• Test results from international laboratories confirm that the death of millions of farmed carp in Iraq in late 2018 was caused by fish disease, not pollution.
  • The carp suffered from the Koi Herpes Virus (KHV), a lethal disease known to cause almost 100 percent mortality rates in carps.
  • Based on these results, we can therefore rule out that chemical contamination played a role in the fish kill, which should reassure the public that the farmed carp is safe to eat.

On 26 October 2018, a major fish kill episode that wiped out millions of mostly caged farmed carp in Iraq’s central Euphrates region sent the country into major panic. Fear spread that the fish kill was caused by a mysterious pollution that could also poison people, whilst fish farmers agonized over their losses as the source of their livelihoods abruptly vanished.

Deeming the fish kill a national security issue, Iraq’s newly appointed Prime Minister, Dr. Adel Abdul Mahdi, immediately assembled a crisis team led by the Ministry of Health and Environment and the Ministry of Agriculture to investigate its causes and take appropriate remedial measures.

“The scale of the fish kill was so huge, we had excavators working for four days clearing the fish from the river,” affirmed Dr. Ala Alwan, Iraq’s Minister of Health and Environment, who personally inspected the situation on the ground once news of the incident broke out. “We also used oil spill booms to contain and prevent the fish from drifting downstream, especially as many fish farmers rashly dumped the dead carp into the Euphrates River,” he added.

Faced with this unprecedented massive fish mortality, the Iraqi Government decided to request emergency technical assistance from the World Health Organization (WHO), the Food and Agriculture Organization (FAO) and UN Environment to help determine the cause of the sudden die off.

Fish and environmental samples were collected by the Ministry of Health and Environment based on UN Environment’s advice from the epicentre of the fish kill incident near Al-Musayab, Babel governorate, approximately 70 kilometres south of Baghdad. Since 2011, this area had become a thriving hub for Iraq’s growing fish farming industry where a rapid expansion in the use of floating river cages to grow common carp (Cyprinus carpio) became established. At the same time, “the high density of fish cages almost back-to-back for kilometres, coupled with extreme overstocking, contravened national regulations,” cautioned Minister Alwan.

UN Environment, WHO and FAO rapidly organized for the fish, water, sediment and fish feed samples to be shipped to internationally-accredited laboratories. Comprehensive chemical and microbiological tests were carried out by three different laboratories, including in Switzerland, Jordan and Italy.

For all the samples taken by the Ministry of Health and Environment, test results showed no significant contamination from heavy metals, hydrocarbons or pesticides. “Unlike water, which only gives a snapshot of environmental conditions at a specific point in time, sediment acts as a storage reservoir for contaminants,” explained Dr. John Pote, Head of the Laboratory of Environmental Microbiology at the University of Geneva, who coordinated the laboratory study commissioned by UN Environment.

“Based on these results, we can therefore rule out that chemical contamination played a role in the fish kill, which should reassure the public that the farmed carp is safe to eat,” he added. These conclusions were also shared by Mr. Ahmed El-Olimat, Deputy Head of Quality and Laboratory Affairs in Ministry of Water and Agriculture in Jordan, who coordinated the test of the water samples sent by WHO to Jordan.

DNA tests run by the Swiss National Fish Disease Laboratory and Reference Laboratory for Notifiable Diseases found the presence of the Cyprinid herpesvirus (CyHV-3) in all fish samples examined, confirming Iraqi scientists’ suspicions that the fish kill was caused by a disease outbreak. They had observed white or brown patches on the gills of afflicted fish as critical clinical signs of an infection. Furthermore, the mortality only affected farmed carp and not wild fish. Virologic analysis commissioned by WHO and FAO – in Jordan and Italy respectively – also confirmed the Swiss laboratories’ findings.

