Pure speculation: From stranglehold to stampede?

Could it have gone something like this...

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It seems obvious to me that the KRG will have wanted to “sign” a US major as soon as the size of Shaikan became obvious. They could well have been in discussions with let’s say Exxon early in 2011 or even before. Now who would have “the upper hand” in these discussions? Clearly Exxon would be keen for a slice of the Kurd action, but perhaps not half as keen as the KRG would be to get Exxon onside, developing Shaikan, “legitimising” the other KRG contracts, and strengthening the strategic alliance with the US. So Exxon, rather than falling over themselves to sign up with the KRG, and putting at risk their contracts and relationships with the ICG, may have extracted a good deal from the KRG along the lines of: help us secure Shaikan/GKP at a good price (no more than £8 per share) and when the time is right we’ll sign up for a number of other Kurd licences. In parallel Exxon get their city allies to keep the GKP sp in check so that £8 seems like a good deal premium. Perhaps Sanddunes got wind of this on 10 July, assumed that it was a foregone conclusion that GKP would indeed be sold for £8 per share, and posted his famous “shafted for £8” on iii. Todd also got wind of it and realised that were a hostile bid to be launched he might not have enough supporting votes to resist. So on 20 Sep, despite being “fully funded”, he decided to go for a significant placing of 90m shares (at £1.40) to “sympathetic” buyers whose votes he knew he could rely on. Todd also got his skates on beefing up the NEDs, appointing Lord Guthrie on 3 Oct to help him avoid foul play. And of course GKP continue to “drill baby drill”, to prove up what we have in the ground and show the doubters that £8 is not enough. Hence Sh5 spudded earlier than expected on 28 Oct and major OIP upgrade announced on 8 Nov. Meanwhile Exxon are not hanging around either. They follow through on their deal making with the KRG and agree to purchase the Shaikan 3rd party option and/or back-in rights at a $pb price that would imply a valuation of GKP at around $7b (or £8.30 per share). And sign for 6 other licences. The rumour mill picks up the story and the IoS/Leftly back it up. The KRG wrong-foot everyone proudly announcing on 14 Nov that Exxon have taken 6 new licences! Using the 3rd party deal price as leverage/evidence of value, the KRG then “sound out” GKP and pressurise them to accept a similar $pb deal from Exxon for the whole of GKP. They also attempt to get major shareholders on-side for this deal. But GKP decline, insisting the company is worth double-figure billions. (These events form the basis of the IoS story on 18 Dec which Leftly admitted probably took place several weeks earlier.)(They also resonate with CJ’s assertions that “moves have been afoot to get shareholders on side to accept a lower figure”). Todd fights back making it clear he wants to see an auction, and will not yield to the first bidder. On 25 Nov he appoints NED Mark Hanson to bring the Chinese into the fray. Rumours continue to build and on 18 Dec the IoS/Mark Leftly run their “Exxon woos GKP” story. Hanson reports back to Todd that the Chinese will not enter the bidding unless they are assured there is not already a done deal and can see a level playing field – in particular that GKP is not already in detailed discussions with the US majors. TK isn’t – so he lets the Chinese and any other potential bidders know that he is “not in discussions over the sale of the company” in the denial RNS of 19 Dec. And to emphasise the point that there is plenty more oil to bid for GKP announces the early spud of Sh6 the very next day 20 Dec. JG also lets it be known that he expects at least 2 more major upward revisions to the Shaikan OIP figures. I think he also talked up Ber Bahr comparing the early drill results there to the findings at Sh1. Other shareholders also realise that they need to help Todd fight his corner. Numerous “valuations” are proffered. And 20 Dec also saw the release of GRH’s famous satellite oil maps. Exxon begin to realise that to secure the prize, a high profile offer is needed swiftly. They go for $19b and get US SD backing. (See CJ 9 Jan). But that bid is quickly over-trumped by 23% another US major. (CJ) And the chinese haven't even put their first bid in yet.... ================ Author scaramouche View Profile Add to favourites Ignore Date posted Wednesday 14:06 Subject Each and Every one....... Votes for this Posting Voted 137 times. Message I can see that there are now 2000+ posts on this board every day... and the worldwide interest in GKP is growing by the minute! But with so many posts it is not always very easy to ensure that we are all ‘on the same page’ as far as our understanding goes. There have been some great posts recently about the responsibility of the Board to keep us fully informed on any key developments, and I am sure that they are making every possible effort to do so. However, like so many on here, I see at as absolutely essential that the Board and Investor Relations are made aware of the CONCERNS that many of us have regarding TRANSPARENCY and ASSURANCES..... that we will NOT find ourselves suddenly presented with an OFFER that WE, quite literally, CANNOT REFUSE! With this in mind, I have decided to write to GKP directly as follows, to try to address a number of points that are increasingly being discussed on this board. The note that follows contains TEN QUESTIONS, some or all of which might strike a chord with many on here. And I would simply ask each of you to consider whether it might form the basis of an email that you could also send to the company, to help ensure that everyone receives the assurances they need. *** IMO, this is all about communication, and it is the ONLY way that we can guarantee that everyone is getting exactly the same information *** I fully appreciate that you may not agree with some/any of the questions, might have some of your own, or disagree with it completely as a concept. But, as I believe that we are now approaching the end game, I would like to think that all sharholders will consider doing something to make sour that thier opinions count. In any event, I sincelry hope you find it useful as a basis on which to formalise your own thoughts. If the feeling I detect on here is anything to go by, I would like to think that if many people were to contact GKP directly, it could prompt them to find a more effective means of ensuring that both their concerns, and those so clearly expressed by CJ and others, are fairly dealt with. The “non-denial denial” RNS was in my view far from adequate and has simply served to add fuel to the fire! So, below is my proposed email to IR/Todd Kozel/whoever.... GLA, scaramouche ---------------------------------------------------------------------- Dear Mr. Kozel, As a long-standing holder of GKP shares and continued supporter of the company and its Board of Directors, I would appreciate it if you could respond to the following list of questions which, given both press reports and information widely discussed on many investment forums, are currently causing me some degree of concern. 1. Are there (or have there been) any DISCUSSIONS with major oil companies regarding the sale either of the Company as a whole, or its interests in Shaikan? If there are indeed, as mooted, a number of such discussions (even at an early stage), I understand that the LSE rules for AIM stipulate that shareholders must be made aware of this at the earliest possible opportunity. 2. Have any BIDS been put forward either for the Company or any of its key assets and, if so, what figures have already been flatly rejected? While I appreciate that the specific details cannot be provided, I do think that shareholders should have an appreciation of what the Board sees as a “floor” in any possible negotiations, in order to help manage their own expectations. 3. Can I please have your personal assurance that there is no truth in the rumour that THE KRG is exerting any undue influence on the Board to accept a preferred bidder? It is widely recognised that Iraqi /Kurdish politics are very delicately balanced and price-sensitive, but I am sure that you will agree with me that it would be unfair on shareholders if any FREE AUCTION was to be undermined by external forces. 4. Can you please confirm if the sale of GKP’s share in the AKRI-BIJEEL licence is still expected, and if the time-table for that sale that you referred to in September has been altered as a result of the disappointing results from Bekhme-1 recently announced by MOL? There has been nothing in the latest RNS’s to suggest that the situation has changed, but we have now reached your original anticipated deadline. 5. In the event that a BID is made for the COMPANY or SHAIKAN, can I have your personal guarantee that shareholders will be immediately informed of it? I would also like your confirmation that all shareholders will be made aware of which bidders are involved in any subsequent bidding process, their initial offers, and any significant changes arising to those offers, thereby ensuring complete transparency and strict adherence to the AIM rules and those of the Takeover Code. 6. Given the swiftly increasing OIP figures from the ongoing drilling activities on each of the Company’s blocks, and therefore rapidly RISING VALUE of GKP’s assets, can I have your assurance that the Board will not with-hold any available information that is likely to have a significant influence on its share price or on prospective valuations or bids for the company. In this context, I assume that, should any proposed sale of the company be announced, its shareholders will receive sufficient information as to the latest Operational status, on all of the company’s licences, on which to base their DECISION as to whether or not to accept a proposed offer. 7. In the event that the Board RECOMMENDS acceptance of a BID which is, at least on a ‘prima facie’ basis, less favourable than an alternative offer, the Board will inform shareholders fully as to the REASONS behind their recommendation. 8. I am sure that no member of the Board of Directors would ever ACCEPT any form of inducement, nor OFFER any inducement to any parties interested in the ultimate destination of any of GKP’s assets. But can I please have your cast-iron guarantee that you would immediately respond appropriately should this ever prove to be the case. 9. I would also appreciate an understanding of the TIME-TABLE that the Board will seek to follow in the event that a BID is made for the company, the approach to any ensuing auction, and any actions that should be taken to ensure that I and all other shareholders have ample time in which to make our decisions. I would like to think that, for a company with such massive and diverse assets as GKP has, no ‘offer’ would ever be presented to its shareholders as, in effect, a ‘fait accomplit’. 10. Please could you ensure that shareholders are provided with an UPDATE as to the status of GKP’s Algerian assets, the proposed addition of a third Non-Executive Director, and the previously announced intention to join the FTSE as, to my knowledge, nothing has been communicated on these subjects for some time. While I am sure that it can almost be taken as read that the Board of Directors will actively ensure that it always acts in the best interests of shareholders, it is I think important to obtain your confirmation that my understanding is the same as yours in respect of Each and Every One of these matters. Kind regards, XXXXXXXX ============= Iraq aims to reduce IOC red tape Passengers wait to go through customs at Baghdad International Airport. (MOHAMMED AMEEN/Reuters) By BEN LANDO of Iraq Oil Report Published January 13, 2012 Prime Minister Nouri al-Maliki has ordered the government to remove many of the bureaucratic roadblocks that have slowed foreign oil companies over the past two years. Iraq Oil Report has obtained a copy of Maliki's directive, ordering six key government institutions to implement the recommendations made to Maliki by Iraqi Oil Minister Abdul Karim al-Luaibi in a letter dated Oct. 11, 2011. If implemented, the new guidelines will help companies avoid logistical problems such as visa delays and... ================ Bidders sought to build Kurdistan pipeline SUNDAY 15 JANUARY 2012 Gulf Keystone Petroleum has invited bidders to build a pipeline that would allow the much-watched oil & gas company to export vast supplies of black gold from its key Kurdistan field. This pipeline would have the capacity to handle 500,000 barrels a day. There is also an option to build a second pipeline, of similar capacity, which would ramp up production to a million barrels a day. That would be more than 1 per cent of the world's oil needs and explains why super-majors are running the slide rule over the company. =============== Author scaramouche View Profile Add to favourites Ignore Date posted Tuesday 20:24 Subject Just as the line went dead.... Votes for this Posting Voted 83 times. Message Allegedly.... 18 October 2011... JG: Todd, I’ve got Rex on the phone for you. TK: You know I’m not prepared to talk to that man after what he has put us through this year! JG: No, not Wempen.... Tillerson! TK: Oh, okay that’s different. Put him through. RT: Hi Todd, as I expect you know I’ve just become one of your neighbours! Anyway, I was just thinking. You know you have a few problems at the moment – wife trouble, some legal case, and your share price stuck at around 150p. Well, I understand that you have discovered about 11.8 billion barrels of OIP in Kurdistan, with an estimated TWO BILLION barrels of Reserves attributable to GKP. What would you say to an offer of about $5 per barrel for....? -----The phone line inexplicably goes dead ----- TK (to JG): What is it about people called Rex, eh John - are they all out to ‘shaft’ us? Make damn sure that everyone knows that I am NOT ready to sell the company.... and certainly not for anything less than double-figure billions. Oh, and I’m talking Pounds sterling here, not U.S. dollars! JG: Okay Todd, I’ll get on to it right away. TK: By the way, John - get that latest Operational update out pretty damn sharp! Those revised OIP figures should make a few more people sit up and take notice! 