The Governor of the CBI is Expected to Cut Interest Rates

The Governor of the CBI is Expected to Cut Interest Rates
January 25, 2010

The Governor of the CBI is expected to cut interest rates

بغداد – الصباح BAGHDAD – morning

Central bank governor said: that is likely to cut its interest rates from the current rate at seven percent, but the size of the reduction will depend on inflation.

Shabibi ruled out in a press statement to the Iraqi economy suffered any problems because of the elections scheduled for next March.

The Iraqi Central cut interest rates to seven percent from nine percent in June to fit with the decline in the rate of inflation.

He added that it was likely to be less interest rate of seven percent, but stressed that it would depend on the rate of inflation to growth and that will be monitored so closely.

Shabibi said: that monetary policy impact on developments in inflation and added that the central bank has managed to reduce inflation through monetary policies.

He said inflation fell to about 6.0 percent. Although the inflation index for consumer prices stood at 9.2 percent early last year.

Shabibi said that it expected growth of the Iraqi economy, which depends on oil production.  Expectations of the International Monetary Fund came in at 5.8 percent.

Shabibi expected to end violence once more economic growth and rising income levels.

Iraq: Oil Ministry Signs Deals for Oil Field Development

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Iraq: Oil Ministry Signs Deals for Oil Field Development

Stratfor Today » January 22, 2010 | 1449 GMT


AHMAD AL-RUBAYE/AFP/Getty Images
CEO of Italy’s Eni, Paolo Scaronis (R), and Iraqi Oil Minister Hussein Shahristani in Baghdad on Jan. 22

Iraq’s Oil Ministry signed a 20-year service contract Jan. 22 with a consortium comprised of Italy’s Eni, Occidental Petroleum Corp. and Korea Gas Corp. to develop the al-Zubair oilfield in Basra. Under the terms of the deal, the consortium will be paid $2 per barrel for the oil they extract from the field above current production and will pay a 35 percent tax on profits. In place of a signature bonus, the consortium will pay the Oil Ministry $300 million as a refundable five-year loan. Eni plans to invest around $20 billion in this deal over the 20-year period and aims to raise the field’s output from its current 195,000 barrels per day (bpd) to 1.125 million bpd within the next six years.

Iraq’s Oil Ministry has also signed deals with Royal Dutch/Shell and Malaysia’s Petronas to develop the giant Majnoon oil field, and with Petronas and Japan Petroleum Exploration Co. to develop the Garraf oil field in the south. Exxon Mobil and Shell are expected to finalize a contract for the development of West Qurna Phase 1 oil field in the south on Jan. 25 (KK: which they did.)  Though Iraq offers a highly uncertain investment environment and slim profit margins for the development of these fields, thus far these energy firms are willing to incur substantial risk in order to stake a foothold in a country with immense energy potential.

Iraq: Oil Deals Signed With Sonangol

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Iraq: Oil Deals Signed With Sonangol

January 26, 2010
Iraq on Jan. 26 signed deals with Angolan state oil company Sonangol to develop the oilfields of Qayara and Najmah, Reuters reported. Qayara, with reserves of some 800 million barrels, and Najmah, with 900 million, are in Iraq’s northern Nineveh province, where militants remain active. The contracts are part of deals Iraq has begun signing that could help increase its oil output capacity to 12 million barrels per day in seven years from the current 2.5 million; that would bring it to a level that rivals Saudi Arabia.

UPDATE 2-Iraqi parliament approves $72.4 bln 2010 budget

10:40am EST


BAGHDAD, Jan 26 (Reuters) – The Iraqi parliament on Tuesday passed a 2010 budget that sets federal spending at 84.7 trillion Iraqi dinars (around $72.4 billion) and a deficit for this year of 22.9 trillion dinars ($19.6 billion), lawmakers said.
The budget sets an expected oil price of $62.5 per barrel and puts expected average oil exports, virtually the sole source of government revenue, at 2.15 million barrels per day (bpd) in 2010, lawmakers said.

“The parliament has approved today the budget of 2010,” said Kurdish member of parliament Sami al-Atrushi, a member of the chamber’s finance committee.
The deficit amounted to 27 percent of total spending and was to be financed with surpluses from previous years and also through domestic and external borrowing, the budget law said.

Alaa al-Sadoun, head of the finance committee, said the new oil projections were an increase from the 2009 budget, which put expected oil exports at 2 million barrels per day and the oil price at $50 a barrel.