“WHO was very concerned about this incident which could have posed a public health risk to communities in Babylon governorate and beyond. However, after confirming that the outbreak is due to a viral infection, WHO is confident that fish consumption has no effect on human health,” confirmed Mr. Mohamed Hamasha, Senior Environmental Health Expert and Mr. Soren Madison, Food Safety Adviser at WHO.

“High loads of Cyprinid herpesvirus DNA in the gill, kidney and brain fish tissue revealed that the carp suffered from the Koi Herpes Virus (KHV) disease,” affirmed Dr. Thomas Wahli, who heads the Swiss Reference Laboratory for Notifiable Diseases. “KHV is a very serious and lethal disease that is known to cause almost 100 percent mortality rates in carps,” he added. The Principal Virologist at the UK’s International Centre of Excellence for Aquatic Animal Health (CEFAS), Dr. Richard Paley, also agreed that “while overstocking and transient water quality issues such as low dissolved oxygen levels may have stressed the fish and helped propagate the virus, given the current information, one can reasonably conclude that the root cause of this mass fish kill episode is KHV disease.”

With Euphrates River water temperature dropping to 23-25°C in November, an optimal environment was created for the CyHV-3 virus, which flourishes between 16-28°C. Reports of similar small-scale fish kill incidents in multiple pockets in western and central Iraq further validated the occurrence of a wider epidemic.

“The outbreak may represent development of the disease in latently infected fish due to stressor events or perhaps more likely, based on the size of the event, introduction of infected animals into naïve stocks with no previous exposure or immune protection, indicating a recent introduction”, reckoned Dr. Paley.

“This is the first case of Koi Herpes Virus disease in Iraq, and it is a significant case report which will need to be notified to the World Organisation for Animal Health,” underlined Minister Alwan.

“We are pleased to have been able to get to the bottom of this difficult case and intend to build on this experience to improve our environmental surveillance and diagnostic capacity, particularly for viral diseases, so that we can properly investigate such events. Meanwhile, we need to control fish farm numbers and raise farmers’ awareness on the appropriate procedures to follow to prevent and rapidly contain similar outbreaks in the future,” he asserted.

(Source: UN Environment Programme)

International Women’s Day was celebrated today at an event organized by the Directorate for the Empowerment of Iraqi Women at the Council of Ministers.

The event, which was supported by UN Women and the International Medical Corps, was attended by senior Iraqi government officials, including the two Deputy Speakers of the Council of Representatives, human rights activists, civil society representatives, the international community and many others.

Deputy Special Representative of the United Nations Secretary-General (DSRSG) Alice Walpole (pictured) addressed the meeting, along with Dr. Mahdi Al-Allaq, Secretary-General of the Council of Ministers, who represented the Prime Minister; Dr. Thikra Alwash, Mayor of Baghdad and Chair of the Standing Committee on the Advancement of Women; UN Women’s Representative, Ms. Dina Zorba and UNFPA Representative, Dr. Oluremi Sogunro; as well as the Director-General of the Directorate for the Empowerment of Iraqi Women, Dr. Ibtisam Aziz.

In her remarks, DSRSG Walpole welcomed the upcoming discussions in Parliament on updating the Anti-Domestic Violence Law. “We need to acknowledge that domestic violence diminishes and shames all of society; it is a threat not just to women but to society itself,” she emphasised.

Reflecting on the challenges facing displaced women across Iraq, DSRSG Walpole noted that “They continue to suffer the brutal consequences of the recent conflict”.

“Female-headed households should be prioritised in accessing public services,” she said, and called on the Ministries of Defence and Interior, and the National Operations Command, to “to ensure that secure clearance mechanisms are coordinated among security actors to minimize re-screening of individuals already screened; and to consider removing security clearance requirements for civilians who have not been charged with a criminal or terrorism-related offence, so they do not face obstacles in accessing public services, including civil registries and courts”.

DSRSG Walpole also noted the high unemployment rate amongst young women, which is double that of men. She called on the government to “offer small business grants to female entrepreneurs to help them into the business arena, in particular to women returnees in the liberated areas, and those heading households”.

