Iraq: Turkey to be major outlets for gas exports

22 septembre 2009

(MENAFN) A spokesman for Iraq's Oil Ministry said that Turkey would be one of the major outlets for Iraqi gas exports in the future, once local needs are covered, Aswat Al Iraq reported.

He said that after Iraq's gas output reaches the export stage, Turkey is expected to be a major outlet through the Nabucco pipeline to Europe, and the joint Arab gas pipeline.

The spokesman said that Iraq is planning to boost oil production and accordingly reflect on its gas output in the different oilfields, such as the Akkas oilfield or the ones in the province of Basra.

Turkey's Minister of Energy & Natural Resources, Taner Yildiz, said earlier that his country and Iraq have gone through discussions regarding the potential signing of a memorandum of understanding (MoU) to export Iraqi natural gas to Europe via the Turkish territories through the Nabucco pipeline whose investments reaches $11.6 billion.

The Minister noted that the pipeline network is backed by several European Union (EU) countries and the US. The pipeline is expected to carry gas from the Caspian Sea and the Middle East to central Europe, in line with plans of curbing dependence on Russia by the year 2014.

Turkey, Iraq in extensive cooperation talks

Senior ministers from Turkey and Iraq met here Thursday for two-day talks aimed at boosting cooperation in a wide range of areas, mainly in the economic field.

Turkish Foreign Minister Ahmet Davutoglu hailed the meeting as "a new model of partnership" between the two neighbours, whose ties have often been troubled by separatist Kurdish rebels taking refuge in the mountains of northern Iraq.

"The objective is to secure genuine economic integration on the highest possible level between our countries," Davutoglu said.

"The projects that we are going to develop will link Basra and Edirne," he said referring to the southern Iraqi city and Turkey's westernmost province.

His counterpart Hoshyar Zebari, who led the Iraqi delegation, pledged to boost cooperation "in all fields ... security, economics, energy, water and health."

The meeting was meant to prepare the ground for a visit to Baghdad by Turkish Prime Minister Recep Tayyip Erdogan, planned for October, during which the two sides are expected to launch a series of joint projects.

The two countries' ministers of the interior, foreign trade, energy, construction, health, transport, agriculture and environment were taking part in the talks.

Turkish-Iraqi ties have improved since last year after Baghdad and the Iraqi Kurds pledged to end the safe haven Kurdish rebels enjoy in northern Iraq, setting up a three-way commission, including the United States, to deal with the problem.

Later Thursday, Davutoglu and Zebari were to be joined by Syrian Foreign Minister Walid Muallem and Arab League Secretary General Amr Mussa for talks aimed at defusing simmering tensions between Baghdad and Damascus.

Turkey has been acting as a peacebroker after the neighbours' tit-for-tit recall of envoys last month, six days after massive bomb attacks in Baghdad whose masterminds, Iraq says, are harboured in Syria.

Syrian President Bashar al-Assad had separate talks with Erdogan in Istanbul Wednesday.

Iraq says it has evidence backing allegations that militants based in Syria orchestrated the August 19 truck bombings that killed 95 people and wounded 600 at the finance and foreign ministries in Baghdad.

The flare-up threw into disarray extensive efforts in the past year to boost ties between the countries, which had been weak under Iraqi dictator Saddam Hussein and his Baathist rule but had recently been improving.

SUMMARY OF PROCEDURES AND COSTS FOR SETTING UP A BUSINESS IN IRAQ

STANDARDIZED COMPANY

Legal Form: Private Limited Liability Company

Minimum Capital Requirement: 2,000,000 ID

City: Baghdad

This table summarizes the procedures and costs associated with setting up a business in Iraq.

Registration Requirements for setting up a company
No:	Procedure	Time to complete	Cost to complete
1	Search for a company name; obtain a name reservation letter from the Baghdad Chamber of Commerce	2 days	ID 350,000
2	Hire a lawyer to draft articles of association	1 days	about ID 900,000
3	Deposit initial capital at commercial bank and obtain confirmation receipt	2 days	ID 5,000
4	File for registration at the Commercial Registry	14 days	ID 250,000 - 350,000
5	Advertise incorporation notice in the newspaper	3 days	USD 70
6	Make company seal	2 days	ID 20,000
7	Obtain registration certificate	1 days	included in proc. 4
8	Report to tax authority to establish tax registration	2 days	no charge
9	Legalize accounting books	2 days	USD 150
10	Register employees for social security	3 days	about ID 20,000
11	Apply for a trade license	30 – 60 days	ID 200,000

Canada SNC-Lavalin, URUK shortlisted for Iraq deals

BAGHDAD, Sept 3 (Reuters) - Canada's SNC-Lavalin Group Inc. and Iraqi-owned URUK Engineering Services have been shortlisted for $255 million in contracts to install gas turbines in three power stations, an Iraqi official said.

