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By Mina Al-Oraibi, for Foreign Policy. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.
Iraq’s Oil Dysfunction
The world’s sixth-largest oil producer still suffers from fuel shortages and power outages.
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The post Iraq’s Oil Dysfunction first appeared on Iraq Business News.
Iraq’s economy is gradually recovering from the twin shocks of the pandemic and collapse in oil prices in 2020. Both oil and non-oil growth are on track to reach their pre-pandemic levels as oil production increases and the easing of COVID-19 restrictions restores domestic economic activity.
Fiscal and external deficits are back to surpluses as oil prices continue to surge. Growth in the medium term is projected to be driven by the oil sector as OPEC+ production cuts are phased out. The outlook remains subject to significant risks including uncertainties relating to the impact of geopolitical tensions, the ongoing pandemic, security challenges, and climate change.
Recent Developments
Iraq’s economy is gradually rebounding following the deep economic strains of the COVID-19 pandemic. Real GDP is estimated to have edged up by 1.3% in 2021, after a sharp contraction of 11.3% in 2020. The rebound was mainly driven by the non-oil sector which grew by 6% in 9 months of 2021-2021 year-on-year (y/y), underpinned by a strong performance of the high contact sectors including transport, accommodation, and retail sectors.
However, agriculture and construction contracted by 17.5% and 36.8% respectively, following severe droughts, energy outages, and the rising global price of inputs. In 9M-2021, oil GDP contracted by 4%(y/y) as Iraq adjusted its oil production as per the OPEC+ agreement. Headline and core inflation edged up to an average of 6% and 6.6%(y/y) in 2021, respectively, following the 23% devaluation in December of 2020 and the gradual recovery in domestic demand.
Outlook
The turnaround in oil markets has significantly improved Iraq’s economic outlook in the medium term. Overall growth in 2022 is now forecast at 8.9% as OPEC+ quotas end and Iraq’s production surpasses its pre-pandemic level of 4.6 mbpd. Growth in the outer years is projected to remain modest at 3.7% on average as oil production moderates.
Non-oil GDP growth is projected to converge to its long-term potential growth trend in part aided by higher investments that would be financed through the oil windfall. However, growth is forecast to remain constrained by the economy’s limited absorptive capacity and other inefficiencies.
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(Source: World Bank)
The post Iraq’s Economic Update — April 2022 first appeared on Iraq Business News.
By John Lee
Iraqi Prime Minister Mustafa al-Kadhimi has ordered that a working team from the Ministry of Electricity travel to Iran to solve problems related to the supplying of gas.
At a meeting with the Electricity Ministry and senior officials on Sunday, there was discussion about the high electricity demand in summer, and how to remove obstacles relating to the production and distribution of electricity.
The meeting addressed plans to protect electric pylons from sabotage, and the status of the rehabilitation work on the Baghdad / Baiji 400KV line.
(Source: Office of the Iraqi Prime Minister)
The post Iraqi Working Group to coordinate with Iran on Gas Supply first appeared on Iraq Business News.
By John Lee.
Iraq’s oil ministry has said that future of the long-delayed oil export pipeline from Iraq to the Jordanian port of Aqaba will be decided by the next government.
The country has still not formed a new government following parliamentary elections in October.
At a press conference at the weekend, the Ministry of Oil clarified that the project, which it says will not exceed $8.5 billion, is still “under technical study“, and has not yet been put out to contract.
It also revealed that the Council of Ministers agreed to change the contract basis from BOOT (build-own-operate-transfer) to EPCF (engineering, procurement, construction and financing), which is sometimes referred to as “turnkey“, for the entire project; it had previously been split between the two methodologies.
The total capacity of the pipeline from Basra to Haditha is planned to be 2 million barrels per day (bpd), with one million bpd planned for the section from Haditha and Aqaba.
The American company Honeywell UOP was recently approved to develop Haditha refinery.
(Source: Ministry of Oil)
The post Iraq-Jordan Pipeline Decision Delayed Again first appeared on Iraq Business News.
By John Lee.
DNO has issued an update on production and sales volumes for the quarter as well as other key financial information.