“Advancing women’s economic empowerment in this way will contribute to the government’s efforts to achieve national stability,” she noted

(Source: UN)

Pearl Petroleum Company Limited, the consortium led by Crescent Petroleum and Dana Gas of the UAE, has signed a new 20-year Gas Sales Agreement (GSA) with the Kurdistan Regional Government (KRG) to enable production and sales of an additional 250 MMscf/day that the consortium aims to produce by 2021 as part of their expansion plans in the Kurdistan Region of Iraq (KRI) in order to boost much needed local domestic electricity generation.

Pursuant to the Settlement Agreement reached between the parties in August 2017, this new gas sales agreement was signed on 19th February 2019 by Dr. Ashti Hawrami, Minister of Natural Resources on behalf of the Kurdistan Regional Government, and Mr. Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, on behalf of Pearl Petroleum.

All approvals for the agreement, including by the the Kurdistan Region Council for Oil & Gas Affairs and the Board of Pearl Petroleum, have since been granted, with  project work now under implementation.

The Kurdistan Gas Project was established in 2007 as Dana Gas and Crescent Petroleum entered into agreement with the Kurdistan Regional Government (KRG) for certain exclusive rights to appraise, develop, produce, market, and sell petroleum from the Khor Mor and Chemchemal fields in the Kurdistan Region of Iraq (KRI).

Production from the newly built plant in Khor Mor began just 15 months later, in October 2008. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders, and with OMV, MOL, and RWE joining the consortium subsequently with a 10% share each.

The $700 million expansion underway at the Khor Mor plant will include the addition of two new production trains at the Khor Mor plant, as well as drilling of new wells with plans to raise production from the current 400 MMscf/day to reach 650 MMscf/day by 2021 based on this latest GSA, and then to 900 MMscf/day beyond that by 2022.

This follows the 30% production increase from debottlenecking throughput at the Khor Mor plant, which brought current total production to 106,000 barrels of oil equivalent per day (boepd), making it the largest regional private sector upstream gas operation in Iraq today.

Gas sales commenced late in 2018 under a gas sales agreement signed in January of that year, and all payments have been received in a timely manner in full, which gives confidence for the investment and expansion plans currently underway by the Consortium. The Kurdistan Gas Project, which recently commemorated 10 years of continuous production, supplies natural gas from the Khor Mor field by pipeline to power plants in Bazian, Chemchemal and Erbil, as well as LPG and condensate, which are sold in the local markets.

In August 2017, Pearl Petroleum reached a full and final settlement with the KRG of the arbitration between them, including settlement of past receivables and committing to expand their investment and operations in the region. These expansion plans include the multi-well drilling program currently underway in both the Khor Mor & Chemchemal fields, as well as installation of additional gas processing and liquids extraction facilities. The fields are operated jointly by Crescent Petroleum and Dana Gas on behalf of Pearl Petroleum.

Total investment in the Kurdistan Gas Project to date exceeds $1.6 billion, with total cumulative production of over 260 million barrels of oil equivalent (boe), delivering billions of dollars in fuel cost savings and wider economic benefits for the Kurdistan Region and Iraq as a whole. That impact will continue to grow as production capacity expands in the coming years.

Dr. Ashti Hawrami, Minister of Natural Resources of the Kurdistan Regional Government (KRG) said:

“This agreement is an important step for us as we deliver improved services to the people of the Kurdistan Region of Iraq through enhanced electricity generation from the increase in gas production by the Consortium. The Kurdistan Region holds significant reserves of gas and the KRG is committed to playing a positive role in the growing gas and electricity needs of Iraq and the region.”

Mr. Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, commented:

“This gas sales agreement opens a new chapter in the expansion of the Kurdistan Gas Project that will see a further investment of over $700 million in coming years to expand production up to 900 MMscf/day, further fueling the Region’s economic growth and development. We look forward to developing the significant resources from these important fields, for the benefit of the Kurdistan Region and all of Iraq.”

