Thursday Afternoon Iraq Economy News Highlights 6-23-22
Thursday Afternoon Iraq Economy News Highlights 6-23-22
Iraq Is Preparing To Secure The World's Oil Needs After Sanctions Against Russia
Posted On2022-06-23 By Sotaliraq Translated by Hamid Ahmed
A global report confirmed that Iraq is one of the countries in the Middle East in which oil capabilities are growing, pointing to its ability to cover the needs of the West after the sanctions on Russia.
A report by the global website (Oil Price) for oil and energy news stated that “Iraq is among the four countries in the Middle East where refining and oil production capabilities are growing and will be able to cover the needs of the West and the European Union countries for the quantities of fuel after the disruption of Russian fuel supplies due to the sanctions that will enter It will come into effect at the end of this year.
The report added, "Each of Iraq, Saudi Arabia, Kuwait and Oman is witnessing a growth in their capabilities and capacity in oil refining and production, which resulted in the release of additional quantities of more than one million barrels per day."
He pointed out, "The refineries of the Middle East countries may be able to produce approximately 8.8 million barrels per day of crude oil, based on these additions."
The report indicated that "this increase in production is approximately equivalent to the amount of fuel provided by Russia to the countries of the European Union, which will be interrupted by sanctions at the end of this year."
According to some experts, the report confirms that “the increase in the production capacity of the countries of the Middle East will be sufficient to cover the quantities of barrels of oil that will be lost if the sanctions enter into force.”
He pointed out, "Theoretically, these quantities will suffice, especially since oil producers from these countries will seek to win the most willing customers to buy."
The report noted, “Iraq is now working on three projects for liquidation, including the expansion and development of a refining facility already located in Basra at a cost of 4 billion dollars, with the establishment of a new refinery plant in Karbala with a production capacity of 140,000 barrels per day, which is planned to enter into this production.” general.”
And he spoke about a new refining facility in Al-Faw at a cost of $7 billion, with a production capacity of 300,000 barrels per day, which will be implemented by the China National Chemical Engineering Company.
The report stated, "The Deputy Prime Minister and Minister of Finance, Ali Allawi, confirmed in an interview this week that Iraq can raise its oil production capacity to 6 million barrels per day over the next five years."
And he stated, "Iraq is the second largest oil producer within the Organization of Petroleum Exporting Countries, OPEC, but it is trying hard to boost its production in line with the (OPEC - Plus) production expansion agreement, according to which the related production hike was extended for the past year after the demand for oil began to recover after The end of the Corona pandemic phase.”
The report added, "Iraq's production for the month of May amounted to 4.4 million barrels per day, based on the latest monthly report of OPEC on the oil market."
And he indicated, "These rates constitute a decrease from the production of the month of April, which amounted to 4.426 million barrels per day."
The report stated, "The production rate of May was also lower than Iraq's production rate for the last quarter of 2021. Before the epidemic decimated oil demand and OPEC and its partners were forced to significantly reduce production, Iraq was pumping approximately 4.5 million barrels per day." . He cautioned, that "Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail has the ambition to see production capacity reach 8 million barrels per day by 2027, despite the political problems and doubts that hover over future investments in the Iraqi oil sector."
On the other hand, the report quoted “Finance Minister Allawi as saying that he does not expect our production capacity to exceed more than an additional million barrels per day within the next five years, noting that reaching the number of 6 million barrels per day is a more realistic goal for the side.” Expansion of production capacity.
And he added, "Iraq is also expanding its production of liquefied natural gas, amid the increasing global demand for it." And the report went on, "The Basra Gas Company announced this week its first shipment of semi-cooled liquefied gas from the port of Umm Qasr."
The company's director, Malcolm Mays, stated in an official statement that "this came as a result of continuous hard work to achieve the strategic goal by rehabilitating the port of Umm Qasr and equipping it with the necessary refrigeration units to be used in export operations."
About: Oil Price website LINK
Adviser to President Barzani: “Influential forces” in Baghdad are using oil and financial differences as a tool for political pressure on Kurdistan
Posted On2022-06-23 By Sotaliraq We reject “selectivity” in dealing with the constitution
Adviser to President Barzani: “Influential forces” in Baghdad are using oil and financial difference
An advisor to the leader of the Kurdistan Democratic Party, Massoud Barzani, accused "influential forces" in Baghdad of exploiting the oil and financial disputes to "undermine" the Kurdistan Region, with a delegation from the party starting talks in the Iraqi capital to search for a way out of the political crisis.
Recently, statements and positions described as “escalatory” were issued by federal government officials towards Erbil, when Finance Minister Ali Allawi confirmed that the Federal Court’s decision, which judges the illegality of the oil and gas law issued by the regional parliament, “prevents allocating a share to the region in the budget,” threatening That “the amount that is transferred monthly to the region, amounting to 200 billion dinars ($138 million), will not continue either.”
