One year after successful elections, Kurdistan is

One year after successful
elections, Kurdistan is a model
of political, economic, and social
progress that could show the
way forward for all of Iraq
I
f there’s one place that’s never out of the news, it’s Iraq. Seven years
after the US intervention, this ancient cradle of civilization faces a
challenging future as American forces start drawing down in August,
with a view toward leaving the country by the end of 2011. Despite
security gains since the 2007 surge, delayed and indecisive elections in
March left the civil administration in stalemate, with no government
formed for months.
In the federal region of Kurdistan, July 2009 parliamentary elections saw
the Kurdistani List garner 60% of the popular vote, making Dr. Barhim Salih
the Kurdistan Regional Government’s (KRG) new prime minister. Salih was
formerly Deputy Prime Minister of Iraq, placing him in a unique position
to appreciate how Kurdistan can serve as a model for Iraq’s future.
President Barack Obama meets with Kurdistan Region
President Masoud Barzani in the White House in January 2010.
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KURDISTAN REGION: GATEWAY TO IRAQ / SPECIAL ADVERTISING SECTION
“We have significant influence in Baghdad, now, and
should make good use of it to promote a democratic, stable,
and prosperous Iraq,” Salih argues. “The Kurdistan Region, as
a self-governing entity, offers a good example to other parts of
Iraq, and I genuinely believe that [our] political and economic
strength strengthens the rest of Iraq.”
The Kurdistan Region was granted
nominal autonomy in 1970, but, under Saddam Hussein, suffered enormous hardships. It was not until after
2003, however, when Peshmerga resistance fighters joined coalition troops to
overthrow the regime, that it won real
rights as a federal entity under the 2005
Iraqi constitution and established itself
as a valued ally and potential business
partner for the West.
“Our vision for Kurdistan’s developDR. BARhIM SAlIh,
Prime Minister of
ment is: [our] market is promising, we
the Kurdistan Region
want to grow a strong economy, and
must defend our rights, but it is far more
important to see Kurdistan as a gateway to the rest of Iraq,” Salih
argues. “We want the private sector to look on the Kurdistan Region as stable and prosperous, with a strong educational base and
a friendly business environment, where we are not focused solely
on the regional market, but on the entire Iraqi market.”
Religious tolerance, plentiful natural resources, and a unified
population of five million, which shares a common language
and heritage, have given the region an enviable reputation for
security and an enabling environment for business. And the administration’s commitment to transparency aims to make it
even more attractive as an investment destination.
Jorge Restrepo
RecommendATIonS foR
InTeRnATIonAl InveSToRS
BEfORE InvESTInG and doing business in Iraq, foreign companies and investors should consult with experts on international anti-corruption statutory compliance, commercial law
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transactional, and cultural landscape. Jorge Restrepo is an independent international transaction attorney with over four
and half years’ experience in Iraqi investment and contract
law matters. He advises the Kurdistan Regional Government
on all contractual matters for Erbil International Airport, and
private-sector clients on transnational legal and business
transactions. He can be reached at [email protected]
“Bad business practices and instances of mismanagement
created powerful vested interests,” PM Salih admits. “We had
corruption in the past and still have it today; this is an important concern for any society, and we need to implement effective measures to change things for the better.”
“The KRG is modernizing its legal framework to compete
with the rest of Iraq and other countries for foreign direct investment,” notes Jorge Restrepo, an independent attorney and
government advisor. “Its 2006 Investment Law is more liberal
than the central government’s, and grants real-estate ownership rights, complete exemption from taxes, recourse to international arbitration, and many more benefits.”
Kurdistan Region Security Protection Agency
“The KuRdISTAn RegIon IS The TRue SucceSS SToRy of The AmeRIcAn InTeRvenTIon In IRAq”
WALKInG ERBIL’S STREETS at night doesn’t seem
like a particularly noteworthy pastime, until you
remember that you’re in Iraq, one of the most dangerous places in the world. Life in the cities of the
Kurdistan Region, however, is very different from
that in Kirkuk and Mosul, just beyond its borders.
In the last three years, says Masrour Barzani, General Director of the Kurdistan Region Security Protection Agency, there has not been a single instance
of terrorist activity in Kurdistan.
“We are confident that we can continue providing sufficient security to our people and creating
a safe environment for the growth of our economy,” says Barzani, “protecting the wealth of the local people, as well as of foreigners that come into
the country. We are very hopeful and very optimistic, and as we move forward we can only get better.”
A former Peshmerga fighter in the Kurdish resistance against Saddam Hussein’s rule of Iraq, and a
graduate in International Studies from the American University in Washington D.C., Barzani is well
placed to appreciate both the domestic and international ramifications of the region’s enviable security situation, and sees lots of reasons to be positive about the region’s future.
“In the last elections, [held in 2009] regardless
who accounted for more or less votes, there was
a clear majority that voted for an alliance that is
now forming the government and ruling the Kurdistan Region,” Barzani notes. “I think this is a very
healthy environment, it’s a very healthy society, as
we have an opposition, we respect the opposition,
and we have a government that has won the confidence of the majority of people.”
