Archive for March, 2009

The Truth About Iraq’s Hydrocarbon Law

Tuesday, March 31st, 2009

The Truth About Iraq’s Hydrocarbon Law

Ever wonder about the hydrocarbon law? Consisting of a set of four laws which outline how the oil industry should be governed, how the Iraqis will divide the profits from this industry, and how the oil industry should be re-shaped.

These four laws define, respectively, how the Iraqi Ministry of Oil should be re-structured, how investments in the oil industry should be managed, how revenue should be distributed and divided, and how the Iraqi National Oil Company should be reconstituted.

These laws are necessary for the permission for international companies to begin investing in the Iraqi oil industry (and to subsequently jump start the oil production industry), as they provide the guidelines, regulations, boundaries, etc. for how to run this industry.

Whether or not the hydrocarbon law is beneficial or detrimental to the Iraqi government and economy is widely discussed, with many disagreeing on its actual benefits for the Iraqi people overall.

The four laws are as follows
(resource link)
http://www.longwarjournal.org/archives/2008/02/inside_iraqi_politic_3.php

1.) Managing investment in Iraq’s oil resources, specifically the industry’s upstream development;
2.) Revenue sharing among private companies, provinces, and the federal government;
3.) Restructuring the Ministry of Oil; and
4.) Create and constitute an Iraq National Oil Company (INOC) to control all aspects of the Iraqi oil industry.

This includes managing investment by Iraq’s various factions and tribes in a controlled manner, and eliminating previous warring and feuding for control of oil in various provinces. Also including management of investments (including granting of contracts and acceptance of bids for developing oil fields) by foreign companies and firms as well as Iraqi national firms.

In terms of managing Iraq’s various factions and tribes this law states that the oil industry will be managed by the federal government rather than by each province’s regional government. Each province and faction to be given a portion of the oil industry profits, with the amount of revenue received being in proportion to the population of each province.

In terms of managing foreign investment, this law states that foreign companies will be given national treatment when bidding for or applying for a contract to develop in Iraq’s oil fields. That they must be given equal preference as Iraqi national companies, and that the Iraqi government can not favor Iraqi companies when granting contracts.

Due to Iraq’s decaying infrastructure in its oil industry, foreign investment is needed and is quite necessary; however, there is disagreement as to how the involvement and investment of foreign companies should be managed.

Whether or not it can be managed fairly as to still allow the Iraqi government control over its oil industry, and whether or not foreign companies will eventually control this entire industry. Some believe that creating an equal balance between Iraqi and foreign companies is indeed possible.

Foreign investment will not only repair the infrastructure, but also jump start the industry and increase the overall revenue from this industry. Maximizing the industry’s profits and potential should be in check. Others, however, believe that sharing with foreign companies is not possible, as they will unfairly undermine Iraq’s overall control of their oil.

Some believe that sharing the profits among all of the provinces will result in less feuding over oil control. All provinces following this law will create a calmer, more democratic society and government.

Others believe that with foreigners having some control and share in the profits of this industry, this will anger some provinces. Such angry provinces may believe that they are losing a portion of the profits that should be rightfully theirs. This can result in escalating civil war, feuding, and hostility towards foreign companies and foreign presence thus creating more uncertainty for Iraq Dinars stability and growth potential.

“Keep in mind that what some believe is not necessarily occurring in reality” -DrDinar.com Operations

These same people also believe that foreign companies will gain increasing levels of control, and may possibly gain total control eventually. With this increase will come greater levels of dissatisfaction among the various factions and provinces, all of which will contribute to escalating levels of violence, warring, and faction.

Revenue sharing must be defined and agreed upon by both the federal government and individual provinces. As well as the inclusion of foreign companies; the current revenue share plan in place does give some of the revenue to individual provinces.

More must still be defined in terms of privatization vs nationalization in terms of profit sharing, or distribution of revenue. Different provinces and sects favor different forms of revenue sharing, with provinces in possession of the most oil fields and resources wishing for provincial government and authority over these. As well as revenue to be distributed according to each province’s resources.

Provinces with less resources favor federal, centralized, and more shared revenue distribution by government. Equal and agreed upon profit sharing among all of its various provinces and sects is critical to stabilizing the country among its various provinces and sect.

Nationalization or Privatization in Iraq

Nationalization of this industry, rather than privatization (the investment of foreign companies), is generally favored. Restructuring of this federal governing body would give it more control and power in passing, defining, and regulating laws regarding the oil industry.

Establishing this company can and will increase the Iraq government control of this industry. Iraq Government control of the industry assumes Iraq’s Government has 100% independence militarily.

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Bahrain Investment Research Report

Monday, March 23rd, 2009

Benefits of offshore banking in Bahrain is that one may expand and grow one’s wealth and assets here. This is done through no tax on inheritance, income from investments and interest, and capital gains.