8 November 2011... JG: Todd, Rex T is on the line again. He says he has seen the update showing 10.5 billion barrels at Shaikan. He understands that you now have about 2.5 BILLION barrels of reserves and he is thinking about offering $6 per barrel, plus a payment in lieu of all the costs to date and cash in the bank. TK: Jeez, what is it with these people – do they ever give up? Tell him I’m busy interviewing for some Non-Execs at the moment. 19 December 2011 (at a secret location)... US Major Exec: Rex, I’ve got that State Department approval for the move on GKP. They’ve agreed to that $19 billion you were ready to offer for GKP. The trouble is that some guy from Chicago seems to have got hold of the story, and only yesterday a journalist from the British newspaper, the Independent, has also written a story about it. RT: Dammit, I thought we could keep this all safely under wraps. I’d better ring Kozel. ----- RT picks up the phone ----- JG: I’ve got Rex on the line again. TK: Jeez, he doesn’t half pick his moments. I was right in the middle of a Chinese takeaway. Tell him I’ll phone him back after I have had a good look at those latest SH-4 results. Mmmmm..... 2375m of gross pay. Talk about “an oilman’s dream” – this is becoming more fantastic every day! 17 January 2012.... JG: Todd, I’ve got Rex on the phone again – he doesn’t sound very happy at all! He says that a journalist called Tamsin has recently mentioned the ‘S’ word in one of her articles, and hinted that the Chinese might be about to show their hand. TK (nervously): Okay, John. Put him on. RT (coldly): Todd, anyone would think that you have been avoiding my calls! When we last spoke, I enquired what you would say to $5 per barrel of Reserves, and then I suddenly got cut off. I know you’ve now got much higher numbers to talk about and Global interest in GKP, so I’ve now got a much higher offer to discuss with you. In fact, I’d also like to say that I now have irrevocable undertakings from almost all of the Institutional holders to agree to the offer. So, I suppose you could say that GKP is pretty much ‘sold’. TK: I have to congratulate you Rex. So close to SH-4 and BB-1 results, and not too far away from confirming the OWC level with SH-6, and you seem to hold all the cards. What a day – and just when my divorce has finally been settled. Ashley pretty much wiped me out, you know, and she now holds about 2% of MY Company. Amazing, eh! If you think I’m a ‘tough American businessman’, you want to try dealing with my ex-wife – she can be even harder to bargain with, I can assure you! And as for those pesky PIs, they’ve been talking about a ‘FAIR AUCTION’ for GKP... for what seems like ages. I can hardly wait for it all to be over. ----- Once again, the line went dead ---- It would certainly be a good story IF this was what had really happened, wouldn’t it - Not saying it did, mind you! GLA, scaramouche ========================== 70% Jump in US Companies Considering Iraq Posted on 18 January 2012 The Iraqi Embassy in Washington DC dealt with nearly 5,000 applications from American companies hoping to do business in Iraq last year, a 70% jump from 2010, according to an article from Chicago Business. Among the companies mentioned are the Schaumburg, Illinois-based manufacturer Quality Float Works Inc., which mades devices to control liquid flows in machinery. Another is Navistar International, whose subsidiary Navistar Defense supplied the U.S. military with about 9,000 trucks during the occupation. Now it’s aiming to become a commercial truck supplier. Northbrook, Illinois-based NewMedical Technology Inc., which makes a scar-reducing gel, is diving into what company Vice-president Jeff Dziura described as “cumbersome” regulatory paperwork in order to sell in Iraq. (Source: Chicago Business) (Picture: Navistar) ============== Luaibi to Iran for Hormuz threat talks Iraqi Foreign Minister Hoshiyar Zebari (left, C) and his Iranian counterpart Ali Akbar Salehi (right, C) smile as they attend an official meeting in Tehran June 21, 2011. (MORTEZA NIKOUBAZ/Reuters) By BEN LANDO AND STAFF of Iraq Oil Report Published January 18, 2012 As tension between Iran and the West increases, sparking a threat by Tehran to shut down the Strait of Hormuz to oil tankers in response to increased economic sanctions, the president of OPEC and Iraq's Oil Minister, Abdul Karim al-Luaibi, is attempting to head off a crisis. "On this occasion, tomorrow (Jan. 19) I am going to visit the Islamic Republic of Iran and we are going to discuss with our brothers the officials there about issuing important and real assurances to the world that all ar... ============== Author scaramouche View Profile Add to favourites Ignore Date posted Sunday 20:19 Subject Before the Curtain comes down.... Votes for this Posting Voted 197 times. Message For some time, I have been conscious of the statement often mentioned on this board and made by Marius Kloppers. CEO of BHP Billiton, the largest mining company in the world. As a reminder, in July 2011 he stated that their < Billiton’s> $12.1 billion bid for Petrohawk Energy Corp. should be valued against the gas and oil assets in the ground rather than the U.S. shale gas company's share price”. I have also been constantly aware that, as far back as 31 August 2010, the phrase “drill, baby, drill” was coined by broker Daniel Stewart, since when GKP has clearly been trying to ensure that as many drills as possible are happening at the same time. It is therefore very obvious from these statements that the more oil RESERVES (Assets) that GKP can prove up, the higher should be the real value of the Company. The missing factors for our Valuation are surely then just the DOLLARS PER BARREL OF RESERVES that our suitor(s) might be prepared to pay, and the TIME LEFT for proving it all up. With this in mind, I find it quite puzzling that many posters on these boards, and even analysts such as the chap from VSA capital in the recent Proactive Investor’s video http://www.proactiveinvestors.co.uk/companies/stocktube/987 repeatedly attempt to relate the potential return that shareholders might get to the prevailing SP. It makes no sense to me at all! Anyway, as an exercise, I thought I would take a look at how our assets have risen in recent times and how this could correlate with the many rumours and SP guestimates posted, as well as the claim that Exxon have had the “very best best block in Kurdistan” RESERVED for them. Although this is quite a long post, I hope you find it interesting.... 1. For most of 2010, GKP had just 4.2 BILLION OIP (P50) from Shaikan which, with an estimated one-third (33%) Recovery Factor and a 54.4% Net WI in Shaikan, would have given them Reserves of 750 MILLION. The oil price was about $75 which would have given us approximately a net $6 per barrel, based on what we understand today. To allow ‘something for the next man’, $4 per barrel could therefore easily have taken us out. A $3 Billion oil reserves valuation, little cash, and return of costs amounting to $200-300 million - and we would have been ‘worth’ about $3.2 billion had the For Sale sign been up. For the then 675 million shares in issue it represented $4.75 per share (or about £3). *** How many of you can remember how those with a less than positive view on GKP would tell us then that we would be taken over for at best 300p per share? *** 2. Then came the October 2010 placing, taking shares in issue to about 750 million. This was soon followed by a 2.4 BILLION (P50) oil discovery by MOL at Akri-Bijeel, giving us another 100 MILLION of ‘estimated’ reserves, or a new total of 850 MILLION. The Oil price was heading inexorably for $100 which would give us a net $7.80 profit per barrel. So, if in early 2011 we had upped the sale price valuation to, say, the $5.90 per barrel of reserves implied by the Vallares/Genel merger http://www.bloomberg.com/news/2011-09-07/vallares-agrees-to-merge-with-genel-in-2-1-billion-share-deal.html ... GKP’s 850 MILLION of attributable reserves would have become worth about $5 BILLION. Adding recoverable costs and cash in the bank, we would probably then have been looking at a ‘sale’ valuation of $5.5 BILLION (£3.7 billion).... or about £5 per share. **** And the de-rampers were at it again, proclaiming “you’ll never get more than 500p” ***. 3. We were all however really waiting on Shaikan-2 and, when the results came in April 2011, we saw the OIP figures jump to 7.5 BILLION (P50), and so too our attributable Shaikan reserves to 1.36 BILLION. The TOTAL RESERVES had therefore risen to around 1.46 BILLION, and the oil price was now firmly in the $100+ range. On that basis, GKP could conceivably have been taken out as follows: 1.46 BILLION reserves x $5.90 per barrel = $8.6 billion (£5.7 billion). Add in cash and recoverable costs totalling £300 million, and you have a total of £6 BILLION... or £8 per share for the 750 million shares then in issue. *** How often did we then have that supposed ‘pie in the sky’ of 800p drummed into us, I wonder? *** But then, it was as if everything changed.... 4. In JULY, Sanddunes came up with his infamous ‘shafted for £8’ post, and the doom-merchants still insisted that everyone was crazy if they thought we would get that more than £5. Of course, they could have been right had we been looking exclusively at the prevailing SP of about 150p.... but NOT if we based our evaluation on the ASSETS IN THE GROUND. In AUGUST, we had “preliminary” figures of 1.9 billion OIP (P50) for Oil found at Sheikh Adi. This added about 500 MILLION to our estimated Reserves figures – but the SP went down! In SEPTEMBER, TK said that our share in Akri-Bijeel was for sale and Ewen hinted that we could expect several hundred million dollars, which would be reasonable for 100 million or so recoverable barrels. But we needed Bekhme results first, and Bekhme-1 seemed to be drilling forever. There was virtually no impact on the SP ! Also in SEPTEMBER, we had an unexpected placing, taking shares in issue to 850 million.... mainly I think because TK wanted the drills to keep turning and our OIP figures to rise – curiously, the SP fell well below the placing price of 140p for quite some time! *** A total now of nearly TWO BILLION estimated Reserves, £120 million of new funds, and yet we still had a MARKET CAP of only just over £1 BILLION - something clearly didn’t make sense ***. Then, in OCTOBER we started hearing rumours that Exxon had moved into Kurdistan, and that other majors were likely to follow. The KRG confirmed the rumour on 13 NOVEMBER 2011 when they told us about the 6 exploration licences Exxon had signed for.... but not about the best block ever that the VSA capital analyst recently said had been “reserved” for them... presumably SHAIKAN! And also in NOVEMBER, GKP announced a further 3 BILLION upgrade to 10.5 BILLION (P50) at Shaikan, giving about 550 MILLION extra estimated reserves. Perhaps this was designed to remind Exxon and others that big OIP upgrades could happen at any time. By this time GKP’s total estimated reserves were a staggering 2.5 BILLION, and we would have been ‘worth’ $14.7 billion at $5.90 per barrel of reserves, plus cash and recoverable costs of about $500 million, which converts to somewhere close to £10 BILLION! (Note: Had Bekhme-1 come in as originally expected with a further 200 MILLION of attributable reserves, we might even have been looking more closely at at Nobletrader’s $16.5 Billion bid rumour). 5. On 19 DECEMBER 2012 we saw the famous Mark Leftly article in the Independent on Sunday... which essentially demonstrated the problem for any possible buyer. In October 2011, GKP could perhaps have been valued at £7 BILLION (800p per share), but the upgrade in November had surely taken it into... “double-figure billions”, eh Todd! No wonder, any ‘sounding out’ was unlikely to have got past first base. It is interesting too to see our friend from VSA capital popping up again in this article of the same date http://blogs.wsj.com/deals/2011/12/19/analysts-weigh-exxons-possible-kurdistan-oil-play/ Extract: A bid by ExxonMobil for Kurdistan-focused explorer Gulf Keystone “wouldn’t be out of kilter at all,” says VSA Capital analyst Malcolm Graham-Wood, who points out the 800 pence a share offer price first referenced in an Independent on Sunday article would be at the top end of most valuations. But was there a time-lag here perhaps, as any possible bid would surely have to take account of the latest upgrade - perhaps an element of Managing our Expectations? 