Volumes (boepd):
| Gross operated production | Q1 2022 | Q4 2021 | Q1 2021 |
| Kurdistan | 106,465 | 107,472 | 111,985 |
| North Sea | – | – | – |
| Net entitlement production | Q1 2022 | Q4 2021 | Q1 2021 |
| Kurdistan | 26,670 | 29,367 | 28,593 |
| North Sea | 12,700 | 13,571 | 15,173 |
| Sales | Q1 2022 | Q4 2021 | Q1 2021 |
| Kurdistan | 26,670 | 29,367 | 28,593 |
| North Sea | 10,689 | 23,289 | 10,953 |
Selected cash flow items
During the quarter, DNO received USD 206.6 million net from the Kurdistan Regional Government, of which USD 160.7 million represents the entitlement share of October, November and December 2021 Tawke license crude oil deliveries.
Of the balance, USD 13.8 million represents override payments equivalent to three percent of gross October and November 2021 Tawke license revenues and USD 32.1 million represents payments towards arrears built up from non-payment of certain invoices in 2019 and 2020.
DNO paid one tax installment of USD 12.6 million in Norway as tax losses for 2021 ended lower than estimated tax losses that were the basis for tax refunds received during H2 2021.
The Company paid a dividend of NOK 0.20 per share, totaling USD 22.2 million.
(Source: DNO)
The post DNO releases latest Production Data first appeared on Iraq Business News.
By John Lee.
The KRG’s Council of Ministers held its weekly meeting on Wednesday, led by Prime Minister Masrour Barzani.
Referring to the recent round of discussions to resolve the dispute over oil sales between Erbil and Baghdad, the Council stressed the importance of continuing to defend the Kurdistan Region’s constitutional rights within Iraq.
It added that negotiations with Baghdad will continue until a mutually acceptable agreement is reached concerning the Region’s oil and gas industry.
With no final agreement having yet been reached, the Council added that, while they regard the situation as a violation of the Iraqi oil and gas law, contractual obligations to oil companies currently engaged in the Region will be fulfilled regardless.
(Source: KRG)
The post KRG to continue Oil Negotiations with Baghdad first appeared on Iraq Business News.
By John Lee.
Genel Energy has announced that Nazli K. Williams has tendered her resignation as a Non-Executive Director of the company with effect from 13 April 2022.
David McManus, Chairman of Genel, said:
“Nazli has been a Director of Genel since the merger with Vallares in 2011. She has provided both valuable contributions and important continuity to Board considerations during her time on the Board.
“I thank her for her commitment to the company over the last decade and wish her the very best for her future endeavours.“
(Source: Genel Energy)
The post Nazli Williams steps down as Director of Genel Energy first appeared on Iraq Business News.
By John Lee.
Demonstrators have reportedly caused disruption at oil facilities in Dhi Qar on Wednesday.
According to Anadolu Agency, dozens of university graduates gathered at the Al-Gharraf oilfield to demand employment.
A local resident is quoted as saying that applications for jobs at the field had received no reply.
(Source: Anadolu Agency)
The post Protesters disrupt Gharraf Oil Field first appeared on Iraq Business News.
By John Lee.
The Iraqi federal government in Baghdad and the Kurdistan Regional Government (KRG) have concluded a first round of talks to discuss the management of the Kurdistan region’s oil and gas resources.
The meeting follows the ruling by a federal court in February that exports of oil and gas from the Kurdistan region were unconstitutional.
After the meeting, Baghdad’s Ministry of Oil has said that it has proposed that existing oil contracts in the region be transferred to a new company, to be set up in Erbil but owned by the federal authority.
Revenues from sales would be lodged to an escrow account at an international bank, owned by the Ministry of Finance.
(Source: Ministry of Oil)
The post Baghdad, Erbil conclude First Round of Talks on Oil first appeared on Iraq Business News.
By Samuel Ramani, for The Middle East Institute. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.
What does Russia’s war in Ukraine mean for Iraq?
Although Iraq has avoided taking sides in Russia’s war with Ukraine, the conflict could exacerbate factional divisions and profoundly impact the Iraqi economy’s near-term trajectory.
While the strides made in Russia-Iraq cooperation over the past decade are unlikely to be destroyed by the war, Baghdad is likely to limit its cooperation with Moscow to essential spheres and overcome the impact of sanctions by embracing a genuinely multipolar foreign policy.
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The post What does Russia’s War in Ukraine mean for Iraq? first appeared on Iraq Business News.