Iraqi PM stresses integrated approach for oil and gas investments, 1 OCT
Sunday, October 1, 2023
"RV UPDATE" BY NADER FROM MID EAST & KAPERONI, 1 OCT
Nader From The Mid East
About the HCL - We received some payments...I checked my bank over there. I received some money.
It's good news. It's great. So the HCL start paying. This time we got some money. Next time a little less but it's going to be month to month and it's going to depend on if oil is going up or down...hang in there. It's happening.
Kaperoni
...In order for Iraq to go international they'll have to be IMF Article VIII compliant. They're not close with a current market rate of 1152 which is over 18% from the official rate. Well out of compliance.
There are many countries around the world with weak currencies, and Iraq's currency will remain weak until they diversify their economy.
The Central Bank announces that the rate of trade use of the dollar platform has increased by 95%, 1 OCT
The Central Bank announces that the rate of trade use of the dollar platform has increased by 95%
9-30-2023
The Central Bank announces that the rate of trade use of the dollar platform has increased by 95 percentInformation/Baghdad..
Al-Alaq said in an interview with the official agency followed by “Al-Maalouma” that “the electronic platform witnessed many difficulties at the beginning of its work that led to the reluctance of some to enter into it,” indicating that “the implementation rate in the electronic platform has now increased from 20 percent to 95 percent, and this gave We are reassured that accessing the platform provides speed and safety.”
He added, “Entering the electronic platform in the external transfer process saves all parties from the risks of being exposed to local and international sanctions.”
Al-Alaq stated that “90% of the Central Bank’s sales are for the purposes of remittances and external transfers, and they are proceeding smoothly and at the official price (1320), but the problem lies in the cash side, which represents 10% of internal daily sales.”
He pointed out that “the ten percent rate is sufficient to meet the needs of travelers, but some are trying to dominate by withdrawing the amount allocated to travelers, which creates pressure and an increase in the cash price, and these parties have been identified as carrying out illegal and criminal operations.”
Al-Alaq warned of “some merchants who cannot work in an organized atmosphere, and are looking for chaos, and that the Central Bank is working to surround this challenge in coordination with the government to besiege these groups that are being diagnosed and followed up.”
almaalomah.me
The sovereignty complex impedes the adoption of the oil and gas law in Iraq, 1 OCT
The sovereignty complex impedes the adoption of the oil and gas law in Iraq, 1 OCT
Advisor to the Iraqi Prime Minister, Mazhar Salih, stated that the pending oil and gas law will attract investment and increase revenue.
In his statement, he mentioned that the new law will create a consistent plan for the oil industry in the country, encouraging investments in oil and gas projects. It will also establish a single oil policy and a committee to oversee oil and gas fields. This will enable Iraq to make the most of its hydrocarbon resources, including those in the Kurdistan region.
It is expected that passing the law will enable production-sharing agreements with foreign companies. However, differences between Baghdad and Erbil remain an obstacle to its adoption.
If natural resources were distributed based on citizenship, technical disputes would remain.
Experts believe that the dispute between Baghdad and the Kurdistan region is primarily related to sovereignty over oil rights, production, and revenues. The central government of Baghdad is pushing for all rights to be owned by them, which would result in the revenues being deposited into a single account under the supervision of the central government. On the other hand, the Kurdistan region authorities want to have the freedom to contract with foreign companies and retain the right to deposit the revenues into their own accounts, thereby not making them subject to the supervision of Baghdad authorities.
According to Representative Firas Al-Muslimaoui, there is a strong desire within the House of Representatives to pass legislation. He emphasizes that Iraq’s oil is unified and there are ongoing efforts to ensure equitable distribution of wealth to the people, regardless of their region – be it Kurdistan, the central region, or the southern region.
Before the closure of the Ceyhan line in Turkey, the Kurdistan Region exported approximately 450,000 barrels of oil per day, while Iraq’s daily export was around 3 million barrels.