6. NOW, at nearly 2.5 BILLION of reserves.... GKP might be estimated to be worth something like £10 Billion (or $15.5 billion). But, what is the betting that, in the short-term, what is already known about Shaikan (from SH-4) will take us quickly up to CJ’s $19 billion on that same $5.90 per barrel basis? Indeed, could the imminent news expected from BB-1 or SH-5 even move us 23% higher towards CJ’s subsequently revised figure? In conclusion, I can’t help thinking that the apparent change of approach (which seemed to begin in about July 2011 may have signalled a set time-frame.... during which GKP was required to prove up as many reserves as it could. Could that deadline be approaching very fast? JG said recently he expected another 2 upgrades, which may see us getting the results first from SH-4 and SH-5, and then hopefully SH-6 should be the icing on the cake. But isn’t it ironic that we spent almost the whole of 2010 and 2011 failing to respond to the FACTS in our RNS’s, and the SP is now only just beginning to react to what seem like albeit credible RUMOURS? Finally, did anyone notice that our friend from VSA capital also said about Exxon... ”and they wouldn’t have gone in there if the STATE DEPARTMENT had said it was going to be a problem (at 4.10 into the Proactive Investor video”).... just before a sideways glance to the camera which suggested to me that this was the line he really wanted to get in! Are we essentially saying that there is State Department approval for the US Major, as has also been rumoured on here. Maybe this is what all the rumours are pointing to. Exxon is about to be proclaimed the preferred bidder and their price, just like Tony Hayward’s, is about $5.90 per ‘proved-up’ recoverable barrel. And maybe, just maybe, we have only a little more time.... before the curtain comes down. The recent spate of buying, and sequence of recent RNS’s, suggests to me that this could well be the case. GLA, scaramouche ======================== By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News. It is very difficult with a market like Iraq to separate current issues, past progress and likely consequences. Since mid-2009 there has been significant achievement and progress, a sustained period of calm which now, sadly, is turning into what will probably be a very violent period as the actions and indecisions running up to the last election start to be resolved. Let us take a quick look back at what has been achieved by the Iraqi Government: Two licence rounds that were very much more transparent than most in Western countries; Production has increased from about 2 million barrels of oil a day in 2009 to about 3 million today and is increasing rapidly; 14 IOC’s (International Oil Companies) and hundreds of service companies operating in Iraq; $43 billion in foreign investment during 2010 with numbers showing about twice that expected in 2011. The Central Bank of Iraq has a surplus of $50 billion The contracts being awarded are massive, but it is not clear to me that many companies are making much in the way of profits in the country because the operating costs are so high. If companies cannot generate earnings commensurate with the risk, they will leave – especially with the price of oil rising quickly. However despite the achievements there are significant problems, some of which have been highlighted already, but it is important to understand the likely out-turns of what is going on in this re-emerging economy. There are a few facts that, in my view, are driving what you are seeing in Iraq now; these are: The Shiite-Sunni divide has been a fact in Iraq that has never gone away. Facts, so the expression goes, are stubborn things and 1,300 year-old facts are especially stubborn. The US must bear some of the blame for encouraging and playing a part in managing a coalition of Maliki and Allawi and excluding the Sadrists from this Government – it was understandable but silly and this is a large part why we are seeing this violence. For a fuller explanation it is worth visiting the website of historiae.org, a direct outlet for historical research on topical issues in world politics and reading their view of the role played by Christopher Hill, the US Ambassador in Iraq. The US troop withdrawal was set in motion 3 years ago but it was the process which was more interesting than its outcome. Maliki was seen to be in favour of then against the withdrawal and then used it as an opportunity to set-up Allawi, for a fall. A critical element in the stability and growth of the country was turned into a political battlefield. The US military pulling out does not mean that the US will have a reduced presence – the US Embassy will continue to have an astonishing 15,000 and 16,000 staff in Iraq and about 5,000 armed contractors guarding them. This will be the USA’s largest diplomatic presence in the world. From an oil and gas industry perspective, Exxon-Mobil’s decision is interesting; this is a company which does analysis and assessment very well, they picked 6 of the most sensitive blocks that were possible to pick for their very public venture into Kurdistan. When Maliki started talking to the US Government about Exxon’s presence this turned from a commercial decision to a political / security one. It was a good call by Exxon and they may well get away with the decision – and probably flush out a couple of other big oil majors into moving into Kurdistan . The announcement last week to pass the Oil Law (the same one that has been about to be passed for the last 5 years) without Allawi’s party being involved just shows how the politics has shifted from a Shiite / Sunni issue to a Sadrists plus one of the others issue; that is a development worth watching. But all this has not stopped the investment in Iraq. In 2010 Iraq attracted almost $43 billion in foreign investments – the real surprise is not the magnitude or the destination but the nature of the investments made. The top sector is not Oil & Gas, whatever you are led to believe from the press; the top destinations are residential property (33%), transport (16%), electricity (14%), industry – mainly cement and steel (14%) and then – in 5th place – oil and gas with 13%. Turkey dominates the investments with just over 33%, followed by Italy (12%), France (10%) then South Korea and the USA with the United Kingdom at 9th place with just under 3%. What Iraq really needs is a truly integrated Government focused on Iraqi interests: and this needs Maliki to dump a few of the overtly pro-Iranian figures from his coalition. Allawi needs to abandon the idea of a strategic policy council (this was dumped in late 2010 in all but Allawi’s mind) and the Sadrists need to be properly integrated into the Government in some way (if the Mahdi army is reformed it will not be good) and lastly some sort of long-term military deal with the United States needs to be sorted out. But then …… which country does have a Government that puts national interest ahead of political survival. For investors in Iraq there are going to be periods of investment and periods when you need to keep your head down. Iraq is a different market from most others in that investors will need to understand the political dynamics more fully than the other markets – the costs of making a mistake are too high. Aberdeen energy businesses looking to develop business opportunities in Iraq are able to access free advice through a series of seminars run by Upper Quartile on behalf of Aberdeen City Council. The next seminar in the series will take place at Marischal College on Friday 27th January. For information contact Siobhan Young at siobhan@upperquartile.co.uk. = 29-01-12 From stranglehold to stampede? GKP.L 157 Nearly 3 months ago, I posted details of all the companies that had TSCs in Southern Iraq, and the stringent terms under which they were operating. http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&threshold=0&action=detail&id=8915923 Here’s an extract from that post: Anyway, BBBS, from the details above I have concluded that there are 15 large oil companies operating in Southern Iraq: • BP of the UK • SHELL of the UK/Netherlands • Exxon Mobil and Occidental of the USA • PETRONAS of Malaysia • CNPC of China • LUKOIL and GAZPROM NEFT of Russia • TOTAL of France • ENI of Italy • STATOIL of Norway • TPAO of Turkey • SONANGOL of Angola • JAPEX of Japan • KOGAS of South Korea Those in the top half of the list are perhaps the most likely contenders to move into Kurdistan, and could be the reason that Shamaran declares “Additional Industry Interest Imminent”... perhaps also signalling the end to the ICG imposed ‘blacklist’!” >> Well, we already know the impact that EXXON taking up 6 exploration licences in Kurdistan (announced by the KRG in early November 2011) has had, plus the inference that GKP’s SHAIKAN oil field is very firmly on their watchlist. And now it seems that we have confirmation too that TOTAL have joined them there. Who can blame them? TOTAL have an 18.75% share in the Halfaya licence, which offers a paltry $1.40 per barrel for production, even less than the $1.90 per barrel that Exxon was getting at West Qurna-1! And what has always struck me as odd about those TSCs is that the payment was fixed throughout the life-time of the contract, even if oil goes to $200 per barrel - a seemingly miniscule return for the extreme risk of operating in Southern Iraq where ethnic tensions are high the Maliki regime has been becoming ever more authoritarian. Shahristani might be a very tough negotiator but there had to be some incentive to foreign oil companies, which the Maliki government's failure to agree a unified Oil and Gas Law more than a year after taking office has clearly negated. Assuming that Total’s entry into Kurdistan is soon confirmed, it seems obvious that what was just a single super-major choosing to break the stranglehold previously applied by Baghdad will soon become something of a stampede. It is interesting too that Ashti Hawrami (Kurdistan’s Natural Resources Minister) made these comments to the FT in an interview published on the KRG website on 22 November 2011 only 2 weeks after the Exxon news broke http://web.krg.org/articles/detail.asp?lngnr=12&smap=02010200&rnr=73&anr=42363 Extract: FT: Do you expect other super majors to follow EXXON into Kurdistan? Dr Hawrami: Yes. I think the region is becoming very dynamic, in fact, it has been dynamic over the last 12 months. There is a lot of activities going on, and you are aware of the acquisition of Genel Energy by Vallares. That’s just an example; I think there will be others to follow.>> Hmmm.... Does ENI-one really think that the release of the news at this time (with the OGL continually having obstacles put in its path) is purely OCCIDENTAL? Or can we expect to see several more super-majors breaking rank in Southern Iraq and SHELL-ing out huge sums for prospects in the much more business-friendly environment of Kurdistan, I wonder? There is little doubt that confidence is building. And in the next few weeks, it looks very likely that long-term holders will be well rewarded, and their resolve to stick it out throughout the very testing Iraqi political impasse.... TOTAL-ly EXXON-erated! Yes, CJ, the 'landscape' is definitely changing! AIMHO and please DYOR GLA, scaramouche ============ Reko Diq damages claim ‘exaggerated’ By Shahbaz RanaPublished: May 14, 2018 0 SHARES SHARE TWEET EMAIL STOCK IMAGE STOCK IMAGE ISLAMABAD: There are glaring flaws in the Tethyan Copper Company’s (TCC) damages claim of $11.43 billion in the Reko Diq mining case that may reduce it by as much as 61 per cent, officials maintained. The company, they said, exaggerated its future profits by underrating tax and royalty obligations by as much as 61 per cent. The damages claim was filed in the International Court for Settlement of Investment Disputes (ICSID) of the World Bank. The hearing for quantifying damages will start on Monday (today) in London, lasting till May 24. Reko Diq is part of the Tethyan Magmatic Arc, a mineralised belt that originates in Eastern Europe and runs through Iran and Pakistan before ending in Afghanistan. Pakistan’s legal and tax experts have submitted another report in the court, hoping that it will have ‘substantial impact’ on the damages claims, sources told The Express Tribune. Pakistani authorities did not quantify the impact in dollar terms, but their internal correspondence suggested that the TCC had understated its royalty and tax obligations towards the state of Pakistan up to 61 per cent. In 2012, the TCC filed claims in the ICSID after the Balochistan government turned down the company’s lease request. Sources said that the TCC had built its case around damages on its investment in Pakistan and future profits from mineral extraction over a period of 56 years. They said that the claims were based on wrong application of tax provisions by TCC in addition to understating royalty. The royalty had to be paid at the time of materialization of five per cent on gross receipt basis but TCC calculated it on the basis of two per cent net, they said. According to Rule 102(4) of Balochistan Mineral Rules of 2002: “The fair market value, in respect of any mineral or group of minerals which has been disposed of, shall be determined by reference to the first point at which it was disposed of, without allowing for any deductions from the gross amount so determined.” But the TCC worked out the figure on the basis of net smelting. Balochistan government had increased royalty rates from two per cent to five per cent in 2009, sources said. The Chinese firm, operating the Saindek gold-copper project in Balochistan, has been paying royalties at the enhanced rate of five per cent, sources said. Over a 56-year lease period, the difference in payment of royalty alone would have been in billions of dollars. This single point could again lower the TCC’s claim by at least 40 per cent, sources said. The TCC has also not included the impact of indirect taxes, including the federal excise duty, in its deductions, the sources said. Pakistan government had not given any exemptions on federal excise duty and other taxes, sources asserted. This would cause a dent in TCC’s claim, reducing it by another 21 per cent, sources claimed. Pakistan has hired a legal firm GST, out of Washington DC, that advised the federal government to take a tax expert on board. The authorities engaged Dr Ikramul Haq as tax expert, a Supreme Court lawyer and an expert in international tax laws. The Office of the Attorney-General is vigorously defending TCC’s ‘outlandish claim’ through its International Arbitration Unit, according to a briefing to a parliamentary body. Pakistani authorities expressed the hope that arguments about tax and royalty payments would be crucial for minimizing TCC’s damages claim. Although at this stage Pakistan believes that the damages claim was unjustified. The Supreme Court and the federal and provincial authorities mishandled the TCC case, according to the proceedings of the Public Accounts Committee. During the ICSID proceedings, the jurisdiction and liability were decided against Pakistan: The tribunal found that the country had breached the Bilateral Investment Treaty of 1998 between Pakistan and Australia. The PAC also questioned the manner in which successive provincial governments allowed changes in ownership, delegating it from one Australian company to two others between 1998 and 2006 despite the fact that there was no such clause in the original Chagai Hills Joint Venture Exploration Agreement. In 2013, the SC declared that the agreement and all its successor agreements were void ab initio and that the TCC had no legal rights to explore and mine in Reko Diq.