Baghdad also refrained from allocating a share to the region from a project to build 1,000 “model” schools within an agreement signed by Baghdad with China, while the Minister of Natural Resources revealed The Region, Kamal Muhammad Salih's Agency, reported that Baghdad had stopped sending gasoline fuel to the region.
Disagreements between the federal Iraqi governments and the Kurdistan Region over the oil file have been going on for years and have recently intensified after the decision of the Iraqi Federal Supreme Court, which was controversial in terms of ruling and timing, which many described as “politicised” of the illegality of the Oil and Gas Law issued in the Kurdistan Region in 2007, and the announcement of the Minister Iraqi Finance Minister Ali Abdul-Amir Allawi, last Friday, stopped sending funds allocated to the region in this year's budget, in clear violation of the federal budget law.
The Prime Minister of Kurdistan Regional Government, Masrour Barzani , said that Iraq lacks a federal court formed according to the constitution and not the era of former US ruler Paul Bremer, stressing that the Iraqi Oil Marketing Company (SOMO) operates with central and not federal laws.
Adding that, this court was not established under the constitution, and it does not comply with its provisions at all, and therefore there is no federal court in Iraq.
The Federal Minister of Oil, Ihsan Abdul-Jabbar, announced again, that his ministry "will proceed with the legal and constitutional procedures that will enable us to implement the Federal Court's decision on the Kurdistan Region's oil file," he said.
In response to Abdul-Jabbar's statements, Kifah Mahmoud, media advisor to Kurdish leader Masoud Barzani, said that Abdul-Jabbar's statements "may be included in the political rivalries, especially since the existing problem dates back to many years, since 2014, the influential forces in Baghdad have always used the financial side. As a means of pressure on the region, when the region's share of the budget was cut for five years, amounting to about 50 billion dollars, where did this amount go?
He added, “The Peshmerga forces were also deprived of their financial dues despite being part of the defense system, and the application of Article 140 of the Constitution (regarding the disputed areas), not to mention the deprivation of the region from international loans by donor countries, up to medicine. and fuel.”
And the Federal Ministry of Oil had previously asked, last May, the oil and gas companies operating in the region to sign new contracts with the “SOMO” company, instead of the regional government, and summoned seven companies to a commercial court that was postponed twice. In contrast, the Erbil Investigation Court ruled By “referring the commercial court sessions against international oil companies to the Erbil Court,” as well as the Kurdistan Regional Government’s Ministry of Natural Resources filing a civil lawsuit against the Federal Minister of Oil “for sending emails and letters to intimidate the oil companies operating in the region and his interference in the contractual rights of these companies and the government of Territory.”
However, Kifah Mahmoud explained in press statements followed by (BasNews) that the understanding concluded between Erbil and Baghdad, last year, "estimated the region's production at 460,000 barrels per day, with 250,000 barrels per day delivered at the price of the Federal Oil Marketing Company "SOMO", not The price of the region, as a result of the pressures and lawsuits brought by Baghdad against the companies, and this is not a result of today, but years ago, forcing the region to sell it at a price much lower than the price of the global market.”
And he continued, by saying, "In spite of this, an amount of a quarter of a million barrels per day is deducted from the region's share in the budget at the market price, and 210 thousand barrels remain, half of which goes to power plants and the other half is refined for local use, so that this quantity is not enough, what makes it imperative for Baghdad to It compensates for the remainder, meaning that the region’s share in the budget, which is less than 13 percent, reaches only 5 percent of it.”
President Barzani said: "If Baghdad is serious and has the will to solve crises, then the constitution is the arbiter to solve problems, but a selective interpretation of the constitution cannot be accepted."
It was reported that the oil dispute would be among the delegation’s negotiating terms, and a member of the negotiating delegation, Bankin Rikani , did not rule out the withdrawal of his party from Parliament, along the lines of the “Sadrist Movement” bloc in the event of a “violation of substantive issues.”
Kurdish officials confirm that the region, "despite its limited capabilities," has enjoyed security stability and economic recovery, during which it was able to rapidly develop its infrastructure during the years after the fall of the former regime in 2003, while the rest of the Iraqi regions suffered from a sharp deterioration at various levels "despite the fact that The abundance of money” due to corruption, and this difference pushed Baghdad “which is under resentful public pressure” to work to undermine the entity of the region.