Mazhar Salih emphasized the importance of adopting a unified national oil policy and achieving optimal investment and production across Iraq’s oil fields. This includes both the southern and northern regions, as well as other regional fields. By doing so, Iraq can take advantage of opportunity costs and operate its oil policy in a more harmonious and effective manner. This will lead to better financial returns for the country, thus enabling it to finance various developmental projects and build a sustainable economy for the future.
The proposed oil and gas law in Iraq, which is currently under review by the Parliament, includes a provision that mandates a national oil company to manage the country’s oil fields. This management must be supervised by a specialized federal council. According to the Kurdistan authorities, the Iraqi government has the right to participate in the management of oil fields discovered before 2005, but any fields discovered after that date belong to the regional government.
As per the Iraqi News Agency, the consultation committee comprises the Minister of Oil, the Minister of Natural Resources in the region, the Director General of SOMO Company, and the advanced staff in the Ministry of Oil. It also includes the governorates that produce oil such as Basra, Dhi Qar, Maysan, and Kirkuk.
Iraqi Prime Minister Muhammad Shiaa Al-Sudani emphasized the significance of the oil and gas law at the beginning of August. He stated that the law is crucial to Iraq’s strength and unity, and has been pending for years. It is urgently needed to capitalize on the country’s natural wealth and address many outstanding issues across different sectors.
The political system in Iraq, which is based on the rule of sectarian quotas, is the main cause of conflict in the country. Experts suggest that if the oil and mineral wealth were divided based on citizenship, with rights to revenues shared on the basis of population size, the dispute over other details would only be a technical matter. The current dispute is between two parties, each of which wants to control its sovereignty. The central government claims to represent all of Iraq, while the Kurdistan Regional Government argues that the federal system allows it to control the region’s oil revenues. This situation has led to a legal and political dispute.
In February 2022, the Federal Court in Baghdad ordered the region to deliver oil produced within its jurisdiction to Baghdad. Additionally, it nullified contracts signed between regional authorities and foreign companies and instructed them to cancel such agreements.
According to observers, the problem facing the ruling parties in Baghdad goes beyond sovereignty issues. It also includes Iran’s concerns that the region should have its own funding source and not be under the supervision of the central authority. This provides a basis for separatist motives.
After lengthy discussions and the need to approve the general budget for three years, a temporary agreement was reached between Baghdad and Erbil in early April. The agreement stated that Kurdistan oil sales would be conducted through the Iraqi Oil Marketing Company (SOMO) and the generated revenues from the region’s fields would be deposited into an account at a bank approved by the Central Bank of Iraq.
The issue at hand is not only about external factors, but also involves internal conflicts within the Kurdish community. The Patriotic Union of Kurdistan Party, led by Bafel Talabani, is advocating for the protection and guarantee of the share of Sulaymaniyah Governorate. This region constitutes their main base and they want it to be safeguarded by the central government. They do not want it to remain subject to the wishes of the regional government in Erbil, which is controlled by the Democratic Party of Kurdistan Region led by Masoud Barzani.
The government in Baghdad is concerned that giving extensive powers to regional authorities could potentially encourage local authorities in oil-producing provinces like Kirkuk and Basra to gain control over investment, extraction, and marketing rights similar to what the regional government is requesting. As “federal Iraq” takes into account sectarian divisions and provides the Kurds with broad administrative powers, the governorates dominated by Sunni and Shiite populations will also aspire to have the same rights as a region.
The proposed legislation comprises 53 articles that mandate the establishment of the Federal Petroleum Council. The Council will be chaired by the Prime Minister and consist of ministers and representatives from the governorates. The Council is tasked with formulating petroleum policies, issuing guidelines for implementing contracts, approving exploration, development and production, as well as sanctioning completed contracts. All agreements must be signed by the Federal Ministry of Oil and endorsed by the Federal Oil Council within three months.
The proposed oil and gas law before Parliament requires a national oil company to oversee oil field management.
