Saturday Afternoon Iraq Economic News Highlights 7-15-23
Saturday Afternoon Iraq Economic News Highlights 7-15-23
Away From The Dollar.. America Is Besieged And The Government Is Rising Up To Ensure The Future Of Energy
Today 15:45 Information / Baghdad... The idea of oil for gas was not on the table for Iraqi governments over the past years in which Iraq suffers from weakness and lack of hours of electricity supply, especially with the lack of sufficient quantities of gas to operate power stations, as the US blockade imposed on Iran, which prevented according to it, the Iranian gas dues were sent from Baghdad to Tehran, prompting the government of Muhammad Shia'a al-Suwadni to search for the best solution, after discussions with the Islamic Republic, to ensure access to gas and the flow of Iraqi oil towards Iranian territory, without using the dollar or entering the maze of sanctions.
Suhaila Al-Sultani, a member of the Al-Fateh Alliance, told Al-Maalouma, “All Iranian gas money will return to the government, as the money will not be transferred to other ministries or classified without rehabilitation or development in the electricity sector.” , and there is a move by the government to invest gas money in starting operations.” Developing alternative energy mechanisms, as well as contracting with companies to establish new power stations.
And she added, "The barter agreement with Iran will end all obstacles set by the United States of America to send gas money that causes the annual electricity crisis," noting that "the government decided to invest the money that was allocated in the budget to develop the electricity sector."
On the other hand, a member of the Oil and Natural Resources Committee, Ali Al-Mashkoor, said during a televised interview followed by Al-Maalouma, that “exchanging oil for gas is a positive step to solve all problems, since most of the Iranian stations use and work with black oil, as Iraq will be profitable from this agreement and that the government has put out incentives for the return of the popular movement by barter.
He explained that "the fears of mortgaging Iraqi oil are completely unjustified, and the mortgaging of Iraqi oil has nothing to do with bartering oil with gas," stressing that "the government has shortened many stages and will save the gas money that was previously paid .”
On a related level, a member of the Parliamentary Oil Committee, Kazem Al-Touki, confirmed to Al-Maalouma, that "Iraq needs 5-6 thousand fuel tanks in order to cover the actual need and operate power plants that operate on this fuel." , as Iraq's total production of gas that stations need Electricity amounted to about 1,000 cubic meters, which is a quantity that is not enough for the stations except after it is supported by more than 4,000 cubic meters of gas fuel,”
noting that “the associated gas investment operations that were referred to some companies need two or three years in order to obtain this fuel.Unable to cover the actual need for gas," explaining that "the need is covered through the projects of the sixth licensing round, which can reap its fruits after 6 years, which include exploration fields in Anbar, Nineveh,and Najaf.” LINK
Bartering Iraqi Oil For Iranian Gas Would Likely Violate US Sanctions
Posted On2023-07-15 By Sotaliraq By Arshad Mohammed WASHINGTON (Reuters) - A deal to swap Iranian natural gas for Iraqi oil under the deal announced by Iraqi Prime Minister Mohammed Shia al-Sudani earlier this week would violate US sanctions against Tehran unless the United States issues a waiver allowing so.
Al-Sudani said on Tuesday that Iraq would start bartering crude oil for Iranian gas to end repeated delays in payments due to Tehran due to the need to obtain US approval for such transactions.[/size]
Al-Sudani added that Iran had cut its gas exports to Iraq by more than half until the first of July due to Baghdad's inability to obtain US approval to pay dues, but Tehran agreed to resume pumping gas exports in exchange for crude oil.
Few details were announced about the possible barter agreement that would contribute to defusing a political problem faced by Al-Sudani due to power outages during the sweltering summer in Iraq, when temperatures exceed 50 degrees Celsius.
But three former US officials said the quid pro quo would likely run counter to US sanctions.
Making this kind of trade-off with Iran would be a violation of US sanctions unless a US national security exception is issued," said Richard Goldberg of the Foundation for Defense of Democracies think tank.
This would be prohibited by the Iran Freedom and Nuclear Non-Proliferation Act, which prohibits any energy-related transactions with Iran," added Goldberg, who served on the National Security Council staff in the administration of former US President Donald Trump.
A US State Department official said Secretary of State Antony Blinken issued an exception on March 21 for a period of 120 days allowing Iraq to pay Iran only for electricity imports, not for natural gas used to generate electricity in Iraq.
The March 2023 exception granted by the foreign minister allows Iraq to buy electricity from Iran,” the official added, on condition of anonymity. And nothing else.” The State Department announced the exception on March 31.
There is speculation that the exception may be modified to allow barter, a matter the official refused to discuss.
We are not in a position to review any future decisions related to the exception," the official said. We have no comment at this time regarding reports regarding bartering arrangements between Iraq and Iran.”
The Iraqi embassy in Washington has not yet responded to a request for comment.
Former US officials said the Treasury Department, which oversees most US sanctions against Iran, defines the term "transaction" broadly, possibly including barter.
What is important here is whether the transaction was 'significant'," said a former senior Treasury official, speaking on condition of anonymity. And it does not matter if it will be conducted in one currency or another or if … it is a barter.”
The former official added that this may provide "enough room for maneuver ... for the United States to turn a blind eye, but it is a political decision, not a legal issue."
