Iraq Commercial Activities & Business Development Opportunities - Aug 2016

Four Deals In JulyFour companies landed four deals in Iraq in July, back to the weak showing of May, which had only four deals, after the strong month of June, which had twelve deals. On first blush, we would say that this would indicate that June was an anomaly. However, we would also note, as we mentioned before that it is probably more appropriate to focus on the fall for actual confirmation, as the summer months of July and August are likely to be slow seasonally. As a result, we would only say that the unusual strength of June has not yet been confirmed, but that neither is the unusual weakness of May and July.Geographically, there were two Iraq-wide deals, one in Basra and one in an undisclosed location, as the client was not named. Four countries had one deal each – Bahrain, France, the UAE and the UK. Oil and gas had two deals, and Defense and Banking had

one each. These last two areas were the Iraq-wide deals, given the broad focus on military actions and bank branch networks. Finance over the last year seems to have a consistent, though low, level of investment, below the pillars of oil and gas and defense, but still significant because of continued investment in improving financial services in Iraq.

PM orders travel ban on MPsIraqi Prime Minister Haider al-Abadi has issued a travel ban on several members of parliament accused of corruption until an investigation is completed. On 1 August, Defence Minister Khaled al-Obeidi accused Parliament Speaker Salim al-Jabouri and other politicians of lobbying for businesses seeking contracts to sell overpriced planes, vehicles and other goods to the armed forces. He said they sought to influence ministry appointments and some tried to blackmail him.Besides the speaker, Obeidi mentioned the names of four sitting MPs, a former MP and two parliamentary officials affiliated with the speaker. They all denied the accusations and called for an investigation. Abadi ordered the "temporary travel ban" against those accused, in order to investigate. A parliament-appointed committee will probe the allegations, according to Talal al-Zobaie, head of the Integrity Commission.

Investing in Iraq

CONTENTS1. Investing in Iraq2. Iraq at a Glance3. Government Tenders4. Commercial Activity5. Sector Profiles6. Investment Climate7. Conferences & Delegations

Iraqi Commercial Activity & Business Development Opportunities

August 2016

UAE | Libya | Bulgaria | USA www.whisperingbell.com

Iraqi Commercial Activity & Business Development Opportunities - August 2016

2


Whispering Bell MEA DMCC, PO Box 487151, Dubai, United Arab Emirates. Tel: +9714 448 6690

www.whisperingbell.com

Iraq at a GlanceDahuk

Ramadi

Karbala KutHillah

NajafDiwaniyah

SamawahNasiriyah

BASRA

Amarah

BAGHDAD

Sulaymaniyah

Baaqubah

MOSUL

KIRKUK

Tigris River

Euphrates River

Erbil

Key Investment Thesis

Iraq’s economic infrastructure has been destroyed by more than 35 years of war and sanctions that began with the Iraq-Iran War in 1980. Some 95% of the Iraqi federal budget is derived from crude oil sales, the vast majority of which is dedicated to supporting state owned enterprises, social welfare programs, and in the post-IS era, defense. Following the IS invasion, Iraq continues to need hundreds of billions of dollars in foreign capital to rebuild infrastructure and kick-start private sector growth. Although the overhang of the IS invasion remains, Iraq retains demographic advantages and abundant oil which could drive near double-digit economic growth as IS is pushed out and the country retrenches in years to come.

Major DealsSee Commercial

Activity Section for other info

Iraq Critical Data (2015 est.)

Land Mass: 441,839 sq kmPopulation: 37.1 mnNominal GDP: US$ 165.1 bnGDP Growth: 0% GDP per capita: US$ 4,450Inflation: 1.8%Oil Exports: 3.0 mn bpdLabor Force: 8.9 mnUnemployment: 16%Imports/GDP: 30.2%Exports/GDP: 33.1%External Debt: US$ 58.1 bnDebt/GDP: 35.2%Govt. Budget: US$ 86.6 bnFiscal Deficit: - 41.7%Currency: New Iraqi Dinar

Drake and Scull International won a $61.5 million EPC contract for construction of a water injection network installation project at Zubair oil field in Basra

MBDA Missile Systems won a GBP 28 million contract to support a long range missile in Iraq and Libya

Ahli United Bank raised its stake in Commercial Bank of Iraq by 10 per cent to 64.7 percent

Deep Casing Tools Deployed Turbocaser Express reaming system for a client who had experienced liner running issues

3




Current Political State of PlayKEY POINTS

• Maliki wades into Kurdish politics• Part of renewed bid for PM post?• Abadi asks for corruption probe

Is Maliki plotting return to power with Kurdistan visit?In a scene surprising to many, a smiling Nouri al-Maliki disembarked from an Iraqi airliner in July in the city of Sulaimaniyah and was received by senior officials from the Patriotic Union of Kurdistan (PUK), one of the major parties in Iraqi Kurdistan. Maliki said his visit was merely a normal meeting with PUK and Gorran (Movement of Change) leaders in the wake of the two parties' having formed an alliance earlier this year. However, the trip took place amid unconfirmed reports of his hopes of taking back the premiership from Haider al-Abadi, a fellow Islamic Dawa member and that party's leader. General elections are due to be held in 2018.Once thought of as poised to become a strongman of sorts in Iraq, Maliki had to vacate the office of prime minister in 2014, with many blaming him for the dramatic territorial sweep of the Islamic State (IS) through Iraq. Defying expectations that this would spell the end of his political

career, however, Maliki has worked relentlessly behind the scenes for the past two years to retain his political stature and is now reported to be plotting a comeback.

Maliki shortly after his arrival in Sulaimaniyah. Mala Bakhtiar, Head of the PUK Politburo is to his right..

Maliki's visit to the Kurdistan region came at a time of deep fissures among major Kurdish factions, and disagreement over how to deal with the government in Baghdad. The two dominant parties in Sulaimaniyah, the PUK and Gorran, formed an alliance in mid-May putting them at odds with the Kurdistan Democratic Party (KDP). Led by Massoud Barzani, acting president of the Kurdistan Regional Government (KRG), the KDP dominates the Kurdish government and has adopted rhetoric highly critical of Maliki. Whereas the KDP publicly advocates secession from Iraq, or at least greater powers for the Kurdish region in a confederation, the PUK and Gorran favor reconciliation with Baghdad and exhausting all available options before any decision to push for statehood.Against this backdrop, many have questioned Maliki's motive for visiting PUK-Gorran

4




Current Political State of Play Cont’d.representatives and ignoring the KDP at a time of such acute political rivalry among Iraqi Kurds. “Whether Maliki’s visit was as innocent as he said or not, suspicions about his real intentions can only deepen when it is rumored … that Maliki is plotting to form a new alliance with the aim of returning to power as prime minister,” said Kamran Karadaghi, a veteran Iraqi Kurdish journalist and former chief of staff to Iraqi President Jalal Talabani, also the PUK's leader.“During his two terms as Iraq’s prime minister [2006-14], Maliki became a controversial and divisive figure,” Karadaghi added. “As such, his Sulaimaniyah visit has stirred problems in Kurdistan. I am afraid Maliki’s visit has had a negative impact on efforts to overcome differences between the Kurdish parties.” Maliki's past relationship with the Kurds was a troubled one, reaching a tipping point when he withheld the Kurdistan region's share of the Iraqi budget in early 2014 after the KRG sold oil independently against Baghdad's wishes. In addition, Barzani had been a main figure in attempts to unseat Maliki in 2012 in a failed no-confidence motion in the parliament. The PUK's Talabani did not support the effort to remove Maliki from power. Thus, it is of no surprise that Maliki's visit stirred controversy among the Kurds. Maliki also attempted to project optimism about settling the disputes between the KRG and Baghdad governments. “There is a lot of hope for resolving the budget dispute between Baghdad and Erbil,” Maliki said during a joint news conference with Mala Bakhtiyar, a senior PUK leader, on July 18. “Since we have a constitution, that means we can resolve all the problems. The budget issue can be addressed on the basis of the constitution.” According to Iraq's budget laws in the past years, the KRG is entitled to around 17% of the country's budget.While KDP officials and affiliated media took the lead in slamming Maliki's visit, PUK officials have been struggling to defend their largely warm reception of him while denying that the visit had anything to do with Maliki's alleged prime ministerial ambitions or trying to deepen Kurdish discord. “Maliki wants to see KRG-Baghdad relations improved,” Saadi Pira, a member of the PUK's political bureau, told Al-Monitor. “He was not here to discuss his premiership and gather support for [obtaining] it.” Consequently, even though it is not yet clear whether the disgraced former prime minister is likely to gain another chance to win the premiership, it is clear that his meddling in Kurdistan could add fuel to the fire of internal divisions there.

