Iraq Oil Output Declines

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There’s an interesting piece in the FT today about how oil output is steadily decining in Iraq due to over explotation of existing wells and the difficulties in attracting the technical staff necessary for serious development of new capacity:


Iraq’s oil industry has gone backwards since the fall of Mr Hussein in the spring of 2003. Oil production is barely more than 2m barrels a day, a far cry from the 3.5m b/d Iraq pumped before the first war with the US in 1990 and the level industry analysts thought the country could again achieve within a couple of years of the war ending.

The latest figures show Iraq produced 1.24m b/d in November, the lowest level in a year. Iraq’s capacity to produce oil appears to be declining, possibly because its southern fields are being driven too hard and damaged by officials keen to compensate for losses to production from the north, which has been hampered by frequent sabotage.

Airbus May Build Factory In China

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This is news. Bloomberg covers the story. China apparently may need 1,790 planes new planes by 2023 Airbus estimate, and it makes sense to, well, make them in China.

Toulouse-based Airbus, which is trailing Boeing in new orders this year, may win an order for as many as 150 planes valued at $9 billion, said people familiar with the negotiations yesterday. Chinese Premier Wen Jiabao may announce at least part of the order today at a Paris press conference with his French counterpart Dominique de Villepin, said the people, who declined to be named.

The European planemaker said yesterday after Wen’s visit that it might open a factory in China for assembling A320 planes. Air China and the country’s six airline groups may need 1,790 planes valued at $230 billion by 2023, Airbus estimates. Boeing on Nov. 20 won an order from China for 70 planes worth $4 billion.

Airbus spokeswoman Barbara Kracht declined to comment yesterday on the Chinese order. Ren Houxiang, director of the Civil Aviation Administration of China in Beijing, declined to comment Dec. 2 on the likelihood of China signing an order with Airbus. Repeated calls to the Chinese embassy yesterday weren’t answered.

More from Reuters here.

Mario Monti Makes A Reasonable Point

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Mario Monti – former European commissioner for the EU internal market – is interviewed in the FT today. On the recent ECB decision to raise interest rates he has this to say:

“Critics of the ECB say its monetary policy has been too restrictive. Mr Monti disagrees but says “there is an institutional credibility to be gained in the infancy of an institution. For a central bank, that is gained if you err on the restrictive, rather than the permissive side.”

Yesterday’s rate increase “is likely to avoid a weakening of that perception of credibility, and is likely to reduce the need for further increases in the very short term”, he said.”

I don’t entirely agree with him, but this is a reasonable explanation. I agree that you couldn’t exactly call recent ECB policy too restrictive. You really can only sustain that position if you think that what Germany really needs is a sustained dose of Japanese-style ZIRP (but to do this you would have to undo monetary union in my opinion, EMU wasn’t constructed with this type of problem in mind). We may get to this situation, but we aren’t their yet. Hence there is a plan b available, which is try to continue offering a bit of something for everyone.

In this context M. Monti is concerned about bank credibility, but he also makes a more subtle point: that a quick rise now buys time, and takes off the pressure for subsequent rises in the short term. As I say, I don’t entirely buy this, but at least it is a coherent argument.