Reko Diq: Pakistan risks squandering billions in questionable deal

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Security concerns: SC asks army to weigh in on Reko DiqBy Qaiser Zulfiqar
Published: February 23, 2011
Apex court wishes to know if the project violates any defence concerns. PHOTO: ONLINE
ISLAMABAD: The Supreme Court on Tuesday directed the Deputy Attorney General to seek the army’s opinion on the Reko Diq project in light of national security, and inform the court on Wednesday.

A three-member bench of the apex court headed by Chief Justice Iftikhar Muhammad Chaudhary heard a number of petitions challenging the award of the contract to the Tethyan Copper Company (TCC), a Canadian consortium of Barrick Gold and Antofagasta Minerals for exploiting gold and copper in Reko Diq.

“There was no clause in the agreement on the protection of areas geographically sensitive from a defence point of view,” the chief
justice remarked during the hearing. “National Interest and sovereignty should
figure prominently in such agreements.”

The Pakistan army had no objection to mining after a briefing on the agreement, counsel for TCC Khalid Anwar apprised the court. Chaghi is a sensitive area but 20 other companies are operating there, he said, adding that TCC has given an application for a lease licence.

“No licence will be issued until the final judgment of the apex court,” Advocate General Balochistan said, adding he had yet to receive the application.
The chief justice asked why the former governor of Balochistan relaxed regulations while awarding the contract for exploration and was informed by the counsel for BHP-Billiton Abdul Hafeez Pirzada that “the agreement was not approved by the Governor but the Balochistan government.”

Published in The Express Tribune, February 23rd, 2011.



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Multi-billion-dollar project placed at the mercy of consortium companies who may walk away with its riches. KARACHI: In what is being described as the most unfair business deal of the decade, the multi-billion-dollar Reko Diq copper-and-gold project has been placed at the mercy of a consortium of companies who may walk away with its riches, robbing the country of a golden opportunity to lift itself out of its growing external debt.

The consortium will take away 75 per cent of the income while the Balochistan government will get a paltry 25 per cent of share from the project as part of the terms of agreement.

Geologists have estimated that Reko Diq contains mineral deposits worth $500 billion and if the authorities did not take action immediately, this golden opportunity of turning around Pakistan’s fate will be lost.

Preparations are believed to be under way to sign agreements for mining and excavation with a consortium of foreign companies without any effort being made to estimate the actual worth of the vast gold and copper reserves found in the Chaghi district of Balochistan. According to geologists the actual worth of the reserves can be upwards of $500 billion. Economists say that the reserves are not only a solution to the nation’s economic woes, but can also help wipe out Pakistan’s debt.

Geologists associated with the Geological Survey of Pakistan had discovered huge reserves of gold and copper in Chaghi and adjoining areas in 1978-79.

After this discovery, international consultants of repute were commissioned to prepare feasibility studies about Saindak under the supervision of the Resource Development Corporation. They included Mountains Estates Enterprises (USA), Cel Trust Engineering (UK), Oto Kumpo (Finland), RTB Bor (Yugoslavia).

But after the Saindak study, instead of appointing international consultants for assessing the value and quantum of Reko Diq reserves, the Balochistan government entered into an agreement in 1993 with an Australian company having vast investments in oil and gas sectors under which 75 per cent of the reserves of Reko Diq were to be given to BHP Billiton, while 25 per cent share was to go to the government of Pakistan.

The drilling work for the feasibility study report was started under this agreement but in 2006, BHP Billiton suddenly sold its shares to Canadian company Barrick Gold which, in turn, sold half of its 75 per cent shares in Tethyan Copper Company (TCC) to Chile’s firm Antofagasta. This means that now Balochistan is owner of 25 per cent share in TCC while Barrick Gold and Antofagasta hold 37.5 per cent share each.

The TCC completed its feasibility report last year and claimed that the feasibility study and social and environmental analysis cost it $250 million while the overall estimate of the project – $3.3 billion – will be spent in the next 56 years.
According to geologists who played important role in the Saindak project, foreign companies make such agreements with developing companies to take advantage of their lack of funds and earn hefty profits by purchasing mineral reserves at throwaway prices.

They said that it was strange that the successful process of Saindak was not replicated in this case.

Analysts said that in Saindak, the drilling was done 91,000 feet deep while the cost was just $20 million while according to the TCC website, drilling on this project was only done till a depth of 21,000 feet.

They also contest the company’s claim about overall cost ($3.3 billion), calling it an exaggerated figure. They said it was not too late to get a consultancy firm hired to conduct a standard study. The services of Pakistani geologists can also be utilized for supervising the drilling work. According to the experts, the Balochistan government is not bound to assign the contract of mining and processing to the same firm which was given the licence for exploration.

Geology expert Dr Suhail M Qureshi said that Deko Riq reserves were being sold at very cheap prices. He said that according to the information received, the average price of gold and copper reserves is agreed to be $4,000 per ton which is too low. He said that an area of 25 square kilometers has been given on a 30 year lease.