Iraq Defense Minister, Brigadier General Khaled Al-Obeidi

PM Haider al-Abadi orders probe over corruption allegations

5




Iraqi Prime Minister Haider al-Abadi ordered an investigation on August 1 into allegations of corruption in weapons deals ahead of planned military moves to retake Mosul from Islamic State (IS). Infighting over anti-corruption measures, which stalled government activity for several months and sparked clashes between protesters and security forces in Baghdad earlier this year, threatens to slow momentum to recapture Mosul and capitalise on battlefield gains against the ultra-hardline militants. Parliament Speaker Salim al-Jabouri denied charges of corruption made at a closed parliament session by Defence Minister Khaled al-Obeidi, who later said on his official Facebook page that he had details of blackmail relating to weapons contracts, without providing any evidence.Abadi said in a statement that he had directed the Integrity Commission, a government body tasked with fighting corruption, to investigate the accusations, and it is as yet unclear where the invesigation will lead.

Current Political State of Play Cont’d.

6




Key Recent Security IncidentsDahuk

Ramadi

Karbala KutHillah

NajafDiwaniyah

SamawahNasiriyah

BASRA

Amarah

BAGHDAD

Sulaymaniyah

Baaqubah

MOSUL

KIRKUK

Tigris River

Euphrates River

Erbil

SECURITY OVERVIEW

With Anbar Province and Baghdad relatively quiet in recent weeks, focus shifted to Ninewa and preparations of the eventual assault on Mosul. Popular Mobilization Forces (PMFs) have been increasingly integrated into that process, with Iran's IRGC-Quds Force Commander Qassim Suleimani reportedly visiting unnamed locations in Ninewa Province on August 4. Suleimani’s presence in theater has typically preceded intense militia involvement in the operation, as happened in Baiji in mid-October 2015. Thus his recent presence in Ninewa indicates that Popular Mobilization, including proxy militias, could play a serious role in upcoming operations in Shirqat and even Mosul. Senior militia leaders, including Badr Organization leader Hadi al-Amiri and Popular Mobilization Deputy Chairman Abu Mahdi al-Muhandis, also met with senior ISF officials under Salah al-Din Operations Command on August 6 to discuss participation in Shirqat. The PMFs, however, will face resistance against their deployment to northern Iraq from Coalition, Kurdish, and Ninewa officials out of fear of sectarian reprisals on Ninewa’s majority Sunni population. The Coalition will also reject militias imposing on long-cultivated Coalition turf. The Coalition will likely shape the Mosul operation by leveraging air support to eliminate militia participation and by increasing its presence on the ground, including the August 5 deployment to provide logistical support to Qayyarah airbase, which was recaptured on July 9. The base will serve as a logistics hub for operations into Mosul. Coalition basing in both Qayyarah and Makhmur may limit the militias’ expansion towards Mosul, though they are likely to participate in Shirqat. So we would watch for continued jockeying for advantage among militias and other forces in the lead-up to the assault on Mosul.

BAGHDAD• (Aug 5) Reports emerged

that ISF thwarted a planned IS attack on Baghdad called, "The Great Battle of Baghdad." The attack was said to have targeted the Mansour and Kadhimiyah neighborhoods near government buildings, and was reportedly meant to be similar to the deadly July 3 Karrada attack, using SVBIEDs and Suicide Vests.

ANBAR PROVINCE• (Aug 3) Units of the Iraqi

Border Guards, Federal Police, Iraqi Army, and tribal fighters, supported by coalition air forces, recaptured the al-Waleed border crossing with Syria. IS counterattacked from the Syrian side on Aug 8, only to be repelled.

NINEWA PROVINCE• (Aug 5) Coalition troops

deploy to Qayyarah Airbase to support its rehabilitation and logistics for the assault on Mosul

• (Aug 7) ISF repel a major attack by IS forces on the Tigris river downstream of Mosul, killing 104 militants

• (Aug 8) Iraq Defense Minister Obaidi's convoy attacked near Qayyarah with no casualties

7




With ISIS switching tactics in Iraq, Baghdad must raise its gameOver the past few months, the Islamic State has shifted tactics in Iraq, reverting to targeting civilian locations in the capital and other major cities. Iraq’s government, which has seen success in retaking territory, must now adjust as well. On July 3, ISIS claimed responsibility for the suicide car bombing that killed over 300 Iraqis in Baghdad’s popular Karada district. This was the deadliest bombing since the 2003 U.S.-led invasion. The last time a bomb in the city killed even half as many people was seven years ago. The surge in attacks comes as the Islamic State is on the decline. Prime Minister Haider al-Abadi continues to celebrate the victories and liberation of Iraqi cities from IS fighters, most recently, a few weeks ago in Fallujah.After suffering such military defeats, the Islamic State has had to change its modus operandi. The organization, which once sought to conquer and occupy territory in an effort to build a state, is more frequently resorting to asymmetrical warfare and attacks on civilian populations in Baghdad. Haider al-Abadi has reached a working compromise that has thus far proved successful in liberating Fallujah: Iraqi government forces, namely the Golden Division special operators, move into cities while the Popular Mobilization Forces (PMF) protect borders and provide support from the outskirts. Washington now directly funds and equips the peshmerga. U.S.-led airstrikes have proven critical in battles in Fallujah, Tikrit, Baiji, and Ramadi.

General Talib Shaghati al-Kenani Shaghati al-Kenani with US Secretary of Defense Ash Carter in July 2015.

Since conventional battle has become difficult, the Islamic State is returning to the tried-and-tested tactics of its predecessor, al-Qaeda in Iraq. The organization also uses these attacks to instigate political division inside Baghdad. They provide the opportunity for Abadi’s opponents to discredit his leadership. Following the Karada bombing, former Prime Minister Nouri al-Maliki made several media appearances to criticize the security problems. He even told BBC that he could be ready to return as prime minister if necessary. For the Islamic State, attacks on civilians in Baghdad has become an easy way to maintain legitimacy and sustain the narrative of a powerful organization that strikes fear against national armies and citizens.To address the tactical shift, Abadi has focused on increasing troop levels in Baghdad. According

Security Analysis

KEY POINTS

• IS shifts to asymmetric warfare• ISF must respond with coordination• KRG regains control of Bai Hassan

8




to a report, almost half of Iraq’s combat troops are now based in the capital. He has also worked to get rid of fake bomb detectors, increase aerial reconnaissance, and better fund military groups. The PMF leadership, moreover, has mobilized inside Baghdad to secure the so-called “belt areas,” where much of the attacks have occurred. Despite these efforts, civilians in the capital are not being properly protected, mainly due to lack of coordination between the several security forces and intelligence agencies.Analysts have offered various solutions. Some say suggest bringing together the U.S.-led coalition’s technology, planning, and intelligence expertise with Iraqi ground forces. However, the solution must also include the emergence of a clearer and more effective structure to monitor and coordinate security and intelligence agencies. Abadi’s attempt to bring the various government agencies and non-government groups together, including Order 91, which makes the PMF a part of the Iraqi armed forces, has thus far failed. Ideally, the answer is in the integration of the paramilitary groups. Although there is a PMF administrative office within Abadi’s office, the some 80 groups under the PMF remain autonomous entities. At times, they are at odds with the state or with each other. Today, integration of these groups into the state apparatus is too distant a reality. As long as this is the case, however, Baghdad’s security and intelligence will be at the behest of different actors who do not always act in unison. This creates the ideal environment for the Islamic State to continue its tactical shift and stage attacks in Baghdad.