MASROUR BARzANI,
General Director,
Kurdistan Region
Security Protection
Agency
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eRBIl
Master plan transforms
regional capital
into gateway to Iraq
Massive public and private-sector
investments in infrastructure provide
vital guarantees for new investors
e
rbil is one of three governorates which make up the
Kurdistan Region, the other two being Duhok and Suleymaniyah, and is home to the capital city of the same
name. Iraq’s fourth largest conurbation, Erbil has been
the site of human settlement since the 23rd century BC and,
today, is a thriving business hub which manages to seamlessly blend ancient and modern, thanks to a far-sighted vision for
its development.
“The former Prime Minister, nerchirvan Barzani, created a
board to develop Erbil,” nawzad Hadi Mawlood, Erbil’s Governor recalls. “Our role, as the governorate, was to facilitate the
implementation of the project and help them find solutions.
Once the plan was approved, we signed a contract with Dar AlHandasah for the new master plan and have started developing the city.”
Over the last five years, according to
the Governor, his administration has
invested $4 billion in infrastructure,
and the private sector has pumped an
additional $13 billion into projects, like
the new international airport, during
the same period.
“Our authority is different from other
governorates outside the region like Basra, Mosul or Baghdad, because they are
not yet established as federal regions,”
NAWzAD hADI MAWlOOD, Governor Mawlood explains. “We have
Governor of Erbil
more autonomy and what we have always tried to do is to cooperate with
the ministries and with the directories, aimed at distributing the
budget where it is most needed. We work as a team.”
The future looks bright for the capital and its governorate,
and new investors from the United Arab Emirates are planning to enter in the near future, Mawlood adds, as well as others from Bahrain and Kuwait, thanks to the organization guaranteed by the master plan.
“In the next 5-10 years, Erbil will be a new city,” Mawlood
notes. “We have made Erbil the biggest center for business
and trade in Iraq. for investors, coming to Erbil and Kurdistan
means being ready to tackle the Iraqi market as a whole. We
have become the undoubted gateway to Iraq.”
Erbil City opens its doors to the world. Open
to our history, culture and the idea that we
are all part of knowledge. The site of the
first human settlement in history, Erbil City
opens its arms and welcomes mankind.
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eRBIl InTeRnATIonAl AIRPoRT
The terminal building at the new Erbil International Airport.
A tale of two airports, from former
military base to modern international hub
new facility boasts greater passenger and cargo capacity,
thanks to one of the world’s longest runways
o
riginally built as an Iraqi air base in the 1970s, and
abandoned by the military following the first Gulf
War in 1991, it was only after the invasion of Iraq
by coalition forces in 2003 that the Kurdistan Regional Government (KRG) won control of the airstrip at
Erbil, the autonomous region’s capital, and took the first
steps toward transforming the facility into a world-class
hub, connecting east to west.
Erbil International Airport (EIA) opened to commercial
flights in 2005, but currently handles just 100 flights a week,
despite capacity for 100 flights per day. According to Talar
darin company
oveR A decAde’S exPeRIence
ReconSTRucTIng The KuRdISTAn RegIon
fOR OvER 12 yEARS, Darin Company has contributed to reconstruction and is now building the future of the Kurdistan Region of Iraq. A truly diversified company, it works in contracting, construction project management, and general trade and
marketing, and has invested around $200 million since its creation. Today, Darin is one of Kurdistan’s most experienced and
respected providers of on-time, on-budget, and high-quality
services in every aspect of its activity and a trusted partner for
international brands, including Jones Lang LaSalle in Turkey,
Italy’s Tekno-Ice, and numerous others.
faiq, EIA’s Director, “Constraints imposed by the old airport’s
facilities, particularly its runway, have restricted economic
growth in the region and the country. The more flights we
handle, the more we contribute to the country’s growth.”
Previously a KRG representative in London, faiq was appointed to lead the airport in August 2010 and is now overseeing the completion of the all-new Erbil International
Airport, due to open to traffic by the end of 2010. The new
$550 million facility, designed by the UK’s Scott Wilson
Group and built by Turkey’s Makyol Cengiz, is a prime example of how overseas firms are working together in Kurdistan to revolutionize local infrastructure.
The new EIA has a 4,800-meter runway (9,200 feet), enhanced cargo capacity, and a new passenger terminal designed to handle over three million passengers a year. The
region’s lowest fuel prices are yet another reason for international airlines to choose EIA as a stopover or hub destination.
The goal is to position EIA as a gateway, not only to Kurdistan,
but to the whole of Iraq, benefiting from the region’s enviable
security and location on the Silk Road of the skies.
“We have almost no limits at the new airport,” faiq acknowledges. “It has the fifth longest public runway in the
world, so it can handle any aircraft flying in the world today, including the Airbus A380.”
numerous carriers are already winging their way to Erbil, with the likes of Air Berlin, Austrian Airlines, and Lufthansa providing regular services to Europe; Etihad, fly
Dubai, Gulf Air, MEA, and Royal Jordanian to the Middle
East; and Atlas Jet to Istanbul, in neighboring Turkey. Other
airlines, including Turkish Airlines, look set to follow.
