JAPANESE EMBASSY IN JORDAN ORGANIZED FORUM ON

UNCLAS SECTION 01 OF 02 AMMAN 002459 SENSITIVE SIPDIS FOR NEA/ELA, NEA/I, AND EEB E.O. 12958: N/A TAGS: PREL EINV ENRG IZ JA JO SUBJECT: JAPANESE EMBASSY IN JORDAN ORGANIZED FORUM ON INVESTMENT IN IRAQ WITH FOCUS ON OIL INDUSTRY Sensitive but unclassified. Not for internet distribution. ¶1. (SBU) Summary: The Japanese Embassy in Jordan organized the "First Japan-Iraq Business Forum" in Amman in early July. Iraqi Vice President Tariq Al-Hashmi attended the event and urged Japanese companies to "invest in Iraq today" in order to secure future Iraqi oil supplies. The Iraqi Deputy Oil Minister described plans for exploration and expansion of existing oil storage and transportation facilities, and reported Iraq was planning to expand gas exploration in the Akkaz field in Anbar over the next three to four years. Iraqi businessmen did not seem optimistic about future business with Japan, and Japanese oil industry executives expressed only mild interest in investment in Iraq. End summary. Japan-Iraq Business Forum In Amman -------------- ¶2. (U) The Japanese Embassy, in cooperation with the National Iraqi Investment Commission and Iraqi Vice President Tariq Al-Hashmi, held the "First Japan-Iraq Business Forum" July 2-3, in Amman. The Japanese Embassy reported 200 participants including the Japanese Senior Vice Minister of Economy, Japanese Vice Minister of Foreign Affairs, Iraqi Minister of Industry and Minerals Fawzi Hariri, senior Japanese executives from the oil industry, as well as representatives from the Kurdistan Regional Government. VP Hashmi addressed the forum and urged Japanese companies to undertake more first-hand involvement in Iraq, saying if Japan wants to secure Iraqi oil in the future, it had to "invest in rebuilding Iraq today." He also called for more grants, MOUs, and technical cooperation. Hariri noted the GOI was transforming its economy from a centralized, heavily subsidized system into a free market one, and was planning free trade and special economic zones. Iraqi Deputy Oil Minister Outlines Current Oil Policy -------------- -------------- ¶3. (U) Iraqi Deputy Oil Minister Ahmad Al-Shamma delivered a presentation on Iraq's Oil Policy through 2017, describing GOI goals to confirm the existence of an estimated 40 billion barrels of probable oil reserves and 60 Trillion Cubic Feet (TCF) of probable gas reserves, and to increase oil production to 6 million barrels per day by 2015, sustaining that output until 2017. He further outlined plans for expansion of existing facilities for crude oil storage and export transportation, which would lead to an increase in gas production from the present 1,500 thousand (M) Standard Cubic Feet per Day (MSCFD) to 6,900 MSCFD. ¶4. (SBU) Al-Shamma later told EconOffs that over the next three to four years the GOI intended to expand exploration in the Akkaz field to secure gas reserves for an electrical generating station in Anbar, with subsequent plans to establish long-range pipelines for gas exports to Europe. Conditions in Iraq Better, But Still Difficult -------------- - ¶5. (SBU) Several Iraqi business executives said they did not expect business between Iraq and Japan to expand dramatically in the near-term because of GOI bureaucracy and corruption. They reported favoritism by the Iraqi Ministry of Finance in awarding contracts and expediting payments to politically-connected -- and allegedly Iranian -- businessmen. ¶6. (SBU) Other Iraqis remarked that the security situation had dramatically improved in Baghdad, and businesses were returning, however the government was still not able to provide basic services. One businessman reported the electrical generators at his offices still had to run approximately 17 hours per day because electrical production was so sporadic. On the positive side, he noted that when his office first opened in Baghdad in 2004, he paid his engineers about USD 500 per month; now, because the market had so improved, he needed to offer prospective employees over USD 3,000 per month in order to remain competitive. ¶7. (SBU) Comment. Japan, an active player in Iraq, has several on-going investment projects underway. For example, the Japan Bank for International Cooperation (JBIC) is preparing to disburse approximately $2.4 billion in concessionary loans for improvements in a range of infrastructure projects, including rehabilitation of refineries and a crude oil export facility. From the private sector, Japanese petroleum companies JAPEX, INPEX, ENEOS, and AMMAN 00002459 002 OF 002 Mitsubishi have qualified to participate in a first licensing round that should occur before the end of the calendar year to expand production at Iraq's oil and natural gas fields. This well attended conference highlighted the Japanese-Iraqi relationship as well as the possibility of enhanced trade activities between Japan, Iraq, and Jordan, and Iraq's desire to develop the oil industry. Most attendees confirmed that security and economic conditions have been improving in Iraq, but expressed the view that it will still be awhile before doing business in Iraq will be considered completely normal. ¶8. (U) This message has been coordinated with Embassy Baghdad. Visit Amman's Classified Website at: http://www.state.sgov.gov/p/nea/amman Beecroft