People gather at the site of a car bomb attack in Baghdad al-Jadeeda, in eastern Baghdad, on June 9.

Kurdish Forces retake oil field after Islamic State attackKurdish Peshmerga forces in northern Iraq regained control of an oil field near Kirkuk on July 31, after Islamic State militants overran the facility, setting fire to two storage tanks and causing crude production of 175,000 barrels a day to be halted. “The Peshmerga killed two Daesh suicide attackers who seized the Bai Hassan field this morning, a third blew himself up, and there is a search for others,” the Kurdish armed forces said in a statement, using the Arabic acronym for Islamic State. “The situation is now under near-total control but the fires are still burning at the oil storage tanks.” Five Kurdish soldiers and one oil worker were wounded in the clashes, the Peshmerga said. Islamic State invaded large swathes of northern Iraq in June 2014, driving

Security Analysis Cont’d.

9




Iraqi Government Tenders

The following pages contain a presentation of highlighted tenders issued in the previous month by six major ministries of the Iraqi government. The following tenders are intended to provide an illustration of the kinds of equipment, materials and services that are currently in demand – and especially those that would be of interest to foreign firms and investors.Dunia Frontier Consultants maintains a full database of all tenders released by the ministries, as well as copies of the underlying bidding requirements and instructions. Any interested parties should contact Dunia for further details and assistance in pursuing these opportunities.

Bidding Process OverviewEach ministry or state-owned enterprise that releases a tender offer provides its own set of instructions and priorities; in general, however, all bids for Iraqi government tenders require at a minimum the following steps or submissions:

1. Submission of a bid bond: equal to 1 percent of the total tender value, in the form of a bank guarantee, certified check, or debenture bond issued by an Iraqi bank recognized by the Iraq Central Bank or Trade Bank of Iraq.

2. Proof of company registration: foreign companies must present their articles of incorporation as certified by their own government, as well as the Iraqi embassy in their home country; locally-based firms must provide their proof of registration with the Iraqi Ministry of Trade, as well as addresses and contact information within Iraq.

3. Qualified use of proxies/agents: any company wishing to use submit a bid through an agent must also provide authorization documents as well as proof of affiliation (i.e. an agent must show certification with the stamp of the manufacturer or bidding companies, as well as registration with the Iraqi embassy in the country of agency).

4. Proof of purchase: the original receipt of the purchasing tender should be attached to the bid.5. Proof of financial status: companies may need to submit their records of profits or revenues

as certified by an accountant; a certificate of registration from the General Commission for Taxes that authorizes participation in any bid; as well as proof of the non-existence of any outstanding financial or legal disputes.

6. Samples: in the case of certain equipment (e.g. electrical transformers), some ministries require that product samples be included along with the bid.

7. Price vs. technical bid: some ministries require that the technical proposal be submitted separately from the cost proposals.

Finally, nearly all ministries and state-owned enterprises offer information sessions during which potential bidders can seek clarifications and additional information regarding the general conditions of the tenders.

out the Iraqi central government’s army. Kurdish forces then took control of Kirkuk oil fields and started shipping crude from the area through their export pipeline network running to Turkey’s port of Ceyhan.

10




Ministry of Oil Tenders

Inside Scoop:Dunia has learned of the following activity from the Ministry of Oil in July:- In order to raise performance and open cooperation with international companies, a delegation from Chinese company Lanpec visited the Heavy Engineering Equipment State Company (HEESCO) to discuss cooperation, particularly in areas related to the manufacturing of reservoirs and other core business fields the company is specialized in. HEESCO also confirmed that it completed a number of projects in oil and gas and other government sectors, to include the manufacturing of 3 oxidation towers and thermal swap engines with a capacity of 3.5 m3). The company also completed the manufacturing of 15 thermal switches and reservoirs for sulfuric acid for Midland Refinery Company as well as two gas reservoirs for Gas Filling Company.- Separately, the Ministry of Oil announced that Maysan Oil Company (MOC) will soon start the work on phase 3 of the Halfaya field, which aims to increase production to a peak of 400,000 bpd by mid-2018. The company’s general manager, Adnan Nochi, confirmed that upon MoO and the Council’s approval, the MOC and Petrochina (the main operator) will begin execution, including the creation of a complex to process crude oil and an integrated export system, as well as the modernization of the complex's dewatering facilities.

Company Requisition Closing Date Ref. No. Contact

Oil Products Distribution

Company (OPDC)

The establishment of Hasaniyat fuel station

23 August 2016 1/2016Opdc_dura2010@yahoo.

com

Heavy Engineering Equipment State

Company (HEESCO)

Provision of Radial Drilling Machine (Italian, approximate value: IQD

370mn)

5 September 2016 2016/th.h.m/m/4 [email protected]

Oil Products Distribution

Company (OPDC)

Provision of tires suitable for paved road and long

distances30 August 2016 602/2016

[email protected]

Gas Filling Company (GFC)

Supply of Thiophene material (quantity: 50 tons

from West Europe)21 August 2016 8F/2016 [email protected]

TENDERS AT A GLANCE

Total this month: 52Largest issuer: Midland Refinery Company (10)

www.oil.gov.iqOil Complex Building

Port Saeed Street Baghdad – Iraq

Tel: 00964 – 1 – 7270710 [email protected]

Minister: Adel Abdul-Mahdi

No. of Employees: ≈ 66,500

11




Ministry of Agriculture Tenders

Inside Scoop:Dunia has learned of the following activity from the Ministry of Industry and Minerals (MIM) in July:- As part of enforcing a new plan to boost local agriculture the Kurdish government has now added the rest of Iraq to the list of countries from which no agricultural products can be imported, especially after businessmen started using Iraq as a route to get around import regulations. Traders and suppliers have been said to bring Iranian and Turkish products into Iraq and from there bring them into the Kurdistan Region to avoid the ban list and high tariffs. Most of the products are fruits and vegetables. However, products that can prove they come from farmers licensed in Iraq, with official Ministry of Agriculture documentation will be allowed into Kurdistan. For three years the Kurdish government has banned the import of certain products, especially during harvesting season, in order to protect local agriculture while imposing heavy tariffs on other products to make local production more appealing to local customers.

Company Requisition Closing Date Ref. No. Contact

State Company for Seeds

(MESOPOTAMIA)

Sale of wheat residues (as first meal) in Azizia (725 tonnes subject to increase/decrease)

24 August 2016 (18)/2016 [email protected]

Ministry’s Directorate in

Baghdad/AlKarkh Renting of farm lands 29 August 2016 111/2016,

98/2016Zeraa-AlkarKh@Moagr.

org

Ministry’s Directorate in

Baghdad/AlKarkh Renting of farm lands 25 August 2016 96/2016 Zeraa-AlkarKh@Moagr.

org

Ministry’s Directorate

in Baghdad/Alrasafa

Renting of farm lands 26 August 2016 44/2016 [email protected]

TENDERS AT A GLANCE

Total this month: 15Largest issuer: Directorate in Baghdad/AlKarkh

http://www.zeraa.gov.iq Minister:

Falah Hassan Zeidan Ministry governing support of agriculture within Iraq through direct activity or subsidy.