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SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
mecRI gRouP
A home away from home in Erbil
The first five-star hotel in the region,
and in Iraq, is ready to take on new
competition in a fast-growing sector
c
ompetition in Erbil’s fledgling hotel industry is
heating up with the opening of a new five-star hotel from Abu Dhabi’s Rotana, after the summer, and
Turkey’s Divan Hotels announcing plans for another five-star establishment in 2011. Iraq’s tourism sector is
expected to attract investments of $145 billion over the
next five years, and with more and more business travelers heading to the Kurdistan Region’s capital, hospitality
groups are looking north to enter the Iraqi market.
At Kurdistan and Iraq’s first five-star hotel, the Erbil International Hotel (EIH), which opened in 2004 and has long
been a favorite with overseas visitors, the CEO of MECRI
Hotels, Adel Baban, is looking forward to the challenges
new players in the marketplace will bring.
“The potential is getting bigger every day,” Baban affirms. “This is healthy and it’s good to work in a competitive
MECRI is a growing company with a promising future in development, project management,
and general contracting. It is equipped with a competent staff that manages a large number of portfolios and projects.
The company’s strength lies in its staff’s technical prowess and educational background.
Its approach is all about teamwork, and this helps the company to overcome unexpected
and complex transactions. Furthermore, the company has been able to take advantage of
current possibilities of investments and developments.
At present, MECRI owns and operates five 5-star hotels in Iraq.
Erbil
International Hotel
Nineveh
International Hotel
Mosul
International Hotel
Basrah
International Hotel
Erbil City
Mosul City
Mosul City
Basrah City
Khanzad
Hotel & Resort
environment which will positively reflect in better service
standards. We were, and are, the model for hotels in town
and have changed ideas of how to build a hotel.”
With 167 rooms and suites, the 10-story EIH is close to
the ancient citadel and the international airport. Three
restaurants, a bar, lounge, and coffee shop leave guests
spoiled for choice, and the hotel’s health center, complete
with indoor and outdoor pools, is the perfect place to pamper oneself after a busy day.
EIH is one of five MECRI (Middle East Corporation for Reconstruction and Investment) Hotels, part of the familyowned nasri Group of Companies (nGC). Although nGC is a
relatively new enterprise, it has acquired highly diversified
holdings, ranging from banking to real estate, and manufacturing to distribution, and moved into the hospitality
sector very early on.
“In 2001, I was convinced that things in Iraq would
change,” recalls nizar Hanna nasri, nGC’s President. “In
my experience, when things change, the first demand is
for a comfortable place to stay, and that is a hotel. So we
decided to start two five-star hotels in Erbil.”
MECRI is also executing a residential project called Dream City, located in Erbil, in northern
Iraq. Dream City is located about 2 kilometers south of the famous and ancient Erbil
Citadel and has now more than 300 newly built and privately owned villas. It’s designed
to provide all the needs of a city like shopping malls, various schools for boys and girls,
kindergarten, day care, restaurants, market places, health center, maintenance offices, as
well as a social and cultural center, and a pool and play places.
AlHayat-Pepsi is also owned by MECRI, which owns and operates the Pepsi Bottling
Facility in Iraq. Pepsi-Cola North America is the refreshment beverage unit of PepsiCo,
Inc., in the United States and Canada.
Shaqlawa Street. Erbil Tobacco Factory, Erbil – Iraq
Telephone No. : 066 2529685
Email : [email protected] • Website: www.mecri.com
Kurdistan region of Iraq´s gateway to the world
The world’s gateway to Kurdistan region of Iraq
On the Silk Route of the Airways, the new Erbil International Airport (EIA) aims to actively support the growth
of the Kurdistan Region of Iraq by providing high quality,
efficient, and pleasant air services to passengers, cargo
transporters, and aircraft operators.
www.erbilairport.com
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SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
eneRgy And nATuRAl ReSouRceS
Overseas players and region’s government
unite to exploit potentially huge reserves
Gulf Keystone strikes it rich with early test drilling into deposits at its Shaikan block
J
DR. AShTI hAWRAMI,
Minister for
Natural Resources
TODD F. KOzEl,
Chairman and CEO,
Gulf Keystone
une 1, 2009 was an historic date for the
Kurdistan Region, as petroleum exports
flowed from its oilfields for the first time.
Representatives from the Kurdistan Regional Government (KRG), oil company executives, and
the Presidents of Iraq, Jalal Talabani, and the Kurdistan Region, Masoud Barzani, celebrated the opening of the valve that let Kurdistan’s crude into the
main Iraqi pipeline, which carries the entire country’s production over the border to Turkey.
Last October, however, the valve was closed by
the KRG, after the Iraqi administration refused to
honor contracts signed with foreign companies
under the region’s innovative 2007 oil and gas law,
and withheld payments for expenses. The lack of
national hydrocarbons legislation has long been a
stumbling block between the federal government
and regional authorities, and this was the latest in
a serious of disagreements about who pays for, and
receives, what from oil deals.
In January 2010, temporary compromise saw
petroleum begin to trickle out of the region again
and, by early May, it appeared the dispute had
been resolved, with all oil-contract revenues being transferred to Iraq’s State Oil Marketing Organization (SOMO), which would then pick up the
bill for extraction costs.