Former finance minister Shaukat Tareen said that such conflicts can be averted if transparent procedures are adopted and national interest remains uppermost when concluding agreements for natural resources. He said that all the steps that the government of Balochistan is taking now to make the deal transparent should have been taken much earlier.

He said that according to his information, Reko Diq has the fifth largest reserves of gold and copper in the world and under the raw material agreement Pakistan will get $40 billion in 30 years. He said that if Pakistan makes the agreement for the refining process done in Pakistan, the price and income may increase by 7 to 8 times. He said that according to a safe estimate, the income can be raised to $500 billion.

According to Tethyan Copper Company spokesperson Ms Samia Ali Shah (Manager Corporate Communications) the total investment of the present co-owners of TCC is about $435 million, including the cost of acquisition.

Since 2006, about $220 million has been spent on exploration and technical studies. For mining and processing plant another “$3.3 billion will be required”

According to Ms Shah, once the Supreme Court hands down its verdict and all the negotiations are completed and necessary agreements signed, it will take about four years to build the infrastructure required to make the mine operational.

This means that any income from Deko Riq is not possible before 2015.

She confirmed that TCC is working under the same terms and conditions that BHP and government of Balochistan agreed upon in 1993.

She said that so far the feasibility study and environmental and social impact assessment reports have been completed and these are important milestones in the mining cycle which establish whether the project is financially and technically viable.

Published in The Express Tribune, January 12th, 2011.
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Govt not taking Reko Diq case seriously: CJ
The chief justice was visibly annoyed at the federation, the Balochistan government as well as the Petroleum Ministry for failing to submit their reply in the case.
ISLAMABAD: Chief Justice Iftikhar Muhammad Chaudhry on Monday admonished the government for not taking the Reko Diq case seriously.

The chief justice expressed these sentiments during today’s (Monday) hearing of the Reko Diq case in the Supreme Court (SC). The chief justice was visibly annoyed at the federation, the Balochistan government as well as the Petroleum Ministry for failing to submit their reply in the case.

He observed that the Reko Diq case is an important one but that the government is not taking it seriously.

The Deputy Attorney General informed the court that the government had not received any notice from the court for the submission of the federation’s reply.

The Supreme Court has adjourned the hearing till January 25. It also ordered the petitioners to submit their reply till January 19.

The Supreme Court had last week sought replies from all respondents in the Reko Diq case and decided to conduct a daily hearing starting from February 11.

Pakistan is reportedly likely to incur huge losses if the government signs the 30-year agreement with the company in February. The DG Minerals, ministry of petroleum, has already signed the contract in acceptance of the company’s terms and conditions. Members of the federal and provincial governments have yet to sign the agreement.

The new agreement is to be renewed by the government on expiry of the previous contract on February 11. The project manager of TCC informed the court that his company plans to invest another $3.5 million whereas $460 million have already been invested in Reko Diq.

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I don’t post much on here, but one point I did like from today's Petrohawk / BHP bid was this:

Dow Jones reported that BHP Billiton Limited's USD12.1 billion bid for Petrohawk Energy Corporation should be valued against the gas and oil assets in the ground rather than the company's share price, the chief executive of BHP said.

http://www.reuters.com/finance/stocks/HK/key-developments/article/2364270

LTV


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Reuters
BHP must drill deep to justify $12 bln shale deal


(Corrects gas price unit in paragraph 4)

-- (The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

BHP Billiton has found somewhere its cash is welcome -- U.S. shale gas. The Australian miner will spend $12 billion acquiring producer Petrohawk, building on its $4.8 billion purchase of a shale field in February. BHP generates about $30 billion of cash a year and shareholders should welcome the discovery of an opportunity to reinvest. But the logic of spending so much on shale when gas prices languish below 2008's peak rests on some bullish assumptions.
Shale, the great hope for U.S. energy self-sufficiency, suits BHP. For starters, it's a free market. That counts for a lot after the miner's $39 billion approach to Potash Corp in Canada was nixed by the local regulators. Shale also favours companies with big balance sheets. Petrohawk had some $3 billion of capital expenditure planned for this year, yet expected operating cash flows of around $2 billion. A financing squeeze was weighing on its valuation.
While Petrohawk needed a deal, BHP has paid up to get a recommendation. The premium of 65 percent to the target's prior-day closing price looks generous. But the valuation is in line with other deals, at $0.39 per million cubic feet of gas in the ground. It's a shade lower than BHP's purchase of Fayatteville in February, but for what is clearly a top-class asset. Its exposure to the liquids-rich Permian Basin also gives consolation if gas prices stay low but oil remains high.
Earning a decent return will nevertheless require some heavy lifting. With production of 950 million cubic feet per day, a gas price of $4.50 per thousand cubic feet and an oil price of $90 a barrel, Petrohawk would make around $700 million of operating profit. Tax that at the company's 35 percent rate, and the 3 percent return on investment looks meagre.(deficient in quantity or richness)

950 million cf per day, which includes both oil and gas, is 347 bn cubic feet per year (950 x 365).
89% of that is gas, at $4.5 per 1000 cubic feet, which means gas revenues of $1.4 billion.
11% is oil, at $90 a barrel, equivalent to $15 per thousand cubic feet. So oil revenues are $572 million per year.
Total production revenues are therefore just under $2bn per year.

Petrohawk’s production costs, as reported in Q1, are $3.6 per million cubic feet including depletion charge, total $1.2 billion

Deduct production costs from revenues, and operating profits are just over $700m

Part of the problem is that resource majors have piled into shale and seem content to keep uneconomic projects humming, so prices stay low. A Breakingviews analysis suggests that to juice returns up to a more acceptable 7 percent, BHP would need to grow Petrohawk's production by 150 percent, or gas prices would need to hit $8. Most likely is a bit of both. But even so, Petrohawk's payback will be some way off.

CONTEXT NEWS
-- BHP Billiton announced an agreed deal to buy Petrohawk Energy, a U.S. shale gas producer, for $38.75 a share in cash on July 15. The offer valued the company at $12.1 billion, or $15.1 billion including net debt, and represented a 65 percent premium to the closing price on July 14. 65 percent premium is cash value of offer per share, compared with the closing share price on the previous day.



-- Petrohawk has proven reserves of 3.4 trillion cubic feet of natural gas equivalent, spread across 1 million acres. Its total resource of 35 trillion cubic feet represents a price of $0.39 per unit.$0.39 per cubic feet of gas is the valuation for all of the resource in the ground. It’s not related to the annual production of 950 Mcf per day, but to the total volume of Petrohawk’s gas assets. You just divide the offer price (including net debt) by the total resource size. BHP and Petrohawk outlined this figure in their release.


BHP bought a stake in the Fayetteville shale field in February for $4.8 billion, equivalent to $0.43 per unit.
-- Resource majors have been buying up shale assets, as technology gains have made alternative sources of energy more economical to produce. Buying Petrohawk and Fayetteville would triple BHP's total oil and gas resources, the company said.
-- BHP attempted to buy Potash Corp of Saskatchewan in September for $39 billion, but the deal was blocked by authorities on the grounds it offered no net benefit to the country. BHP had previously attempted to form a joint venture with rival iron ore miner Rio Tinto, but that collapsed after regulators raised objections.

-- Graphics: Global shale deposits: http://link.reuters.com/vyf98r
Shale "fracking": http://link.reuters.com/ryf98r

(Editing by Chris Hughes and David Evans)
((john.foley@thomsonreuters.com))===============Canada worried about Reko Diq investmentBy Owais JafriPublished: December 16, 2011“Canada especially wants to make investment in mining industry, but response from the Reko Diq project is really disappointing,” Canadian Deputy High Commissioner Lajoas Andraaz said. PHOTO: ONLINE/FILEMULTAN: Canadian Deputy High Commissioner Lajoas Andraaz has expressed concern over investment worth $400 million stuck in Reko Diq copper and gold mining project, referring to the money injected by Tethyan Copper, a joint venture between Canada’s Barrick Gold and Chile’s Antofagasta.Early last month, the Balochistan government rejected a mining lease application submitted by Tethyan, which has a majority stake of 75 per cent in the mining project.“We do not have any political objectives in Pakistan, Canada wants an economically viable and strong Pakistan and we will keep supporting it,” said Andraaz during a visit to Multan along with a delegation.He also chaired a workshop on peace-building and interfaith harmony and met different social and political figures.“Canada especially wants to make investment in mining industry, but response from the Reko Diq project is really disappointing,” he said.He referred to a statement of Balochistan chief minister that foreigners would not be allowed to continue work on the project, which the diplomat said was a big worry as Canadian investors had injected $400 million into the project.He stressed that the Canadian government had always aimed to promote economic interests of the people of Pakistan beyond any political means and vested interests.Published in The Express Tribune, December 16th, 2011.
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The real victims in Balochistan!

By Danish Kazi - Feb 24th, 2012 (4 Comments)
5

I still remember the long barren stretches of roads during my trips of Baluchistan. The serenity gave a lot to think about. If I may share, I took the biggest decision of my life whilst on an official trip to the Rekodiq Gold mine project. Amazed as I was of for the black desert parallel to Black Chaghai Mountain, Koh-e-Suleman & Koh-e-Dalil volcanoes. No one told me that this province gives us not only gas but resources like iron ore, zinc, gold & copper etc. It was the night of 13th August whilst on my return to Quetta I heard loud explosions during my dinner in a place called Naushki; that I immediately headed to Quetta only 3 hours or more away. The hours of solitude due to lack of any communications all the way from Taftan to Lakh Pass gave a lot for me to think about.

There were several grenade attacks on 14th of August. I found minimal news on these incidents of serious nature on reaching Karachi. My friend Mr. Mengal told me the reason of these attack is hatred against Punjab. They felt that they were already an independent state in 1947, sense of deprivation, anger because of no access to the money linked to natural resources and top of that the gas reached Quetta only in 1984 though discovered in 1958 at Sui.

I always ascertained that the subsequent governments, establishment and Baloch Sardars were equally responsible for the plight of the poor Baloch brothers. Whilst the governments didn’t do much effort in the most resourceful province as this was a cash cow for them and the local Sardars also didn’t do much as well. I wonder how many hospitals, schools or any other facilities they can boast of?

