Oil deals fuel Arbil investments
In the first six months of 2012, Northern Iraq attracted $3.4 billion in private sector investments, more than the total $3 billion in 2011. DHA photoThe Kurdistan Regional Government (KRG) in northern Iraq attracted $3.4 billion worth of private sector investment in the first six months of the year, according to the KRG’s Board of Investment.
The figure is more than the $3 billion recorded in the whole of 2011 and is likely to surpass the record $4.8 billion posted in 2010, according to a recent report by the Middle East Economic Digest (MEED), a regional business intelligence provider.
The rush by foreign energy companies to enter the region, despite the central Iraqi government’s opposition, lies behind the large increase in investments in the region. Baghdad has called on energy giants such as Chevron, ExxonMobil and Total not to bypass it in making direct deals with Arbil.
In total, the KRG has attracted more than $21 billion in foreign and domestic private sector investment since 2006, MEED said.
The majority of these investments have gone to the Arbil governorate, which has received $12.5 billion.
Sulaymaniyah has attracted close to $6 billion, while Dohuk has brought in some $3.3 billion, MEED calculated.
Investors are increasingly picking the region given the uncertain and fragile security and political situation in other areas in Iraq.
Investors also benefit from favorable tax policies in the region.
Baghdad promises more
Meanwhile, Iraq will make future energy exploration contracts more lucrative in a bid to lure a greater number of foreign firms to auctions for exploration blocks, a spokesman said over the weekend. The concessions come after the country held a disappointing auction for oil and gas exploration blocks in May in which a dozen plots of unexplored territory were offered up, but only four contracts were awarded, AFP reported.
“We will give more concessions to foreign companies,” Oil Ministry spokesman Assem Jihad told AFP. “We want to encourage the companies to develop our gas fields. Economic and financial aspects will be reviewed in light of our experiences. The final details of the contracts will be worked out between the foreign companies and the Oil Ministry.”
Last month, the deputy prime minister responsible for energy affairs, Hussein al-Shahritani, said officials were carrying out “a study in the Oil Ministry to improve the model of contract to make it more attractive for oil companies.” However, he also admitted that the May auction was “not successful” because the contracts were “very tough.”