DrDinar Blog

Can you comprehend Iraq’s full potential over the next 10 years? Have you thought about what is possible if Iraq were to maximize oil production and exports over the next decade?

As a matter of fact, Iraq government officials are even planning to expand its oil export. If we try to sum up the total energy consumption of the world today, we would actually observe a staggering increase of energy prices which will definitely profit the owners of oil – Iraq is never excluded. It is even believed that the country is planning for complete energy independence. However, it would need to renew and rebuild the poor infrastructure condition of its oil industry brought by several wars it had. Nobody can deny the fact that over 90% of the country’s power distribution systems were sabotaged last 1991 brought by Persian Gulf War.

Just how rich is the Iraqi oil of 2012? Saudi Arabia, UAE and other Arab Gulf countries own a stunning share of 65% of the world’s oil reserves and the other 12% belongs to Iraq. This makes the country a silent bank of money underneath its ground. If we take oil as money in the bank, we could actually formulate a stunning trillion worth bank account owned by the country. Normally, the country can supply approximately 2 billion barrels of oil in a year – based on the current price per barrel ($100), it could accumulate a total of $200 billion in just one year. So, two decades of constant oil exports would generate $9 trillion – a good luck sign of revaluation on its currency.

This year alone, Iraqi officials are planning to expand its oil exports. Is Iraq really capable of expanding its oil exports? It is believed that February will be a grand month for the country as it will increase its export capacity by 900,000 barrels in a day. Asim Jihad, spokesman of Oil Ministry, released a statement that the finalization of export facilities and pipelines for the floating terminal will be finished by January 31. The ambitious expanding of Iraq’s oil exports is greatly influenced by its desire to rebuild the oil industry after economic sanctions and war. The country is even planning to climb up the ranks of global oil exporters.

Just as what an engineer on South Oil Company’s export project told the Reuters, “We will definitely be ready to start exports at the first single-point mooring by the end of this month.” Shell and BP are just some of the big foreign investors that the government has developed contracts with in line with the country’s export expansion project. If we ask for an analyst’s point of view, the export project could visualize a 7 million bpd outcome. So, what is the bottom line? Export expansion project is expected to reach 2.5 million bpd for 2012 alone. Will the country hit its ambitious goal amidst the poor condition of its power generating systems?

The announced plan of the government officials brought good news and doubts for Dinar investors and Iraqi citizens. Some Dinar vets are confident that the country would soon have the power to outweigh rich countries, given the fact that the government officials have agreed to expand its export capacity to 900,000 bpd, while a group of Investors are skeptical about the future plans of Iraq because of the poor condition of its power generating systems. Will this result to Complete Energy Independence? Will the country hit its ambitious goal amidst the poor condition of its power generating systems? The only certainty that anyone can hold is the fact that the country is listed as one of the oil rich countries today.

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Last 2011, Iraq was surrounded with several speculations about its booming currency and its new set of government officials but, the said year was a good start for the country’s economy. Now, let us take a closer look about some possibilities in the year 2012 and understand some facts behind the real increase of Iraqi Dinar price against the US dollar which is believed as a decision announced by the central bank of Iraq. Will there be more opportunities this 2012 than in the previous years?

The Economy of Iraq

Will the Central Bank of Iraq be strong enough to increase the Iraqi Dinar price against the USD? Is the economic growth reliable to raise the price? If we are going to check the current status of the country, we could just look at its oil reserves. As a matter of fact, Parliamentary Finance Committee recently stated that the country does not need to borrow from the International Monetary Fund although the budget deficit for this year is estimated to be around 13 trillion dinars. Why? The Finance Committee of the country knows that the deficit can be paid from the price of oil without obstructions.

For most people, they take this as budget deficit but, Dinar investors treat this as a part of the nation’s necessities given the fact that the country exports more than 2 million barrels of oil in a day. With an oil price of not less than $100, it seems that the economy will keep on pointing upward. Najiba Najib, a member of the Finance Committee, was even straight forward when she told the Kurdish news agency about the recent economic study about getting calculations to support the nation for the year 2012.