The other political parties; rich or poor have ploughed back something at least for their people for welfare. It is something else that some are using it now days for their election campaign. Unfortunately, could not see the same done by the famous Sardars like Bugtis and Mengals especially in their areas of influence.

The real victims are the poor & educated Baloch who are no doubt the most deprived. I just met a dear Baloch friend who told me that even though there were over a hundred jobs for telecom engineers in Quetta. One talented telecom Engineer from Quetta had to go to Islamabad for a month if not more to move some strings to get what is rightfully for him; since I am sure there would not be many in the province.

Though Sardars are the important being a tribal society, but I wonder if some efforts are being done to talk to Mr. Allah Yar & co ; a survivor of brutality & who has inspired this movement. The common man has taken up arms to my knowledge like doctors, engineers & lawyers for their rights. I don’t think the Sardars are any more effective to reverse the cycle in Baluchistan; in fact would be afraid to go against the tide.

The time for intellectual APC is gone and it is time for action as rightfully said by Mr. Altaf Hussain. Start resolving the issue by announcing a relief package to the loved ones for the missing persons and by giving rights to the real victims of Baluchistan. The day a common Baloch irrespective of his tribe can get elected to the assemblies would the day the tide would change.

I think in the upcoming elections the Sardars should withdraw themselves from nominating for elections but bring forward the common Baloch to run the province if they are truly sincere to them. I wonder they call them their children on the TV but yet enslave and ruthlessly rule them. Establishment should start reconciliation; if they can talk to baby killers, soldier executors like Talibans why not the Baluch people. Pakistan would have to be patient and would need a big heart to await the resolution. I pray whatever happens the common Baloch people rise as they are the real victims of this decade’s old tyranny.
Danish Kazi
Bloggers Intro

Danish Kazi, a business graduate from Institue of Business Administration, keeps a close eye on the politics activity in Pakistan and wants empowerment of the masses in the country.

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Risk of inflating split-rim tires as was for Barrick-Reko Diq.
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To protect from outsiders, Raisani declares Reko Diq an Export Processing Zone
By Our Correspondent
Published: April 11, 2012

The Chief Minister pledged to use the sovereign right of the people of Balochistan in ensuring the implementation of the plan to exploit copper and gold for the benefit of the people of Balochistan. PHOTO: FILE

QUETTA: The Balochistan Chief Minister on Tuesday proposed that the Reko Diq mining area be declared an Export Processing Zone on the request of Balochistan Government and the Export Processing Authority.

The Balochistan Government is expected to sign a memorandum of understanding with the Export Processing Zone Authority in this regard soon. Samar Mubarakmand had informed Chief Minister Nawab Mohammad Aslam Raisani of the development during a meeting of the Board of Governors of Reko Diq Project in Islamabad. Rasani is the Chairman of the Board of Governors of the Reko Diq Copper and Gold Project.

The Chief Minister pledged to use the sovereign right of the people of Balochistan in ensuring the implementation of the plan to exploit copper and gold for the benefit of the people of Balochistan.

“Whether we remain in government or not, we will leave a valuable asset and a gift for the people of Balochistan and Pakistan in the shape of Reko Diq Copper and Gold Project,” the Chief Minister declared. “It will remain a gift for the people of Balochistan,” hinting at perhaps a continued longevity of the project which may remain unaffected by any change in the Chief Minister House on Zarghun Road.

Raisani said that he had experienced and bore tremendous pressure from various quarters to defend the sovereign right of the people of Balochistan on this Project. He said he and his colleagues would never surrender to those pressures, taking a jibe at the international arbitration to which the Reko Diq is now subject to.

“There was a pressure and demand that we sell this vital economic and prestigious project at a throw away price to interested parties which we refused,” Nawab Raisani said, adding,” some people from the surroundings also tried to create trouble for the Provincial Government and we frustrated all evil designs in this connection.”

Nawab Raisani disclosed that international forces were also opposed to the plan that Balochistan Government operates the project for which they used different means and pressure tactics against the Government. “The project will allow Pakistan to stand on its economic feet without foreign assistance or charity,” he added.

He said that all those elements constantly criticising the government should also appreciate the good work done including the decision to operate Reko Diq Copper and Gold Project in the public sector and not to sell it to a foreign company.

As Chairman of the Board of Governors, Nawab Raisani approved decisions of the past meeting. He also approved a budget of Rs1.8 billion of the project and the revised policy to recruit competent and technical people on various posts.

The Government of Balochistan had also approved the decision to use sub-soil water from the Upper reaches of Tal Ap from where water for the project would be fetched and used.

Dr Samar Mubarakmand also briefed the Chief Minister on the progress so far made on the project. The Geological Survey of Pakistan had pledged to help train manpower for carrying out a drilling survey of the mining areas of the Reko Diq Project. Raisani was also told that the applications received for technical staff were being processed. Chief Minister issued instructions that all recruitment should be made purely on merit and the local people should be given preference over others.

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Fool’s gold?: Reko Diq rift exposes investor risk
By Reuters
Published: February 18, 2012

Tethyan Copper Company (TCC), a joint venture between Chile’s Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit. PHOTO: FILE
ISLAMABAD:

Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the country’s mining sector, but it’s beginning to look more like fool’s gold to the companies involved. The project was expected to yield revenues of at least $60 billion over the 56-year life of the mine.

Tethyan Copper Company (TCC), a joint venture between Chile’s Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year. TCC says it never did get an explanation.

“It’s been difficult to define what their actual issues were,” Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. “We went back to them for clarification, as many of their issues are not covered in the Balochistan Mining Regulations.”

A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was “cheating” Balochistan by under-valuing the worth of the copper and gold.

“They are the monopoly,” the official said angrily. “They are the monopolists of the gold! They don’t want to disclose the worth of the gold in Balochistan.”

The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Balochistan government, meanwhile, has recently handed out 11 exploration permits in the area around Reko Diq to five new Pakistani and Chinese companies with no mining experience.

What’s the deal?

The Balochistan government received a 25 per cent stake in the venture for no money down. Adding in taxes and royalties, the total share of revenues to the provincial and federal governments would come to just over half.

According to documents filed with the Supreme Court, TCC projected the mine would produce at least $60 billion worth of ore over its lifespan based on long-term copper and gold prices of $2.2/pound and $925/ounce, respectively.

Higher spot prices would increase that sum significantly. Based on recent copper and gold prices, the mine would be worth almost $120 billion, with Balochistan getting a quarter of that after operating costs. It is this difference in long-term and spot prices that has led to angry allegations in the media and from Balochis that outsiders are exploiting their natural wealth.

Investment risk

Despite its remoteness, TCC’s Livesey said the project would add “percentage points” to Pakistan’s gross domestic product, which grew at just 2.4 per cent in fiscal 2010-11.

Indeed, the mining sector has been hit especially hard, posting only 0.4 per cent growth last year and contributing just 2.4 per cent of GDP, down from a peak of 2.7 per cent in 2004-5. TCC’s feasibility study alone was already the largest single foreign direct investment in Pakistan’s history.

The rejection of a mining license after an exploration permit had been granted is highly unusual, industry sources say, and has heightened perceptions of foreign investment risk in Pakistan.

The Balochistan government says it rejected TCC’s permit because the company didn’t complete the feasibility study on time and the study did not cover the entire area for which the exploration license had been granted.

But TCC and mining experts say it is normal to submit feasibility studies for a smaller area than originally explored.

Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list.

Published in The Express Tribune, February 18th, 2012.


