Category: Investment

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Iraq was Largest Beneficiary of China’s Belt & Road in 2021

By John Lee.

Iraq was the largest beneficiary from China’s Belt and Road Initiative (BRI) in 2021, according to a study by the Green Finance & Development Center, at Shanghai’s Fudan University.

It says the country with the highest construction volume was Iraq, with about $10.5 billion, followed by Serbia (about $6.8 billion) and Indonesia (about $2.4 billion).

In the energy sector, Iraq received by far the most investment from China in 2021.

Iraq and China cooperate on oil (e.g., construction of the Al Khairat heavy oil power plant with a total value of about $5 billion), gas (e.g., development of the Mansuriya gas field by Sinopec together with Iraq’s Midland Oil Company), as well as solar (e.g., a 2 GW power PV project, currently in permission stage developed and owned by Power Construction Corporation of China valued at $3.7 billion).

The report suggests that the price for the solar power project seems unusually high if no energy storage facility is included, with a comparable 2.2GW solar plant completed in China’s Qinghai, with 202 MWh storage, at a cost of $2.2 billion.

A Chinese company, the China State Construction Engineering Corporation (CSCEC), will also rehabilitate Nassiryiah International Airport.

The full report can be read here.

(Source: Green Finance & Development Center)

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KRG PM meets President of the Iraq Britain Business Council

The Prime Minister of the Kurdistan Regional Government (KRG), Masrour Barzani, on Saturday met Baroness Emma Nicholson, President of the Iraq Britain Business Council (IBBC).

Prime Minister Barzani highlighted the reforms of the ninth cabinet, its bid to diversify the economy and crucially to make the Kurdistan Region a focal point for business.

Baroness Nicholson gave a briefing on the council’s work, especially its last conference which was held in Dubai and which concentrated on developing UK, Iraq, and Kurdistan Region trade relations.

(Source: KRG)

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IBBC Dubai Autumn Conference fields Top Speakers in All Sectors

As a measure of confidence in the global and Iraqi economy, the Iraq Britain Business Council (IBBC) is seeing a marked upswing in quality and quantity of speakers at the Autumn Conference at the Address hotel, Dubai 22nd November.

The topic, in line with COP26 and the new energy horizon, is one of sustainability. Not only is this a key question for the oil and gas sector in Iraq, but also for the diversification of the economy and sustainable finances and industrial sectors within the country. With the hope of formation of a new government and stronger oil prices and government revenues, this could be described as a critical juncture in the evolution of Iraq.

Will the Government make the bold reform steps its people require? Can the economy diversify and enable the private sector to flourish? How will Iraq reform its energy sector and inflect towards renewable power, and develop its agricultural intentions at a time of water scarcity? How best to train and employ the many young people in the short term and how can the digital transformation of Iraq be delivered.

The Oil Minister H.E Ihsan Abdul Jabbar Ismaael intends to attend, along with Dr Salem Chalabi President of TBI, the Iraqi Ambassador to UAE, the British Ambassador to Iraq, and HM Consul General to Middle East. There is a very strong showing among IBBC members, leading IOC’s including BP, TotalEnergies, and Basra Gas Company, and major suppliers to the Energy Sector such as Hydro-C and Oilserv and the ability to meet their CEO’s at the event.

Professor Frank Gunter will give his insightful analysis of the economic outlook for Iraq and the steps to reform it must take to create a sustainable economy.

Finance too is fielding heavyweight speakers from IFC, Standard Chartered, Sardar Group (Principal Sponsors), Emirates credit insurance and a representative Director General of the Finance Ministry. Of particular interest are companies dedicated to supporting reform in Iraq, notably City and Guilds via GEMs and Stirling Education who are setting up international level qualifications for Iraqi companies for the first time, to raise standards and opportunities for Iraqi companies and youth, and SAP who are dedicated to the digital transformation of Iraq and will be outlining their vision and practical steps to achieve this. Both skills and digital applications are key drivers of a sustainable economy and take centre stage in this respect.

On the Industry Panel we see Dahlia Energy, Sardar Group, Al Busttan and Khudairi discussing the diversification of the economy and how they can help sustain momentum into the future, with their forward-looking businesses.