An estimated amount of 100 billion USD budget would make a great impact on how we could visualize the current economy of the country. If we try to convert the prospected budget, it would make up to more than 100 trillion Iraqi Dinars – a good sign of foreign exchange for modern Dinar investors. The only problem the country might expect is the US withdrawal because of the charges against the country’s Deputy President al-Hashemi’s involvement in terrorism. Although, the charges were denied by Tareq al-Hashemi, these allegations might affect the country’s current economic status.

An Increase of more than 3%

2011 was filled with speculations about the negative effects of redenomination to the increasing numbers of Dinar investors. Last year, news about the ‘deleting of zeroes’ was hitting the consciousness of Dinar holders. It raised hot questions that were even fueled when the Governor of CBI released prospected years if ever there would be a plan of replacing the currency.

As of this year, the tide tends to turn from ‘redenomination’ to the raising of Iraqi Dinar price as the economy of the country tries to compete with the world market. 2012 seems to be unpredictable for both foreign and local investors. Recently, Central Bank of Iraq increased the Iraqi Dinar price against the US dollar by approximately 3.4%. It was even noted that the decision was greatly influenced by the auction participated by more than 20 banks of the country. We can assess, based on the increase of price, that one US dollar will make up to 1166 dinars.

The unprecedented decision by the Central Bank of Iraq might affect the exchange rate of Dinar against the USD. In short, this might be a great start for the Iraqi market. But, will it also be pleasurable for some Dinar investors? Did the CBI make the right decision? Or is this another miscalculation that might lengthen the anticipated revaluation?

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Calling the Iraqi Dinar a scam is like Iran loyalists calling the USA currency a scam. You must filter your scepticism through a brain cell if you are going to refer to a countries currency as a scam in and of itself.

Yes it is true that violence prone Iraq, now independent from US coalition forces; Iraq has their work cut out for them no doubt. This reality does not for a second mean that authentic Iraqi banknotes are a scam.

Properly gauging the situation would refer to Iraq investing as a high risk investment with the potential for high return on investment. Merely calling the currency a scam sounds like the type of financial advice one would get out of a broke person.

However, there are several real scams that are associated with the sale of Iraq dinar currency or Iraq based investments.

Counterfeit currency is a real potential dinar scam, always be careful to make sure your dinars are certified authentic and that any other type of Dinar investing such as dinar accounts, bonds, stock, or any Iraq based investment is legal and not criminal in any way.

Be weary of web sites and articles that spout ‘Get Rich Quick With Dinar’ and neglect to inform you of the risk potential involved. There is an excellent chance that such web sites or articles are geared towards some form of short term profit to either sell you dinar no matter what.

Some Dinar cheerleaders just want you to join by artificially jacking your expectations beyond what the Dinar could ever deliver on just so such site could profit from advertising revenues in the highly profitable Dinar Google ads which pay $1 to $2 per click.

Having a diversified list of sources for your Iraq money information is just as important as having a diversified approach to your over all investment portfolio. Don’t put all your eggs in one basket. Take your research to a trusted certified financial advisor, and only invest what you can afford to loose.

Yes the Iraq Dinar has been endorced through the years by the likes of Jim Cramer from Mad Money and Mr Donald Trump but it does not mean that you should sell your mothers house with your mother in it to get more of it, that would be like selling the farm.

All this being said, enjoy the opportunity and find ways to enjoy the wait. Plenty of dinar investors enjoy starting rumours which drive other investors crazy. The last 9 years has aloud a well refined group of Dinar information web sites to come out the wood work.

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Around 66 oil reserves have been discovered in Iraq, while most of it still remains unexplored. It is suspected that more discoveries of oil fields will be made in the years to come. However, with the resources lying at its feet, Iraq is unable to utilize it to its maximum potential. The global oil industry is not really pleased with Iraq’s endowment. Constant strife, lifelong war has left Iraq crippled with none of its industries flourishing. The evolution of Iraq in all sectors has been hampered due to many decades of violence and the scars are still visible.