========= Reko Diq case: Counsel admits Pakistan free to ink accords with foreign firms By APP Published: November 14, 2012 The petitioner had moved an application seeking initiation of criminal proceedings against provincial government for violating May 25, 2011 order of the court. PHOTO: FILE ISLAMABAD: The counsel for a petitioner in the Reko Diq mining agreement issue on Tuesday admitted before the Supreme Court that the government was free to enter into commercial agreements with foreign companies of those countries with which it had no treaties; but such accords will be operated within the framework of Pakistan’s legislation. Syed Raza Kazim, counsel for Dr Abdul Haq Baloch, one of the petitioners, resumed his arguments before the three-member bench including Chief Justice Iftikhar Muhammad Chaudhry. The petitioner had moved an application seeking initiation of criminal proceedings against the provincial government for violating the May 25, 2011 order of the court. Kazim argued that the Tethyan Copper Company Australia (TCCA) was not a mining company and subsequently the Tethyan Copper Company Pakistan (TCCP) was established to undertake the project. The chief justice observed that such agreements will fall within the jurisdiction of the federal government and not of provincial governments. He said the BHP Minerals – a mining company – in 1989 tried exploration in the area but failed and signed an agreement on February 7, 1998 with the TCCA. He questioned under which rules the relaxation was granted as the government was required to be in the picture under the relevant legislation. Kazim replied that the TCCA was not controlling anything in Pakistan as after the year 2000 as it was formally sold out by BHP Minerals to Tethyan’s Pakistan counterpart. The bench adjourned hearing and asked the counsel to conclude his arguments on Wednesday with relevant documents. Published in The Express Tribune, November 14th, 2012. ============= Apex court questions TCCP sub-lease for Reko Diq exploration By APP Published: November 27, 2012 TCCP claims they were allotted a 44,000 kilometere area for exploration. ISLAMABAD: A three-member bench of the Supreme Court on Tuesday questioned how the Tethyan Copper Company Pakistan (TCCP) been given rights by BHP unilaterally without obtaining consent from the Balochistan Government first despite having rights in the project only as a partner of the Joint Venture Agreement (JVA) made for the project in Reko Diq. Reko Diq is a multi-billion dollar project in the area of district Chaghi of Balochistan where millions of tonnes of copper and gold were identified in different reports prepared by world renowned companies. The three-member bench comprising Chief Justice of Pakistan Justice Iftikhar Muhammad Chaudhry, Justice Gulzar Ahmed and Justice Sheikh Azmat Saeed resumed hearing on the pending issue of grant of mining lease over exploration of gold and copper reserves in the Reko Diq area. Khalid Anwar, counsel for TCC said that Balochistan Government had enhanced the area for exploration of minerals and awarded contract for 44,000 kilometer area instead of 13,000 kilometer in its own interest. He added that the provincial government had failed to explore gold and copper reserves in the area. The counsel said that the foreign company has invested large amount of funds for exploration during the last ten years. Justice Gulzar said that the Balochistan government was not a part of amendments made in the license since there was no stamp of the governor on the agreement. Anwar responded that the Balochistan Government never refused that document either. The Chief Justice remarked that there was nothing on record that the governor had approved it and added that the governor was bound to follow the advice of the Chief Executive under PCO. Advocate General Amanullah Kanrani informed the court that TCCP had received documents before government of Balochistan and departments concerned. He said that he himself got copies from TCCP while original documents were in TCC’s custody and added that if the documents are produced before the apex court, a separate case could be registered against the company. The Chief Justice asked Anwar that the amendment on which he was depending should be checked for its authenticity. Kanrani told the court that the Balochistan government had no record. Anwar said that the Chief Minister had sent a summary with amendments for approval in May 1999 and it was included in the Balochistan Government documents presented to the apex court. The Chief Justice though observed that the summary was not approved but it was suggested that a committee should be formed to look into the matter. The Chief Justice remarked that the court knew validity of every document and added that the Balochistan government is part of this case and we could not exclude it from the case. The bench adjourned further hearing till Wednesday by advising TCCP’s counsel to conclude his arguments on Wednesday. ============== Myanmar protesters occupying mine ignore order to end rally Hundreds of Buddhist monks and villagers occupying a copper mine in northwestern Myanmar refused to leave by Wednesday. The protesters have set up six camps at the site and said they will stay until the project is halted. They blasted the Letpadaung mine near the town of Monywa for causing environmental, social and health problems, the AP reported. The project is a joint venture of a Chinese firm and a company controlled by Myanmar's military. Myanmar authorities had ordered protesters to cease their occupation of the mine or face legal action. ================= Reko Diq case: Supreme Court seeks lease documents from Balochistan government By Our Correspondent Published: November 28, 2012 Apex court aims to ascertain legality of contracts between Balochistan govt, mining companies. ISLAMABAD: The Supreme Court has sought documents of the Reko Diq mining lease agreement from the Balochistan government to ascertain the legality of the contracts between the Balochistan Development Authority (BDA) and international mining companies on Tuesday. A three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, was hearing identical petitions against the Balochistan government’s decision to lease out gold and copper mines in Reko Diq in Chagai district to foreign companies. Khalid Anwar, the counsel for Tethyan Copper Company Pakistan (TCCP), asked why the BHP and the provincial government entered into a new agreement in 2000 over the Reko Diq mining lease when an original agreement, known as CHEVJA, had already been signed with the BHP in 1993 – this agreement was eventually bought by the TCC. “Our interest is ensuring transparency in terms of law,” remarked Justice Chaudhry. “We do not go into issues pertaining to the transaction agreement between the parties. But we look into whether the agreements are valid,” he added. Anwar also informed the court that as many as 10 prospecting licences were issued to the BHP while the TCCP had spent millions of dollars on compiling a project feasibility report – which would go to waste if the agreement with the TCCP was cancelled. He also pleaded that no proficient engineer was available in Pakistan to handle the Reko Diq mining lease operation so his client had paid a huge amount of money to foreign engineers. Justice Gulzar Ahmed pointed out that the agreement has been signed by the BDA, not by the Pakistan government. Anwar responded that many agreements are signed by either a section officer or a deputy secretary on behalf of the government and the BDA was authorised by the then provincial governor to do so in accordance with the law. The chief justice replied that the agreement was made under the instructions of such a senior provincial functionary, but there was no mention of a date on the agreement and the governor cannot issue such directives to sign any addendum. “Tell us the importance of this agreement under Pakistani law. We also need the validity of every document in this agreement,” Justice Chaudhry remarked. The bench asked Khalid Anwar to complete his arguments and adjourned the hearing of the case till today (Wednesday). Published in The Express Tribune, November 28th, 2012. ================ Fool's Gold? Pakistan mine rift exposes investor risk Fri, Feb 17 01:52 AM EST 1 of 4 By Chris Allbritton ISLAMABAD (Reuters) - Pakistan's Reko Diq, an untapped copper and gold mine of fabulous potential, was meant to be the biggest foreign investment in the country's mining sector, but it's beginning to look more like fool's gold to the companies involved. Set in one of the bleakest places on earth, a Baluchistan desert at the foot of an extinct volcano, Reko Diq was expected to yield revenues of at least $60 billion over the 56-year life of the mine. Tethyan Copper Company (TCC), a joint venture between Chile's Antofagasta and Canadian-based Barrick Gold, had sunk $220 million over the past five years into exploring the deposit in the ochre sand desert, where temperatures reach 130 degrees Fahrenheit in the summer. It was planning to invest a total of $3.3 billion when the provincial government abruptly refused to grant a mining license last year. TCC says it never did get an explanation.

"It's been difficult to define what their actual issues were," Tim Livesey, CEO of TCC, told Reuters in an exclusive interview. "We went back to them for clarification, as many of their issues are not covered in the Baluchistan Mining Regulations."

A local government official, who requested anonymity, said TCC took too long to complete its feasibility study and that it was "cheating" Baluchistan by under-valuing the worth of the copper and gold.

"They are the monopoly," the official said angrily. "They are the monopolists of the gold! They don't want to disclose the worth of the gold in Baluchistan."