Some experts in the oil industry have expressed concerns over the proposed law, stating that if it is passed in its current form, it will result in reduced treasury revenues. This is because every governorate will want to assert ownership over oil discoveries made after 2005, similar to the example set by Erbil, and supply only a percentage of it to the treasury.
The regional government is trying to restore its lost power by proposing that investment, extraction, and marketing decisions related to Basra fields should be based on consensus between the two parties. This can create a complicated situation where investment decisions in the Basra fields would be subject to approval by the regional authorities, while investment decisions related to Kurdistan rights would require approval from Baghdad. The ultimate goal is to regain control over the decision-making process and restore the lost sovereignty.
Representative Al-Muslimaoui said he expects the draft oil and gas law to be completed and approved within four months.
Al-Muslimaoui is one of the majority representatives in Parliament who believe that Iraq’s oil should be managed by a single administration. However, this belief fails to take into account the fact that the sectarian quota system is the root cause of the problem, which prevents Iraq’s oil from being managed as a single entity. The current system divides the oil revenues based on citizenship and population, making it natural for the Kurds to consider their oil as their own, and for the Sunnis and Shiites to follow suit by considering the resources of their respective provinces as their own.
Al-Rafidain Bank Enhances Social Protection with Salary Distribution in Iraq, 1 OCT
Al-Rafidain Bank Enhances Social Protection with Salary Distribution in Iraq, 1 OCT
In a move signifying a commitment to social protection, Al-Rafidain Bank, one of Iraq’s leading financial institutions, has recently announced the distribution of protected salaries. This crucial development will ensure the continued financial security of individuals who depend on these salaries for their daily living.
Alleviating Financial Insecurity
The exact number of individuals who will benefit from this distribution hasn’t been specified in the bank’s announcement. However, the impact of this development is expected to be significant, especially for those who heavily rely on these protected salaries. The announcement underscores Al-Rafidain Bank’s dedication to ensuring that individuals receiving social protection benefits continue to do so in a timely manner.
A Beacon in a Troubled Economy
This move by Al-Rafidain Bank comes at a time when Iraq’s economic and political climate is marred by instability, which has led to a general climate of mistrust. Many prefer to stockpile cash at home rather than depositing it in banks, undermining the development of Iraq’s banking system. This system is already strained due to insufficient legal and regulatory frameworks and the influence of the country’s oil rentier model.
Despite these challenges, some individuals are looking beyond the traditional banking system, exploring opportunities in digital banking. Advocates argue that this could broaden the Iraqi public’s access to financial services and bolster economic development. However, cash remains the dominant mode of transaction in Iraq.
Embezzlement Scandals and Corruption
Al-Rafidain Bank’s decision comes in the wake of massive embezzlement scandals dubbed the “theft of the century” that has gripped the nation since mid-October. This scandal saw a network of thieves forge documents to withdraw 2.5 billion in cash from an idle government account. The money vanished into shadowy real estate purchases and foreign banks, implicating high-ranking officials, bank clerks, and crooked businessmen. The corruption case underlines that Iraq is in the grip of systemized corruption, which is devised, managed, and protected by the political elite. This elite group has controlled the country since 2003, dividing up power and resources among themselves.
Focusing on Social Protection
Against this backdrop of corruption and mistrust, Al-Rafidain Bank’s initiative represents a crucial step towards ensuring financial security for those covered under social protection schemes. According to the Social Protection Authority in the Ministry of Labor and Social Affairs, the social welfare salary for November 2020 has been released for more than 1,300,000 families across the Iraqi governorates. This amounts to more than 214 billion dinars.
The Director-General of Social Protection, Hussein Ali, stated that “the number of families with breadwinning men reached 963,676, benefiting from an amount of more than 161 billion dinars, while the number of families with breadwinning women reached 430,260, benefiting from 52 billion dinars”.
The social welfare salary is currently being paid monthly (instead of every two months) according to an agreement with Al-Rafidain Bank. This move is undoubtedly a beacon of hope in a troubled economic landscape, reflecting the bank’s commitment to upholding social protection and alleviating financial insecurity for numerous Iraqi families.
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