“This progress represents a positive political gesture from all the parties involved,” says Dr. Ashti
Hawrami, the KRG’s Minister for natural Resources.
“Politicians recognize that Iraq needs the additional revenue from the Kurdistan Region’s oil exports.
The KRG and its contractors have made a serious
effort to find new oil. We have 30 to 40 companies
investing in Kurdistan, and Iraq now has additional
reserves as a result.”
While Iraq is thought to have some of the world’s
largest potential reserves of oil and gas, the vast
majority of existing deposits remain undeveloped
and many more are still unexplored. The Kurdistan
region is estimated to have up to 40 billion barrels
of oil and 300 trillion cubic feet of gas, enough to
make it a major player in global markets, and oil
companies from around the world have already
made some significant discoveries.
Registered in Bermuda and listed on the London
Stock Exchange, Gulf Keystone is one company
that has certainly struck black gold in Kurdistan.
founded in 2001 by Todd f. Kozel, in August it announced that test drilling at its Shaikan block had
produced over 20,000 barrels per day (bpd) from
just a small area. This positive news came on the
back of January’s upgrade of estimates at Gulf
Keystone’s discovery, and the success of a fully
subscribed $165 million placing to fund work in
Kurdistan through 2011.
“extraordinary” oilfield discovered
“What started off as a field holding two to five billion barrels increasingly appears to have anything
up to 11 billion barrels in place. It is extraordinary,”
says Kozel, the company’s Chairman and CEO. “I
would say Gulf Keystone has discovered more oil
in a single field than any other oil company in the
world, not just the Middle East, in recent years.”
Gulf Keystone was awarded the Shaikan block in
november 2007, along with a smaller interest in the
adjacent Akri-Bijeel field, together with its partner, MOL, Hungary’s oil and gas company. It then
expanded its interests in the region in July 2009
with shares in the Sheikh Adi and Behr Bar blocks,
northwest of its existing operations. In less than a
year and half from signing contracts, the company
found oil, something Kozel says could
not have been achieved without the
KRG’s cooperation and assistance.
“Our discovery is opening up this
area for people like us, who are willing to take a risk to come here, negotiate licenses, work with the
KRG and Dr. Hawrami’s office, go drilling, and find
out what is there,” Kozel
says. “I truly believe the
Kurdistan Region’s achievement has surprised the world
[with] the capacity of resources in the north. The amount
of oil and gas that people
are finding has been an eye
opener for everyone.”
Gulf Keystone drilling for oil
in the Kurdistan Region.
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Dana Gas’ installations
at Khor Mor.
eneRgy And nATuRAl ReSouRceS
Kurdistan has potential
to produce one million
barrels per day
Over $3 billion has already been invested
in exploration and oilfield development
W
e believe Kurdistan’s potential production, on
a steady, sustainable basis, is about one million
barrels a day (bpd),” says Dr. Ashti Hawrami, the
Kurdistan Regional Government’s (KRG) Minister of natural Resources. Those are the kind of numbers
that could see the region become a global force in hydrocarbons. To hit the one million bpd target, Dr. Hawrami thinks
will require investment of $10 billion. While some individual investments top $1 billion, many more are around $100200 million, which explains the interest of smaller players
who, potentially, could reap very big rewards in Kurdistan.
“We now have 37 contracts with 40 companies from 17
countries,” points out Dr. Khaled Salih, Senior Advisor to the
Minister of natural Resources. “People did not think that
contractors would start working immediately, but they did.
People did not expect us to be able to export and we did. So
things have progressed, and the Kurdistan Region became a
name in the oil industry.”
One of the first companies to begin work was norway’s
DnO International. Established in 1971, it signed a production-sharing agreement (PSA) with the KRG in June 2004
for the Tawke block. The oilfield, which has an estimated
volume of up to 1.9 billion barrels, has been fast-track developed by DnO with full support from the regional government, according to Magne normann, DnO’s Managing
Director for Kurdistan.
“This region had never really been explored before DnO
began in 2005. We commenced seismic surveys in May and
continued with drilling in november of the same year, with
a discovery very early in 2006,” normann recalls. “Since
2004, we have been working very closely with key members
of the KRG. If it had not been for [their] involvement working with us as a ‘joint team’, things would not have progressed this fast.”
normann is bullish about the region’s prospects as a
whole: “The Kurdistan Region has become the gateway
to the rest of Iraq, thanks to its good security and development needs. There are great opportunities in Kurdistan.
That is why we are here,” he adds.
While the development of the gas industry has temporarily taken a back seat to oil, sizeable potential reserves have
attracted foreign companies like the United Arab Emirates’
Dana Gas. It signed a contract with the regional government
in 2007 for a $700 million project to supply power plants
near Erbil and Suleymaniyah with gas from the Khor Mor
field, and installed a 110-mile pipeline in record time despite significant hurdles.
“We delivered the first gas to the power plants in October
2008,” confirms Shakir W. Shakir, Dana’s Kurdistan Branch
Manager. “Our job was not only about excavating, but we
had to start with demining. In spite of the mines and rocky
ground, it took us only 15 months, a ‘world record’ under
those conditions.”
