A specialized website that paints a positive picture of the future of investors’ work in the Iraqi energy sector

A specialized website that paints a positive picture of the future of investors’ work in the Iraqi energy sector

2024-11-30 04:24

Shafaq News/ The “B Media Network” website, which specializes in oil and energy affairs, stated that energy projects in Iraq are moving in the right direction, as international investors have begun to take a new look at the development plans for these projects, while the Iraqi government is working to address the many obstacles that prevent doing business, while concerns about nationalization of resources, political conflict and insecurity have begun to fade with the current government committed to launching major projects.

While the London-based website noted that there is a “real push by the Iraqi government for reform” with a shared understanding of the needs of investors and the government, it described Crescent Petroleum as a pioneer in its work in the country, and it also sets an example of how to do business in Iraq, through its operations in the country since 2007, where it has been focused on a clear message of developing a local mindset.

The report, which was translated by Shafaq News Agency, said that foreign investors who will take a fresh look at Iraq now will see that there is a clear opportunity to meet halfway while the government adopts a more international outlook.

While the report noted that policymakers are focusing on a series of major reforms to the business environment in Iraq, it quoted energy specialist Jessica Obaid as saying that “political stability is a key enabler for investment, and many reform measures must be taken to enhance the business investment climate,” noting that the most important of these measures are transparency, providing incentives, ensuring timely payments, facilitating the issuance of licenses, and ensuring cost recovery.

According to Obaid, “implementing anti-corruption measures to enhance a transparent investment environment is the way forward, while resolving the sector’s structural issues and business climate.”

The report quoted Abbas Kadhim, a researcher at the American Atlantic Council Institute, as saying that “the current attempt to obtain flared gas could have started in 2007-2008, but the officials at the time were more ideological than practical, which meant that they did not give the oil companies what they needed to invest,” adding that “they did not like the idea of ​​multinational companies entering Iraq and influencing the government.”

The report pointed out that these established positions forced new investors to adopt a more practical approach. In this context, it referred to the “Hilal Oil” company, which came to Iraq in 2007, when the country was on the brink of civil war.

According to Hilal CEO Majid Jaafar, having a local mindset (reflecting the company’s Iraqi roots) and a can-do approach meant the company was able to drill wells, install seismic processing facilities and a pipeline within 15 months, working alongside the Kurdistan Regional Government.

The report quoted Jaafar as saying that balancing investor expectations with government expectations is “the key to success,” explaining that “Iraq must focus on maximizing the value of oil efficiently, rather than treating contracts as a zero-sum game with investors.”

Jaafar explained that sometimes there is a mismatch in expectations between the government and foreign investors, adding that when it comes to natural gas, the priority should be generating power in Iraq, while “the priority of the major international companies is to put the gas on a ship and ship it to the world market.”

The report stated that the prevailing feeling now is that the situation in Baghdad is changing, as the government of Mohammed Shia al-Sudani is focusing on implementing major projects, with large budgetary resources allocated, noting that the government has made it clear that it wants new partners to come and invest in the energy infrastructure to enhance energy security in Iraq and support the country’s role in the growing regional energy sector.

In addition, the report said the government had introduced broader reforms to the executive branch, to assess government performance and tackle corruption. “There is now a lot of liquidity in the Iraqi system, the stock market has grown by 100 percent, and you can see the impact in the construction cranes dotting the skyline of Baghdad and in the new housing projects,” Jaafar was quoted as saying.

According to Jaafar, while bureaucracy, corruption and lack of electricity continue to pose challenges to doing business, the overall trend is positive and the government’s desire to attract investment and address the industry’s problems is very clear.

The report pointed to the cooperation between an institution affiliated with the World Bank through the signing of an agreement on a partnership between the public and private sectors to rehabilitate, expand and maintain Baghdad International Airport, which constituted the first real partnership project between the public and private sectors.

He also pointed out that one of the most prominent challenges facing investors is the weakness of the local banking sector, noting that the banks, which consist of about 70 private banks and 6 state-owned banks, are not in a good condition that allows them to support financing the energy sector.

The report quoted the CFO of Al Hilal Company, Neeraj Agrawal, as saying that “so far, it has been mainly Western and Chinese energy companies that have committed to investing in Iraq, noting that Western companies finance their investments through their balance sheets, as does China, which also receives some assistance from its government.”

The report indicated that among the areas in which new financing for investments can be secured is the use of capital markets, noting that some oil and gas companies have issued bonds in the Kurdistan Region, including Pearl Petroleum, Genel Energy, and the Norwegian company DNO.

The report quoted Agrawal as saying that this step was a successful model in providing capital, and the bond market was an important means for strong projects managed by good companies, adding that “there is no reason why this cannot be done in federal Iraq.”

The view in Baghdad, the report concluded, is that with a little encouragement, support and stability, the pieces of the financing jigsaw will work together to help Iraq’s energy sector achieve its true potential.

shafaq.com