Thursday Evening Iraq Economic News Highlights 9-29-22
Thursday Evening Iraq Economic News Highlights 9-29-22
Oil signs a contract with China's Sonic to develop an exploratory survey in the Gulf waters
Money and business Economy News-Baghdad The Director General of the Oil Exploration Company, Ali Jassim Hammoud, revealed, on Thursday, the imminent conclusion of a work contract with an international company to develop exploratory survey operations in the waters of the Arabian Gulf, stressing that the step comes with the aim of maximizing and investing the national reserves of hydrocarbon wealth and compensating the depleted of it.
Jassim told Al-Sabah that "the project of seismic surveys of the Arabian Gulf is a qualitative leap in the oil sector's business record, and this step represents a starting point for exploratory work in regional waters."
He added, "Our first work in this project has become imminent, especially after concluding a contract with the Chinese company Cinoc for an exploratory survey in the Arabian Gulf in the land and marine parts of the territorial waters, and that we hope to maximize and invest the national reserves of hydrocarbon wealth by relying on concerted National efforts for the success of this experiment, which is the first of its kind in seismic surveys for our company.”
He explained, "Efforts are focused towards implementing the plans of the Iraqi National Oil Company in transforming expectations into a tangible matter," stressing the work and achievement with extreme accuracy and record speed by investing the efforts and expertise of the company's employees.
Jassim pointed out that "there are no limits to the ceiling of our ambitions in working to maximize hydrocarbon wealth, compensate for the depleted of it, and advance the national industry, taking into account the extreme accuracy in the work of seismic surveys, combined with reducing the factors of effort and time to reach the highest levels of quality and perfection," noting that "among the activities What we will try with the joint study with the Chinese company Cinoc are specialized bathometric and geophysical surveys, as well as high-resolution gravitational surveys of the work area.”
Views 13 Added 09/29/2022 - 11:41 AM Update 09/29/2022 - 12:59 PM
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Specialists: Oil prices are enough to cover costs, and their decline is ineffective
Posted On2022-09-29 By Sotaliraq Baghdad / Hussein Hatem After a rise that exceeded the $100 threshold for more than a month, oil prices fell back below $90, recording a decline in global markets, which raised Iraqis' fears in light of the longer political impasse after 2003 and the absence of the public financial budget.
However, specialists stressed that the decrease does not affect the economic situation and employee salaries as long as it is higher than the price specified in the financial budget for the year 2021.
According to the specialists, the prices are still appropriate to cover all costs and achieve a surplus of 100 million dollars during the coming period, while they stressed the need to employ the surplus funds in the industrial and agricultural sectors.
Oil prices fell by more than 1% on Wednesday, affected by the rise in the US dollar and the growth of crude inventories, which offset the support of US production cuts caused by Hurricane Ian.
Brent crude futures also fell 91 cents, or 1.05%, to $85.36 a barrel by 04:41 GMT, while US West Texas Intermediate crude futures fell 85 cents, or 1.08%, at $77.65 a barrel.
Economic expert Diaa Al-Mohsen said in an interview with (Al-Mada), that "whether oil prices rise or fall, the citizen is not a major player in them."
Al-Mohsen added, "The rise and fall in oil prices is subject to many variables, including political, economic and climatic ones."
He pointed out, "Oil prices, even with their decline, are higher than the figure specified during the public financial budget, and this is what keeps the economy away from danger and deterioration."
Al-Mohsen expected, "the arrival of oil revenues during the current year in light of the drop in prices from 90 to 100 billion dollars," pointing out "the possibility of covering the expenses of the past year, and eliminating the financial deficit completely."
He stressed, "the necessity of investing the money generated from oil revenues in the industrial and agricultural sectors and not relying on the rentier economy."
Al-Mohsen pointed out that “there is a reluctance with regard to economic development, and this indicates the government’s loss of correct planning by the ministries of planning and finance, and the failure to employ the surplus funds was the cause of the deterioration of the Iraqi economy and other real sectors such as agriculture and industry, in addition to the tourism sector, and there was no correct employment of the surplus funds. in these sectors,” noting that “this reluctance will not affect the salaries of employees and the operating budget.”
In turn, economic and financial expert Safwan Qusai said in an interview with (Al Mada), that "oil prices started to decline as a result of the interest rate increase by the US Treasury," noting that "the US Treasury is trying to withdraw the surplus liquidity in Europe and the rest of the countries to reduce the effects of inflation."
Qusay added, "The higher the interest rates, the lower the sales rates for international companies, and consequently the need for oil."
He pointed out, "There is a need for oil derivatives in Europe, especially in the next few months, as this may bring oil to a price of 130 dollars a barrel, especially if the United States, China, Japan and Europe raise the percentage of depreciation from their stores."