12




Other TendersInside Scoop: TendersDunia has learned of investment opportunities with the following provincial investment commissions, as well as select opportunities with various other national ministries. For further information or for the relevant point of contact, e-mail [email protected].

Ministry of Oil (Continued)The Missan Oil Company (MOC) offered the following tenders:

• Purchase of Inspection, CP, Corrosion Instruments and Monitoring Spares for CPF 1 & 2. Tender submissions are due August 22, 2016

Interested parties can contact the directorate at [email protected]

• SA NY Crane Operation Training (training for 4 iraqi crane operators). Tender submissions are due August 25, 2016

Interested parties can contact the directorate at [email protected], [email protected]

• Purchase of Camp Maintenance Material, Carpenter materials, Paint materials, Tools, plumping and sanitary materials and Others. Tender submissions are due August 16, 2016

Interested parties can contact the directorate at [email protected], [email protected]

The Midland Refinery Company (MRC) offered the following tenders:• Supply of Electrical motors & starters (medium voltage)• Supply of Bung 2", Tap Seal 2"• Supply of Fire Fighting Agent Alcohol Resistant• Supply of Inst. Gramenga/Chrinkage Machine• Supply of Fire & Safety equipment

Tender submissions for all the above are due August 29, 2016 .

• Supply of VALVE FITTINGTender submissions for all the above are due August 24, 2016.

• Supply of Wrapping machine

13




Other Tenders Cont’d.• Supply of METALS• Supply of Supplementary Inst. & Meter• Supply of SPARE PARTS FOR GROVE CRANE

Tender submissions for all the above are due August 22, 2016.


The Oil Products Distribution Company (OPDC) offered the following tenders:• Supply of tires with tube and flap. Tender submissions are due August 30, 2016• Supply of pistols in different measurements and specifications. Tender submissions are

due August 21, 2016Interested parties can contact the directorate at [email protected], [email protected]

The Iraq Drilling Company (IDC) offered the following tenders:• Supply of LINK ELEVATOR. Tender submissions are due August 29, 2016• Supply of Repair Kit. Tender submissions are due August 29, 2016


Ministry of Electricity TendersThe Ministry’s Electrical Energy Distribution Directorate – Al Sadr issued the following tenders:

• Provision of maintenance work and the collection of electricity network in all of the directorate’s related areas. Tender submissions are due August 28, 2016


The Ministry’s Directorate for Power Transmission – Mid Euphrates issued the following tenders:• Supply of oil filter purifier adapters for oil treatment plant (10000 liters / hour of

capacity). Tender submissions are due August 28, 2016Interested parties can contact the directorate at [email protected]; [email protected]

The Ministry’s Nasiriyah Production Directorate issued the following tenders:• Supply of 500 Bushing for Nasiriyah steam power station. Tender submissions are due

August 25, 2016.

14




Commercial Activity: Deals in DetailThe following is a deep-dive presentation of facts, contact information, and potential business development opportunities for some of the most important, recently announced, deals and projects:

Bahrain’s Ahli United Bank raises stake in Commercial Bank of IraqAhli United Bank (AUB), Bahrain’s largest lender, has raised its stake in Commercial Bank of Iraq to 64.71 per cent, according to a stock exchange statement. AUB purchased a 10 per cent stake in Commercial Bank of Iraq, AUB said in a statement, without elaborating. A statement from the Iraq Stock Exchange on 28 July said AUB’s stake in Commercial Bank of Iraq had reached 64.71 per cent after AUB purchased 25 billion additional shares in the bank. It did not mention the price AUB paid for the shares. Commercial Bank of Iraq’s closing share price on 28 July was 0.43 dinars, which would value the 10 per cent stake at around 10.75 billion dinars ($9.20 million).

Business Development OpportunitiesIt is not clear in the news whether the additional stake that Ahli United Bank has taken in Commercial Bank of Iraq foreshadows a change the strategic relationship between the Bahraini parent and its Iraqi subsidiary. We believe that, should this turn out to be the case, key business development opportunities could result. These may center on various aspects that a tighter integration between AUB and CBI would entail. These could include core functions such as financial systems and other information technology aspects of the business, like human resources customer support and relationship management systems. Or, it could be indirectly driven by a tighter integration, such as other opportunities in branch expansion or restructuring resulting from increased investment coming from the parent. Either way, any business development opportunity would begin with a deeper understanding of the nature of AUB's increased investment and whether it implies any operational change or is just a portfolio enhancement on their part. We would reach out to both parent and subsidiary management to gain some insight into the implications of the investment and take it from there.

Interested parties should contact:Ahli United Bank B.S.C Building 2495, Road 2832, Al Seef District 428, P.O. Box 2424, Manama, Bahrain, Tel.: +973 17 585 858; email: [email protected] Bank of Iraq PSC, Al-Sadoon Street, Baghdad, Iraq, Tel: (+964) 1 7405583

Deep Casing Tools Deploys First System in IraqCasing and completion tool specialist Deep Casing Tools has continued its Middle East expansion with a successful deployment of its drillable turbine technology in Iraq. The company’s 7” Turbocaser Express™ high-speed reaming system was deployed recently for a client who had experienced liner running issues. The Turbocaser Express™ reamed through multiple problematic areas overcoming reactive shale and limestone stringers. Following a successful cement program, the Turbocaser Express™ was quickly and successfully drilled out with a PDC (polycrystalline diamond compact) bit and the next section was drilled during the same run.

Business Development Opportunities

15




Dunia research indicated that even though Deep Casing Tools has had some level of business in the Middle East and Asia for some time, it first established an office and warehouse presence in the UAE in January of 2015, underpinning a renewed push in the region. The Iraq success seems to be a direct result of the company's local marketing push. Consequently, we would speculate that there may be some upside business development opportunity in synergistic businesses in Iraq. Companies in oil and gas, particularly complementary services and equipment related to the company's completion and casing tools services, may want to explore any synergistic business activities that might be possible in the context of Deep Casing's expansion in the Iraqi market. However, we would caution that the company is rather small, with business in 2014 at about GBP 9 million, although that was double the revenue of the year before. Based on that trajectory, we would note that the company should be well into its double-digit millions in revenue. Because of its rapid growth and new opening in Iraq, therefore, it will likely be looking for new partners to help leverage its presence there and elsewhere in the Middle East. This may mean it will be looking for a new partner to bring business relationships to the table, but it could also bring new solutions and help a key partner to win business in Iraq with its apparently unique technology. We would proceed with caution, understanding that depending on the shape of its current Middle East expansion strategy, there could be strong synergies with Deep Casing, or perhaps not.

Interested parties should contact:Deep Casing Tools, Middle East, Jebel Ali Free Zone, Tel.: +971 56 6867425

Dubai's Drake wins $61.5mn Iraqi oil field contractDubai-based Drake & Scull International announced on 18 July that it was awarded a $61.5 million engineering, procurement and construction (EPC) contract for the construction of a water injection network installation project at the Zubair oil field in Basra, Iraq. The contract was awarded by ENI Iraq, a subsidiary of the Italian oil and gas multinational firm ENI, the company said in a statement. Under the terms of the agreement, Drake and Scull Oil & Gas (DSOG) will oversee the EPC of a gas supply pipeline system to a power plant in addition to water injection systems consisting of flow lines, trunk lines, manifold stations and wellhead hook-up work to enhance oil recovery.Mobilisation activity on the project has commenced with a scheduled completion of early 2018, the statement added. Wael Allan, chief operating officer of Drake & Scull International, said: “Drake & Scull Oil and Gas continues to achieve substantial progress and has gained a noticeable foothold in the oil and gas infrastructure construction sector in the MENA region in short period. The contract award has also raised DSI’s total project wins to AED570 million in very challenging circumstances.”

