ago
مقر الناتو في بروكسل
NATO headquarters in Brussels

Roudao – Erbil

Turkish Defense Minister Fikri Ahiq met in Brussels on Wednesday, with US counterparts Ashton Carter and Frenchman JeanYves Le Dorian, to discuss the latest developments with regard to combating Daesh organization in Syria and Iraq.

The Ahiq arrived in Brussels this morning to participate in the meeting of defense ministers of NATO countries (NATO) to be held in Brussels, where he began his meetings to meet with NATO Secretary General Jens Stoltenberg at the NATO headquarters, before meeting the American and French counterparts.

It was the tripartite meeting between the ministers away from the lenses of journalists, according to the information it has been “talking during the meeting, the focus is the fight against al-Daesh in Syria and Iraq.”

Trilateral meeting continued between the defense ministers of Turkey and the United States of America, France, for an hour, without a formal statement on the substance of the talks that took place between them.

https://translate.googleusercontent.com/translate_c?depth=1&hl=en&prev=search&rurl=translate.google.com&sl=ar&u=http://www.faceiraq.net/inews.php%3Fid%3D5183938&usg=ALkJrhhjKrZlso04ec9_pyqMYh9qWmPF-Q

Economic Council propose to parliament the federal budget amendment

 

History of edits:: 26.10.2016 17:1329 visits readable
[Where-Baghdad]
feet Economic Council, a proposed amendment to the draft federal budget for 2017 Act, to the House of Representatives.
The head of the Economic Council , Ibrahim al – Masoudi in a statement received by all of Iraq [where] a copy of it on Wednesday, said that “because of the necessity and the urgency to maximize resources and provide jobs for the purpose of encouraging and supporting the national industry, so we propose to amend Article 36 and 28 of the federal budget for the year Law 2017. ”
He continued Masoudi, that” the amendment includes a paragraph secondly added to Article 36 which, as an exception and what is mentioned in the first exempted from fees of raw materials and imported components by the general productive sector companies which are contained in its name and its use exclusively in the production processes. ”
He added, that” the amendment includes, adding the phrase [any domestic product] on Article 28 to be as follows, abide by federal ministries and provinces and departments not associated with the Ministry to buy their requirements from the federal ministries products [Wi domestic product]. ”
He stressed that” not less than the value added of these bundled products and processed for [25%] of the cost of import value added to them and to not be a local product prices higher than imported counterparts by more than [10%] , taking into account the quality specifications and quality. ”

Jihadists ‘shave beards’ as pressure builds on Mosul

 

Tens of thousands of Iraqi fighters have been advancing on Mosul from the south, east and north after an offensive was launched on October 17 to retake the last major Iraqi city under control of the Islamic State group

Khazir (Iraq) (AFP) – Jihadists with the Islamic State group were shaving their beards and changing hideouts in Mosul, residents said, as a major Iraqi offensive moved ever closer to the city on Wednesday.

With pressure building on the 10th day of the Mosul assault, Western defence chiefs were already looking ahead to the next target — IS’s other major stronghold of Raqa in Syria.

Recent advances on the eastern front have brought elite Iraqi forces to within five kilometres (three miles) of Mosul, and several residents reached by AFP said the jihadists seemed to be preparing for an assault on the city itself.

“I saw some Daesh (IS) members and they looked completely different from the last time I saw them,” eastern Mosul resident Abu Saif said.

“They had trimmed their beards and changed their clothes,” the former businessman said. “They must be scared… they are also probably preparing to escape the city.”

Residents and military officials said many IS fighters had relocated within the city, moving from eastern Mosul to their traditional bastions on the western bank of the Tigris river, closer to escape routes to Syria.

The sounds of fighting on the northern and eastern fronts of the Mosul offensive could now be heard inside the city, residents said, and US-led coalition aircraft were flying lower over it than usual.

Tens of thousands of Iraqi fighters have been advancing on Mosul from the south, east and north after an offensive was launched on October 17 to retake the last major Iraqi city under IS control.

– Raqa in ‘next weeks’ –

The assault is being backed by air and ground support from the US-led coalition — which also includes Britain and France — that launched a campaign against IS two years ago.

Iraqi federal forces, allied with Kurdish peshmerga fighters, have taken a string of towns and villages in a cautious but steady advance over the past week in the face of shelling, sniper fire and suicide car bombings.

About 3,000 to 5,000 IS fighters are believed to be inside Mosul, Iraq’s second city, alongside more than a million trapped civilians.

With the noose tightening on Mosul, officials from the 60-nation anti-IS coalition have increasingly pointed to the next phase of the fight.

Both US Defence Secretary Ashton Carter and British counterpart Michael Fallon said Wednesday they expected an offensive on Raqa to be launched within weeks.

“It starts in the next few weeks,” Carter told NBC News before arriving in Brussels for a two-day meeting of NATO defence chiefs.

“That has long been our plan and we will be capable of resourcing both,” Carter said.

If Mosul falls, Raqa will remain as the only major city in either Syria or Iraq under IS control, the vestige of a cross-border “caliphate” the jihadists declared after seizing large parts of both countries in mid-2014.

An offensive on Raqa is likely to be far more complicated than the assault on Mosul however, because unlike in Iraq, in Syria the coalition does not have a strong ally on the ground.

Syria’s five-year civil war has left the country in chaos, with jihadists, US-backed rebels, Syrian Kurds and President Bashar al-Assad’s forces all engaged on multiple fronts.