In June 2010, Dr. Hawrami estimated the Kurdistan Region
could provide as much as 500 billion cubic feet of natural gas
to help make the nabucco gas pipeline, which will link Turkey’s eastern and southern borders with Austria, transporting Asia’s gas to Europe’s markets, a reality by 2014.
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SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
KAR gRouP
Homegrown company provides pioneering
solutions to the oil and gas sector
“We are the first private-sector investor in the oil and gas industry
to implement an integrated project from A-Z”
f
ounded in 1999, bringing together successful companies
With an initial capacity of 20,000 bpd, the KAR Refinery has
from different sectors of Iraq’s economy to offer multidisci- undergone rapid expansion to 40,000 bpd, including a process
plinary services in construction, development, and project train to convert naphtha to gasoline. KAR recently concluded
management, KAR Group has grown from its roots in civ- an engineering and supply contract with ventech Engineering
il engineering to become a pioneer in Iraq’s oil and gas sector, and of Texas to reach total capacity of 80,000 bpd by the end of 2011.
one of its best-known partners for overseas operators.
KAR operates beyond the Kurdistan Region
“We began by implementing the engineering side
and has established strong international partnerin midstream and downstream activities,” explains
ships with companies, including: Canada’s OGI
Baz R. Karim, KAR’s President, “and did our best to
Group, Ireland’s Petrel Resources, and Italy’s Enmake sure that we gathered the right team to build
ereco Engineering. The company recognizes the
the right infrastructure that could be useful, at a latimportance of bringing the latest technology and
er stage, to ultimately develop upstream operations.”
know-how to Iraq, as oil and gas development acIts first energy-sector initiative was the developcelerates.
ment of a new oilfield at Khurmala, in Erbil Governor“Our country has a rich history of being cuttingate. After winning a $140 million contract in 2004 from
edge in oil and gas exploration and production, but
the Ministry of Oil in Baghdad, KAR led an consortium
years of conflict have set us back,” Karim said. “We
with the United Kingdom’s DPS and Turkey’s AvrAsya. BAz R. KARIM,
need partners to lift us and make us believe in our
The company then partnered with international com- President, KAR Group
bright future.”
panies on engineering and supply agreements for the
With continued public-sector support, KAR is lookHamreen oilfield in central Iraq and the Subba and Luhais fields ing to provide its on-time, on-budget, turnkey solutions across
in southern Iraq. Combined, the three projects contribute some Iraq, building on the success of its ventures in the Kurdistan Re310,000 barrels per day (bpd) to Iraq’s crude production.
gion, where a far-sighted local hydrocarbons law and an enabling
In July 2009, KAR completed processing facilities at Khurmala environment for investment have paid dividends.
Dome and the first oil was sent, via a 25-mile-long pipeline engi“The whole country and the Kurdistan Region are going in
neered, built, and commissioned by the company, to KAR’s new the right direction: in politics, in investment, and in developrefinery in Erbil, the regional capital. The KAR Refinery is the ment,” Karim believes. “I hope this will continue, so all of us
largest private-sector refinery in Iraq, and the first in Kurdistan have the chance to see a more modern and more democratic
and Iraq to produce high-octane, unleaded gasoline.
country with an open market.”
YOUR SUCCESSFUL PARTNER
IN THE IRAQI ENERGY SECTOR
OIL/GAS PROCESS FACILITIES • PIPELINES AND STORAGE • CIVIL ENGINEERING AND CONSTRUCTION
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TAlISmAn eneRgy
Canadian oil and gas
giant aims to find
“new core area”
The company acquired its first interests
in Kurdistan in June 2008 and is currently
exploring three blocks in the region
c
anada’s Talisman Energy is a diversified, upstream oil
and gas company, with operations in north America,
Southeast Asia, and the north Sea. It was established
in 1992, is listed on the Toronto and new york Stock
Exchanges, and had a market capitalization in excess of $20
billion at the end of 2009. Rob Mills, Talisman Energy’s vicePresident for Operations, Middle East, talked to Economy Survey Corporation about the company’s activities, expectations,
and plans for the future in Kurdistan.
When are you expecting to find oil?
We have announced a significant gas condensate discovery in Kurdamir-1, with operations
continuing this year. On Block K39, we expect our
first well to be completed next year. And on Block
K9, we are preparing to shoot seismic in 2010,
which, if encouraging, will be followed with our
first well. The message is that we are in an early
exploration phase in a relatively unexplored area.
Challenging conditions for oil and gas companies.
And Kurdistan essentially remains virgin territory?
Absolutely. Given its history, the Kurdistan Region of northern Iraq is unique in that it is under-explored, but has highly
prospective and potentially material acreage. There are very
few similar places in the world.
“The Kurdistan
Region is
unique in that
it is underexplored, but
has highly
prospective
acreage”
How would you describe the degree of satisfaction of Talisman’s shareholders, to date?
Kurdistan forms part of a wider exploration portfolio for Talisman. not every location
will ultimately meet this expectation, so we simultaneously undertake exploration activities
around the world. Therefore, I think there is excitement about Kurdistan within Talisman, but
also a realistic understanding of expectations –
it is still very early days and we have to wait and
see what we find.
How much have you invested, to date, in the
Kurdistan Region?
