By Samar Rassam-Whitticombe
I wish everyone a very Happy New Year. May God bless you all with prosperity, peace and stability in 2019.
Summary of 2018
The parliamentary elections on 12 May saw a new Iraqi government in place. Mr Barham Saleh took over as the new President. The new Prime Minister is Mr Adel Abdul Mahdi and a new cabinet were also elected.
On 20 September Mr Muhammad Al Halbusi was appointed as the Speaker of the Iraqi Council of Representatives, followed in October by the appointment of Mr Thamir Al-Ghadhban as the new Iraqi Minister of Oil.
In September, Siemens presented a reconstruction plan to the Power Sector of an 11GW agreement which would examine “a series of short-, medium- and long-term plans to meet the reconstruction goals of Iraq and support the country’s economic development”.
In October, Siemens and GE both signed preliminary agreements to add 11GW and 14GW respectively to Iraq’s power infrastructure amid competition for multibillion dollar contracts.
Shell withdrew from the implementation of its obligations to develop the Majnoon oil field in Basra, and handed over operations to Basra Oil Company (BOC) at the end of June. On 19 December, BOC signed two contracts in order to boost production as well as consolidate technical management of the field. One was with the international company Schlumberger to drill 40 oil wells at Majnoon and the other was with the Iraqi Oil Exploration Company (OEC) to carry out seismic surveys at the oil field.
On 22 December, the Iraqi Prime Minister praised the US for its decision to extend the waiver on Iran sanctions by 90 days in order to allow Baghdad to purchase Iranian electricity. This will finally allow Iraqis to benefit from 24 hours of electricity.
On 24 December, at the Arab Petroleum Exporting Countries (OAPEC) event in Kuwait, the new Minister of Oil Mr Ghadban stated that Iraq was keen to strengthen relationships with brethren Arab countries because greater cooperation was needed to face the major challenges in the oil market. The subjects discussed were international oil markets, environmental monitoring and climate change, as well as studies by OAPEC and the Arab Oil Institute.
There are still some vacancies in the Cabinet, which hopefully will be filled in 2019 – these are the Ministers for Defence, the Interior and Justice
There was an encouraging considerably higher oil price throughout the year, though it did decrease towards the end of the year. There is still a certain amount of fear amongst Iraqi decision makers due to the oil price collapse and fluctuation that has been happening since June 2014, as well as potential social unrest, and I think that will take a while to settle down as the troubles aren’t that far behind us yet and there is a lot of work to do to get Iraq back to where it was before ISIS. The good news is that it is predicted that Iraq’s GDP is to grow by 4.1% in 2019 thanks to the 2018 oil prices.
There were protests in the South of Iraq over the summer where people took to the streets demanding basic services, which highlighted the problems with unemployment, corruption, shortages of electricity and access to water.
Although the defeat of the Islamic State was a major cause of celebration in 2018, it has been offset by the problems of security and political risks, plus the political infighting in Iraq.
The issues between Erbil and Baghdad still have to be resolved. The new Prime Minister Mr Adel Abdul Mahdi met with the Kurdistan region Prime Minister, Mr Barazani in an effort to resolve the issues via dialogue. The talks encompass the budget crisis with Baghdad, the emergence of ISIS and the influx of IDPs and refugees from Mosul and Syria into the Kurdistan region. The discussions continue but there was strengthening cooperation towards the end of 2018. The situation in the wider region in general and a number of issues of mutual interest were discussed and solved in the latest meeting between the Prime Ministers.
The Kurdistan region’s cabinet formation was stalled due to differences between the two ruling parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK). This was due to disagreements over the framework of negotiations and it came to a head when Mr Barham Salih (PUK) was elected to be Iraqi President despite strong opposition from the KDP.
As 2018 came to a close, there was an important event hosted by British Expertise International in London which could symbolise increased commercial connections between the Kurdistan region and the UK. The Chairman of the Kurdistan Federation Chambers of Commerce and Industry of Erbil and Head of Chambers of Commerce and Industry of, Slemani and Duhok were in attendance and offer official & commercial figures
Looking forward into 2019
Following on from the recent cooperation between Baghdad and Erbil, I am hoping to see greater economic revival for the whole of Iraq.
There is a great deal of rebuilding to be done since ISIS took over the key oil fields and refineries and destroyed a lot of the infrastructure. The government is concentrating on the rehabilitation of Iraq’s Energy and Power sector and reducing the flaring of gas in its southern oil fields is a priority.
Iraq is in need of investment in the areas of education, energy, infrastructure development, industry, agriculture and tourism. This is a great opportunity for international companies to invest and support Iraq to the benefit of both parties.
