Early Thursday Iraq Economy News Highlights 5-19-22
Early Thursday Iraq Economy News Highlights 5-19-22
Governmental Adviser: The Judiciary's Decision On The Food Security Law Will Affect The White Paper
political| 07:44 - 18/05/2022 Baghdad - Mawazine News, Adviser to the Prime Minister, Mazhar Muhammad Salih, determined, on Wednesday, the impact of the Federal Court's decision regarding the Emergency Food Security Support Law on the white paper.
Saleh told the official news agency, "The reform white paper is closely related to the issue of financial and economic sustainability in an interactive and coherent manner," noting that "indicators of financial reform that flow into the mentioned sustainability mechanisms require the availability of a regular annual financial plan supported by the indicators included in the legislated general budget law. Within its timings established by the Financial Management Law No. 6 of 2019 amended through financial policy tools in implementing financial and economic reforms.
He added that the indicators of the white paper and its approved timings will face a clear slowdown and an imbalance in timing and implementation because the fiscal policy has started working with partial reform constants, which requires reconsidering the timing of implementing the white paper again in order to fit the conditions of the country’s financial policy in general and the economic policy in a more stable and continuous manner. 29/p77 https://www.mawazin.net/Details.aspx?jimare=193564
Iraq Signs A Contract With A Chinese Company To Drill 22 Oil Wells
2022-05-19 06:26 Shafaq News/ The Iraqi Drilling Company signed a contract with the Chinese company COSL to carry out the work associated with drilling 22 oil wells in the Maysan fields.
The contract signing ceremony took place at the company's headquarters in Barjisiya, according to a statement issued by the drilling company today, Thursday.
The statement quoted the Director General of the Iraqi Drilling Company, Basem Abdul Karim Nasser, as saying, "This contract is in support of the contract concluded by our company with the Chinese company CNOOC to drill 22 oil wells in the Maysan fields in a turnkey manner and for a period of no more than two years. Iraqi Drilling has allocated two devices with 2000 HP to fulfill this contract. LINK
Iraq Balks At Greater Chinese Control Of Its Oilfields
By Sarah Mcfarlane and Aref Mohammed
Iraq persuaded Lukoil to halt sale to Sinopec - sources
Baghdad concerned China becoming too dominant - sources
Western firms not happy with terms of Iraqi deals
LONDON/BASRA, May 17 (Reuters) - Iraq's oil ministry thwarted three prospective deals last year that would have handed Chinese firms more control over its oilfields and led to an exodus of international oil majors that Baghdad wants to invest in its creaking economy.
Since the start of 2021, plans by Russia's Lukoil (LKOH.MM) and U.S. oil major Exxon Mobil (XOM.N) to sell stakes in major fields to Chinese state-backed firms have hit the buffers after interventions from Iraq's oil ministry, according to Iraqi oil officials and industry executives.
Selling a stake to a state-run Chinese company was also one of several options being considered by Britain's BP (BP.L), but officials persuaded it to stay in Iraq for now, people familiar with the matter said.
China is Iraq's top investor and Baghdad was the biggest beneficiary last year of Beijing's Belt and Road initiative, receiving $10.5 billion in financing for infrastructure projects including a power plant and an airport.
But when it comes to further Chinese investment in major oilfields, Baghdad has drawn a line in the sand.
Iraq's government and officials at state-run firms are concerned that further consolidation of fields in the hands of Chinese companies could accelerate an exodus of Western oil companies, a total of seven Iraqi oil officials and executives with companies operating in Iraq told Reuters in interviews.
Supported by state-run oil company officials, Iraq's Oil Minister Ihsan Abdul Jabbar dissuaded Lukoil last year from selling a stake in one of the country's largest fields, West Qurna 2, to Chinese state firm Sinopec , three people familiar with the matter said.
Iraqi officials also intervened last year to stop Chinese state-backed firms buying Exxon's stake in West Qurna 1 and to persuade BP (BP.L) to stay in Iraq rather than offloading its interest in the giant Rumaila oilfield to a Chinese company, people familiar with the matter said.
