In March 2010 a preliminary agreement between Royal Dutch Shell, Mitsubishi, and the Iraqi Oil Ministry to develop natural gas in Basra expired. The deal would’ve created a joint venture between the three to collect and sell 700,000 cubic feet per day of gas. Iraq currently produces 1.64 billion cubic feet per day, mostly during oil production, but 70% of that is burnt off rather than used.
Talks between the three have been delayed for more than two years now since February 2008. The main reason is that Baghdad does not have the money to pay the two companies their 51% share of any gas production deal because of budgetary issues. Iraq has also been slow to refurbish its gas and power infrastructure necessary for the extraction, and the international oil companies that signed agreements with Baghdad in 2009 are unwilling to provide natural gas to the consortium because they may need it themselves to extract petroleum. As a result, Shell and Mitsubishi were given another six-month extension to complete the deal. That deadline may come and go as well, because it could take most of that time for Iraq to form a new government after its March 2010 election. Whatever new regime comes to power is likely to review all of the plans underway, causing more delay. In the meantime Iraq will be wasting another valuable resource, and the Shell-Mitsubishi talks may never come to fruition.
SOURCES
Carlisle, Tamsin, “Iraq’s Kurdish region aims to resume oil exports,” The National, 4/12/10
Hafidh, Hassan, “UPDATE: Iraq To Hold New Bid Round For 3 Gas Fields – Official,” Dow Jones Newspapers
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6 comments:
I'm currently doing some research for a paper I'm doing on the best way ahead for Iraq economically. I've read some articles and of course your blog, but can you recommend book or author who is particularly insightful?
There's very little on Iraq's economy overall besides its oil industry. I don't know of a single book off the top of my head for instance.
In terms of reports there's the quarterly Special Inspector General for Iraq reports, the Defense Dept. Security and Stability in Iraq quarterly reports.
The World Bank also just issued its "Doing Business In Iraq 2010" report.
The IMF also has a series of reports on Iraq's economy.
Here's a report on Iraq's economy by the Ctr for Strat. and Int. Studies:
http://csis.org/publication/economic-challenges-post-conflict-iraq
You could also check out the following sites:
Iraq Business News:
http://www.iraq-businessnews.com/
Investors Iraq:
http://www.investorsiraq.com/forumdisplay.php?370-Iraqi-News
Aswat al-Iraq's economy page:
http://en.aswataliraq.info/?cat=4
AK News' economy page:
http://www.aknews.com/en/aknews/2
That's what I got off the top of my head.
thanks so much for taking the time to respond.
I'm sure this will help.
I want to write about Iraq's economic ideology - economic nationalism, liberalism, marxism? I want to say something about how that ideology will affect their ability to integrate with global and regional trade. I want to talk about oil and how well or not well Iraq is exploiting that for its advantage and what political factors (foreign and domestic) will affect that exploitation.
I'm definitely going to hit those resources you cited. thanks again.
Iraq definitely has a socialist system and mindset. The public especially is use to a large welfare state, and is generally opposed to foreign companies owning property, etc. in Iraq.
The government has been trying to implement free market reforms for a while now, but with very little progress. They did just amend the investment law to allow foreign companies to own land if it is for housing projects, and they are trying to open up to international energy corporations to develop their oil and gas, but even then there's been a lot of opposition.
In terms of the region, it's been a boom to its neighbors because it has little to no tariffs and has been flooded with cheat imports as a result. Iraq is just now trying to fix that. Of course, a lot of Iraqi businesses have lost money or gone out of business in the meantime.
Good luck on the paper!
Fix it - how, by reinstating the tariffs? That's going backwards. They need to turn their private sector loose, instead. Such backwards, wrongheaded thinking. Hopefully, it won't take Iraq 50 years to figure this out like it did India!
It just might take that long Jason. There is a huge amount of opposition to privatization and ending the soialist system.
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