The peak oil production by Iraq was 3.9 million barrels per day in the year 1979, till date ie. Sept. 2011. Production from Iran suffered in the 1980’s due to war and deteriorated in 1990’s by the sanctions imposed on Iraq due to its Kuwait invasion. Iraq was permitted to enter the market towards the end of 1996 with certain limitations by the UN agreement. It further suffered in 2002 by restrictions imposed on its sales. The oil production in Iraq in the year 2010 was ranked below 2.36 million barrel per day.

Iraq signed contracts with international companies to develop its oil fields and realize their full potential. This measure was vehemently opposed by many Iraqis who wanted the oil reserves to remain in national hands. The oil production however, still remains below average.

Iraq has had to import oil and gas in a large capacity as its oil refineries performed only 50 to 60 percent of their full capacity. Iraq has spent millions on plans to develop its existing refineries and make further advancements where required. These plans however only exist on paper. Iraq has instead attracted foreign companies that are not willing to deal on fair terms. It can be estimated that this scenario will remain the same in the near future.

A large part of Iraq’s oil is wasted due to flaring. Iraq’s ambition to produce up to 12.5 million barrel per day by the year 2017 is opposed by many veterans of the oil industry. They fear that the world oil demand would not increase enough to allow for consumption of oil from Iraq as well as the increased production from other countries. In such a scenario oil prices would be volatile and affected negatively. Iraq might end up spending millions of dollars on enhancing its oil resources that it may be unable to use. To avoid conflict with other oil producing nations Iraq may have to hold back as none of the nations want to destroy prices on oil. Taking Iraq’s development projects into consideration, future oil price may definitely suffer.

Although the plans to develop oil fields are on, Iraq lacks a well developed infrastructure for increased exports.

Kyles Humphreys is an experienced journalist in oil related fields, who frequently writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.

Article Source: http://EzineArticles.com/6601792

The United States’ eight-year military operation of Iraq is coming to an end. Military commanders in Iraq say the withdrawal of troops and equipment from the country is nearly complete. Welcome home ceremonies are being held across America and the families of the troops are enthusiastic and are now at ease as the U.S. military’s time in Iraq comes to an end.

President Barack Obama declared an end to the combat mission there last August, setting a goal of bringing all troops home by the end of this year.

“We’re quickly, quietly and professionally moving out,” said Army Lt. Col. Charles Krumwiede, strolling past lines of trucks driven by Indian and Pakistani contractors and protected by U.S. armored vehicles and attack helicopters. Only 8,000 U.S. troops and 5,000 support contractors remain in Iraq, said the general overseeing the exit of U.S. forces on recently, ahead of the Dec. 31 deadline for withdrawal.

Also leaving are hundreds of non-military personnel who worked on the military bases, including those from Pakistan, India and Nepal. Violence across Iraq has fallen dramatically over the last few years, but on the eve of the American withdrawal, Iraqi Army and police units are still overwhelmed by roadside bombs and assassinations.

Pictures of 17 dead Iraqi soldiers line the entry hall of a nearby Iraqi Army office, where a mourning banner for a revered Shiite imam hangs from the façade. U.S. officials have warned that the departure of American forces will leave some gaps in Iraq’s defenses, particularly in defending its airspace.

“For all the convoys that come through here, the convoy commanders come in and check in with us, we verify their documentation, and if there is anything wrong with the documentation, we correct it on the spot,” said Captain David Moses, one of the officers coordinating the final drawdown. The drawdown has been under way for months, but in recent days movement has accelerated at U.S. bases in Kuwait that serve as transit points. The drawdown is progressing with surprising speed.

Camp Adder, near the southern Iraqi city of Nasiriyah, is the last staging post for trucks and soldiers before they arrive in neighboring Kuwait. Most of the convoys have made it safe over the border, but the American Embassy recently warned of about the severe threat of kidnapping and terrorist attacks inside the walled-off International Zone, where American diplomats and the last forces in Baghdad are stationed.