What kind of challenges does working in the
Our major commitment to date has been a caRob Mills,
Kurdistan Region present?
pacity-building payment of over $200 million. InTalisman Energy’s
VP Operations, Middle East
Some are not that different from those in
stead of signing bonuses, we agreed with the KRG
other parts of the world, so we are able to leto invest a significant amount for the benefit of
verage our worldwide experience. We apply
the people of the Kurdistan Region. The Government has committed to use this initial money to support and our technical and operating competence and capability, and,
finance infrastructure, including: roads, schools, and housing. of course, our size and financial capacity, to successfully undertake operations in Kurdistan. Ultimately, this gives us the
The real long-term benefit will come, if we find oil.
best chance of delivering the desired result for the people of
What does Kurdistan represent in terms of your worldwide Kurdistan and ourselves.
operations, and what are your expectations in the region?
Do you think your contract could be any more competitive?
Talisman has three main operating areas [and] a portfolio
nothing has been given away. The Kurdistan Regional Governof high-impact exploration opportunities. A key element of our
exploration strategy is to build new core areas with significant ment recognizes the need to attract international investments to
undiscovered resource potential. [We] define significant as the rebuild the region. They are also aware that this is a highly propotential to produce 30,000 - 50,000 barrels per day (bpd) or spective region for oil and gas. Therefore, the contracts have been
more. Kurdistan is one of a number of places where we hope to robustly negotiated to ensure that they will get the best possible
terms for the people of Kurdistan and the people of Iraq.
build a new core area.
ECONOMY SURVEY CORP
SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
Key InveSToRS In KuRdISTAn
Possibly the best place to invest in the Middle East
from power generation to construction, and from distribution to the leisure industry,
Kurdistan’s economy is booming and new ventures abound
A
s a Kurd, I wanted to serve my people and the Kurdistan Region,” says Ahmed Ismail Saleh, Chairman of Mass
Global, thinking back to when his company began investing in Iraq in 2007. “At that time, there was only one or
two hours of electricity per day. So I believed the best thing to do
was invest in power plants.”
Mass Global’s first 500MW plant cost $480 million and received
backing from the Kurdistan Regional Government. It then began
a 500MW facility in Duhok and a 750MW plant in Suleymaniyah,
both scheduled for completion in 2010. The Erbil plant will soon
be expanded to 750MW, taking production to 2,000MW by 2011.
Since 2007, Mass Global has also been active in Iraq’s cement
industry. Its Suleymaniyah factory opened in 2009, and currently
produces two million tons, 10% of national demand, with capacity set to double by mid-2011. It is now planning to invest $250-300
million in a steel smelting plant in Erbil.
Another company that built its fortune on cement is the
Khoshnaw Group. Established in the 1980s, it began by supplying
building materials. In the 1990s, it moved into distribution, specializing in tobacco. By the 2000s, it had become the leading
construction company in Iraq, while acting as agents for global
brands, like LG, Carrier, and Imperial Tobacco.
Its latest project is the ‘family fun’ amusement park and leisure development, on 500 acres near Erbil. The park will feature
world-class attractions and high-end villas, and serves as a symbol of the safe environment that Kurdistan enjoys today.
“Business, in general, is very good, and security is also very
good,” says Ghafur Khoshnaw, the Group’s Chairman. “This privileged situation makes our region the best gateway to the rest of
Iraq. I would like to invite American companies to come [here].
We are ready to offer all kinds of support, in order to do business
and cooperate in different sectors.”
Malashene Basheer, the Chairman of Darin Company, another
local player which has has success in the construction and trading sectors since 1998, concurs: “Currently, I see the Kurdistan
Region as the best place to invest in the Middle East,” he says.
MASS GLOBAL FOR INVESTMEN Co
From
Exploration
to Production
in Record Time
The only international
oil company ready to export
through pipeline network
in Kurdistan
www.dno.no
MASS Global for Investment Co. is a limited liability company. It has offices and branches in the cities of Erbil and Suleimaniyah in the Kurdish
region of Iraq, and in Khartoum, Sudan. It provides significant services
to the community and to the way of life of its people, such as electric
power, necessary products for their construction projects like cement,
and applications to other industrial and service rendering projects.
Its projects have no borders (Iraq, Jordan, United Arab Emirates, and
the Sudan). It is fully prepared to work and invest in any other country
which needs services and products that are beneficial to its citizens.
www.mass-global.com
ECONOMY SURVEY CORP
KURDISTAN REGION: GATEWAY TO IRAQ / SPECIAL ADVERTISING SECTION
Delivering
on Promise
Gulf Keystone Petroleum Ltd is an independent oil and gas exploration company with
interests in the highly prospective oil province of Kurdistan in Northern Iraq.
There are over 25 international oil companies in the region benefitting from onshore, low cost
development and exploration in a safe & supportive operating environment. For Gulf Keystone
in particular, the highly experienced management team draws on the strength and depth of its
relationships with the Government and licence partners.
“I believe we are
a much stronger
company operationally
and strategically
than a year ago and
I do believe the outlook
has never been
more exciting
for Gulf Keystone.”
With one of the largest acreage positions in Kurdistan, the Company’s four blocks offer multibillion barrel potential. The area has witnessed several recent major discoveries and there
remain many undrilled surface structures.