Laith al-Mamury, the head of the investments and contracts office in the Iraqi Electricity Ministry, said SNC was a finalist for contracts to install the turbines in two of the three sites. Dubai-based URUK was shortlisted for one site.

"We have recommended these two companies to the cabinet and we are waiting for approval," Mamury told Reuters on Thursday.

Mamury said the three sites would produce 660 MW of power.

The ministry, starved of resources this year after tumbling oil prices forced Iraq to slash its 2009 budget three times, had $100 million of the money needed, and would divide that up among the three sites for start-up costs.

The balance -- $155 million -- would be funded in the 2010 budget, Mamury said.

The gas turbines being installed were delivered by General Electric under an earlier contract. (Reporting by Aseel Kami; Editing by Michael Christie)

Deutsche Bahn to Rebuild Iraqi Rail Network

Tuesday, June 23rd, 2009

Germany’s rail operator Deutsche Bahn wants to help rebuild Iraq’s rail network. CEO Rüdiger Grube aims to draw up an initial agreement with the Iraqi Transport Minister later this week.

Deutsche Bahn, which runs Germany’s railway network, has set its sights on rebuilding the Iraqi railways. Deutsche Bahn’s Chief Executive Rüdiger Grube is meeting with Iraqi Transport Minister Amir Abdul-Jabar later this week to seal an initial agreement. The company is particulary interested in working to rebuild the country’s freight train network and is hoping to operate it later with Iraqi partners.

There are still no details of the value of the investment planned nor the scale of the project.

Until now, talks between Deutsche Bahn and Iraq have remained highly secretive. The company’s former boss Hartmut Mehdorn first sent reprepresentative to Iraq a year ago to evaluate the business opportunites in the country.

Germany has a long history of railway building in the region. More than a century ago, Kaiser Wilhelm II struck a deal with the Ottoman Empire to build the Baghdad railway with finance from Deutsche Bank.

Last year, Germany and Iraq signed a bilateral investment agreement designed to boost business links between the two countries. The deal was said to be the first of its kind following the 2003 US-led invasion of the country.

At the time, German Economy Minster Michael Glos said: “With backing by investment guarantees from the federal government … German firms can in future make an important contribution to the reconstruction of Iraq.”