He added, "The increase in prices will lead to an increase in the price of a barrel of oil in the budget for the next year, as setting the price of $90 a barrel may be appropriate for the budget according to the increase in prices."
And Qusay, that "the industrialized countries will be the first to be affected by the shortage of gas, including Germany, which is considered the third in the world at the level of industries, which prompts the resort to oil derivatives to operate the stations and generate electricity."
He explained, "The prices are still appropriate to cover all costs and achieve a surplus of 100 million dollars during the coming period."
For his part, Professor of Economics at Basra University, Nabil Al-Marsoumi, said in a blog post that Al-Mada followed that "the drop in the oil price to $86 per barrel means that Iraq is close to the danger zone."
Al-Marsoumi added, “Iraq needs a price of $80 per barrel and exports of up to 3.3 million barrels per day in order to obtain oil revenues of up to 140 trillion dinars, which are sufficient with non-oil revenues to cover the requirements of public expenditures, which rose by 25 trillion dinars this year as a result of the legislation of the Food Security Law.”
Regarding the salaries of employees and retirees, Al-Marsoumi explained that “they are insured even if the price of a barrel of oil drops to 50 dollars, as one of the members of the Parliamentary Finance Committee says, and he cites that the same prices fell in 2020 to about 38 dollars a barrel and salaries were not cut off.”
He continued, "This is a very accurate statement, but the price was to raise the exchange rate of the dollar against the dinar by 23%, and the employees lost a quarter of their real salaries, while the poor lost a large part of their purchasing power as a result of the rise in commodity prices."
And the professor of economics added, "The price was also an increase in the internal debt in Iraq by 30 trillion dinars to reach 68 trillion dinars."
Al-Marsoumi went on, “As long as there is a balance in the Central Bank of Iraq of up to 85 billion dollars, it is possible to borrow from it, even indirectly, to pay salaries even if the internal debt exceeds the 100 trillion dinars barrier, and if it is not enough, it is possible to raise the exchange rate of the dollar against the dinar.” once again". LINK
OPEC+ Begins Talks On Cutting Oil Production
Energy Economy News _ Baghdad Three sources said today, Thursday, that prominent members of OPEC + began discussions on reducing oil production at the group's next meeting on October 5, according to "Reuters".
An OPEC source told the agency that a cut was "likely", while two other OPEC+ sources said senior members had spoken on the matter.
A source familiar with Russian thinking told Reuters earlier this week that Moscow could propose a cut of up to 1 million barrels per day. Views 12 Added 09/29/2022 - 11:59 AM Update 09/29/2022 - 1:05 PM
Report: India Is Communicating With Iraq To Obtain Liquefied Natural Gas
Energy Economy News – translation India has reached out to Iraq, Saudi Arabia, the United Arab Emirates and the United States to secure affordable liquefied natural gas (LNG), while LNG supplies from Russia's Gazprom are in decline, according to the Mint newspaper.
In 2018, Gazprom Marketing and Trading Singapore (GMTS), a subsidiary of Gazprom, signed an agreement with Gas Authority of India Limited (GAIL) to supply 2.5 million tons of LNG for a period of 20 years.
But since the beginning of the war in Ukraine, supplies of GMTS have been dwindling.
India's consumption of liquefied natural gas rose on the back of the center's decision to diversify its energy sources.
Currently, gas makes up 6.2 percent of India's energy needs. Mint added that the government plans to absorb it by up to 15 percent by 2030.
India is also largely dependent on imports to meet its oil and gas needs. Eighty-five per cent of the domestic demand for oil and 55 per cent of the domestic demand for gas is met by imports in India.
Mint quoted a government spokesman as saying that the center was trying to get gas from anywhere possible "at the most reasonable prices."
“So far, the availability of gas is not a problem, only the price. Today, gas is available everywhere, including in the United Arab Emirates and the United States. We are looking at negotiating to get a good deal where we can get gas at reasonable prices,” another official said. to Saudi Arabia, the United States, the United Arab Emirates, and Iraq.
The report added that India may not pursue arbitration against Gazprom, but may deal with the case bilaterally "at the highest level of the Indian government."
40 . views Added 09/29/2022 - 10:20 AM Update 09/29/2022 - 12:55 PM
With Iraq Looking To Boost Liquefied Gas Exports... India Is Looking For Gas At A Competitive Price
2022-09-29 Yes Iraq: Baghdad India is looking to buy liquefied natural gas from one of the four countries “Saudi Arabia, Iraq, the Emirates, and America”, as it depends on who will give facilities and competitive prices compared to the other, at a time when the Iraqi interest is clear in promoting its exports of liquefied gas.
In 2018, Gazprom signed an agreement with Indian Gas Limited to supply 2.5 million tons of LNG for a period of 20 years.
But since the beginning of the war in Ukraine, supplies of GMTS have been dwindling.
