DUBAI and LONDON // Through war and peace, northern Iraq's Kirkuk oilfield - endowed with 10 billion barrels of reserves, equal to half of America's total - has effectively lain fallow.
Proposals have been floated to revive today's anaemic production of 280,000 barrels per day (bpd) but progress has been blocked by a disagreement over whether the federal government or the Kurdistan regional government has rights to the land.
"Years passed and still we are in limbo," says Ali Salhi, the chairman of the oil and economic development council of the Kirkuk governorate. Today, his hopes are buoyed by the success of Kurdistan, which has partnered the world's biggest oil companies in the face of opposition from Baghdad.
"With this new era and new Kirkuk and new Kurdistan - with these huge resources - the local people should become a beneficiary," Mr Salhi said at a conference in Dubai.
Kirkuk is the next battleground in the spat between Baghdad and Erbil, the Kurdish capital.
This year, the Iraqi oil ministry hosted BP executives in Kirkuk to evaluate the possibility of doubling production to 600,000 bpd.
The Kurdish oil ministry said such a deal would require its approval. It is planning to award a contract to a major to treble output at the Khurmala dome, one of three geological formations in the Kirkuk field. Such moves exacerbate long-running tensions over the fate of Kirkuk. In Tamim, the province that is home to the field, a referendum over whether to join Kurdistan or remain federally governed has been delayed since 2007. For Mr Salhi, Kurdistan has already won.
"I am very optimistic [for] all the companies working in the north - all the rights and the contracts they have will be [ made legitimate]," he said.
In the past year, ExxonMobil, Chevron and Total have all signed agreements to explore acreage in Kurdistan, in spite of the central government policy of excluding companies operating there from future licensing rounds in the south. Oil majors complain the onerous terms imposed on them by Baghdad leave little room for profitability.
This week, Iraq's central government ratified an agreement that releases payments to international oil companies in Kurdistan.
Oil exports, which were suspended last month over the payment dispute, will now resume at previous levels of 140,000 bpd, said Ashti Hawrami, the Kurdish minister for natural resources. Exports will rise to 200,000 bpd next month, and increase to at least 250,000 bpd next year. Kurdistan is also forcing the central government's hand with a planned 1 million bpd export pipeline to Turkey next year, which will allow it to export crude without using infrastructure controlled by Baghdad. A limited amount of oil product is already flowing into Turkey from Kurdistan in exchange for petrol, signalling that Ankara is supportive of the Kurdistan regional government's efforts.
The Kurds believe their ambitious production targets give them additional leverage against the central government.
"When you have a volume increase, everybody is forced to make the right decision," Mr Hawrami said at a conference in London.
A national oil law enshrining the legitimacy of the profitable contracts signed by the Kurdish regional government and oil companies, including those owned by the UAE, could be signed by the end of the year. A committee including Mr Hawrami and his Baghdad counterpart is being set up to revive efforts to revive the long-stalled law, said the minister.
"I believe this export initiative and companies being paid according to their contracts is a big breakthrough to pave the way to get the draft oil and gas law working," said Mr Hawrami.
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EXPATS
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The five pillars of Islam
Killing of Qassem Suleimani
More from our neighbourhood series:
MORE ON TURKEY'S SYRIA OFFENCE
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
BEACH SOCCER WORLD CUP
Group A
Paraguay
Japan
Switzerland
USA
Group B
Uruguay
Mexico
Italy
Tahiti
Group C
Belarus
UAE
Senegal
Russia
Group D
Brazil
Oman
Portugal
Nigeria
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The Africa Institute 101
Housed on the same site as the original Africa Hall, which first hosted an Arab-African Symposium in 1976, the newly renovated building will be home to a think tank and postgraduate studies hub (it will offer master’s and PhD programmes). The centre will focus on both the historical and contemporary links between Africa and the Gulf, and will serve as a meeting place for conferences, symposia, lectures, film screenings, plays, musical performances and more. In fact, today it is hosting a symposium – 5-plus-1: Rethinking Abstraction that will look at the six decades of Frank Bowling’s career, as well as those of his contemporaries that invested social, cultural and personal meaning into abstraction.
Killing of Qassem Suleimani
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The specs: 2018 Genesis G70
Price, base / as tested: Dh155,000 / Dh205,000
Engine: 3.3-litre, turbocharged V6
Gearbox: Eight-speed automatic
Power: 370hp @ 6,000rpm
Torque: 510Nm @ 1,300rpm
Fuel economy, combined: 10.6L / 100km
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
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Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
Last-16 Europa League fixtures
Wednesday (Kick-offs UAE)
FC Copenhagen (0) v Istanbul Basaksehir (1) 8.55pm
Shakhtar Donetsk (2) v Wolfsburg (1) 8.55pm
Inter Milan v Getafe (one leg only) 11pm
Manchester United (5) v LASK (0) 11pm
Thursday
Bayer Leverkusen (3) v Rangers (1) 8.55pm
Sevilla v Roma (one leg only) 8.55pm
FC Basel (3) v Eintracht Frankfurt (0) 11pm
Wolves (1) Olympiakos (1) 11pm
SCORES IN BRIEF
New Zealand 153 and 56 for 1 in 22.4 overs at close
Pakistan 227
(Babar 62, Asad 43, Boult 4-54, De Grandhomme 2-30, Patel 2-64)