In parallel the online Tech conference is addressing data and its benefit to Government, business and the citizen. Sponsored by SAP, who will lead on the benefits of data in digital transformation, complimented by UK’s GDS, Mastercard on smart cities, UK’s Agri-epicentre and British Water and Serco; all leaders in their fields and passionate about the benefits of technology and data in delivering sustainable future economies.

For companies looking to meet the main business leaders in Iraq, this really is a conference to attend. Not only to meet Government officials and ministers, but also the leading supply chain organisations and IOC’s and to learn about the future opportunities and likely evolution of Iraq’s economy. To this end there is a pre-conference reception the night before at the Iraqi pavilion Dubai Expo 2020, and many opportunities to interact with delegates during lunch and coffee breaks, as well as the ability to sign up to view the conference online.

For more information and the latest speaker line up- please go to: IBBC Autumn Conference – IBBC (iraqbritainbusiness.org)

About the sponsors:

Saradar Group: Principal sponsors

With more than 30 years of rich experience in the automotive sector, Sardar Group became the leading group in the Automotive Sector in Iraq. Their intimate knowledge of the Iraqi market helped import, stock and sell the right brands, types, and models, while their excellent reputation, track record and credibility have helped grow the business times many over since 2003.

Since 2005 with a desire to move from Automobile Trading to providing its customers with all-round Automotive Solutions, Sardar Group started utilizing the synergies of its existing operations to diversify its automotive business activities to include Trading, Leasing of Vehicles, Equipment & Machinery and most importantly Aftersales Service Support.

Today, Sardar Group represents world-renowned automotive brands and heavy construction equipment & machinery exemplified in the following brands:

  • Toyota & Hino (in partnership with Sumitomo Corporation)
  • Jaguar
  • Land Rover
  • Polaris
  • Doosan
  • TOTO

Hydro-C : Gold Sponsors

Hydro-C is catalysing the transition of fossil fuel-based energy to renewables by means of introducing sustainable green solutions into the industry to decarbonise operations and projects, and maintain profitable output. The company plan to focus on Solar, Wind and Hydro powers as a source of energy to achieve net Zero with energy providers and IOCs by 2050 in Iraq. By trading the UK innovative solutions and replicating successful projects which can cut on emissions and support sustainable growth. The company focus is on investing in the young generation, education, new technologies and innovations to support this transition.

SAP: Gold Sponsors

SAP is one of the world’s leading producers of software for the management of business processes, developing solutions that facilitate effective data processing and information flow across organizations. SAP helps companies and organizations of all sizes and industries run their businesses profitably, adapt continuously, and grow sustainably. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improves people’s lives. SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: 77% of the world’s transaction revenue touches an SAP system. SAP’s machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers’ businesses into intelligent enterprises. Their end-to-end suite of applications and services enables its customers to operate profitably, adapt continuously, and make a different

City&Guilds/ GEMS: Gold Sponsors

City and Guilds was Founded in 1878 and Granted a Royal Charter by Queen Victoria in 1900.

Global leader in skills development. 4 million people each year use City and Guilds to develop skills that help them into a job, develop on that job and prepare for their next job. Global Benchmark operating in Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Turkey and UAE

Vocational Education / City and Guilds Models in Iraq:

  • To Partner with Training Institutions for delivery of City and Guilds qualifications – pathway to work programmes with curricula developed by employers.
  • Accredit employers’ own training so employees can obtain internationally recognised qualifications.
  • Partner with Iraqi investors to set up Private Technical and Vocational Institutions that deliver City and Guild qualifications.

Operational in Baghdad, Basra, Erbil and exploring a project in Najaf.

Serco: Silver Sponsors

Serco is managing Air Traffic control systems in Iraq and internationally. In the Middle East, Serco employs more than 4,500 people across four countries including the United Arab Emirates, the Kingdom of Saudi Arabia, Qatar and Iraq

Basra Gateway Terminal: Bronze Sponsors

Basra Gateway Terminal (BGT) is Iraq’s premier container and multi-purpose cargo handling facility. It is situated in Umm Qasr, 50 km from Basra and 500 km from Baghdad.