The Kurdistan Regional Government had revealed its intention to “establish two public companies to manage the oil and gas file, in the name of the Kurdistan Regional Oil and Gas Company “Kroc”, which will undertake the task of exploration, production and transportation operations, and the Kurdistan Company “COMO” is specialized in the marketing process, pointing out that “the two companies can coordinate with The two federal national oil and oil marketing companies “SOMO” in the relevant fields, and that “coordination is taking place between the Federal Ministry of Oil and the Ministry of Natural Resources in the region,” but the regional government stipulated before that “an amendment to the structure of the “SOMO” company, and its internal system, to be an institution Federal issues decisions in a joint formula that guarantees the real participation of the Kurdistan Region, and that the representative of the region has the right of veto regarding issues related to the region. LINK
Today, Wednesday, The Financial Advisor To The Prime Minister, Mazhar Muhammad Salih, Revealed The Government’s “Relative” Control Over The Prices Of Fuels And Foodstuffs In The Country.
Posted On2022-06-22 By Sotaliraq Saleh said that "the cash flows in foreign currency to Iraq are high, and it is in the hands of the government and is considered one of the important things to support prices," noting that "the emergency law's function is to support prices, reduce and confront inflation, and maintain the standard of living and cash income from rising prices, foodstuffs and fuels."
Saleh added that "fuels in Iraq, some of them are imported, and their prices are fixed as a result of the support, although the prices of gasoline in the world are doubling, but there is support for these prices, as is the case with the ration card."
]The government’s financial advisor indicated that “there is relative control over prices and that the emergency law will support this control over prices, and there is control over inflation that is based on financial policy tools,” adding that “in the event that prices develop, the reserves of high hard currency and monetary policy will interfere with its tools in a way It is more effective to stop or limit any price hike.”
Saleh pointed out that "prices are still controlled by government support such as fuel and foodstuffs, and all government services have fixed prices and there is zero for customs, and taxes have been greatly reduced."
For his part, the Minister of Finance said in a statement that "the emergency support law for food security and development came to reduce poverty and achieve financial stability," noting that "the ministry is keen to implement the paragraphs of the emergency support law for food security and development, which the House of Representatives voted on recently."
Allawi clarified that "the ministry is committed to financing all the assignments listed in Table (A) of the law to secure the food and electricity sectors, lecturers, administrators, contracts, procedures, graduate degree holders and graduates from among the first whose contracts have been terminated by the security and military services."
The minister added that "the aim of presenting this law is to cover the actual financial needs that contribute to alleviating unemployment, reducing poverty, achieving financial stability in light of urgent global developments, and continuing to provide the best services to citizens and raising the standard of living for them." LINK
Iraqi Oil Shipments Face Competition From Russian Crude... And An Expert Comments
Shafaq News/ Iraq, which currently exports the majority of crude oil to Asia, may face competition in that market from Russian grades that are sold at a discount to other crudes amid tightening sanctions imposed on Moscow.
Trade sources told Standard & Poor's Global that Iraq's Basra crude is likely to face stiff competition in the current trading cycle as alternative grades from Russia and the West are increasingly attracting price-sensitive buyers in Asia.
According to shipping data from Kpler, last year Iraq was the second largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), India's largest oil supplier, and the latter the second largest importer of crude in Asia.
Iraq supplied India with more than 1 million barrels per day in 2021, more than a third of its total exports last year, according to Kepler.
Data showed that Iraq supplied China with 953,000 barrels per day in 2021, which is the second largest customer for oil last year, while Europe received 15% of Iraq's exports of crude oil in 2021.
However, Iraq has exported more crude to Europe in recent months, with May volumes rising to 635,000 bpd from 591,000 bpd in April and 500,000 bpd in March, according to Kepler data.
Russia's seaborne crude exports remained at their post-pandemic highs in the first half of June, as India and China continued to snap up reduced volumes and EU member states pulled back from oil trade with Moscow ahead of the bloc's first-quarter 2023 deadline to end imports of Russian crude.
Kpler's data showed that the two Asian oil importers had grown their share of Russia's shipped crude to nearly 30% and 20%, respectively, a combined growth of more than 1 million barrels per day over pre-war levels.
Russia's main export grade Urals crude has been trading at deep discounts to other grades since the country invaded Ukraine on February 24.
The Russian Urals are classified as medium acid, with a specific gravity of about 31-32 API with a sulfur content of 1.7%, and this makes them very similar in quality to other medium acid ores such as Basra Medium, Saudi Arabia Medium, and Arabia Heavy, Iranian Heavy, Brazilian Miro and Omani Crude Blend.
For his part, the oil expert, Amir Muhammad Al-Hasani, commented in an interview with Shafaq News Agency, on the possibility of Russian crude competing with Iraqi crude in Asian markets, saying that "Russian crude cannot compete with Iraqi crude markets," attributing the reason to the fact that the latter "deals with solid companies and has Forward contracts with Indian and Chinese state companies to buy oil.