Dr. Patrick Allman-Ward, CEO of Dana Gas, added:

“Dana Gas and our partners in Pearl Petroleum are particularly proud to be investing further in the gas sector of the Kurdistan Region of Iraq, delivering a reliable source of cleaner energy, and supporting local economic development.  The continuing receipt of payments in a timely manner gives confidence for our continued investment commitment as we enter our second decade of production.”

As part of its work in the KRI, Pearl has implemented a corporate social responsibility program to support local communities, including providing school supplies, drinking water treatment, generators and fuel enabling 24-hour electricity for local villages, mobile medical units, and youth sports facilities, as well as financial support for 1,000 orphans from the Chemchemal area in partnership with a local charity Foundation.

These initiatives are assisting the local communities in improving their standard of living, health, well-being, security and stability and the development of human capital.

(Source: Dana Gas)

By John Lee.

Shell is reported to be still in the process of evaluating the viability of the $11-billion Nebras petrochemical complex in Basra.

The project was designed to produce 1.8 million mt/year of various petrochemicals, using naphtha as a feedstock.

Last year, Reuters reported that Saudi Basic Industries Corp (SABIC) was in talks to join the project, but according to S&P Global Platts there has been no update on the progress of these talks.

(Source: S&P Global Platts)

Intertek, the UK-based assurance, inspection, product testing and certification company, has announced the launch of the first independent crude oil, fuel testing and petroleum products laboratory in Iraq.

The new hydrocarbon laboratory, located in the port of Khor Al Zubair, will support the increased demand for quality assurance solutions in the petroleum industry across Iraq and will soon be offering octane engine fuel testing of gasoline for the first time in the country.

The launch of the 1,300 square feet laboratory allows Intertek to offer its services in this fast-growing market and in this highly strategic location. Khor Al Zubair incorporates industrial areas that are home to several petrochemical and other companies that will benefit from the proximity of the laboratory services to their operations. The nine jetties in the port of Khor Al Zubair are vital for fuel imports and exports in Iraq and enable direct access for crude carriers, refiners, distributors and trade companies.

Based within SKA Energy’s new oil storage terminal, the laboratory represents a significant investment in the Iraq oil and gas industry. Offering a wide range of services for the petroleum and related industries, the laboratory will deliver sample testing, and services for the downstream oil and gas and aviation sectors.

It will also provide detailed crude oil, naphtha and gasoline quality analysis and testing, which helps clients maintain or improve fuel quality to meet commercial and regulatory specifications. The facility will offer 24/7 operations and trouble-shooting support.

Matthew Skinner, Intertek Regional Managing Director Gulf and Pakistan, said:

As the demand for Assurance services in Iraq grows, we are delighted to have achieved an industry first in opening this laboratory.

“Our new facility in Khor Al Zubair allows us to cater for the needs of numerous parties operating within the oil and gas industry in Iraq, providing our customers with systemic Total Quality Assurance Solutions. Local companies can now obtain lab reports to help them assess their fuels in accordance with industry international standards, at a shorter turnaround time.

(Source: Intertek)

By John Lee.

The United Nations has advertised new positions in Iraq:

(Source: UN)

(Picture: Finger pressing a new career start button, from Olivier Le Moal/Shutterstock)

By John Lee.

The United Nations has advertised new positions in Iraqi Kurdistan:

(Source: UN)

(Picture: Success, growth, career, development signpost from 3D_Creation/Shutterstock)

By John Lee.

Oil Minister Thamer Al-Ghadhban met on Tuesday with Nhat Ozdemir, Chairman of the Board of Directors of Turkish conglomerate Limak.

The minister said he was keen to develop the energy sector through cooperation with international companies, noting the presence of promising opportunities in Iraq.

Mr Ozdemir said his company wants to cooperate with the Ministry of Oil in the development of the energy sector in the country.