Operated by International Container Terminal Services Inc. (ICTSI), BGT’s team of high-performing Iraqi and International port professionals deliver customer-focused, high productivity and congestion-free port services to Iraq’s economy.

Bell Finance LLC: Bronze Sponsors

Bell Finance Limited Liability Company was created in the US State of Delaware in July 2019 to build upon the Iraq Middle Market Development Foundation’s lending and educational activities in Iraq since 2005 (www.immdf.org). Bell will continue IMMDF’s lending activities by co-financing with Iraqi banks qualifying private sector projects that generate employment and economic growth in Iraq, incorporating Iraqi private sector companies as equity partners. Bell will also continue and expand IMMDF’s educational activities in Iraq.

(Source: IBBC)

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IBBC’s Autumn Conference – Open for Business Engagement

IBBC’s Autumn conference is back with a bang and open for business engagement.

On 22nd November this year the overarching conference topic is looking to the future with ‘sustainability’- whether in terms of energy and renewables, the Iraqi economy and its diversification, or sustaining finance, logistics and training. Underpinning much of this is the application of technology and modernising ways to run a successful economy, with the tech forum’s online sessions.

With a successful election now completed and a new government being formed, it’s a good time to discuss the prospects for reform and sustainability.

IBBC members find that the Autumn conference is probably the best forum to meet the leaders in the region and those engaged with provision of supply chains and decision making. Many of Iraq’s industry sectors have regional headquarters in Dubai, which enables the high turnout and interest in the networking opportunities.

The current speaker line-up is probably the best for some years, featuring the Iraqi Minster of Oil H.E. Ihsan Abdul Jabbar Ismaael giving a keynote speech, H.E. Dr Thani bin Ahmed Al Zeyoudi UAE Minister of State for Foreign Trade. Dr Salem Chalabi, President and Chairman of the Trade Bank of Iraq, Iraqi Ambassador to the UAE H.E. Mudaffar Mustafa Al Jubouri and UK ambassador Mr Mark Bryson-Richardson, Mr Simon Penny, UK’s Consul General and Trade Commissioner for the region, and top academic Professor Frank Gunter on the economic outlook for Iraq.

For those engaged with energy, Mr Zaid Elyaseri from BP will be speaking, and Dunia Chalabi will be representing new Iraqi entrants Total, who have signed contracts to invest USD 27 billion in and plan to bring in hundreds of expatriates into Iraq to develop the Ar-Ratawi oil field and build gas capture, solar power and injection water facilities. Leading figures from Oilserve, Ms Sara Akbar, and Hydro-C, Mr Hassan Heshmat, will discuss sustainable energy, and a separate session will be voted to Basrah Gas Company.

The Finance panel includes a stella line up with Emirates Credit Insurance Co, Standard Chartered Bank and IFC. Mr Aziz Khudairi heads the Industry panel and a significant group including Martrade and IBBC Autumn Conference Principal Sponsor Sardar Group.

Finally, and in parallel, an online Tech forum session on Data and its benefits to Government, Economies, business, and citizens, will include speakers from UK’s GDS, British Water, Agri-epicentre, Serco and Mastercard with more to be confirmed.

Overall, the panels will be exploring in more detail how to ensure the current high oil and gas prices can bring investment and rebalance the economy and promote and develop agriculture and enhance the food chain to increase employment and reduce food poverty. These discussions will also address how to improve the water supply and waste reduction and consider the role of clean power generation in relation to climate change and initiatives to improve sustainability.

We look forward to welcoming you to Dubai, or even following us online if you are unable to make it in person.

A pre-conference reception will be held at the Iraqi Pavilion at Dubai EXPO2020 in the evening of 21st November.

Finally, we’d very much like to thank our sponsors: Principal Sponsor Sardar Group, Gold Sponsor: Hydro-C, Silver Sponsor: Serco and Reception Sponsor: Basra Gateway Terminal

(Source: IBBC)

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DNO Completes $400m Bond Placement

DNO ASA, the Norwegian oil and gas operator, has completed the private placement of USD 400 million of new five-year senior unsecured bonds with a coupon rate of 7.875 percent.