And Al-Hassani said, "The demand for Russian oil comes from independent Indian companies, not government, due to the low prices sold to Asia after the embargo on Russian oil by the European Union."
He added, "Despite the entry of Russian oil to the Asian markets, Iraqi oil still ranks first for India's imports for the past months, and it ranks third for China's oil imports," adding that "the drop in Russian Urals crude prices raises the appetite of commercial oil companies in Asia."
He pointed out that "Iraq can play a greater role in exporting oil to Europe to compensate for Russian oil, and this is what we heard about from the desire of some countries, such as Britain, France and Germany, to obtain Iraqi oil during the coming period," stressing that "these exports will not be at the expense of its exports." oil destined for Asia.
The Iraqi Oil Minister, Ihsan Abdul-Jabbar, had confirmed Iraq's endeavor to increase its oil production to 8 million barrels per day at the end of 2027. LINK
Tehran Offers Cooperation To Baghdad: We Have 400 Oil Fields, Some Of Which Are Located On The Border With Iraq
Shafaq News/ The Executive Director of the National Iranian Oil Company, Mohsen Khojsteh Mehr, expressed his country's readiness to cooperate with Iraq in developing the oil and gas field between the two countries.
This came during the meeting of the joint working group for oil cooperation between Iran and Iraq, according to what was published by the semi-official Iranian news agency "Fars" today, Thursday.
Mehr said that all our efforts are aimed at moving in the various fields of oil and gas and developing economic relations between the two countries, adding, "The time has come for Iran and Iraq to take practical steps for cooperation in the field of oil and gas activities and the scientific, technical and educational sectors."
He pointed out that Iran and Iraq have great energies in the region and the world, and that both countries have strong influence and powers in the Organization of Petroleum Exporting Countries (OPEC), and serious cooperation between them is necessary in order to ensure sustainable energy security in the region, and this requires cooperation in various productive and scientific sectors. .
Mehr added by saying that Iran is ranked first in the world in terms of total oil and gas reserves in the world, and it has 400 oil and gas fields, some of which are located on the Iranian-Iraqi borders, while the current production of oil is 4 million barrels and gas is one billion cubic meters per day, and in order to deliver oil production to 6 million barrels within the next eight years, we need investments worth 90 billion dollars, and in order to bring gas production to 1.5 billion cubic meters per day, we need investments worth 70 billion dollars.
He said, "We want to accomplish part of these investments through joint cooperation with Iraq," adding that the opportunity exists today for joint cooperation with Iraq in the fields of exploration, extraction and production.
The Executive Director of the National Iranian Oil Company also noted Iran's capabilities in the technical and engineering services sector, saying: We are ready to cooperate with Iraq in various fields of geology, studies of oil and gas reserves, and the completion of seismic measurements and exploratory exploration.
He added that Iran has about 140 offshore and onshore drilling platforms to explore for oil.
Mehr saw that one of the other areas of cooperation between Iran and Iraq is in the education sector and technology transfer, saying: The University of the Oil Sector is ready to grant scholarships to Iraqi students. LINK
"The Biggest Loser" .. Russian Oil Hits The Iraqi Economy "Killed"
Shafaq News/ An American report stated that Iraq may be one of the biggest losers from the flow of cheap Russian barrels of oil to Asia, with the decline in demand for Iraqi oil in all its degrees.
Bloomberg quoted dealers as saying; There have been no immediate purchases of Basrah Medium Crude or Basra Heavy Crude so far in the current Asian trading session, while no tender has been awarded for the sale of Heavy Oil.
India and China are major buyers of Iraqi oil, but they boosted purchases of discounted Russian oil after the invasion of Ukraine.
Basra's medium and heavy crudes are the two main types that Iraq exports to international markets, so any reduction in volumes or prices would be a blow to the second largest producer in OPEC.
Dealers said that sellers of heavy oil discussed offering shipments at a discount to the official selling prices to attract buyers.
China increased its imports of Russian oil significantly in May, according to official figures, Monday, which helped Moscow compensate for Western markets that were deprived of it due to the sanctions imposed on it against the backdrop of its war in Ukraine, according to AFP.
This amount exceeds oil imports from Saudi Arabia (7.82 million tons), traditionally China's first oil supplier.
Western countries imposed unprecedented sanctions on Moscow in response to its invasion of Ukraine, and especially reduced its imports of Russian oil and gas.
In May, China's imports of Russian oil rose 55 percent year on year, according to released figures. Monday, by Chinese customs. Last month, the Asian giant bought from Russia about 8.42 million tons of oil, according to Chinese customs. This amount is much higher than the Russian shipments received by China a year ago (5.44 million tons). LINK