– ‘Wave of displaced’ –

Aid workers have warned of a major potential humanitarian crisis once fighting begins inside Mosul itself and civilians were already leaving in growing numbers.

An Iraqi minister said Wednesday that more than 3,300 fleeing civilians had sought help from the government the day before, the most for a single day so far.

There was “a big wave of displaced people… the greatest number since the start of the military operation,” Displacement and Migration Minister Jassem Mohammed al-Jaff said.

Numbers of displaced residents were growing but stood at a relatively low 8,940 on Wednesday, according to a UN tally, because most of the fighting so far has taken place in sparsely populated areas.

Civilians in villages on the eastern outskirts of Mosul were being bused to a camp near Khazir, an AFP correspondent reported.

“The army made us get out, they told us to leave and said we would see about the details of our settlement” in a camp, said Umm Ali, a 35-year-old woman.

“We used to live in terror night and day, the shelling was coming closer. The Islamic State controlled our lives, so we decided to flee,” said Essam Saadou, a 22-year-old student.

https://www.yahoo.com/news/jihadists-shave-beards-pressure-builds-mosul-103836474.html?utm_source=twitterfeed&utm_medium=twitter&ref=gs

 

Iraq Threatens To Sink OPEC Deal

 

AL Luaibi

 

 

Oil prices dropped more than 1 percent on Tuesday as waning expectations of an OPEC deal weighed on the market.

Iraq insisted on Sunday that it be allowed to be exempt from production cuts should OPEC reach a deal in a month’s time in Vienna. Iraqi officials said that it needs every possible resource to fight against the Islamic State, and the costly battle is a justification for allowing Iraq to be excluded from the coordinated production cuts.

“We are fighting a vicious war against IS,” Iraq’s oil minister Jabar al-Luaibi told reporters. The head of Iraq’s state-owned oil marketing company, SOMO, went further. “We should be producing 9 million if it wasn’t for the wars,” Falah al-Amiri said, according to Reuters. “Some countries took our market share.” Fellow OPEC members like Saudi Arabia, and especially Iran, have ratcheted up output over this past year. Iran, for one, will be exempt from the November cuts, a fact that is not lost on Iraqi officials.

Iraq makes a strong argument for its special treatment, but every exemption granted by OPEC to member countries pokes holes in the efficacy of a final deal. With Iran, Libya and Nigeria already not included in the planned cuts, the significance of any result is already in doubt. But if Iraq, too, is excluded, then any cut of substance will really need to come from Saudi Arabia.

OPEC members agreed to a collective cut of a relatively small 200,000 to 700,000 barrels per day. Much of that could be achieved through the usual seasonal adjustments in Saudi Arabia – as summer ends and cooler temperatures arrive, Saudi demand falls and as a result production is throttled back. Saudi Arabia might have cut several hundred thousand barrels per day because of the end of summer demand, and so it gains a lot and loses little by calling it a “production cut” as part of an OPEC deal, than to quietly lower output as it typically might at this time of year anyway.

Nevertheless, cuts from other members are also necessary even as output is actually on the rise. Nigeria and Libya are restoring production at a faster clip than some thought a few months ago. Nigeria’s oil minister said that his country’s output has climbed to 1.9 million barrels per day (mb/d), up from a low of 1.3 mb/d several months ago following a string of attacks from the Niger Delta Avengers. Nigeria is now not far off from the 2.2 mb/d it typically produces. Meanwhile, Libya has ramped up output to 580,000 to 600,000 barrels per day, up from the less than 300,000 bpd it had been producing for much of the past three years. If those numbers are correct, the two countries have together added roughly 600,000 barrels per day since September, according to OPEC’s secondary sources data. In other words, Nigeria and Libya just added about as much oil to the market in the past month as OPEC says it will cut as part of its November deal.

That presents a dilemma for OPEC, or more specifically for Saudi Arabia. Riyadh was the one that wanted the deal more than anyone (aside from, maybe, Venezuela), so the burden of making deeper cuts in order to create the desired price stability will almost certainly fall on Saudi Arabia. Bloomberg calculates that Saudi Arabia might need to cut as much as 1 mb/d to give the agreement some credibility, a figure that assumes Iraq is granted an exemption and the excluded countries continue to increase output. If Saudi Arabia does make those cuts, it would take output to a two-year low, down to levels not seen since the market began to nosedive back in 2014.

That could be asking too much. The WSJ reported in early October that Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman authorized his negotiators to reach a deal on production cuts, but only involving amounts that Saudi Arabia had planned on cutting anyway as part of its seasonal changes.

If that is the case, then it could be difficult to reach a deal in Vienna. Should OPEC grant Iraq an exclusion at the risk of leaving yet another major producer outside the framework? If Iraq is excluded, will Saudi Arabia make the deeper cuts necessary to make the deal work? If not, then the deal will need to be watered down tremendously, at which point, OPEC loses credibility once again. But if Iraq is not excluded, then it is possible that Iraqi officials could work to scuttle a deal altogether.

It has become something of a joke among oil analysts that OPEC repeatedly issues statements regarding “optimism for a deal,” paying lip service to cooperation, while ultimately each member refuses to make sacrifices.

By Nick Cunningham of Oilprice.com

http://oilprice.com/Energy/Energy-General/Iraq-Threatens-To-Sink-OPEC-Deal.html