The case is now before the Pakistan Supreme Court, and TCC has filed for international arbitration. The Baluchistan government, meanwhile, has recently handed out exploration permits in the area around Reko Diq to new Pakistani and Chinese companies with no mining experience. Pakistan is already viewed as a high risk investment due to chronic civil and sectarian conflict, terrorism, corruption, poor regulation and chronic power outages. Legal uncertainty would only add to that list. WHAT'S THE DEAL? Reko Diq was supposed to be a model of public-private partnership and a means to lifting an impoverished area where Baluch insurrectionists have long operated. The Baluchistan government received a 25 percent stake in the venture for no money down. Adding in taxes and royalties, the total share of revenues to the provincial and federal governments would come to just over half. "From my experience, 25 percent to the government is extremely generous and it's not normal," said Vivienne Lloyd, a senior consultant at the U.S.-based Copper Research Group. According to documents filed with the Supreme Court, TCC projected the mine would produce at least $60 billion worth of ore over its lifespan based on long-term copper and gold prices of $2.2/pound and $925/ounce, respectively. Higher spot prices would increase that sum significantly. Based on recent copper and gold prices, the mine would be worth almost $120 billion, with Baluchistan getting a quarter of that after operating costs. It is this difference in long-term and spot prices that has led to angry allegations in the media and from Baluchis that outsiders are exploiting their natural wealth. "The picture that emerges is one of a grand deception, loot and plunder that never happened before on such a scale," the News daily said. "And the facts, untruths, half-truths, attempts to sabotage, frauds and back-door bribes, are all documented." The Baluch official was more succinct: "They corrupted our people, they corrupted our nation and for 18 years they looted our money." The Tethyan Copper Company was originally established 18 years ago in 1993 under a different partnership. SANDY MOUNTAIN Reko Diq, which means "Sandy Mountain" in Baluch, is part of the Tethyan Magmatic Arc, a crumple in the earth created by collisions of the African, Arabian, Indian and Eurasian tectonic plates. It contains massive deposits of copper and gold ore of varying grades in a belt stretching from Romania through Turkey, Iran, Pakistan and Afghanistan all the way to Papua New Guinea. The site in Pakistan today is a boulder-littered moonscape of rust-colored dunes, extinct volcano domes and a whipping wind that sends a fine-grit dust over the scattered settlements in the area. There are few towns, fewer roads, no electricity or running water, and almost nothing grows there. The only way in or out is by chartered plane on a private airstrip. TCC's exploration site is like an abandoned moon colony: converted shipping containers and white trailers meant to house workers line up neatly under the baking sun, but stand empty. TCC has laid off about 240 of its 270 workers, but if the mine goes forward, it plans to employ 11,000 people within two years. That seems unlikely now. Alongside the lonely trailers, cavernous warehouses with corrugated steel roofs hold thousands of trays containing rods of compressed earth -- core samples that testify to the riches underfoot. In all, the planned $3.3 billion investment would have included a 1,000-metre-deep open-pit mine, a processing facility, a project village for employees and a 682-km underground pipeline to Gwadar port on the Arabian sea to carry slurry concentrate to a dedicated marine terminal. The village would include schools and cricket pitches, a mosque, health clinics, a library, a public square, restaurants and markets, and even a 189 MW power plant. INVESTMENT RISK Despite its remoteness, TCC's Livesey said the project would add "percentage points" to Pakistan's gross domestic product, which grew at just 2.4 percent in fiscal 2010-11. Indeed, the mining sector has been hit especially hard, posting only 0.4 percent growth last year and contributing just 2.4 percent of GDP, down from a peak of 2.7 percent in 2004-5. "Most mining projects in Pakistan, they suffer from lack of research or lack of management," said Dr Farid Malik, a geologist and former chairman of the Pakistan Science Foundation, explaining the need for foreign investment. Political turmoil and other uncertainties hanging over the $175 billion economy risk deepening the steady attrition of foreign direct investment, which plunged 40 percent to $594 million in the first seven months of the 2011/12 fiscal year. TCC's feasibility study alone was already the largest single foreign direct investment in Pakistan's history. The rejection of a mining license after an exploration permit had been granted is highly unusual, industry sources say, and has heightened perceptions of foreign investment risk in Pakistan. "There is potential ... for multiple mine developments over the next few decades," Livesey said. "By refusing a mining license without good grounds, it's sending quite a negative signal to the exploration/mining community." TCC has filed cases with the International Court of Arbitration in London and the World Bank's International Centre for the Settlement of Investment Disputes. If the courts find in its favour, Pakistan could face billions of dollars in damages. DIGGING UP THE PAST The origins of the dispute go back to 1993, when Australian mining company BHP Billiton and the government of Baluchistan signed a joint venture agreement that set up the Tethyan Copper Company, with BHP getting a 75 percent share of any mineral wealth found. In 2006, Barrick Gold and Antofagasta acquired TCC, taking an equal share each. The Baluch government kept its original quarter share. The new owners soon found signs of the immense deposits. Once word of the billions below ground appeared in the media, an avalanche of lawsuits followed. Last May, the Supreme Court directed the local government to "expeditiously decide TCC's application for the grant of mining lease transparently and fairly." In November, Baluchistan made its decision. It rejected the license -- but not before granting 11 exploration permits for sites surrounding TCC's Reko Diq area to five hastily established Pakistani and Chinese companies with no previous experience in mining. All five companies were created and attained their licenses in the four months following the Supreme Court's May order. "Why should (Baluchistan government) give away 75 or 50 percent of a multi-billion-dollar resource when it can keep everything?" lawyer and arbitration expert Feisal Naqvi sarcastically asked on his blog, Monsoon Frog. The Baluchistan government says it rejected TCC's permit because the company didn't complete the feasibility study on time and the study did not cover the entire area for which the exploration license had been granted. "These were the grounds that we made for the licensing authority to reject the application for the mining lease," said Ahmer Bilal Soofi, who represents the Baluch government. But TCC and mining experts say it is normal to submit feasibility studies for a smaller area than originally explored. In a bid to head off arbitration, the provincial government and a number of nationalist political parties have filed suit in the Supreme Court to have the original deal declared illegal. Soofi says the 1993 agreement was tainted by corruption. The official who signed the original deal, Athar Jaffar, was later convicted of having assets beyond his means and was sentenced to seven years in prison, he says. Though Jaffar's conviction was not related to the deal signed with BHP, "you can infer corrupt practices," he said. Jaffar could not be located for this report, nor could Soofi's statements be verified. THE CHINA SYNDROME Further complicating the story are the Baluchis themselves. Traditionally proud and martial, they are fiercely suspicious that outsiders - including the rest of Pakistan - are out to steal their mineral and energy resources. They have valid reasons to worry. For years Baluchistan has languished near the bottom in literacy, electric power, infant mortality and other social indicators; its natural gas and mineral riches went to the wealthy, populated parts of Pakistan. "They've been exploited so many times in the past," said Malik. "Now they see so much light at the end of the tunnel ... and they think they're not getting their fair share." The Baluchis have staged five uprisings since the province was incorporated into Pakistan in 1948, each time demanding more control over their natural resources. Because of this, some analysts speculate that the powerful Pakistani army sees Reko Diq as a strategic resource and hopes to keep the mineral wealth out of the hands of the Baluchistan government, in case separatist political parties win provincial elections. The army, acknowledging Pakistan's inexperience in large-scale commercial mining, might also want to bring China into the picture. China is the world's largest consumer of copper, has experience in large-scale mining, and has a record of building infrastructure in exchange for resources in developing countries. "Everywhere I look, there are indications of Chinese interest in developing this area, more than Barrick Gold could," said Shamila Chaudhary of Eurasia Group. The Chinese government-owned Metallurgical Construction Corp (MCC) already runs the nearby Saindak Copper-Gold Project, and submitted a counter-proposal to develop the Reko Diq mine during a visit to Pakistan by Chinese Prime Minister Wen Jibbao in December 2010. Pakistan media say MCC's proposal was similar to TCC's, but was sweetened with a larger share of the royalties going to the government. This was after TCC had submitted its feasibility report. MCC has not commented on those reports. TCC is still hoping for a negotiated settlement outside arbitration, but Chaudhary thinks its parent companies are looking to cut their losses. "From what I hear on the Barrick Gold side ... they're looking to come to closure on this issue," she said. (Additional reporting by Qasim Nauman in ISLAMABAD and Faisal Aziz in KARACHI; Editing by John Chalmers and Bill Tarrant) ================== Mining lease case: SC to announce Reko Diq verdict on Jan 7 By Peer Muhammad Published: December 21, 2012 Main petitioner Tariq Asad contended the Reko Diq mining lease was tainted by corruption and urged the bench to direct concerned authorities to take action against TCC. ISLAMABAD: After hearing all sides in the Reko Diq case, the Supreme Court (SC) reserved its judgment on Friday, saying it will issue a short order on January 7, 2013. The three-judge apex court bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, after concluding hearings of the case, observed it will announce a verdict ‘in accordance with the law and the Constitution of Pakistan’. Several identical petitions had been filed in the SC against the lease of gold and copper mines in Reko Diq to the Tethyan Copper Company (TCC) – a consortium of Canada-based Barrick Gold and Chile-base Antofagasta Minerals. TCC had invoked the jurisdiction of the International Chambers for Commerce and International Centre for Settlement of Investment Disputed against the government of Pakistan for not renewing the prospective Reko Diq minerals licence in accordance with Balochistan Mining Rules 2002. During Friday’s hearing, main petitioner Tariq Asad contended the Reko Diq mining lease was tainted by corruption and urged the bench to direct concerned authorities to take action against TCC. Meanwhile, amicus curiae (a person who, despite not being a party to a case, offers unsolicited information which has a bearing on that particular case) Raza Kazim suggested that the court form a commission under a retired apex court judge to resolve the matter. The bench reserved its ruling after Khalid Anwar, TCC’s counsel, concluded his arguments. The counsel for copper mining company BHP, Abdul Hafeez Pirzada and the counsel for the Balochistan government, Ahmer Bilal Sufi, had already concluded their arguments earlier. ============= SC terms Reko Diq mining lease ‘illegal’ By Web Desk Published: January 7, 2013 The court announces short verdict, admits applications against Tethyan Copper Company. PHOTO: FILE ISLAMABAD: The Supreme Court of Pakistan termed the lease of gold and copper mines in Reko Diq to Tethyan Copper Company (TCC) “illegal”, reported Express News on Monday. The court had reserved the 16-page judgement in the case on December 21, and announced the short verdict today. The court also accepted applications to hear against TCC. Several identical petitions had been filed in the SC against the lease of gold and copper mines in Reko Diq to TCC – a consortium of Canada-based Barrick Gold and Chile-base Antofagasta Minerals. TCC had invoked the jurisdiction of the International Chambers for Commerce and International Centre for Settlement of Investment Disputed against the government of Pakistan for not renewing the prospective Reko Diq minerals licence in accordance with Balochistan Mining Rules 2002. Reko Diq is a multi-billion dollar project in the area of district Chaghi of Balochistan where millions of tonnes of copper and gold were identified in different reports prepared by world renowned companies. ================ Sport Business Magazines Culture Blogs Balochistan rejects reports about $11.5bn penalty in Reko Diq case Saleem ShahidUpdated July 18, 2017 2     1 QUETTA: The Balochistan government has rejected reports that Pakistan might face a penalty of $11.5 billion after an international tribunal of the World Bank ruled in favour of Tethyan Copper Company (TCC) in the Reko Diq gold mine case. A spokesman for the Balochistan government on Monday said the International Centre for Settlement of Investment Disputes (ICSID) had not awarded the verdict and therefore all reports appearing in the media and social media were wrong and misleading. He said the losses claimed by the TCC, a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold Corporation, were exaggerated and against the ground realities. The TCC has argued that Pakistan abused its discretion in denying, without any legal basis, the company’s mining application in 2011 after it had spent a substantial amount of money on mining exploration and feasibility studies for around 10 years. Subsequently, the TCC initiated arbitration proceedings before the ICSID against the Pakistan government under a bilateral investment treaty with Australia. The spokesman said that on behalf of the federal government, Balochistan was contesting the claim at appropriate forum with the help of legal experts. A team comprising the attorney general for Pakistan and international legal experts was preparing a rebuttal to the TCC claims which would be filed in the next hearing, he said. “The court had already suspended the quantum proceedings on the request of Pakistan.” He said the provincial government had objected to a member of the tribunal set up under the ICSID and the court had accepted its plea for hearing. He advised the people in general and the media in particular to avoid speculative stories on the issue. Published in Dawn, July 18th, 2017 =============== Decision in Reko Diq case not final ruling, says AG Nasir IqbalUpdated March 24, 2017 ISLAMABAD: Attorney General Ashtar Ausaf on Thursday claimed that the International Centre for Settlement of Investment Disputes (ICSID) — a World Bank-funded tribunal — had accepted Pakistan’s evidence against the international firm over the terminated Reko Diq mining contract. However, he contended that ICSID had declined Pakistan’s request to dismiss financial claims by the Tethyan Copper Company (TCC) over the termination of a multimillion dollar mining lease in Balochistan, adding that the case would therefore proceed. “The order by the tribunal of March 20 states that the tribunal has admitted Pakistan’s evidence on the record,” Mr Ausaf explained in an announcement issued by the AG’s office, admitting that the tribunal had not dismissed the TCC’s claims. Ashtar Ausaf says WB-funded tribunal has turned down govt request to dismiss TCC’s $400m claim Pakistan had adopted the plea that the agreement/mining licence at Reko Diq was procured through corrupt means and, therefore, the claimant (TCC) cannot ask for damages. The tribunal took up the dispute between Pakistan and the TCC after the latter’s application was rejected by the Mining Authority of Balochistan. The Supreme Court, in January 2013, had declared void the Chagai Hills Exploration Joint Venture Agreement, signed between the Balochistan government and Australian mining company BHP in 1993. After the decision, the BHP sold its stakes in the venture to TCC. TCC had invoked the jurisdiction of ICSID against the prospective Reko Diq Minerals Licence, claiming a loss of investment amounting to $400 million. the TCC is a Canadian and Chilean consortium of Barrick Gold Corporation and Antofagasta PLC, formed to explore gold and copper at Reko Diq — a small desert town in Chagai, Balochistan, that sits over the Tethyan copper belt and is known for having the fifth largest deposits of gold and copper in the world. The AG explained that the recent ICSID tribunal order was not a final order or award in the matter of TCC versus Pakistan. “It is part of a series of orders issued at the end of each distinct phase of the hearing,” the AG explained, adding that the tribunal’s order had been issued at the end of a phase where Pakistan presented evidence of alleged corruption by TCC and its representatives. In Sept 2015, Pakistan had filed an application requesting the tribunal to dismiss the claims by TCC on grounds of corruption. Pakistan presented detailed evidence of corrupt practices by TCC in relation to its investment in the Riko Diq project, the AG stated. This order brings to an end the “corruption” phase and it will now proceed with the “quantum” phase. Explaining further, the AG stated that in this phase, the claimant (TCC) will now present its case for the value of compensation it seeks for terminating the licence. Pakistan will rigorously contest any amount claimed by the claimant, AG said, adding that the final liability, if any, would be determined at the end of quantum phase. The ICSID system, he explained, also provided for “annulment” of an award and other remedies and options were available to Pakistan within and outside of international arbitration, which it continues to consider fully. Pakistan reserves the right to challenge the validity and enforceability of any order passed by ICSID tribunal, he said. Published in Dawn, March 24th, 2017 =========================================