The Iraqi economy depends primarily on petroleum and the Ministry of Oil aims to boost its light crude exports to a million barrels per day this year and to increase production in general. Oil production is at a record high, despite the current low oil prices, which is motivating both the new government and international companies that are seeking involvement.
Since the completion of the Maysan Oil Company (MOC) owned new oil processing facility at Halfaya oil field, production has increased by 100,000 barrels per day to a total of 370,000 bpd. A further increase to 470,000 bpd is expected next quarter.
Siemens have stated that Iraq could save $5.2bn in four years from flared gas reduction and the Minister of Oil is aiming to reach zero gas flaring by 2021.
Talks have been held between Iraq and Jordan about starting an oil pipeline running from Basra in Southern Iraq to the Port of Aqaba. This pipeline is predicted to export one million bpd through the Jordanian port.
Other projects that are in the works are:
- the construction, laying and operation of the Shu’aybah-Khor Al-Zubayr pipeline
- the opening and operation of the new Karbala depot
- the opening of the PSI-FAU pipeline which runs between Al-Haidariyah-Karbala-Kheirat stations
There is insufficient generating capacity in Iraq and the result is serious electricity shortage. The overwhelming priority is to supply Iraqis with 24 hours of electrical supply. Currently, the constantly increasing demand is outpacing the capacity.
Significant investment is required in the electricity infrastructure in order to move towards a sustainable economy. Repair and upgrade of the transmission lines and substations is one of the most pressing issues.
Unfortunately, this sector has suffered over many years from bad management, unsustainable policies and a lack of foresight and planning for the future. These issues have to be addressed as a matter of priority in order to bring improved service and economic dividends for Iraq and its people in the long term.
On a personal note
Back in September I accompanied a British firm on a trip to Erbil and Shikhan near Dhauk. This region is attractive to foreign investors due to its sustainable security, stability and welcoming environment. I was very impressed at the high level of expertise of the local Iraqi engineers, which will be very important to the UK companies as it will minimise their risk. It made me very proud indeed to be Iraqi.
I attended the CWC Basra conference in Istanbul in October. Some topics of discussion were that the BOC were planning to increase oil production from 3.2 to 5 million bpd over the next 7 years. Reducing the flaring gas was also a major topic at the event.
The ‘Iraq Energy Projects Tender’ was announced in regard to Refineries, Petrochemical Plants, Ports, Pipelines, Storage and Power projects. The Fao terminal needing new pipelines and storage pumping was mentioned as well as three new subsea pipelines replacing the old pipelines leading to the Khor al-Amaya Oil Terminal (KAAOT) and the al-Basra Oil Terminal (ABOT), adding up to 3 million bpd of new export capacity.
I also attended the IBBC and British Expertise event in London in December. It is clear that British companies are seeking new markets outside of the EU and their investment and trade can greatly assist the Kurdistan region to recover from the troubles that have beset it since 2014.
Information technology was stated as being extremely important to the future of Iraq and the Kurdistan region as it will provide employment opportunities for young people in those areas.
Particular emphasis was placed on the development of the next generation of Project Management in Iraq – currently in Rumaila. The training there not only covers finance, human development, wells, operations, maintenance and projects, but also such communication skills as business, English language and IT.
I have also had the honour of being elected as an Executive Committee Member with the Al Kindi Engineering Society. My role is specifically to focus on helping to connect Iraqi engineering expats to the engineers living in Iraq.
On 13 January a full day of training in Project Management has been arranged for Iraqi engineers in the UK. Learning, training and education is the best way to rebuild Iraq.
It will also be important for me to identify local companies to assist international companies with market research and local advice, in order to help them settle in more quickly.
Another important element of my association with Al Kindi is their interest in renewable and green energy which will minimise Iraq’s dependence on oil and, in time, replace it with Thermo Solar Power in order to generate clean energy and a clean environment, thereby reducing the heat emissions.
There is a need to build skills and capabilities within the workforce in all the sectors and related industries.
As I’ve said many times before, education is the key to developing and rebuilding Iraq to its former glory.
Maybe in the future incentives will be offered that will appeal to talented Iraqi’s that currently live abroad, who might then feel drawn to return home and use their skills to help in the rebuilding of their country. Iraq is in need of a new generation of skilled and specialised talent to take over when the senior energy specialists retire.
It’s heartening to see that many people have returned to their homes after having been displaced. In fact, UNESCO have launched ‘Revive the Spirit of Mosul’ in an attempt to support the Iraqi government in rehabilitating Mosul’s rich and diverse cultural heritage.
I believe there is a very bright future ahead for Iraq.