The placement met strong investor demand across international markets and was significantly oversubscribed, leading the Company to upsize the new bond issue from USD 300 million to USD 400 million.

Settlement is expected on or about 9 September 2021, subject to customary conditions precedent, and an application will be made for listing of the new bonds on the Oslo Stock Exchange.

Net proceeds will be used towards refinancing of the DNO02 bonds (ISIN: NO0010823347) and general corporate purposes. In connection with the placement, the Company has agreed to buy back USD 154 million in nominal value of the DNO02 bonds with a call notice for the remaining DNO02 bonds and other details to be announced upon settlement of the new bond.

Pareto Securities AS acted as Global Coordinator and Joint Lead Manager together with Danske Bank and SEB as Joint Lead Managers.

(Source: DNO)

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Japan extends $300m Loan for Basra Refinery

By John Lee.

Japan’s Minister for Foreign Affairs, Motegi Toshimitsu, visited Iraq on Saturday, meeting with Foreign Minister Fuad Hussein, Prime Minister Mustafa Al-Kadhimi, and President Barham Salih.

Minister Motegi announced that Japan intends to extend the “Basrah Refinery Upgrading Project (Phase 3)” Yen loan project (up to the amount of 32.7 billion yen) [$300 million], and expressed his hopes that this project would contribute to providing the stable supply of energy and to creating jobs in Iraq. In response, Minister Hussein expressed his gratitude.

Minister Motegi added that he appreciates the publication of the “White Paper for Economic and Financial Reforms“, and stated that Japan looks to support Iraq’s reform efforts together with the international community through the “Iraq Economic Contact Group.”

Both sides also exchanged views on measures to prevent the spread of COVID-19 and means to improve the business and investment environment in Iraq.

(Source: Govt of Japan)

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KRG Bureaucracy Delays DNO Investment

DNO ASA, the Norwegian oil and gas operator, has reported operating profit of USD 61 million in the quarter ending 30 June 2021, its second consecutive profitable quarter since the onset of the COVID pandemic. Revenues totaled USD 184 million, up USD 14 million from the previous quarter, as higher oil and gas prices more than compensated for lower North Sea volumes sold.

Gross operated production at the Company’s flagship Tawke license in Kurdistan averaged 110,300 barrels of oil per day (bopd) in the second quarter, of which the Peshkabir field contributed 63,000 bopd and the Tawke field 47,300 bopd. Of the total, 82,700 bopd were net to DNO’s interest during the quarter.

DNO’s North Sea net production dropped to 9,900 barrels of oil equivalent per day (boepd) in the second quarter, primarily due to planned summer maintenance shutdowns at Marulk and Alve and infill drilling at Ula and Tambar. The Company expects the North Sea contribution to average 13,000 boepd for the year.

In the wake of an ongoing reorganization of Kurdistan’s Ministry of Natural Resources, the Company has experienced extended delays to the final approval of its 2021 Tawke field work program and budget as well as to the approvals necessary to fast track early production from the Baeshiqa license. The delays are expected to defer USD 50 million in 2021 DNO net spending in Kurdistan which could have generated up to 15,000 bopd gross production across DNO’s three operated fields (Tawke, Peshkabir and Baeshiqa) going into 2022.

With no new wells coming on production at the Tawke field in more than a year, the natural production decline has been partially offset by pressure support from reinjection of over 20 million cubic feet of gas per day from the Peshkabir field in addition to workovers and interventions of existing wells.

“We are eager to invest and produce more oil in Kurdistan,” said DNO’s executive chairman Bijan Mossavar-Rahmani. “In nearly two decades of operations in Kurdistan, DNO has confronted and overcome multiple challenges and we are well positioned to continue to do so,” he added.

In the North Sea, DNO maintains an active drilling program in 2021, including two appraisal wells on previous discoveries and three exploration wells, the first of which has been drilled leading to a discovery. In addition, the Company plans 10 development wells this year.

Recently, the DNO-operated Brasse project selected the Equinor-operated Oseberg facilities as the preferred development host. With total field reserves of 35 million boe and a relatively modest topside construction scope on Oseberg, Brasse has robust project economics based on a 2022 project sanction target.