Combined, Rumaila and West Qurna produce about half of the crude coming out of Iraq, which sits on the fifth-largest oil reserves in the world.
Iraq's oil ministry did not respond to requests for comment about the deals or the minister's role in any interventions.
The government worried that China's dominance could make Iraq less attractive for investment from elsewhere, two government officials said.
China's strengthening relationship with Iran has helped its position in Iraq due to Tehran's political and military influence there, but the oil ministry is wary of ceding more control over the country's key resources, some officials said.
"We don't want the Iraqi energy sector to be labelled as a China-led energy sector and this attitude is agreed by government and the oil ministry," another Iraqi official said.
RISKY STRATEGY
The interventions over BP, Exxon and Lukoil's positions in Iraq come after British oil major Shell (SHEL.L) decided in 2018 to withdraw from Iraq's vast Majnoon oilfield.
The interventions also mark a shift in stance after Chinese companies won most energy deals and contracts awarded over the past four years. Iraqi oil officials said Chinese firms have accepted lower profit margins than most rivals.
"All the rules regarding tenders were formulated jointly by the Chinese and Iraqi sides and were conducted under transparent and fair principles," said state-owned China National Offshore Oil Corporation (CNOOC) (0883.HK) in an emailed statement.
Pushing back against further Chinese investment is a risky strategy, though, as there's no guarantee others will step up and the government needs billions of dollars to rebuild the economy after the Islamic State insurgency was defeated in 2017.
Over the past decade, oil revenue accounted for 99% of Iraq's exports, 85% of the country's budget and 42% of its gross domestic product, according to the World Bank.
While oil majors jostled to get access to Iraq's vast oilfields after the U.S.-led invasion in 2003, they are increasingly focused on the energy transition and more profitable plays elsewhere. They also want better terms to develop fields, oil executives said.
China is among the biggest buyers of Iraq's crude and Chinese state firms have built up a dominant position in its oil industry.
But when Lukoil notified the government last summer that it was considering selling some of its stake in West Qurna 2 to Sinopec, the oil minister intervened, people familiar with the matter said.
It has not previously been reported that Sinopec was the potential buyer of Lukoil's stake. The Chinese company did not respond to a request for comment.
To encourage Lukoil to stay, Iraq offered a sweetener, a person with direct knowledge said.
A few months after Lukoil signalled it was considering a sale, Baghdad finally approved its plan to develop a field known as Block 10, where the Russian company had discovered an oil reservoir in 2017. Afterwards, Lukoil dropped the idea of selling its stake in West Qurna 2, the source said.
Lukoil did not respond to a request for comment.
BP AND EXXON
Over the past few years BP has also spoken to the government about its options - including leaving Iraq altogether - before settling on spinning off its stake in Rumaila into a standalone company last year, two people familiar with the matter said.
Oil minister Abdul Jabbar led efforts to convince BP not to leave as the government was concerned its partner in the field, China National Petroleum Corporation (CNPC), would buy BP's stake, the people said. Baghdad was also keen to keep such a high-profile international oil major in the country, they said.
BP declined to comment.
When Exxon flagged its intention to leave Iraq in January 2021, meanwhile, U.S. officials told Exxon they were unhappy with the prospect of the biggest U.S. oil major pulling out – for reasons that echoed Iraqi concerns.
State department officials said Exxon's departure could create a vacuum for Chinese companies to fill, a person familiar with the conversations said.
U.S. officials then asked Exxon what it would take to stay in Iraq, the person said, declining to give further details.
A State Department spokesperson said: "We regularly engage with our Iraqi counterparts on fostering an environment conducive to private sector investment."
Exxon had signed an agreement for the sale of its interest in West Qurna 1 to CNOOC and PetroChina (601857.SS), the listed arm of CNPC, people familiar with the matter said.