– jas, SPIEGEL and wire reports

IRAQ: In Need Of Infrastructure Investment

The Iraqi government is keen to invite foreign investment into the power sector. With demand estimated at between 8,500MW and 9,000MW nationwide, and supply into the national grid averaging just 5,400MW over the first four months of 2009, generation is in need of a considerable boost. The Iraqi government is trying to address the problem, and has pledged to install up to 30,000MW of generating capacity. The Iraqi government is keen to invite foreign investment into the power sector. With demand estimated at between 8,500MW and 9,000MW nationwide, and supply into the national grid averaging just 5,400MW over the first four months of 2009, generation is in need of a considerable boost. The Iraqi government is trying to address the problem, and has pledged to install up to 30,000MW of generating capacity. Well Short Of Demand Iraq - Electricity Supplied To National Grid Source: BMI, Brookings Institution Baghdad has made deals with GE Energy and Siemens for the delivery of turbines with a combined generation capacity of 10,150MW, but the government has yet to make plans for the installation and commissioning of these turbines in power plants. Moreover, as Baghdad has been forced to slash its 2009 capital expenditure budget (due to low oil prices), it is now looking for increased foreign involvement in the process. Although overseas contractors will be wary of entering the power sector at this stage, some progress is being made. In May, Iraq signed a US$120mn deal with Pratt & Whitney to build a gas power station with a capacity of 180MW in Missan province. The follows the announcement in January that the company had won a US$70mn contract to supply gas turbines. The structure of this deal is unclear. However, BMI understands that the model the government intends to use for Independent Power Production (IPP) contracts is still in the works, and so companies are likely to prefer engineering, procurement and construction (EPC) contracts for now. Indeed, EPC contracts would commit companies to Iraq for a shorter time period, and the financial risk is lower (though not negligible) as the government will guarantee payment. Instability Hindered Investment Iraq - FDI Inflows (US$mn) Source: BMI, UNCTAD Iraq's reconstruction and economic development will require hundreds of billions of dollars of infrastructure investment and Baghdad hopes that foreign partners will play a sizeable role. We would therefore expect to see a number of major deals over the coming years such as the one announced in April, whereby Iraq entered into an agreement with an Italian consortium to construct a US$3.7bn port close to Basra in the Gulf. Infrastructure projects will likely be principally directed towards supporting the oil and gas sector for now, but over the longer-term, broader-based projects are likely to also take off. But Challenges Abound Foreign investors are likely to find that doing business in Iraq is going to be challenging for several years to come (at least), and there will be a reluctance among many to be first (or early) movers. The challenges are reflected in our proprietary business environment ratings, where Iraq scores a low 23.5 (159th out of 167 countries we rank), with this score weighed down by a very poor score of 18.9 (160th) in the 'infrastructure' sub-component. That said, the other main sub-components do not paint a much better picture: 'institutions' score 25.7 (149th) and 'market orientation' scores 25.9 (155th). Three particular issues stick out for attention. Firstly, there is the problem of governance. Institutional infighting, competing local vested interests, and an inefficient bureaucracy has meant that the investment process has heretofore been excessively time-consuming and frustrating. This was acknowledged by Deputy Prime Minister Barham Saleh, who stated at the recent Invest Iraq conference in London: 'The number one issue for investors was the legislative environment and some of the bureaucratic impediments that an investor would have to deal when they contemplate working in Iraq.' In order to cut through the cumbersome bureaucracy, the government recently formed the National Investment Commission, which it intends to act as a 'one-stop shop' for foreign investors. Still Bottom Of The Class Transparency International's Corruption Perception Index (out of 10) Source: BMI, Transparency International Secondly, and related to the first point, corruption in Iraq is high. According to Transparency International's 2008 Corruption Perceptions Index, Iraq comes in 178th out of 180 countries surveyed. A degree of corruption can certainly grease the wheels of commerce in the early stages of a country's development, and oil companies in particular have investments in countries where perceptions of corruption are high. However, endemic corruption will likely act as a hindrance to investment over the longer-term. Thirdly, the shallowness of the domestic financial services sector threatens to act as a major impediment to investment. In Iraq, housing banks or mortgages do not yet exist, so even though the government is keen to encourage investment from foreign property developers to help remedy the country's housing shortage, these investors will no doubt have reservations. As another example, the underdeveloped banking system means that many Iraqi would-be importers may struggle to secure trade finance, without which potential export partners are just not going to be interested. Consequently, economic development will be hampered unless Iraq rapidly builds up its financial infrastructure. Baghdad has been keen to lay down the welcome mat to foreign companies, hopeful of securing a 'peace dividend'. We do see investment picking up over the coming years, but serious impediments clearly remain.

Small businesses in Iraq deserve credit

• Published: 21 August 2009 12:08 GMT
• Author: Sophie Evans

Until more small firms get ready access to credit, the Iraqi economy will fail to live up to its potential.

Iraq's aspiring entrepreneurs are being held back by the unwillingness of the country's banks to lend to small companies.

Although the US-led Coalition Provisional Authority encouraged Iraq's private companies by awarding reconstruction contracts after the end of the 2003 war, a weak banking sector has starved new businesses of credit.

Just 36 largely undercapitalised banks operate in the country, and in June average local currency interest rates for loans of up to five years in length were a prohibitive 16.4 per cent.

The most prominent local lender is Trade Bank of Iraq (TBI), which was established by the Finance Ministry to facilitate Iraq's international trade and the reconstruction of the country after 2003.

Established in partnership with a foreign consortium led by US investment bank JP Morgan, TBI introduced Iraq's first international credit card in 2005 and built relationships with an international network of 120 prime banks covering 60 cities in 37 countries.

In 2008, it issued $9.1bn worth of letters of credit and guarantees. But this multi-billion-dollar loan book only focuses on extending credit to Iraq's large companies; it is not proving easy for local small and medium-sized enterprises to avail themselves of credit.

Foreign-owned banks, such as Bank of Baghdad, part of Kuwait's Kipco, Credit Bank of Iraq, part of National Bank of Kuwait, and Al-Mansour Bank, owned by Qatar National Bank, enjoy the benefits of their parent companies' deeper pockets to invest in new technology and offer more diverse products, including lines of credit for small and medium-sized enterprises. Until more of these businesses can get ready access to credit, the Iraqi economy as a whole will fail to live up to its potential.