India's consumption of liquefied natural gas rose on the back of the center's decision to diversify its energy sources.
Currently, gas makes up 6.2 percent of India's energy needs. Mint added that the government plans to absorb it by up to 15 percent by 2030.
India is also largely dependent on imports to meet its oil and gas needs. Eighty-five per cent of the domestic demand for oil and 55 per cent of the domestic demand for gas is met by imports in India.
Mint quoted a government spokesman as saying that the center was trying to get gas from anywhere possible "at the most reasonable prices."
“So far, gas availability is not an issue, only price. Today, gas is available everywhere, including in the United Arab Emirates and the United States. We are trying to negotiate a good deal where we can get gas at reasonable prices, another official said.
The report added that India may not pursue arbitration against Gazprom, but could deal with the case bilaterally "at the highest level of the Indian government."
The Ministry of Oil seems to be greatly interested in the process of exporting liquefied gas, “cooking gas,” which is the same used in cars. With this growing interest, a question comes to mind regarding the ministry’s raising the price of a liter of gas sold for cars that run on gas in Iraq. The ministry plans to achieve greater benefit from exporting gas instead of selling it at a subsidized price to citizens.
Deputy Managing Director, Director of the Higher Production Authority of Basra Gas Company, Marfa Al-Asadi, said that “the company continues to work in the production of liquefied gas used in cooking to meet the country’s need,” noting that “the current production covers 80% of the local need, in addition to exporting the surplus.” 6 years ago, through the company’s Umm Qasr port.”
He added, "The company seeks to update its plans to export liquefied gas abroad, as it has worked on developing its facilities and exporting semi-cooled gas (4 degrees Celsius), which contributed to the possibility of loading the product on ships with larger capacities that almost double the previously exported quantity, It reaches 10,000 tons, which allows our product to reach farther markets and to have more tankers used for this substance, after relying on gas exports in small vessels with capacities ranging from 3,500 to 5,500 tons, depending on the type of ship. “.
Iraq produces more than 2.2 million tons annually, and according to statements that 80% of the production covers the local need, this means that about 440,000 tons are exported annually, while 144,000 tons were exported in 2017, which is the beginning of Iraq's transformation into a source of liquefied gas.
The price of a ton of gas is approximately $740 ($0.74 per liter), which is more than a thousand dinars per liter, a price equivalent to 5 times the price at which the ministry sells a liter to cars in Iraq at 200 dinars per liter, before the ministry decided to raise the price to 300 dinars per liter, and perhaps the ministry’s move aims to reduce its losses and reduce the number of cars that go to gas, thus making the most of the gas possible to export it abroad instead of selling it at a subsidized price inside Iraq.
And by exporting more than 400,000 tons annually, this means that it brings to Iraq money estimated at 300 million dollars annually, while selling this amount of cars inside Iraq at the subsidized price will bring only 54 million dollars. LINK
Iraq's Oil Revenues Begin To Go Down... Exports Drop By More Than Half A Million Barrels, And Revenues Drop By 7%
2022-09-29 Yes Iraq: Baghdad Iraq's oil revenues began to gradually decline the lower curve with the start of the decline in global oil prices, as well as the problems faced by the Ministry of Oil in the issue of export and production and their decline.
The Iraqi Ministry of Oil announced the total oil exports and revenues achieved for the month of August, according to the final statistics issued by the Iraqi Oil Marketing Company SOMO, which showed the loss of more than half a million barrels, specifically 525 thousand and 521 barrels.
Somo said in a statement that "the amount of crude oil exports for the month of August amounted to 101 million and 859 thousand and 528 barrels of oil, with revenues of 9 billion and 688 million and 903 thousand dollars."
The statistics indicated that "the total quantities of crude oil exported for the month of August from oil fields in central and southern Iraq amounted to 100 million and 760 thousand barrels, while the quantities exported of Kirkuk oil through Ceyhan port were 1 million and 109 thousand and 628 barrels."
And she indicated that "the average price per barrel amounted to 95,120 dollars, pointing out that" the exported quantities were loaded by (32) international companies of several nationalities, from the ports of Basra, Khor al-Amaya and mono-buoys on the Gulf and the Turkish port of Ceyhan.
While August exports amounted to 101.85 million barrels, July exports amounted to 102.38 million barrels, a decline of more than half a million barrels in August.
As for revenues, they decreased significantly, reaching 9.68 billion dollars in August, while in July they amounted to 10.36 billion dollars, which means a loss of about 700 million dollars, once due to the decline in oil prices, which fell in August to 95.1 dollars per barrel. The average price was $101.2 per barrel.
It is clear that the decline in exports by more than 525,000 barrels has caused a loss of nearly 50 million dollars, while the decline in oil prices has caused Iraq to lose more than 600 million dollars. LINK