Iraqi security forces are supposed to provide the first line of defense for U.S. facilities, and the Pentagon will also provide some support. A defense official said the Defense Department would operate a system to provide warning of incoming rocket and mortar attacks. It might have been just another day, if not for the backdrop of a withdrawal that has already cut the number of American forces to 7,500 on four bases, with all expected to be gone this coming week.

Soldiers who will stay behind until the end will still be responsible for securing roads, protect other American forces and ward off rebellious attempts to impose casualties on departing American troops. Since the war began in 2003, 4,485 American service members have been killed in Iraq, though none from this unit on this tour. Still, some of the soldiers said they worried about what could happen in their remaining days. The United States has paid not only in money but also loss of life. The dollar amount spent on the war as of Nov. 30 was $805 billion, according to the National Priorities Project.

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In recent weeks the U.S. Senate unanimously passed economic sanctions against Iran, a move that the Obama administration cautioned against. Secretary of State Hillary Clinton and Secretary of the Treasury Timothy Geithner announced new measures to increase pressure on Iran.

Secretary Clinton outlined a series of actions to increase pressure on Iran to comply with its full range of international nuclear obligations and to engage in constructive negotiations on the future of its nuclear program. Secretary Clinton said,

“Recent days have brought new evidence that Iran’s leaders continue to defy their international obligations and violate international norms, including the recent plot to assassinate the Saudi Ambassador here in the United States and as verified by the new report from the International Atomic Energy Agency that further documents Iran’s conduct of activities directly related to the development of nuclear weapons. Now, this report from the IAEA is not the United States or our European partners making accusations; this is the result of an independent review and it reflects the judgment of the international community.” -Secretary of State Hillary Clinton.

President Barack Obama has been cautious about harsher sanctions, fearing such a move could disrupt the oil markets at a time of economic uncertainty for many Americans, and alienate potential allies primarily Iraq. US officials have also warned that depriving global markets of Iranian exports could send oil prices sharply higher which can however be good for oil producing allies, but, gifting Tehran a funding boost. Unless a compromise is reached, the US President will have to decide whether to veto it.

“First, President Obama signed an Executive Order that, for the first time, specifically targets Iran’s petrochemical industry, a significant source of export revenues and a cover for imports for sanctioned activities. This will allow us to sanction the provision of goods, services, and technology to the petrochemical sector. To accompany this new measure, we will launch a worldwide diplomatic campaign to encourage other countries to shift any purchases of Iranian petrochemical products to other suppliers”, Secretary Clinton said.

With that sanction more opportunities are given from the neighboring countries of Iran. Most countries will be encouraged to shift to other suppliers especially in Saudi Arabia and Iraq. These two countries are known to have the largest resources of oil reserves in the Middle East aside from Iran. The economic situation of Iran has been really affected due to the new sanction given by the US. The US has already given strong warnings for its own banks from dealing directly with the Iranian central bank.

Under the new sanctions, drafted by Democrat Robert Menendez and Republican Mark Kirk, foreign banks that do business with Iran’s central bank would be cut off from the US financial system. The sanctions are designed to come into effect after a six-month grace period – in order to give oil markets time to factor them in.

Treasury Secretary Timothy Geithner echoed the warnings prior to its passage, stating ’strong opposition’ to the amendment. The amendment would specifically disallow organizations that do business with financial institutions in Iran, including the country’s central bank, from holding financial accounts in the United States.

Waivers though would be provided for companies that deal with national security matters. The amendment also requires that studies be done to better understand how oil prices would be affected in the United States. Europe’s new sanctions blacklist 180 Iranian officials and firms, but do not impose an oil embargo on Iran, because some European countries are dependent on Iranian oil. Ministers meeting in Brussels also agreed recently to work on other measures targeting Iran’s energy sector. The latest round of sanctions follows a recent UN report that linked Iran with the development of a nuclear weapon.

Multiple US administration officials have said that these sanctions would do more harm than good and both raise the price of oil and have little impact on Iran’s alleged nuclear ambitions. As far as Iraq Dinar is concerned, one of the side effects of the Iran sanctions is obviously the potential for higher oil prices which will strengthen dinar, in the short term. Long tern effects, well, we are working on an update for that.

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