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Cablegate: Japanese Embassy in Jordan Organized Forum On

VZCZCXRO5929
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHAM #2459/01 2341542
ZNR UUUUU ZZH
R 211542Z AUG 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3386
INFO RUCNRAQ/IRAQ COLLECTIVE

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

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