Commercial Activity: Deals in Detail

16




Business Development OpportunitiesDrake and Scull has had quite a bit of local success in the Middle East region as well as in Iraq in particular, especially with respect to construction projects tied to the oil and gas industry. Although mobilization for this project has apparently already begun, we would expect that the project could have various ancillary areas that might open opportunities for subcontractors. In addition, we believe that the current project itself may open other opportunities and insights into other parts of the massive multi-billlion dollar water injection project which spans not only ENI but also all other Basra oil and gas projects. Because water injection is crucial to sustaining oil and gas production levels over the long term, this is one of the key areas that must be invested in going forward in the key revenue generator for Iraq. Consequently, there should be other water injection projects besides Drake and Scull's, and any insight into these others may be well worth investigating even if there are no direct opportunities with DSOG itself. We would approach DSOG first, to try to gain insight into this project's opportunities and how it fits into the bigger picture on water injection. Then, we would also reach out to the parent Drake and Scull International to assess what other touch points might present opportunities in Iraq and the broader Middle East as well.

Interested parties should contact: Drake and Scull Oil and Gas, P.O. Box 44325, Abu Dhabi, Tel.: +971 2 493 9239Drake and Scull International, Dubai International Media Production Zone, P.O.Box 65794, Tel.: +971 4 4463444

Commercial Activity: Deals in Detail

17




Increase in Iraq Oil exports and revenues in JulyIraq’s oil exports rebounded in July to an average of 3.202 million bpd in July, up very slightly (less than 1%) from the level of 3.175 million bpd in June, and close to May's level of 3.200 million bpd. With 99.266 million barrels exported in July, revenues reached about $3.744 billion for the month, a 2.6% decrease from June revenue levels (of $3.845 billion). This represented a departure from the previous four consecutive months of increased revenues for the state, even as barrels produced has declined, as the oil price finally broke its winning streak and backed off to $37.72 from June's $40.37 per barrel. Revenues remain far from the monthly peak of over $8 billion in April of 2014, and trends suggest that both the oil price and Iraqi production volumes are likely to remain subdued for the near term.Kurdistan is still exporting oil separately from the Federal Government's State Oil Marketing Organization (SOMO), flowing through the northern Turkish port of Ceyhan for a ninth consecutive

month, owing to the continuing oil dispute between the Government of Iraq (GoI) and the Kurdistan Regional Government (KRG).

Crude oil export levels and monthly revenues from July 2015–July 2016. (Data: SOMO)

Iraq and three IOCs agree to restart investmentsIraq has reached agreement with BP, Shell and Lukoil to restart stalled investment in oil fields the firms are developing, allowing projects that were halted in 2016 to resume and crude production to increase in 2017, Iraqi oil officials said. The agreements, reached in July and August, effectively delay to the second half of the year projects that the three companies had planned to carry out in the first half, which had been suspended because of low oil prices. As a result of the investment, Iraq's crude output should increase by 250,000-350,000 barrels per day next year, Iraqi officials said. The country now produces about 4.6 million bpd, most of it from the southern region.Iraq is OPEC's second biggest producer after Saudi Arabia, and the increase in its output,

Sector Profile: Oil and GasKEY POINTS

• Oil revenues down, breaking streak• Iraq, IOCs agree to investments• OPEC warns on oil demand in 2017

18




alongside that of Iran, could aggravate the global oil glut and complicate discussions between OPEC and non-OPEC producers on output limits to prop up prices. Shell, BP and Lukoil all declined immediate comment. All three firms agreed to spend in the second half of 2016 roughly half the budgets they proposed for 2015. BP agreed to spend $1.8 billion this year at Rumaila. It had initially agreed to spend $3.5 billion last year, which it later revised down to $2.5 billion. Shell agreed to spend $742 million after proposing $1.5 billion last year. Lukoil would spend $1.08 billion, compared to $2.1 billion it had proposed last year."Many vital projects that foreign firms were forced to halt due to lower oil prices will be brought online after the recent budget cuts agreements," said Basim Abdul Kareem, the deputy chairman of South Oil Co that oversees oil operations in the region. "The companies now should have the needed budgets to implement these projects," he said. Iraq has yet to reach agreements with Exxon, CNPC and Petronas on fields those firms are developing in the south. Oil companies helping Iraq develop its massive oil fields have to clear their spending with the government each year. They are then repaid with income from Iraq's exports of crude oil produced from existing fields. The arrangement worked smoothly when oil prices were above $100 a barrel but since crude has collapsed to about $40 a barrel, Iraq has been struggling to find enough oil to repay the companies for their investment. Iraq relies on oil for nearly all its revenues and is spending heavily to fight Islamic State in its northern and western provinces. With its finances stretched, Iraq asked foreign oil companies last year to spend less than proposed, and all but cut off investment entirely for the first half of this year to the major projects.

An aerial view of Rumaila Operating Base in Iraq

"The agreed investment budgets are covering almost the rest of 2016 and it’s obviously a win-win deal," said another South Oil Company official who declined to be identified. "The companies will be able to resume work on many delayed projects that will help to raise Iraq’s production in early 2017. We are talking about at least 250,000 to 350,000 additional barrels a day in early 2017." The Iraqi oil ministry in February said the budget for foreign oil company development costs had been revised down to just over $9 billion in 2016, while the companies estimated their cost at $23 billion, following complex negotiations. Among OPEC members, Iraq's supply rose the most last year and output reached a record 4.775 million barrels per day in January 2016. Iran also intends to boost supply after a deal to lift sanctions imposed over its nuclear programme, making it more

Sector Profile: Oil and Gas Cont’d.

19




difficult for OPEC to agree production limits.

Did OPEC Just Issue A Warning For Oil Prices In 2017?On August 10, OPEC upgraded its 2016 projections for world oil demand growth to 1.22 million barrels a day (mb/d), up by 30,000 b/d from its previous estimate, but warned that there were “lingering concerns” that refiners in the U.S. and Europe may cut processing rates, which could decrease the demand for crude. In its Monthly Oil Market Report, OPEC said that now its latest estimates peg the total oil demand at 94.26 mb/d. For 2017, global oil demand is expected to grow at the same level anticipated last month; that is, going up by 1.15 mb/d from 2016 levels. The total 2017 oil consumption is projected to hit a new record of 95.41 mb/d, OPEC noted.While either affirming or slightly upgrading last month’s forecasts, OPEC alerted that lingering concerns persist that the “U.S. and European refiners could cut runs in response to a declining gasoline crack in both regions in a period when summer driving and margins should have been at their highest during the year.” This was the main reason why crude prices have come under downward pressure in recent weeks, OPEC said. Gasoline demand could drop after the end of the driving season in the third quarter of 2016. The supply side may also pressure middle distillates as stockpiles remain high across the world, especially in the OECD, where inventories are currently around 80 million barrels higher than the latest five-year average, OPEC commented.In addition, lower-than-anticipated demand, high refined-product inventories, and growing crude supply led to the first decline of the OPEC Reference Basket in five months. In July, the OPEC Reference Basket averaged $42.68 per barrel. In its previous report in July, OPEC said it expected the oil market balancing later this year, leaving its forecasts largely unchanged. At the time of writing, West Texas Intermediate (WTI) Crude traded at US$42.03, down 1.73 percent, and Brent Crude was down 1.47 percent to US$44.32.