In a novel move, the parliament included in the new budget a clause setting aside $1 for each barrel of oil produced for oil-producing provinces to use in investment projects, said Ali Hussain Balou, head of parliament’s oil and gas committee.
Other provinces involved in oil refining and gas production will receive similar set-asides.

The Iraqi government is hoping that a spate of new oil deals will transform its struggling oil sector and increase production that still hovers around pre-invasion levels.  The 2010 budget law also includes authorization for Iraq to seek a $4.5 billion financing arrangement with the International Monetary Fund and contemplates $2 billion in financing by the World Bank.

The total income of the Iraqi government was estimated to reach 61.7 trillion dinars ($52.8 billion). The oil producing country relies on crude exports for more than 95 percent of government revenue.  Passage of the budget was held up for weeks by negotiations over additional spending.

Lawmakers said political dealmaking also played a role.  They said rivals of Prime Minister Nuri al-Maliki tried to demand that in return for passing the budget the government had to agree to a law that would prevent Maliki from using any state resources in the campaign for a March 7 election. (Reporting by Waleed Ibrahim; Editing by Michael Christie and Andy Bruce)

© Thomson Reuters 2009. All rights reserved.

Iraq: Parliament Passes 2010 Budget

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Iraq: Parliament Passes 2010 Budget

January 26, 2010
Iraq’s parliament Jan. 26 approved the 2010 budget, setting spending at 84.7 trillion dinars ($72.4 billion) and the deficit at 22.9 trillion dinars ($19.6 billion), Reuters reported, citing lawmakers. The lawmakers said the budget is based on an expected oil price of $62.5 per barrel, with revenues from expected oil exports of 2.15 million barrels per day in 2010.

Iraq seals oil deal with Exxon Mobil, Shell group

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Iraq seals oil deal with Exxon Mobil, Shell group

Mon Jan 25, 6:30 am ET

BAGHDAD – Iraq has signed a final deal with U.S. and European oil giants Exxon Mobil Corp. and Royal Dutch Shell PLC to develop a major oil field in the south.  Under the 20-year deal, the consortium will develop the 8.6 billion barrel West Qurna Stage 1 field for $1.9 for every barrel produced. The deal could be extended for another five years.  The deal was signed Monday in Baghdad.

The field was among five oil and two gas fields left over from Iraq’s first postwar bidding round held in June. The consortium initially asked for $4 per barrel produced, but later accepted Iraq’s lower offer.  Last week, Iraq signed a deal with a consortium led by Italy’s Eni SpA to develop another major oil field in the south.

Iraq: U.S. Marines Leave Anbar

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Iraq: U.S. Marines Leave Anbar

January 23, 2010
The U.S. Marine Corps wound up almost seven years in Iraq on Jan. 23 and formally handed over control of Sunni-dominated Anbar, the country’s largest province, to the Army, a move that signaled the beginning of an accelerated withdrawal of American troops in that country, the AP reported. U.S. President Barack Obama has ordered all but 50,000 troops out of Iraq by Aug. 31, 2010. According to a U.S.-Iraq security pact, those remaining troops will leave by the end of 2011.

Iraq seen as key area for GCC investment in 2010

by Ed Attwood
Thursday, 21 January 2010


INVESTMENT OPPORTUNITY: Iraq’s capital Baghdad. (Getty Images)

2010 represents a strong opportunity for GCC companies to export their knowledge and experience to Iraq, according to a global business consultancy.

Control Risks believes that improvements in the security environment and the political situation in Baghdad mean that a number of industries – not just the energy sector – are being welcomed into the northern Gulf country.

“The second oilfield bidding round showed that both the Iraqi government and foreign companies had undergone the learning process,” said Jonathan Wood, global issues analyst at Control Risks. “The Iraqi government has learnt how to attract foreign direct investment [FDI] in a more efficient way, and the overseas firms have learnt to broker more realistic deals and profit margins.”  Wood said that oil wasn’t the only area of interest, with companies winning contracts in the power generation, telecoms, financial services, logistics, cement and construction fields.

In the first nine months of 2009, one report claimed that the UAE was the highest foreign investor in Iraq, at $37 billion, representing around a quarter of all global investments during that period.   The study, by Dunia Frontier Consultants, said that the only other Gulf country to make a significant investment in Iraq was Kuwait, with $6.8 billion during that period.