With an operational cash flow of USD 160 million, an increase of 135 percent from the first quarter, the Company reduced its bond debt to USD 700 million through a USD 100 million partial bond redemption. DNO exited the quarter with a net interest-bearing debt of USD 396 million, the lowest level since yearend 2018.

DNO received USD 159 million in the second quarter from Kurdistan, up from USD 75 million in the first quarter of 2021. Additional payments this week bring the total 2021 receipts from Kurdistan to USD 290 million year-to-date. The arrears built up as a result of Kurdistan’s withholding of payment of certain invoices to DNO in 2019 and 2020 total USD 214 million, excluding any interest.

(Source: DNO)

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Iraq Borrows $360m to Reduce Gas Flaring

The International Finance Corporation (IFC), a member of the World Bank Group, is investing in Basrah Gas Company (BGC) to support one of the largest gas flaring reduction projects in the world, helping to improve energy access, prevent associated greenhouse gas (GHG) emissions and support a more resilient, sustainable energy sector in Iraq.

BGC is an Iraqi joint venture created to treat and process associated gas that would otherwise be flared. The project is expected to increase BGC’s processing capacity, thereby avoiding more unnecessary flaring and associated GHG emissions by around 10 million tons per annum. It will support Iraq’s transition to a lower carbon path and improve access to a domestic energy source, helping the country meet its growing power needs.

IFC is the lead arranger of the five-year, $360 million loan to BGC.

Ihsan Abdul Jabbar Ismail, Minister of Oil for Iraq, said:

“Signing the loan agreement reinforces the collective efforts to increase investment in associated gas flaring reduction using world-class technologies. It is in line with our objectives of turning flared gas into cleaner valuable energy and reducing the impact of the Green House Gas emissions on the environment.

“This loan opens new horizons for cooperation and collaboration that serve common purposes and interests, reiterating Iraq’s commitment to increasing investment in associated gas flaring reduction and to achieving the objectives set by the Paris Agreement.“

Malcolm Mayes, BGC Managing Director, said:

“We are delighted to have successfully signed this loan with IFC, the first loan facility of its kind in the energy sector in Iraq-a milestone to be proud of.

“The agreement demonstrates the strength of Iraqi companies and their ability to attract funding and trust from international banks. The intent of this five-year loan is to support BGC’s growth project and turn the otherwise wasted flared gas into much needed energy for the country. Our strategy is in alignment with the government of Iraq’s vision to power Iraqi homes with electricity and create a more sustainable energy industry.“

Sérgio Pimenta, IFC Vice President for the Middle East and Africa, said:

“This pioneering project has the potential to deliver significant environmental and economic benefits, including lower GHG emissions and increased fiscal revenues, and will improve energy access and lower costs for Iraqi citizens.

“The project comes after years of hard work and strong cooperation by all parties involved. We hope that it will send a strong signal to other investors and help drive more private investments to tackle climate change and support inclusive growth in Iraq.“

IFC’s investment comprises a $137.76 million loan for IFC’s own account, a $180 million loan in which participations were syndicated to eight international banks (Bank of China, Citi, Deutsche Bank AG, Industrial Commercial Bank of China, Natixis, Sumitomo Mitsui Banking Corporation, Société Générale and Standard Chartered Bank), and a $42.24 million loan through IFC’s Managed Co-Lending Portfolio Program, a platform that allows institutional investors to participate in IFC’s loan portfolio. The loan is without recourse to or guarantees from any of the shareholders.

Iraq is endowed with significant reserves of natural gas, mainly produced as a byproduct of legacy oil extraction. However, in the absence of adequate infrastructure to capture and process it, about 70 percent of all natural gas produced in the country is flared. Capturing associated gas for subsequent use can help Iraq reduce overall emissions.

The project benefits from long-standing engagements of the World Bank Group in Iraq’s energy sector. Iraq joined the Global Gas Flaring Reduction initiative in 2011 and committed in 2013 to eliminate all routine natural gas flaring by 2030.

(Sources: IFC, Iraqi Govt)

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