Gazprom Neft production picking up at BadraProduction momentum at the Badra oil field in eastern Iraq has resulted in almost half of the total volumes emerging this year, Russian company Gazprom Neft said. Gazprom Neft said its Iraqi subsidiary commissioned its 10th production well at the Badra oil field in Wasit province in eastern Iraq, near the border with Iran. "With production volumes at the newly launched well now at 6,527 barrels per day, its commissioning has allowed daily production levels at the field to reach 67,000 barrels," the company said in a statement. Total production at Badra now stands at 2.9 million barrels of oil, the company said, with almost half of that coming online since the start of 2016. An additional four wells are in the planning stages with completions expected by early next year. Gazprom Neft estimates Badra holds around 3 billion barrels of oil in place.The Russian company's trends contrast with other oil developments in Iraq. According to the Organization of Petroleum Exporting Countries, of which Iraq is a member, crude oil production dropped 1.3 percent from May to June. Iraq this year called on international oil companies from BP to Exxon Mobil to cut their investment plans for the country in order to clear debt. The affect, however, is that it reduces oil-generated revenue in the Iraqi budget, which in turn starves the country of the funds to support operations against the Islamic State terrorist group. The Russian company said the terms of its Iraqi contract call for the eventual production of 170,000 barrels per day.

Sector Profile: Oil and Gas Cont’d.

20




Sector Profile: Kurdistan EnergyKEY POINTS

• KRG exports fall again to 473k b/d • DNO launches bid for Gulf Keystone• GKP takeout benefits many parties

KRG oil exports average of 499,908 bpd in JulyThe Kurdistan Regional Government’s (KRG) Ministry of Natural Resources (MNR) released its July production and export report this month, stating the region’s export sales averaged 457,314 bpd, down another notch from 499,908 bpd in June, for the second straight monthly decline. Total exports for the month were listed as 14,176,761 barrels (bbl) of crude oil (compared to 14,997,250 bbl in June). All oil export volumes flowed through the KRG-Ceyhan crude oil pipeline, with all crude oil cargoes lifted from the port of Ceyhan. The KRG realized a total value of $461,196,477 in July from its oil exports, of which $24,914,718 was allocated to producers according to their Production Sharing Contracts (PSCs). In addition, $63,424,530 of that total realized value was retained by buyers against past prepayments. Consequently, the net cash balance retained by the KRG from export sales for the month of June was $ 372,857,229. It should be noted that both the producers and buyers took proportionally smaller amounts out of the total realized value in July, such that although that amount was more than $100 million below the June amount of $562 mn, the cash retained by the KRG only fell by $10 mn, to $373 mn in July from $382 mn in June.However, neither are foreign traders advancing as much to the KRG as in the past. In July, the KRG only took $35 mn as an advance against future sales (versus $127 mn in June). The KRG allocated $ 18.1 mn in petrodollar payments to Kirkuk (versus $30.3 mn in June). This resulted in net income to the KRG budget of $389,757,229, versus about $479.4 mn in June.

Gulf Keystone facilities in Iraq

DNO set to take over Gulf KeystoneMiddle East-focused Norwegian oil company DNO is proposing to put long-suffering investors in Gulf Keystone Petroleum Ltd (GKP) out of their misery with a $300mn cash and share bid for the UK

21




Sector Profile: Kurdistan Energy Cont’d.group. The proposed transaction follows very quickly on the heels of a debt for equity swap that effectively rescued London-listed GKP, but diluted existing holders. In fact the cash component of the bid, $120mn, will provide an “early exit” for former bondholders unable or unwilling to hold the firm’s equity. DNO is one of the biggest operators in the volatile Kurdistan region of northern Iraq, where GKP also made (and some would say also destroyed) its reputation. DNO owns 55% of the Tawke Field, which produces 120,000 barrels of crude a day, while Gulf Keystone owns another premier asset, Shaikan, which churns out 40,000 barrels. For investors in GKP it has been a roller coaster ride, which in recent years has involved a rather scary downhill section. The stock topped out above £4 in 2012 when it first began to enjoy success at Shaikan, at a time when Kurdistan was seen as an exciting new oil frontier.The company funded growth by raising debt based on the potential of its world class assets. However a perfect storm of falling prices, political instability and rather modest export income (that fell well short of what was needed to meet its financial requirements), hurt GKP badly. The company's share price closed at 5.3p on 11 August, not much higher than recent lows close to 3p in July. DNO’s chairman, Bijan Mossavar-Rahmani, said, "Combining these two companies will create further scale and unlock operational synergies that will reinforce DNO's already formidable presence in Kurdistan. "We understand Shaikan's challenges and opportunities and we are well positioned to focus financial, technical, commercial and logistical support to maintain and then grow production at this field to the benefit of both Kurdistan and our investors.”

A Genel oil facility in Kurdistan in 2014

Genel cuts outlook; shares fallGenel Energy, one of the main oil producers in Iraqi Kurdistan, cut its revenue outlook for the year on July 28 after it reduced its production target earlier in the month. London-listed Genel reported a first-half pretax loss of $4.2 million, down from a $31.4 million profit in the same period last year as weak oil prices and lower production took their toll. Shares in Genel were down 5 percent at 98 pence a share shortly after market opening the same day. Genel said 2016 revenue would be $200-230 million, down from $200-275 million previously expected. The oil producer, which is still owed $412 million by the Kurdistan Regional Government (KRG) for oil exports in 2014 and 2015, halved its proven and probable reserves at its Taq Taq oil field in Kurdistan earlier this year.

22




The Taq Taq and Tawke oil fields saw much lower production levels year on year, partly due to the closure of the Ceyhan export pipeline to Turkey and partly due to natural decline in the reservoirs. This led Genel to cut its full-year production target by around 14 percent earlier this month to 53,000-60,000 barrels per day (bpd). With reliance on revenue from its main two oil fields, Genel is banking on a recovery in oil prices to beef up its balance sheet in the short term. "With its production and balance sheet, Genel is a decent levered play on oil price recovery, but the shares may otherwise struggle to make progress," said Daniel Slater, analyst at Arden Partners. In the long term, Genel's Miran and Bina Bawi gas fields are expected to contribute significant cashflow through gas exports to energy-hungry Turkey.

DNO consolidation a potential boon for all partiesNorwegian independent DNO’s move for fellow Iraqi Kurdistan producer Gulf Keystone should potentially be welcomed by all interested parties. For Gulf Keystone shareholders, the $300mn cash-and-shares bid offers a way out before their ownership gets diluted under Gulf Keystone’s last-ditch restructuring plan. For Gulf Keystone’s partners in the Shaikan field, it holds out the prospect of an operator with some cash for investment in the field’s development. And for DNO, it offers a chance to broaden its asset base in northern Iraq’s Kurdish region, for a reasonably low outlay, at a time when there are signs of confidence returning to the region’s upstream sector.But the move will be welcomed most in Erbil, where it will be read as a sign of belief in the region’s prospects. This is quite the turnaround from the start of this year, when Gulf Keystone’s chief executive said the Kurdistan Regional Government’s (KRG) inability or unwillingness to pay for crude exports had put his company “on a financial knife edge”. Massive downgrades to reserve estimates had also shaken the sector that was already caught in the middle of a political stand-off between Erbil and Iraq’s central government.A new payment agreement, implemented in February, was aimed at ensuring planned production capacity rises. DNO and Turkish firm Genel have said that, after five months of regular payments under the new system, they will hold their end of that bargain. Erbil hopes the investment pays off – its battles with Islamist group IS, in northern Iraq and in Syria, is a massive drain on finances that depend entirely on crude sales. The potential for fresh disruption to exports through Turkey is always at the back of minds, and even more so in a post-coup world, hence the sounding out of plans for an export pipeline through Iran.The potential deal has a political angle too. Genel trumpeted its ambitions to be a consolidating force in the KRG oil sector. And the KRG is highly dependent on Turkey for its crude export route and for future gas sales. The unremitting slide in Genel’s market capitalization and the reserves downgrade of its Taq Taq field look to have taken it out of the consolidation game for now, although it is too early to entirely rule out a counter bid for Gulf Keystone. Given the delicate and ever-shifting political relationships within and between Turkey, Iraq, the KRG and the wider region, Erbil may be pleased to see a more unambiguously extra-regional company taking on Shaikan.