Kuwait may write off billions in loans to Iraq

Last Updated: January 19. 2010 10:20AM GMT

KUWAIT CITY/ Kuwait will forgive billions of dollars of Iraqi debt in exchange for guaranteed security and good relations with its northern neighbour, the minister of foreign affairs, Sheikh Mohammed Sabah Salem al Sabah, said this week.

“We do not want money, and we did not ask you for that. All that we need is security and peace,” Sheikh Mohammed said in an interview with the local newspaper Al Qabas on Sunday.

Iraq owes Kuwait US$16 billion (Dh58.8bn) from loans that were mostly made during the 1980s when Saddam Hussein’s regime was fighting a war with Iran. The Iraqi government owes an additional $25bn in war reparations to Kuwait as a result of the 1990 invasion.

Sheikh Mohammed said he was referring only to the money owed to Kuwait through loans, and not compensation, which he said has its own “international mechanism”.

The UN Compensation Commission oversees payments to individuals, companies, non-governmental organisations and governments that suffered in the invasion. Five per cent of the country’s oil sales are used as compensation, and Iraq must resolve the reparations issue before it can be relieved of the UN’s remaining sanctions.

During the interview, the minister also expressed concern that tribal and sectarian divisions in Iraq and problems with al Qa’eda terrorists could spill over the border to threaten stability in Kuwait.

Yousef Ali, the director of Kuwait University’s Centre for Strategic and Future Studies, said because Kuwait is a small state abundant with oil fields, it has often been coveted by the larger and more powerful countries in the region, Saudi Arabia, Iran and Iraq. He said it had paid off its neighbours to avoid confrontation in the past, and Iraq benefited from this policy in the 1960s.

Mr Ali said he believed the threat from Iraq had increased in recent years because of instability there. The Kuwaiti government would be willing to forgive both the debts and reparations if it could overcome opposition from some members of parliament, he said.

“It depends if the government can convince the religious extremists – like the Salafis – to accept it. Some of their MPs will resist the idea,” Mr Ali said. He said the change of Iraqi leadership from Saddam Hussein’s Sunni-dominated regime to a democracy where Shiites are the largest bloc had put many radical Kuwaiti Sunnis off the idea of giving the country a break.

“This is their attitude. In any country if there are some Shiites in government, those fundamentalists try to put pressure on them. Take Lebanon, take Bahrain and now take Yemen,” he said.

Mr Ali said Kuwait, Iraq and the UN all agreed to the demarcation of the border between the two countries after the Iraq war, but some Iraqi nationalists still do not accept the deal. Some Iraqi MPs have questioned the validity of the border, and others have demanded that Kuwait pay Iraq compensation for giving the US-led coalition a base from which to stage the 2003 invasion, which they said was illegal under international law.

Sheikh Mohammed gave a warning to belligerent Iraqi MPs during the interview when he said: “The positions of some Iraqi officials towards Kuwait do not encourage writing off debts.”

Relationships between the two countries are not always acrimonious. A visit from the governor of Basra to Kuwait on Sunday highlighted the hopes many businessmen in the two countries have for increased economic cooperation.

“Iraq is keen on extending bridges of amity and friendship with the state of Kuwait,” the Iraqi governor, Shaltagh al Mayah, told journalists at a press conference with the governor of Ahmadi, Sheikh Ibrahim al Duaij al Sabah.

The Iraqi governor said his visit was to promote brotherly ties and joint interests between the northern Gulf neighbours and urged Kuwaiti companies to invest in Basra because it was witnessing a period of increased security and stability.

The Kuwaiti MP who heads the Kuwait Economic Society, Rola Dashti, has hinted that investing Iraqi payments back into the country would be a suitable compromise to the reparations issue that would benefit both countries. Sheikh Mohammed said the UK, Turkey and Kuwait were now working together to establish a free trade zone in Basra.

Another member of the Iraqi delegation from Basra, Nezar al Jebari, announced yesterday that authorities have selected a plot of land in the Basra governorate to build a hospital that will be funded by the Kuwaiti government.

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Iraq: Oil Chief Says Crude Exports To Begin In March January 7, 2010

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Iraq: Oil Chief Says Crude Exports To Begin In March

January 7, 2010

The head of Iraq’s State Oil Marketing Organization said Jan. 7 the country will begin shipping crude oil in March in preparation for a larger operation in the coming years, Upstream Online reported, citing Reuters. Falah Alamri said the country is familiarizing itself with the process while it readies for exports of 3 million to 4 million barrels per day.