Mid 2009, the Company announced that it had made a significant discovery at its first exploration well named Shaikan-l. The Shaikan structure is on trend with several major discoveries,
including Miran West, Kirkuk, Taq Taq, and Tawke. The results of the exploration have been
independently verified proving the presence of P5O resources of 4.2 billion barrels of hydrocarbons in the Shaikan licence area alone.
Following this success, Gulf Keystone has embarked on an active drilling campaign that will
continue through 2010. This includes the drilling of additional wells on the Shaikan structure
and expansion into the Company’s further three adjacent blocks. This has the prospect of
substantially furthering the Company’s resource base. The results to date for the initial stages
of 2010 work programme have been highly positive and the Company continues to build on
its early momentum.
Todd Francis Kozel
Executive Chairman
& Chief Executive Officer
Gulf Keystone Is quoted on the Alternative Investment Market (AIM) of the London Stock
Exchange. Ticker symbol GKP.
www.gulfkeystone.com
ECONOMY SURVEY CORP
SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
IRAq’S BAnKIng InduSTRy
Almost limitless
potential for growth in
underdeveloped sector
Private-sector players are beginning to
make headway in state-dominated market
I
n a cash-dependent country, where only about half of all
transactions pass through the financial system, and there
are less than 750 branches to serve a population of 30 million
people, there is plenty of scope for development in Iraq’s
banking sector.
As the economy gradually begins to consolidate its recovery
from the devastation wrought by years of conflict, and domestic
companies increasingly turn overseas in search of investment,
strengthening financial networks to facilitate capital inflows
will be more necessary than ever.
According to the Central Bank of Iraq, 24 locally owned private-sector banks and nine Islamic banks are currently active in
the country, but seven state-owned institutions, including Rafidain Bank, Rasheed Bank, and Trade Bank of Iraq, continue to
dominate the marketplace, handling over 85% of transactions
and around 90% of deposits.
Established in 2004, north Bank is one of the most successful
privately owned institutions, with branches in 11 provinces. It
is currently expanding its network, to reach 18-20 branches by
the end of 2010.
“We are definitely one of the banks with the most presence
and coverage in Iraq,” says nawzad D. Al-Jaff, its Chairman. “We
are known in the region as a credible bank, and are trying to
build up that good reputation.”
There are also six foreign banks operating in the market under their own brand names: Bahrain’s Arab Banking Corporation, Bank Melli Iran, Lebanon’s Bank of Beirut and the Arab
Countries, Bank Byblos Lebanese, the International Bank of Lebanon, and the Turkish Agricultural Bank. Other overseas institutions, such as Capital Bank of Jordan, HSBC, the national Bank
of Kuwait, and Ahli United Bank of Bahrain, have a presence in
the country in partnership with domestic players.
At present, the industry contributes only about 7% to GDP, significantly less than in neighboring nations, but accounts for over
80% of trading on the Iraq Stock Exchange. Total assets in Iraq’s
financial sector amount to some $55 billion, and profits for the industry, as a whole, topped $878 million in 2009, with more than
three-quarters of the total generated by the public-sector banks.
In May 2010, Abu Dhabi Islamic Bank (ADIB) became the latest
overseas player, and the first financial institution from the United Arab Emirates, to enter the Iraqi market with the opening of a
branch in Baghdad. It now plans to roll out a branch network in
all the nation’s major business cities, over the coming years.
The result
of your business
is the symbol
of our business
• Openingofaccounts
inIraqidinarsandUSdollar.
• Acceptingdeposits(savings
accountsandfixeddeposits)
IraqidinarandUSdollar.
• Creditgrantingcashofallkinds
(loansandbankingfacilities)
inIraqidinarUSdollar.
• Issuingofinternalandexternal
guaranteelettersforIraqidinarand
USdollar.
• Openingdocumentary
creditsfromforeignimports.
• Issuingbillsandinstrumentsratifiedandacceptedinternaltransfers
ofallkinds.
• Acceptanceofforeignremittance
ofallkinds.
• Interestratesonsavingsaccounts
andfixeddepositsinIraqidinnars
andUSdollar.
• Buyingandsellingforeigncurrency.
NorthBank
Baghdad-Iraq
Karadah neighborhood-upper - Fath Square
Street 99 - Building 51
POB 3377 Alawite
www.northbankiq.com
ECONOMY SURVEY CORP
KURDISTAN REGION: GATEWAY TO IRAQ / SPECIAL ADVERTISING SECTION
BAnK of BAghdAd
Investing in people
and technology
to improve service
Entity is well-placed to make the most
out of Iraq’s financial marketplace,
as it begins to mature
T
he first private bank licensed to operate in Iraq, the
Bank of Baghdad was established in 1992 as a domestic
commercial entity. Acquired by Kuwait’s KIPCO Group
in 2006, it has developed into an international full-service financial institution with 31 branches nationwide and a
branch opening in Lebanon before the end of 2010, holding
deposits of over $565.5 million and registering profits in excess of $15.9 million in 2009.
focused on market-leading technological and human resources development to provide first-class customer service,
the Bank of Baghdad, today, offers credit and trade financing
to corporate clients of all sizes, and access to a wide range of
savings and lending products for individual customers.