Sector Profile: Kurdistan Energy Cont’d.

23




Sector Profile: Telecom and MediaKEY POINTS

• Iran and Iraq to sign trade MoU• Jordan closes Iraq border again• KRG bans foreign produce

Zain profits up despite Iraq challengesOperator group Zain said its results were impacted by continued instability and tax issues in Iraq, with “intense price competition” also affecting key operations. Asaad Al Banwan, chairman, said: “It is pleasing to report growth in several of our key financial metrics for the second quarter and six-month periods, given that Zain Group is exposed to conflict zones and currency fluctuations that continue to impact the growth potential of our business.” Quarterly net income of KD45 million ($148 million) was up 14 per cent year-on-year, on revenue of KD275 million, down 3 per cent. For the first half, net income increased 2 per cent to KD82 million ($272 million), on revenue of KD552 million, down 2 per cent. The company ended the period with 45.2 million active customers. Data contributed 22 per cent of total group revenue in the first half, with the company citing a focus on “leveraging 4G networks”. Zain Sudan launched LTE, the technology’s debut in the country, marking the sixth Zain operation to introduce it.

Many in Iraq carry multiple cell phones because of the fragmented carrier network services and coverage

With regard to Iraq, continued instability plus the introduction of a 20 per cent sales tax on mobile services, as well as “wide-ranging tax increases on other sectors in the country”, are affecting spending on mobile services. H1 net income more than halved to $24 million, on revenue which decreased 11 per cent to $536 million. Scott Gegenheimer, CEO, said: “The severe impact of ongoing civil instability in Iraq is a concern for us, both from the perspective of the human suffering that it causes, but also due to the detrimental impact it has on our business. The sales tax instituted in the country also had a determined negative effect on our overall financial results, though we remain optimistic that the strategy we have in place is the correct one for our circumstances.”

24




Sector Profile: Telecom and Media, Cont’d.For its home market of Kuwait, Zain noted “a very challenging six month period that witnessed intense price competition impacting its financial performance”. Gegenheimer said: “We are actively seeking and securing sources of incremental revenue in the digital space including enterprise M2M services and smart city solutions to governments and mega real estate projects across the region. We have entered into several strategic partnerships recently, which we strongly believe will fast-track and further enhance our ambitions to unlock many lucrative opportunities in the connected society revolution.”

Icflix launches streaming in IraqOn August 3, Middle East subscription video-on-demand service Icflix announced that it is launching in Iraq through a partnership with the country’s leading mobile telco Asiacell. Both prepaid and postpaid Asiacell customers will be able to subscribe to the icflix library of content for a monthly fee of 10,000 IQD (US$8.56), a weekly fee of IQD4,000 or a daily subscription for IQD1,200. Content available will include Arabic female teen superhero animation series Dunia, Arabic series including Al Arrab: Taht Al Hazem, Layali El Helmya 6 and Al Tawarid and Hollywood movies Lone Survivor, Grace of Monaco and Need for Speed.“We are glad to have partnered with Asiacell, the leading provider of mobile telecommunications in Iraq who will ensure their subscribers receive the best of ICFLIX content with ease and uncompromising quality,” said Carlos Tibi, founder and CEO, icflix. Zring Faruk, Asiacell chief commercial officer, said: “This new project and our partnership with a leading company such as icflix reflects our deep interest in modernising the services we use in order to enhance the performance of our company and in turn provide the best entertainment services to our subscribers who deserve the most outstanding services, especially Internet streaming services.”

Daesh cuts off internet in Mosul The Daesh terrorist group has cut off Internet access in Iraq’s northern city of Mosul -- which the group has held since mid-2014 -- with the apparent aim of preventing local residents from communicating with elements of the Iraqi army. "Daesh is afraid that Mosul residents will use the Internet to inform the army as to the whereabouts of the group’s positions and strongholds in the city," the Iraqi army’s media unit said in a statement. According to local witnesses, Daesh has set up small Internet centers throughout the city at which local residents can go online, but the centers are full of Daesh agents who monitor what people are looking at and who they communicate with.Omar Abdullah, a Mosul University professor and expert on Islamic groups, said that Daesh "has recently come to understand how much the Iraqi security forces depend on information provided by Internet users -- especially when it comes to the locations of Daesh positions and sites". "With this in mind," Abdullah noted, "the group decided to cut Internet access in Mosul before the Iraqi army launches its anticipated campaign to liberate the city." Iraqi forces are currently preparing a major offensive aimed at retaking Mosul, Iraq’s second largest city.

25




Commercial Activity: Deals & DetailsProjects and Contracts Announced in July

Company Name Industry/Sector Country of Origin Province/Area Description

Ahli United Bank Banking/Finance Bahrain Iraq-wide Bahrain's largest lender raised stake in Commercial Bank of Iraq by 10 per cent to 64.7 percent

Deep Casing Tools Oil and gas UK UndisclosedDeployed 7” Turbocaser Express high-speed reaming system for a client who had experienced liner running issues

Drake and Scull International Oil and gas UAE BasraAwarded a $61.5 million EPC contract for construction of a water injection network installation project at Zubair oil field in Basra

MBDA Missile Systems Defense France Iraq-wide Awarded a GBP 28 million contract to support long range missiles used in Iraq and Libya

26




Investment Climate

Japan to lend $2.1 bn to develop Basra refineryA top Iraqi official announced on 27 July that Japan will lend an amount of $2.1bn to Iraq, to be allocated for developing Basra refinery. Ali Shadad Al Fares, Head of Oil and Gas Committee of the Basra Provincial Council said: “The Japanese government has agreed to lend Iraq a loan of $2.1bn to execute a number of projects for rehabilitating Basra Oil Refinery. The loan will be repaid in 40 years with a 2% interest rate.”

He further added that the loan is to be used in implementing strategic and vital projects in Basra refinery that are to be completed by 2020. These projects include oil gas hydrogenation project with a capacity of 20,000 b/d. “These projects are designed to bring production at the refinery to about 4,500t of reformulated gasoline, and about 27,000 barrels of fuel oil and 40,000 barrels of hydrogenated oil gas per day, in addition to the production of 500t of liquid gas,” revealed Al Fares.

Lack of banking culture in KurdistanBank managers in the Kurdistan Region paint an optimistic picture of the banking system despite a continued financial crisis and lack of a banking culture among people. “IBL bank have never experienced a case where a client has come and asked for money and we did not have enough money to deliver,” says Ishtar Zulfa, manager of the Erbil branch of the International Bank of Lebanon (IBL). Zulfa says that people still trust the bank but taking into account the financial crisis, they need a little assurance that their money will stay and can withdraw when they want.

Zulfa explained that for transactions within the Kurdistan Region it is business as usual. The only challenge is dealing with transactions outside the region, including in Iraq. “We do have money in the bank but it has become difficult to transfer money to Baghdad and other countries due to the instability of the region and the tension between the two regions,” she said. She pointed the finger of blame at the central banks in Baghdad and Erbil: “The central bank in Kurdistan is not very responsive to our requests

to transfer money to Baghdad and Baghdad is not transferring money to Kurdistan. There is no cooperation between the two.”