(Source: Ministry of Oil)

Denmark provides an additional $4 million to Security Sector Reform in Iraq

The Government of Denmark will contribute an additional 27 million Danish Kroner (approx. USD 4 million) to advance Security and Justice Sector Reform in Iraq in the coming years.

This support will be managed and facilitated by United Nations Development Programme (UNDP).

UNDP Security Sector Reform/ Rule of Law Programme provides advice to Government of Iraq’s Security Sector Reform Programme through partnerships with the Office of the National Security Advisor, Ministry of Interior, Higher Judicial Council, Ministry of Justice, Parliamentary Security and Defense Committee, Iraqi civil society organizations and, other international donors.

The Danish grant will, among others, be used to support implementation of the Local Police Road Map, for development of quick impact projects to improve police – public partnerships, and for mid-level management and, related specialized trainings to Iraqi police officers in close collaboration between Danish National Police, UNDP and the Ministry of Interior. Denmark has supported Iraq’s security and justice sector reform efforts since 2015.

Danish Ambassador Gert Meinecke said “Denmark maintains its commitment to supporting Iraq’s transition to stability, security and recovery”.

While visiting a mid-level management training course at the Ministry of Interior, the Danish Ambassador expressed hope that the trained Iraqi Police Officers will provide a safer and more secure day-to-day environment for the people of Iraq. “The strengthening of local police is important in the transition from ‘green to blue’ security”. added Ambassador Meinecke.

Mr. Vakhtang Svanidze, Officer in Charge of UNDP Iraq said “I would like to thank the Government of Denmark for its generous contribution of 27 Million Danish Kroner which comes in addition to the in- kind support of the Danish police advisor and, expert trainers”. “Improving key public security services such as policing and justice services in the liberated and, other areas will be a key determiner to Iraq’s transition to stability and, maintain safe returns” added Mr. Svanidze.

UNDP is very grateful to the Government of Denmark’s committed and generous contributions to UNDP Security Sector Reform/ Rule of Law Programme in Iraq.

(Source: UNDP)

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Iraqi market, as measured by the Rabee Securities RSISUSD Index, declined by -9.7% in February, taking the year to date decline to -12.5%.

February’s decline takes the index below the multi-year lows made in May 2016, for a decline of ­-70% from the multi-year highs of January 2014 to February 2019, versus the -68% decline from the same highs to May 2016. However, the severity of the decline and the immediate triggers are the only things that the two months have in common, while all other indicators, both fundamental and technical, are diametrically opposed.

The immediate trigger for the decline in the last two months was a foreign portfolio liquidation, the same trigger behind that of the period leading into May 2016. However, the similarity ends there, as the current foreign liquidation is that of a relatively small single portfolio vs. the massive multi-month liquidation witnessed then as the chart below demonstrates.

(Source: Iraq Stock Exchange (ISX), Asia Frontier Capital)

The above chart is an index of the absolute level of foreign selling & buying with their respective moving averages, clearly showing the contrast between the two periods (both highlighted in light orange). The main reason for the similarity, in effect of the selling on the index, is due to the extremely low liquidity in the current market- a low level that has been discussed in “Volumes and Reversion to the Mean”.

The average daily turnover per month since late 2014 (chart below) shows the association of low turnover with the index levels. Moderate selling in such an environment of extremely low liquidity exerts a strong downward pressure on prices, which coupled with low prices turns a few price increments into much larger percentage moves. A case in point is Bank of Baghdad (BBOB) which started the month at IQD 0.280 per share. Due to selling it declined to IQD 0.250 by month’s end. This is equal to three price increments (the minimum price increment is IQD 0.010), yet it is a -10.7% decline from 0.280 to 0.250, which in turn accounted for a -1.2% downward move in the index. Another issue of low liquidity is how it affects higher priced stocks, resulting in them trading in much larger price increments, with the end result producing the same percentage change effects as for the lower priced stocks.