Neither CNOOC nor CNPC responded to requests for comment about the deals.
Exxon's stake was valued at $350 million to $375 million, said people familiar with the matter.
Iraq has veto power over oilfield deals, however, and did not approve the transaction.
Exxon filed for arbitration with the International Chamber of Commerce against Basra Oil Co., arguing that it had followed the terms of its contract for West Qurna 1 and had a good deal on the table, people familiar with the matter said.
The oil ministry then took the unusual step of trying to broker a deal on Exxon's behalf. The ministry offered Exxon's stake to other Western companies including Chevron Corp (CVX.N).
No one was interested. Rather than let the stake go to the Chinese companies, Baghdad said the state-run Iraq National Oil Company (INOC) would take it instead, though INOC is still in the process of being revived after being defunct for many years.
"(Exxon) will continue to work closely and constructively to reach an equitable resolution," said a spokeswoman.
SERVICE CONTRACTS
Iraq's oil industry is mostly based on technical service contracts between the state-backed Basra Oil Co. and foreign companies that are repaid costs plus a fee per barrel to develop fields, while Iraq retains ownership of the reserves.
Oil majors typically prefer deals that allow a share in profits rather than a set fee.
The priority for Chinese firms, however, is achieving secure oil supplies to feed China's growing economy, rather than returns for investors, said a Chinese oil executive with direct knowledge of CNPC's global investments.
There are some signs, however, that Iraq is attempting to make its terms more appealing.
France's TotalEnergies (TTEF.PA) signed a $27 billion deal in September that included payment of 40% of revenue from one field. The deal has stalled, however, due to disputes over terms and it still needs approval from some Iraqi government agencies, Reuters reported in February. read more
TotalEnergies said it was fully committed to the project.
One oil company executive said they were sceptical Iraq would introduce more attractive terms. But unless they improve significantly, analysts say it is hard to imagine Iraq will be able to stem the exodus as the energy transition accelerates.
"Many of the energy majors are looking at the carbon emissions, their ability to generate cash flows if commodity prices are low, and they're looking at improving returns," said Ian Thom, research director at consultancy Wood Mackenzie.
"As the priorities of the energy companies are changing, the relative attractiveness of Iraq is changing."
https://www.reuters.com/business/energy/iraq-balks-greater-chinese-control-its-oilfields-2022-05-17/
Oil Recovers From Early Losses And Hits $110 A Barrel
Economie| 10:42 - 19/05/2022 BAGHDAD - Mawazine News: Oil prices rose today, Thursday, to recover from early losses, as persistent concerns about tight global supplies outweighed concerns about slowing economic growth.
Brent crude futures for July rose 1.50, or 1.37 percent, to 110.61 dollars a barrel by 03:52 GMT, after falling by more than a dollar earlier in the session.
US West Texas Intermediate (WTI) crude futures for June rose 91 cents, or 0.8%, to $110.50 a barrel, rebounding from an early loss of more than $2.
Asian stocks on Thursday tracked a sharp selloff on Wall Street, as investors worried about rising global inflation, China's non-spreading coronavirus policy, and the war in Ukraine.
The European Union this month proposed a new package of sanctions against Russia for its invasion of Ukraine, which would include a complete ban on oil imports within six months, but the measures have yet to be adopted, with Hungary among the staunch critics of the plan.
On Wednesday, the European Commission unveiled a 210 billion euro ($220 billion) plan for Europe to end its dependence on Russian fossil fuels by 2027, and use the hub away from Moscow to speed up its transition to green energy.
Also, US crude stocks fell last week, as refineries ramped up production in response to tight product stocks and near-record exports that forced US diesel and gasoline prices to record levels.
https://www.mawazin.net/Details.aspx?jimare=193620
$30 Billion To Support Food Security In Countries Affected By The Ukraine Crisis.. Iraq Is Commenting
Shafaq News/ Today, Thursday, the World Bank announced the allocation of 30 billion US dollars to help prevent the food security crisis caused by the Russian war in Ukraine, while the Iraqi Ministry of Agriculture confirmed that the country was not significantly affected by this crisis.