Bahrain’s country employs a “strong emphasis on the rule of law and fair market”. There are also no exchange controls. They may offer higher interest rates than some other countries, less legal regulation, There are two tax havens in this country as well, the Jebel Ali Free Zone Authority (JAFZA), established in 2003, and Ras Al Khaimah, both of which offer increased confidentiality.

‘Tax haven’ is defined as having little or no taxes compared to the majority of other countries, customer confidentiality and protection from regulation and oversight from foreign tax officials, and little to no reporting requirements.

Overall the entire country of Bahrain has no tax at all (in other words, completely income tax free), no reporting or filing of accounts, little to no transparency, no taxation information agreements with other foreign countries, and strict laws which further enforce the confidentiality and privacy of its customer The steps to open an offshore account in this country will vary by individual bank (however, most banks will allow non-citizens to open a savings account with a passport and a letter of introduction from their current (domestic) bank; they can not open a checking account, or current account, though)

Various banks in Bahrain will allow non-citizens to open accounts, and a summary of their rules, these banks are as follows:

1.) HSBC Bank (largest international bank in region) – non-citizens are limited to opening only a savings account, not a checking account. To open a savings account they must be aged 18 or over, and must provide a copy of passport and cpr card (they should also be prepared to show these originals in person) and an introductory letter from their bank and employer.

To open an offshore account you must first contact them by email thru the link http://www.hsbc.ae/1/2/ALL_SITE_PAGES/hsbcpremier/apply-offshore The currencies which you may open an offshore account in are AED, USD, GBP, and EUR; they have good interest rates.

2.) HDFC Bank Bahrain – non-citizens must also have permission to work in this country, whether they wish to or not, before being eligible to open an offshore account. In other words, they must have one of the following-visa, work permit, or residence card-as well as proof of residency in the country, including an electricity bill, phone bill, and bank account statement (not more than three months old). They must also have a copy of their passport, one separate photo, a valid identity card from the, and a account opening form from this bank. The account may be opened int eh currencies of the US dollar, British pound, or euro, and changed any time after opening it.

The account may be funded by a foreign currency check from a separate bank acc, or, if you are a non-resident who also happens to be a citizen of India, by a funds transfer from your existing NRE and FCNR account in India; the minimum amount to open the account is $5000 in each denomination. The contact information for this bank is:

AddressCentral Exchange Co. L.L.C, Sharaf Building
Ground Floor Opp. Hotel Ramada
Al Mankhool Street, Bur Dubai
Dubai
Telephone No.  00971 4 3554560 / 00971 4 3025750
Fax No.   00971 4 3511101
Email ID   centexch@emirates.net.ae

AddressCentral Exchange Co. L.L.C, Mercato Centre
P.O Box 29040 Ground Floor
Next to Spinnys, Jumeirah
Dubai
Telephone No.  +971 4 3442022
Fax No.   +971 4 3440027
Email ID   centexme@emirates.net.ae

Contact PersonAl Fardan Exchange Bur Dubai
AddressPost Box 2095
Al Zahraa Techno Centre 1st Floor, Khalid Bin Walid Rd
Next to Dubai Marine Hotel, Opp. Middle East Bank, Bur Dubai
Dubai
Telephone No.  04 3513535
Fax No.   04 3513536
Email ID   burdubai@alfardnexchange.com

Contact PersonAl Fardan Gold Land
AddressPost Box 2095, Gold Land Cntr
Gold Souk, Opp Fish Market
Dubai
Telephone No.  04 2266442
Fax No.   04 2266446
Email ID   goldland@alfardanexchange.com

Contact PersonAl Fardan Exchange Al Garhoud Dubai
AddressPost Box No. 2095
Dubai Festival City Mall Al Garhoud,
Dubai
Telephone No.  04 2325588
Fax No.   04 2325599
Email ID   dfc@alfardanexchange.com

3.) National Bank of Abu Dhabi – non-citizens may open savings account with an initial deposit of 10000 USD, or an offshore account through their Offshore Banking Unit. The bank must be contacted prior to opening the account at Toll Free: 8002211

4.) Lloyd’s TSB – to open an offshore account you must show a passport, proof of address (not necessarily residence) and proof of income (bank account details, etc.); a monthly fee of $7.50 USD will be charged monthly, and a low minimum deposit of $100 is required.

The account can be opened in GBP, Euro, or USD. Other major international banks in this country which offer offshore accounts, with similar requirements to those above (except for minimum opening deposit), are Abbey’s International Gold Account (minimum $5000 GBP opening deposit), RSBS International Royalties Account (minimum 25000 GBP, and Barclay’s iBank account (minimum 5000 GBP minimum deposit).

*********************************************
This article may be reprinted online and offline as long as
the entire article remains unchanged including this area.
Online reprinting of this article must have the hyperlink
activated. This article is written by Darren Chabluk from
http://DrDinar.com
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