Iraq Energy Roundup

Electricity production claims in Iraq exaggerated.

Reports that Iraq is producing as much electricity as it had prior to the U.S. invasion are widely exaggerated, an Iraqi energy analyst said.

Adel Mahdi with the Iraqi Ministry of Electricity said earlier this week Iraq was producing half of its estimated 10,000-megawatt power needs, roughly the same level produced in 2002.

But Isam al-Khalisi, an independent analyst working on national public utilities, said the production levels quoted by the Electricity Ministry were "inaccurate and contradictory," the Iraqi daily Azzaman reported.

"The(se) … figures contradict statistics issued by the ministry in 2006, for example, and a press conference by the minister himself earlier this month," he said.

Khalisi said the electrical grid in Iraq was in "extremely bad" condition, adding most citizens living in the capital, Baghdad, had power for only around two hours per day.

"They want to give the impression that power-generating capacity was on the rise, but that is not true," he said.

Ministry officials said the low levels of power would continue through 2012, when power generation is expected to reach 20,000 megawatts.

Kurdish Baziyan refinery to enter production in September.

Officials in northern Iraqi Kurdistan expect its Baziyan oil refinery to start production in September, satisfying 85 percent of the regional energy demands.

Construction on the refinery began in 2006, and, despite ongoing security concerns in the region, the project is roughly 85 percent completed. When it comes online next month, it will produce around 10,000 barrels per day, The Kurdish Globe reported.

The Iraqi central government was expected to fund the bulk of the refinery construction, but the Kurdistan Regional Government was forced to finance final developments when Baghdad covered only the first stage of the $52 million project.

Amhed Arif with the oil division in northern Sulaimaniya province said Kurdish officials would staff the refinery with local workers and shun foreign employment pools.

The project needs crude oil transportation and water pipelines as well as a 22-million-gallon storage facility.

China signs 20-year oil deal with Iraq.

China has signed a $3 billion service contract with Iraq to develop the vast Ahdab oil field in Wassit province, the first such contract since the U.S. invasion.

Oil Ministry spokesman Asim Jihad said the technical service contracts negotiated with Western oil majors Shell, BP and ExxonMobil have been postponed, but major contracts will be awarded by 2010.

Western firms said negotiations continue on the short-term technical service contracts. The deal with China, however, is a 20-year service contract involving development of the Ahdab field.

The state-owned China National Petroleum Corp. could produce around 25,000 barrels per day from the field, with a maximum output expected at 125,000 barrels per day, The Washington Post reported.

The contract, an amended version of a 1997 contract with the former regime, includes a provision for the construction of an electrical station in the area.

The spokesman, Jihad, said the contract should dispel any rumors the U.S.-led invasion of Iraq was largely motivated by a desire to access Iraq's vast oil reserves.

Turkey invited to bid on Iraqi electrical projects.

Independent Iraqi Planning Minister Ali Baban, a Sunni, invited Turkish firms to bid on several electricity projects offered by the Iraqi government.

Baban said Turkey was a valuable trade partner with Iraq. Despite concerns over security and the activity of the Kurdistan Workers Party, or PKK, in northern Iraq, Baban said relations could improve through increased bilateral economic activity, the Turkish daily Hurriyet reported.

Baban told reporters during a recent visit to Istanbul that his country's relationship with Turkey had moved in a positive direction over the last five years and he looked forward to positive results from trade.