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Al Majal Updates

 

Al Majal Logistics Services (AMLS) continues to grow its cold storage clientele by supporting a leading food and beverage distributor with cold storage services.

 

 

As part of our CSR activities and out of our belief in the role of music in preserving national culture and identity, Al Majal has signed an agreement to sponsor the new premises for the Basrah’s Children Orchestra, providing participating children with a safe haven and a positive experience to heal and thrive through music.

 


Qamar Energy’s Monthly Contribution

 

Latest in the Iraqi & Regional Energy Markets

 

 

Daily coronavirus cases in Iraq have declined to a record low 596 on January 16, an 89% drop from the peak of 5,505 daily cases in September. Travel to and from 20 countries[1] has been banned after a new strain of the coronavirus spreads in these territories[2]. Daily deaths, meanwhile, have reduced by a remarkable 97% from a high of 122 in June, with overall recovery reaching near 93.8%. Iraq has inked a preliminary deal with Pfizer-BioNtech for 1.5 million doses of the coronavirus vaccine to arrive in the early New Year, which should bolster domestic demand sentiment somewhat. Iraq’s National Medicine Selection authority granted the approval for emergency use of the vaccine on December 27.

Economic revival hinges on the country’s energy sector, where several high-profile developments have taken place in recent weeks, with exports in December to increase by 5% to 3.30 Mb/d, although a 15% y-o-y decline from 2019’s levels due to OPEC+ compliance. Iraq’s oil exports averaged just 2.99 Mb/d in 2020, earning just US$ 41.926 B, lowest annual export volume and revenue total since 2014. A draft 2021 budget, which was approved on December 22, sets a record deficit of US$ 43.4 B, raising concerns over how quickly and surely energy plans could return support to the economy. This follows approval of the devaluation of the Iraqi Dinar by ~23% against the dollar to allow the government to generate more dinars from dollar-denominated oil sales. A potential downside is the likely increase in inflation, cost-of living expenses, and negative impact on contractors awaiting payment denominated in dinars.

A roundup of the latest developments in the Iraqi energy market is summarized in the table below.

 

 

Bearish market sentiment is expected to continue weighing on world oil demand outlook for the remainder of the year and into the first quarter of the New Year. A key contributor to the less-than-positive demand outlook is continued bearishness surrounding the return of road and transportation fuel demand in OECD Europe, now that various EU governments and some jurisdictions in the US have re-introduced curfews and partially or fully shutdown hospitality services, and with the emergence of a more contagious Covid-19 strain. Non-OECD demand might improve slightly due to positive momentum from Q3/Q4 carrying forward in China, where industrial activity indicators and petrochemical activity have improved. The situation should improve after Q1 as vaccination becomes increasingly widespread and effective.

In the Middle East, overall demand is expected to contract by 380 kb/d in Q4 2020 from Q3 levels, even though consumption had surged by near 970 kb/d in the third quarter, compared to Q2 levels of 6.91 Mb/d. Seasonality is expected to play a large part in demand reduction due to the winter season, especially in the UAE, Kuwait, Saudi Arabia, and Oman, as well as the continuation of social distancing measures, work and school from home, mobility restrictions, and travel restrictions on tourists and visitors from the EU, South Africa, and Australia, as a new coronavirus strain spreads. PMIs have stabilized, even though economic activity remains slow, reflected in lower diesel consumption. This has informed some noteworthy deals in the energy sector in recent weeks, summarized in the following table.

 

 

Top Energy Deals in the Region

 

 

Regional Rig Count (1): OPEC+ Pressure to Keep Iraq Rig Count Low

 

 

Source: Baker Hughes International Rig Count
Note: Iraqi gas rigs are not reported by Baker Hughes, likely because Iraq reports gas rig figures clubbed with oil rigs and/or lack of response from contractors (drilling for non-associated gas is at minimal levels compared to oil).
* End of Qamar Energy’s contribution, for more information about Qamar Energy, please visit www.qamarenergy.com

 


Eversheds Sutherland’s Contribution – Iraq’s Legal Updates

 

The provisions of the Iraq laws respect the contractual relationship between parties, however certain contracts are governed by the provisions of the law to ensure the stability of relationships and to regulate the legal rights and obligations in addition to eliminating any prejudice which could occur between the parties. One of those contracts are commercial agency agreements, whereas the Iraqi legislator regulated this relationship and set the minimum requirements to ensure the smooth dealings and maintain the rightful fairness between the parties.

 


Iraq Oil Market Highlights

 

 

Iraq Coronavirus Cases Overview
Since the Beginning of the Outbreak

 


Iraq’s Oil & Gas News

 

Iraq’s Ministry of Oil has signed an outline agreement with a Chinese consortium for the development of the Dhi Qar refinery. This agreement comes as an important step forward, and a prelude to the signing of the final investment contract for the Dhi Qar refinery project, which will have a capacity of 100,000 barrels per day (bpd).

 

 

Iraq’s Ministry of Oil has announced finalized oil exports for December of 88.2 million barrels, an average for the month of 2.85 million barrels per day (bpd), up from the 2.71 million bpd exported in November. Exports from oilfields in central and southern Iraq amounted to approximately 85.2 million barrels, while exports from Kirkuk amounted to 3.0 barrels.

 

 

The KRG’s Regional Council of Oil and Gas Affairs has published a report containing verified statistics covering the Kurdistan Region’s oil exports, consumption and revenues for period 1 January 2020 to 30 September 2020. The report provides a quarterly analysis of oil export information and average prices. The data verification was performed by Deloitte.

 

 

Iraq has signed an agreement w