(Source: Iraq Stock Exchange (ISX), Rabee Securities, Asia Frontier Capital)

The macro picture between 2016 and now couldn’t be more different. In 2016 Iraq’s economy was being crushed by the double whammy of collapsing government revenues, due to falling oil prices, and the sharply increasing cost of the ISIS war- a war that many international commentators believed marked the end of the Iraqi state. However, the end of the ISIS war cemented Iraq’s integrity and its position as a key player in the Middle East. This is evidenced by the high number of heads of state and high-level official visits to Iraq over the last few months as relationships which were forged during the ISIS-conflict are being developed into future economic relationships.

On the other hand, the economy in 2019 is gradually benefitting from the expansionary effects of the reversal of the forces that crushed it. In particular, the healing effects of higher oil revenues over the last two years is beginning to filter down into the broader economy with the first signs being seen in the recent recovery in broad money, or M2 which acts as a proxy for economic activity, as can be seen in the chart below.

(Source: Central Bank of Iraq, Iraq’s Ministry of Oil, Asia Frontier Capital)

(Note: M2 as of Nov with AFC est.’s for Dec; Oil revenues as of Feb)

The period leading to the May 2016 low witnessed multi-month declines in oil revenues that had a massive negative effect on economic activity as first seen in the stagnation of M2, followed by a decline as manifested in the onset of a severe economic contraction. It was natural then that these effects would negatively impact corporate earnings and ultimately lead to a marked decline.

A mirror image reversal is taking place in 2019 as multi-month increases in oil revenues have revived M2 which points to an economic recovery. The early signs of this is evidenced in the growth of customer deposits (consumers, businesses and government) with banks, which can be seen in the chart below through the growth of the IQD Current Account (C/A) component of banks’ reserves with the Central Bank of Iraq (CBI) – the recovery of which accelerated in May 2018, with the latest data as of early February indicating a continuation of this trend.

(Source: Central Bank of Iraq, Asia Frontier Capital)

(Note: M0 as of Jan, IQD C/A component of bank’s reserves as of Jan)

Other signs of economic recovery can be seen from the recent earnings reports of consumer spending related companies such as Pepsi bottler Baghdad Soft Drinks (IBSD) and mobile operator AsiaCell (TASC). Of the two, the data from TASC is promising, as the company is especially leveraged to the economic recovery given the severe hits its profitability took due to the ISIS conflict which were discussed fully in “Telecoms Dial up Recovery

The drag on the economy thus far in 2018 and 2019 has been due to the political paralysis before, during, and after the May 2018 parliamentary elections. This led to a torpidity in government spending, but a silver lining of the government inaction has been the steady growth in the government budget surplus that is estimated to be about USD 24.5 bln in the two years ending in 2018. This paralysis in government spending has finally come to an end with parliament’s approval of the 2019 budget in mid-January.

The 2019 budget’s non-oil investment programme is about USD 12.5 bln, which would be equivalent to about a 7.5% stimulus to the estimated non-oil GDP for 2019. While it is highly unlikely that this would be immediately spent, yet the spending should start with a trickle but grow as investment spending gets underway.

Just as the negative fundamental forces in 2016 were the reason for the market’s decline, their reversal and the early signs of economic recovery should lead to an economic growth which must find its way into corporate earnings’ recovery- which in turn should lead to a rising market. Logically, this ought to mean an end to the market’s divergence from its past close relationship with oil revenues (a proxy for the forces driving the economy) which is currently at the widest it has been for the last few years (see below).

(Source: Iraq’s Ministry of Oil, Rabee Securities, Asia Frontier Capital)

(Note: Oil revenues as of Feb)

In conclusion, the fundamentals seen in the prior charts surely argue that it’s only a matter a time before the liquidity in the broader economy finds its way into the Iraqi equity market, the reigning ugly duckling of frontier markets, to turn it into a swan or at least into a duck that flies.

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.