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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    The fifth licensing round... billions of dollars in revenue, and experts diagnosing loopholesproposa

    rocky
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    The fifth licensing round... billions of dollars in revenue, and experts diagnosing loopholesproposa Empty The fifth licensing round... billions of dollars in revenue, and experts diagnosing loopholesproposa

    Post by rocky Sat 25 Feb 2023, 4:38 am

    The fifth licensing round... billions of dollars in revenue, and experts diagnosing loopholes[You must be registered and logged in to see this link.]
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    Baghdad today - Baghdad
    Government officials estimated revenues of up to 300 billion dollars from the revenues of the fifth licensing round contracts signed by Iraq recently, while experts diagnosed "gaps" in the contracts.
    In an official ceremony at the Ministry of Oil, Iraq signed contracts with foreign companies last Tuesday as part of the fifth round of licensing oil for oil patches and border fields.
    The Sudanese Prime Minister, Muhammad Shia'a, pointed out that the delay in implementing the fifth round of oil licensing for 5 years has caused the country great losses and environmental damage, stressing that "the trend towards investment in associated gas and natural gas stems from a firm conviction, to achieve economic reforms, which are a main focus of the program." government.”
    Iraq produces more than 4.5 million barrels of oil per day, and the sector’s imports represent more than 94% of the country’s GDP, at a time when Iraq is the second largest country in burning natural gas in the world after Russia, with losses estimated by the government at about $6 billion annually.
    Big returns
    The importance of the fifth licensing round lies in the fact that it will invest in the border fields with neighboring countries, as they will be converted into productive fields that add large quantities of crude oil and gas to local production, according to Oil Ministry spokesman Assem Jihad.
    Regarding the reason for the delay in signing these contracts, Jihad explained, “The delay, which extended for 5 years, was due to political interference,” noting that “the fields included in this round include 6 fields in the governorates of Diyala (east), Maysan, and Basra (south).
    As for the production rates from these fields, they will reach 250,000 barrels of oil per day, in addition to the production of between 800,000 and one million standard cubic feet of gas per day, with the possibility of doubling this production during the progress of development operations that will be sponsored by the companies, which contributes to In providing part of the local need for gas to produce electric power, as well as stipulating contracts to operate the Iraqi workforce at a rate of 90%.
    In this direction, the appearance of Muhammad Salih, Advisor to the Prime Minister for Financial Affairs, goes, who added that Iraq began for the first time investing in the field of gas associated with oil production operations, especially since the country annually spends $12 billion to import foreign gas.
    Saleh adds, "Iraq began for the first time investing in joint fields with neighboring countries such as Iran and Kuwait," expecting that "the financial revenues from the last licensing round will reach about $300 billion."
    Type of contracts
    And at a time when a spokesman for the Ministry of Oil indicated that the contracts for the fifth licensing round are service contracts, not participation, the economic advisor to the Prime Minister confirmed this, noting that the specificity of the recent contracts lies in the costs of oil production, which will decrease in the event of a decline in oil prices, according to an agreed formula. on her.
    Saleh pointed out, "Iraq needs nearly 3 years to exploit the gas extracted according to these contracts."
    On the other hand, Professor of Economics at Al-Maqel University in Basra, Nabil Al-Marsoumi, does not agree that the contracts for the recent licensing round are service contracts, indicating that they are primarily partnership contracts.
    Al-Marsoumi - who specializes in oil affairs - indicates that Iraq had initially signed this round in 2018 during the era of the government of former Prime Minister Haider al-Abadi, and then returned to sign the final contracts last Tuesday after a 5-year delay.
    He explained that there is a disagreement between the Ministry of Oil, which describes these contracts as "sharing contracts" in profits, while the media office of the Prime Minister describes them as service contracts.
    He continued, "The difference between the two contracts is very large in the basic elements and contractual obligations, and therefore in order to solve this problem and achieve transparency and consistency with Iraq's membership in the Extractive Industries Transparency Initiative, and consistent with Article 111 of the Iraqi constitution that stipulates the people's ownership of oil wealth, it is of great necessity." Publication of the original texts of these contracts to the Iraqi people.
    Gaps
    One of the drawbacks of recent contracts, according to Al-Marsoumi, is that oil costs are very high, and because foreign companies control costs, more than half of the oil revenues will be obtained by those companies.
    His estimates are inferred by comparing the contracts of the fifth round with the oil contracts of the Kurdistan region, as he indicates that the region obtained only 44% of the total oil revenues in 2022, despite the passage of about 8 years since the start of production in the region.
    And Al-Marsoumi indicated that foreign companies are keen to keep costs high in order to maximize their profits, and therefore, it is expected that foreign companies will acquire about half of Iraqi oil revenues.
    The matter does not stop at that, according to the oil expert, as the peak of production was not specified in the contracts of Kurdistan and in the fifth round as well, in addition to the fact that most of the companies that were contracted with in the Kurdistan region are small companies and are not known internationally, which applies to the licenses of the fifth round that were transferred. In which the six fields belong to the UAE Crescent Company and the Chinese Geo Giad Company.
    In addition to all this, the share of the government partner in most of Kurdistan contracts amounts to 20%, while there is no share for the government partner in the fifth round, at a time when the economic advisor to the Prime Minister confirmed that ownership of the fields will remain with Iraq by 100%.
    The fifth licensing round is better than the previous rounds, according to many experts who explained that investing in common fields is better than neglecting them, especially since neighboring countries had already begun to invest in these fields, and that Iraq had incurred large economic losses as a result of its neglect in recent years.
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