The bank said in a statement seen by Shafak News Agency, that "the amount will be allocated in areas such as agriculture, nutrition, social protection, water and irrigation, and this financing will include efforts to encourage food and fertilizer production, strengthening food systems, facilitating increased trade, and supporting families and producers most in need."
"The total amount will include $12 billion in new projects and more than $18 billion in existing food projects that have been approved but not yet disbursed," the bank said.
"The rise in food prices has devastating effects on the poorest and most vulnerable," World Bank Group President David Malpass said in a statement.
"To achieve market stability, it is critical that countries make clear statements now about increased production in the future in response to the Russian invasion of Ukraine," he added.
The majority of the resources will go to Africa, the Middle East, Eastern Europe, Central Asia and South Asia, and these regions are among the hardest hit by the impact of the war in Ukraine on grain supplies.
The World Bank expected that support for new projects, agriculture and social protection, would mitigate the effects of high food prices on the poor and water and irrigation projects.
For his part, spokesman for the Ministry of Agriculture, Hamid Al-Nayef, told Shafaq News, that "Iraq was not significantly affected by the Ukrainian-Russian crisis," stressing that "Iraq does not import wheat from these two countries."
Al-Nayef indicated that "the affected countries have direct economic contact with them," noting that "Iraq has control over the wheat stockpile." He also stressed that "the bread is secured," noting that "the receipt of wheat has currently reached nearly 900,000 tons, and the ministry continues to receive it quickly."
A spokesman for Iraqi agriculture confirmed, "There is currently support from the Council of Ministers for farmers, and therefore we do not need countries or international organizations to help us." LINK
A Representative Of The State Of Law Comments On The New Food Security Law
political| 09:52 - 19/05/2022 Baghdad - Mawazine News, a member of the House of Representatives from the State of Law coalition, Faisal Al-Naeli, confirmed today, Thursday, his rejection of the coordination framework for the new draft of the Food Security Law, which was submitted by the Parliamentary Finance Committee.
Al-Naeli said in an interview with the official newspaper, "The draft carries a financial aspect and a purely legal violation," noting that "the law must be approved by a government that has all the powers, not to conduct business."
He added, "The people's interest is supreme, and the framework bloc can agree to provide the ration card items and provide financial allocations to purchase gas from the Islamic Republic to generate electricity."
And he continued, "The framework refuses to impose road projects, bridges, water resources, the Ministry of Labor and loans in huge amounts amounting to more than 40 trillion dinars, and this means balancing entire countries with the title of emergency with the presence of a caretaker government that cannot be held accountable at the present time, and this matter is totally rejected." Ended 29/N33
https://www.mawazin.net/Details.aspx?jimare=193610
A Slight Rise In The "Dollar" Against The Iraqi Dinar In The Local Markets
Economie| 09:54 - 19/05/2022 Baghdad - Mawazine News The dollar prices witnessed, today, Thursday, a slight increase in local markets throughout the country. And the selling prices of the dollar were recorded at 148.750 dinars per 100 dollars, while the purchase prices of the dollar were recorded at 147.750 dinars per 100 dollars. https://www.mawazin.net/Details.aspx?jimare=193612
Dollar Exchange Rates In Local Markets
Economie 2022-05-19 | 04:23 Source: Alsumaria news 2,040 views Today, Thursday, the dollar exchange rates witnessed a slight increase in local markets.
The selling prices of the dollar were 148,300 dinars per $100, while the purchase prices of the dollar were 148,200 dinars per $100.
Earlier, the Central Bank of Iraq decided to adjust the exchange rate of the dollar against the Iraqi dinar, as the purchase price of the dollar from the Ministry of Finance amounted to 1450 dinars, while the price of selling it to banks was set at 1460 dinars per dollar, while the selling price to the citizen is 1470 dinars per dollar. LINK