“We are in a virgin market, both from a banking and regulatory framework prospective,” confirms Dr. younes Brouche, the
bank’s Executive vice Chairman. “The country has come out of
20 years of instability, and new guidelines have contributed to
bringing foreign investment expertise into the country.”
While official statistics of people using the banking system are not available, Dr. Brouche estimates there could be
as many as 70,000 for each existing branch. In what remains
a massively cash-dependent society, significant investment
will be required, he believes, to develop electronic and mobile banking products and extend their reach to the population, in coming years.
What is needed, according to Dr. Brouche, is new legislation to create independent regulatory bodies, which will ensure transparency and offer greater guarantees to overseas
investors. But, even in the current climate, for those willing
to take the risk, the rewards can be significant.
“We are still far from our full capacity and are already making a significant return on investment,” Dr. Brouche points
out. “Therefore, we are a good example for international
groups to study. To all potential investors, [I say] come quickly
and grasp the opportunity, like we did.”
Bank of Baghdad. Your key
to Iraq and the World
As part of the Kipco Banking family, Bank of Baghdad partners with banks in Kuwait, Bahrain,
Syria, Jordan, Tunisia and Algeria – offering a financial services network right across the Middle
East and North Africa. We offer a complete range of services, from loans and accounts to
international banking with our partners across the world – with 32 branches throughout all
provinces in Iraq.
For further information: +964 7800 004008 or +964 6625 74029
www.bankofbaghdad.org
SmartmoneyAd working.indd 1
a better direction
25/4/10 22:04:09
ECONOMY SURVEY CORP
SPECIAL ADVERTISING SECTION / KURDISTAN REGION: GATEWAY TO IRAQ
TRAde BAnK of IRAq
The first choice for international investors
TBI has access to a global correspondent
network of 134 banks in 39 countries
T
here are huge opportunities for banking in Iraq,” contends Hussein Al-Uzri, the Chairman of Trade Bank of
Iraq (TBI). “Iraq needs state banks, it needs local private banks, and it needs foreign banks. This combination would make the market more attractive and efficient.
We need banks that can really participate in the development of the country.”
Originally set up by the Coalition Provisional Authority in 2003 to replace the United nations’ food-for-Oil program and facilitate trade financing, TBI has extended its
services into retail and corporate products, as well as project financing over recent years. It remains a state-owned
entity, part of the Ministry of finance, but its management
is independent from government control. Although privatization is not on the cards, at present, given TBI’s expansion into commercial banking, Al-Uzri does not rule the
At home, TBI is planning to expand its current national
possibility out in the future.
The first bank in Iraq to automate operations, the first network of 10 branches by a similar number every year, and
to issue credit cards through the visa International net- aims to have a presence in each of Iraq’s 18 governorates
work, and the institution that introduced Automated by the end of 2011. It is also about to roll out its own international expansion campaign, with subsidiaries
Teller Machines (ATMs) to the national marslated for Beirut, Istanbul, and London.
ket, TBI today manages more than $6.1 billion
At the same time, the bank is concentrating
in assets and holds capital reserves in excess
its efforts on developing its investment bankof $100 million.
ing division – it has already acquired a brokerAt its inception, TBI retained sole responsiage fund license for the Iraq Stock Exchange
bility for government letters of credit, but has
– and is putting together a real-estate developtransferred rights to private-sector banks, enment and finance company. And it has recentabling them to handle transactions worth up
ly created Iraq’s first-ever development fund,
to $4 million. In 2006, just 28% of public secwhich aims to facilitate international investtor letters of credit were channeled to privatement in the country.
ly owned banks, but that doubled to over 400 of
“Investors want to [come] to Iraq, but don’t
the 672 letters of credit received by TBI during
hUSSEIN Al-UzRI,
have the access,” Al-Uzri believes. “We have acthe first six months of 2010.
Chairman,
cess to government [and] the largest private
Key to its early success was the establishment Trade Bank of Iraq
companies in the country. So, whenever an inof correspondent relationships with blue-chip institutions from around the world, led by JP Morgan. Today, ternational investor is looking to Iraq with an important
TBI maintains a global network of over 130 banks, in 63 cities project, the first step is to approach TBI.”
TBI Chairman insists that there are already world-class
and 39 countries, providing its clients with competitive advantages and a wide range of international services, accord- companies in Iraq, but that massive investment will be required to enable them to catch up with international coming to its Chairman.
“Our strategy is one of constant review of the needs of petitors, due to more than three decades of neglect.
“Given the size of Iraq, the oil reserves we hold, our peothe country, its trade partners, and strategic investment
partners,” notes Al-Uzri. “We initially started with our ple and location, there are great opportunities for both
main trading partners, [who] were mainly in Europe, the banks and investments in most key economic sectors,”
Middle East, north America and the far East, and we were Al-Uzri concludes.
quite successful. As the economy grows, we are steadily exsaRa PRada
JaMes soutHeRan
panding our network and deepening our business relation- Jacques Fdez de santos
EDITORIAL DIRECTOR
MARKETING DIRECTOR
WRITER
ship with its members.”