Nevertheless, she believes that locals have more trust in international than national banks. “There are still people who come and open accounts because it is an international bank, because they trust the international banks than the Iraqi ones.” The Kurdish government decided earlier this year to boost the banking sector as part of wide ranging reforms of the financial system, and people’s understanding of banks seems to have changed. “Based on my experience I can say there has been a huge development in people’s knowledge about banks,” said Zulfa, who has worked in the sector in Erbil for a decade. “Every year it improves. Before, when we were talking about credit cards, only few had any idea what we were talking and now I have dozens of requests for credit cards.”

Iraq receives first IMF paymentThe Iraqi government had already received the first installment of a multi-billion dollar loan approved by the International Monetary Fund (IMF) in May, an Iraqi official finally confirmed in July. "The Iraqi government received Tuesday the first $634 million installment," Mazhar Mohammed Saleh, the Iraqi Prime Minister's financial affairs advisor said, adding that three of the 13 payments will come during 2016 and total an estimated $2 billion. "The first installment was allocated to the areas of the relief of the displaced, education, health, and social care," he said. In May, Iraq signed an agreement with the IMF for a $5.3 billion loan, at an interest rate of 1.5 percent, after meetings held in the Jordanian capital, Amman. Iraq announced last year that it borrowed $1.9 billion from the World Bank during 2015 in order to cover “the expenses of reconstructing the liberated areas from [militant group] Daesh.” Falling oil prices have contributed to an economic crisis Iraq has been facing which has forced the government to reduce its budget and introduce austerity measures.

KEY POINTS

• Japan lends $2.1B for Basra refinery• Kurdish banking culture lacking• Iraq got first IMF payment in May

27




High level delegation participates in IBBC retreatDara Rasheed, Iraq’s acting Minister of Housing and Construction, Jan Kubis, Head of UNAMI and Special Representative of the United Nations for Iraq, Robert Bou Jaoude, World Bank’s Special Representative for Iraq, Patrick Simmonet, EU Ambassador to Iraq and Baroness Nicholson of Winterbourne, IBBC Executive Chairman and UK trade Envoy for Iraq, Azerbaijan and Turkmenistan, were amongst the participants of IBBC’s annual retreat at Cumberland Lodge, Great Windsor Park, held the 8th-10th July 2016. Christian Josz, Mission Chief of the International Monetary Fund (IMF), gave a presentation on the IMF’s Stand-By Agreement for Iraq approved on the 29th June.The retreat was also attended by senior officials from the Home Office and the Iraqi Embassy in London, who gave speeches on Friday evening. The after dinner speaker on Saturday was Sir Terrece Clark KBE, Chairman of the Friends of the Basrah Museum, who updated delegates on the status of this important cultural initiative.

Iraq considers Belarusian Universal Commodity Exchange (BUCE)The Belarusian Universal Commodity Exchange (BUCE) recently held a meeting with a delegation from the Iraqi Businessmen Association (IBA). In the course of the talks, the representatives of Iraq’s production and trading companies learned about the BUCE's main activities and principles as well as the advantages of leveraging the exchange mechanism to boost Belarus-Iraq bilateral trade.In this context, the sides discussed prospects of using BUCE’s electronic platforms when selling Belarusian products in Iraq and other Middle Eastern countries. It was also noted that in case of a significant number of transactions involving Iraqi companies a BUCE branch office or an exchange warehouse might be opened in Iraq.Closing the meeting, the sides agreed to develop cooperation in information exchange, promotion of BUCE’s services among the Iraqi business community, and facilitation of Iraqi companies’ participation in exchange trade. As a first step, there are plans to arrange a workshop for IBA members so that they could study basic commodity trading strategies and learn how to work with BUCE’s electronic trading platform of industrial and consumer goods.

Conferences & DelegationsKEY POINTS

• Iraq seeks Mexican investors• Barzani receives Iran delegation• US consuls in Erbil transition

28




Conferences & Delegations

Minister of Foreign Affairs Jaafari receives new Hungarian AmbassadorMinister of Foreign Affairs Dr Ibrahim Al-Jaafari received a copy of credentials of the new Hungarian Ambassador Mr Attila Tar, on 3 August 2016, at the ministry headquarters. During the meeting, they reviewed bilateral relations and means to promote them to serve the interest of the two friendly peoples. The minister wished the new Hungarian Ambassador every possible success in fulfilling his diplomatic duties, expressing the readiness of the ministry to supply every possible assistant to make the work of the mission in Iraq successful.HE Dr Al-Jaafari called on the Hungarian companies to invest in Iraq, particularly, in the energy sector. Dr Al-Jaafari urged the Hungarian side to grant Iraqi students scholarships, and make further training courses in several fields, asserting the need to reactivate trade, cultural, and health conventions, signed previously between the two states, or conducting agreements that are still under study. “Hungary is standing by Iraq, and it’s ready to provide further support to Iraq,” The Hungarian Ambassador asserted, expressing the readiness of Hungary to invest in Iraq in energy field. Mr Attila Tar congratulated the Iraqi armed forces for achieving significant triumphs against Da’esh.

29




Conferences & Delegations Cont’d.

Key Upcoming ConferencesName Location Dates Cost* Contact

6th Erbil Oil and Gas Interna-tional Exhibition Erbil, Iraq 22-25 September 2016 $1000 +

Pyramids InternationalT: +90 216 575 28 28

Email: [email protected]

International Healthcare Exhi-bition And Conference Baghdad, Iraq 28-30 September 2016 contact orga-

nizer for details

International Fairs and Promotion – IraqTel: +964 (0)66 2567634

[email protected]

Project Iraq Erbil Erbil, Iraq 3-6 October 2016 contact orga-nizer for details

Mr. Fady Darwiche+964 66 256 7634 / +964 66 225 2048

[email protected]

Erbil International Fair Erbil, Iraq 10-13 October 2016 contact orga-nizer for details

Ms. Rania Houjaij+961 5 959 111 Ext 112

[email protected]

Project Iraq Baghdad Baghdad, Iraq 19-22 October 2016 contact orga-nizer for details

Mr. Fady Darwiche+964 66 256 7634 / +964 66 225 2048

[email protected]

Kurdistan-Iraq Oil & Gas Con-ference and Exhibition London, UK 5-7 December 2016 £2,749

Mr. Mohamad Kantar or Sebastien David+44 20 7978 0781; +44 20 7879 0080

[email protected]

Basrah Building Basra, Iraq 11-14 December 2016 contact orga-nizer for details

Pyramids InternationalT: +90 216 575 28 28

Email: [email protected]

* Nearly all events offered reduced prices for early registration or limited participation.

30




About Whispering Bell

Established in 2009 and headquartered in the UAE, Whispering Bell has rapidly expanded across the region and now provides security risk mitigation support to clients from the oil and gas, critical national infrastructure, finance, telecommunications, maritime, aviation and government sectors.

We are comprised of passionate security, risk management and market entry specialists, focused on delivering integrated physical security, technical security and business advisory solutions with a core focus on service delivery.

By listening to our clients’ needs and sharing our experience, each one of our solutions is unique and built around the specifics of the country, sector, assets and people within the client’s organization.

Business Advisory ServicesMarket Research, Commercial Due Diligence, Partner Vetting and Feasibility StudiesThreat and Risk AssessmentsSecurity Consultancy ServicesTechnical and Information Security Services

For more information on our reporting capability and pricing, contact: [email protected]

Economy & Finance

Iraq Commercial Activities & Business Development Opportunities - Aug 2016