Page 13 - MEOG Week 38

MEOG
neWs in brief
MEOG
of public property located in the al-Ihtifalat square of central Kirkuk city and under the management of the directorate.
Kirkuk is an ethnically diverse province which consists of turkmen, Arabs, Christians, and Kurds, who make up the majority of the population. It is one of the areas disputed by the Kurdistan Regional Government (KRG) and the Federal Government of Iraq.
The turkmen Front, the largest umbrella party for the ethnic group in Iraq, criticized the arrest of yayjli, demanding his release and that a case be opened to investigate alleged corrupt dealings.
The head of the turkmen Front in the Iraqi Parliament, mP Arshad al-salhi, claimed in
a statement that “the issue of violation [of property] in Kirkuk dates back to 2003 by influential political actors...and the mayorship has no power to stop them in light of the complex political situation” in the province.
He warned that “the patience of the people of Kirkuk and the turkmen, in particular, will run out,” adding that the situation would “push the people to take to the streets.”
Iraq ranks high on transparency International’s Corruption Perceptions Index amid the continued waste of public funds. kurdistAn24
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Kuwait shares Saudi
Arabia’s optimism to end
disagreement
Kuwait’s deputy foreign minister said on monday that Kuwait shares saudi Arabia’s optimism to end a disagreement over the saudi–Kuwaiti neutral zone “very soon,” state news agency (KUNA) cited him as saying.
Khaled al-Jarallah added that he listened
to the saudi energy minister’s “positive statements” and wished to “close the page on this disagreement very soon”, KUNA reported.
saudi energy minister Prince Abdulaziz bin salman had said earlier this month talks with Kuwait about resuming oil production in jointly operated fields in the saudi-Kuwaiti neutral zone are “positive” and there was political will to resolve relevant issues. reuters
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Israel Electric set to sign new Tamar gas deal
Israel Electric Corporation (IEC) is close to signing a new agreement with the owners
of rights in the tamar natural gas reservoir. The gas price in the new agreement has been lowered to $4.30 per BtU for 18 months,
after which the agreement with IEC will be renegotiated. In effect, the agreement renews the competition between the tamar and Leviathan reservoirs, because it enables IEC to buy gas from tamar at a lower price than
it obtained from Leviathan. The agreement
is also an achievement for the Public Utilities Authority (Electricity), because it improves the terms in comparison with the previous agreement between IEC and tamar, which the Public Utilities Authority refused to approve.
Leviathan won out over tamar in a tender published by IEC for the purchase of variable quantities of gas beyond the minimum that it is obligated to buy from tamar. The holders of rights in the two reservoirs offer the same price - $4.79 per BtU, but IEC management preferred Leviathan to tamar.
If the new agreement is approved, IEC will be able to purchase an additional quantity
of gas (beyond the minimum amount) from tamar at 10% less than the price obtained
in the tender won by Leviathan. The total amount of gas that IEC will be able to purchase from tamar at a discount until 2021 is likely to reach 2-2.5 BCm. The resulting cumulative discount on the electricity rate (compared with the regular tamar contract price) will reach NIs 300 million. The principles of the emerging agreement were presented to the IEC board of directors last week, and will be contingent on approval by the Government Companies Authority and the Public Utilities Authority (Electricity).
The Public Utilities Authority thwarted
a previous agreement reached by IEC with tamar in February this year. This agreement froze the price of gas for two years in exchange for releasing the capacity of the gas pipeline, which was reserved for IEC, but had not actually been used.
The price of gas from tamar is the most sensitive issue in the gas sector. IEC currently buys almost all of the natural gas that it uses to produce electricity from tamar under an agreement dating to 2012, so the price of gas in this agreement has a major effect on the electricity rate paid by consumers. Beyond the base price stated in the agreement, which is now considered very high, great criticism was aroused by a unique formula that linked the price of gas to the Us Consumer Price Index. This formula increased the price of the gas purchased by IEC from $5.30 in 2013 to $6.10 in 2018, at a time when global oil and gas price were falling precipitously. The state Comptroller estimated that the price of gas and its linkage formula would cost Israeli consumers NIs 8 million extra in costs over the 15-year contract. The state tried to repair a little of the damage by setting a roof price in the gas plan.
In the February agreement, the partners in tamar agreed to freeze any further increase in the price of gas beyond $6.10 per BtU in 2018 and $6.30 in 2019, plus further increases later until 2021, when the price in the agreement
is due to be renegotiated and could fall by 25%. When the agreement was signed in February, IEC said that the freeze would
save the company $85 million, resulting in a lowering of the electricity rates. The Public Utilities Authority (Electricity), however, which examined the agreement, found a number of problems with it, especially a clause stating that the freeze is not guaranteed, but will be discussed retrospectively during the negotiations on revising the price in 2021.
IEC said in response, “No detailed plan was presented; it was a general announcement of management’s possible ideas for revising the agreement, which it plans on trying to promote with all the tamar partners.”
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Week 38 24•September•2019
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