And he added, "From a purely legal point of view, it (the barter) definitely violates US sanctions." LINK
SOMO: Iraq's Production May Be Affected By The Oil-For-Gas Agreement
Shafaq News/ A source from the state oil marketing company, SOMO, said that Iraq's oil production may be affected by an agreement to pay for Iranian gas imports by bartering fuel oil and crude oil from Baghdad, even as the second largest oil producer in OPEC is struggling with the continued suspension of oil. North.
Iraqi Prime Minister Muhammad al-Sudani said in a live press conference on July 11 that Iraq and Iran signed an agreement to swap crude oil and fuel from Baghdad for gas and electricity imported from Tehran due to difficulties in paying the country under US sanctions.
He said SOMO would handle the sales of crude oil and fuel to the nominated companies from Iran.
And according to Standard & Poor's Global, quoting a source in SOMO, in a report seen by Shafaq News Agency, although the implementation of the oil and gas barter deal will take time, Iraq will likely try to increase production from its huge southern fields to compensate for the loss of production and the continuation of Suspension of exports through the Turkish port of Ceyhan.
The source said that SOMO has not yet received details about the start of the barter deal, the amount of crude oil and fuel oil that will be exported to Iran, or the crude grades that will be sold.
Besides the suspension of oil exports from the north, the source said, rampant power outages in the Federal District due to reduced Iranian gas supplies have plunged large swaths of the country into darkness, affecting oil production.
The source said production at the giant Zubair fields in the south, operated by Eni, and Rumaila, operated by BP, was affected by the power outage that began at the end of June.
Once Iran's gas supplies are fully restored, the source said, the power outages will likely stop and help restore production in the southern fields to normal levels.
Iraq pumped 3.985 million bpd in June, less than the 4.22 million bpd of OPEC+ quotas.
This is slightly higher than the 3.955 million bpd it pumped in May, when Iraq joined several OPEC+ countries in implementing a total of 1.66 million bpd of voluntary cuts that will continue through the end of 2024.
These voluntary cuts come on top of the 2 million bpd OPEC+ restrictions that began in November and will continue through the end of 2024.
Three former US officials told Reuters that swapping Iranian natural gas for Iraqi oil under the deal announced by Iraqi Prime Minister Mohammed Shia al-Sudani earlier this week would violate US sanctions against Tehran unless the United States issued a waiver to do so. LINK
A Parliamentary Committee Comments On The Oil And Gas Agreement Between Iraq And Iran
Today, Saturday, the Oil, Gas and Natural Resources Committee in the House of Representatives considered that the agreement to swap black oil for Iranian gas will benefit Iraq and Iran.
Committee member Ali al-Mashkoor said, "The decision to exchange black oil for Iranian gas is a bold and appropriate decision for both parties."
Al-Mashkoor added, "Iraq needed such decisions in order to eliminate all excuses that could lead to power outages for citizens."
He continued, "The financial problem between Iraq and Iran due to the sanctions imposed by America on Iran and Iraq's inability to transfer Iranian gas money imported from Iran has become an eternal problem, and alternative solutions had to be found."
The member of the committee pointed out that “exchanging black oil for Iranian gas is suitable for both parties, as the Iranian side can achieve the benefit by operating its electrical stations because according to the information available to us, most of the electrical stations in Iran operate on black oil, and at the same time it is a good thing for Iraq, since the problem is always It was the reason why gas supplies did not arrive to operate our power stations.”
And al-Mashkoor stated, “Iran would have preferred that the payment be in hard currency due to its need for this currency, but this decision went to find solutions to the problems, which are fair solutions.”
The member of Parliament explained, “The barter did not take place with crude oil or crude oil, but rather with black oil, and that Iraq needs any means that allow the achievement of prosperity for the Iraqi citizen, especially as we are currently going through the months of intense heat and heat, and it is not possible to stand before solutions that do justice to the people, so it is possible that We waste part in order to achieve the largest part, and the government went in this direction.
https://takadum-news.com/archives/173783
Parliamentary Committee: The Oil And Gas Law Will See The Light Soon
Information/Baghdad.. The Oil, Gas and Natural Resources Committee confirmed, on Saturday, Parliament's intention to legislate the oil and gas law during the current session, while noting that the adoption of the law will contribute to resolving the problems between Baghdad and Erbil.
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Committee member Alaa Al-Haidari said in an interview with Al-Maalouma agency, "According to the government program and what was agreed upon by the state administration coalition, the oil and gas law will be legislated soon."
He added, "The legislation of such a law is an urgent necessity, as it regulates the method of extracting oil and minerals throughout Iraq, including the Kurdistan region, as well as regulating oil revenues."
He pointed out that "the oil and gas draft law is of economic importance, and it is obligatory to deliver oil revenues through the Federal Oil Marketing Company, as well as knowing the quantities exported."
He pointed out that "there is an agreement between Baghdad and Erbil to legislate the federal oil and gas law," stressing that "the House of Representatives will work to legislate it during the next stage."
And the rapporteur of the Patriotic Union of Kurdistan Parliamentary Bloc, Karwan Ali Yarouis, revealed earlier that there was a political agreement to pass the oil and gas law in parliament, stressing that "discussions regarding it will start after the end of the legislative recess." LINK