International Oil Companies (IOCs) are pushing ahead with their plans in Iraq that will kick-start Iraqi oil production. BP & CNPC have reiterated their plans to increase production from Rumaila oil field by 100,000 bpd by beginning of next year. Other companies such as ENI are awarding drilling contracts and Lukoil have stated that the company will invest close to $ 5 billion in giant West Qurna oil field. (WSJ)
The National Newspaper reports that illegal oil smuggling especially from Saudi and Iraq is on the increase. The paper cites smuggled oil via Kurdistan region in Iraq and also highlights recent investigation in Saudi Arabia related to smuggling of oil for over 11 years to Europe via an unidentified private Saudi petrochemical company.
Defiantly answering critics who say it has an overly cautious approach to expansion, cash-rich Kazakh firm Kazmunaigas Exploration Production is lining up another shot at one of the most competitive and challenging upstream markets around — Iraq.
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After one long year of tussle between Baghdad and Kurdistan Regional Government and the Oil companies operating in the region, an agreement has been reached to resolve the stand still that has stopped the exports of Oil (40,000 – 60,000 barrels per day) from the Kurdish region in Northern Iraq. The agreement is most probably motivated by political interest as the outgoing Shiite led Government tries to forge a coalition with the minority Kurds after recent March elections. The agreement also addresses the issue of compensation for oil companies cost with the federal government guaranteeing payment costs. Nevertheless, Baghdad still has not accepted the agreements signed between KRG and the companies.
..the new deal doesn’t mean that the country’s federal Oil Minister Hussein al-Shahristani has accepted scores of production-sharing contracts that the Kurds signed with international oil companies, Jihad said. (RIGZONE)
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Cnooc Ltd, the Hong Kong-listed unit of China National Offshore Oil Corp., and state-run Turkish Petroleum Corp., known as TPAO, on Monday clinched a final deal to develop the prized 2.5-billion-barrel Missan oil-field complex in southern Iraq, ministry officials said. Originally Cnooc partnered with Sinochem when the latter dropped out after Cnooc agreed to the Iraqi government remuneration fee of $2.30 a barrels. The new consortium comprises : Cnooc to hold a 63.75% stake in the venture, TPAO will own 11.25% and state-run Iraqi Drilling Co. will hold the remaining 25%. (WSJ)
Fast Company chronicles the involvement of former Bush Adminstration prominent figures in negotiating on private basis oil concessions in Kurdistan (Northern Iraq). Leading figures such as Richard Pearle and Henry Waxman are some of the names that has been linked with some of those negotiations. The article goes on to explain the dynamics of the oil industry and the politics between the Central iraqi Government and Kurdistan Regional Government. Fastcompany write:
But the issue is about far more than money: With a national election imminent, the Kurds agree in principle that the oil they produce belongs to all Iraqis, but they demand the right to determine who their partners are and under what terms they come in. Iraqi nationalists, meanwhile, see those determinations to be the job of the state. In their greed, the nationalists charge, the oil companies and the Kurdish government have incited separatism and deepened suspicions that could tear the country apart.
Iraq is considering plan to increase its refinery output by 150% to 1.2 million bpd at a cost of $ 10.5 billion. Iraq remains cash strapped and is considering all type of investment including joint ventures or Build – Operate – Transfer (BOT) etc in order to upgrade its refinery sector by 2015.
The deal between the Iraqi Government and Royal Dutch Shell PLC to develop domestic gas infrastructure is in disarray due to inability to secure financing for the Iraq’s contribution in the venture. This is also compounded by political opposition to the deal.
The Venture will deliver gas for domestic power generation. One solution that Shell is proposing is to build a floating LNG facility off the Basra coast to ease off security risks. The political opposition stems from the fact that the deal is being negotiated bilaterally without Shell having to compete with other International Oil Companies. Iraq has daily natural gas production of 1.64 billion cubic feet of which is 70% is flared. (WSJ.com)
The first floating power generating plant in the world, self-propelled and with a full crew, has sailed from Istanbul in Turkey for the port of Umm Qasr in southern Iraq, where it will be moored. The electricity generated from the plant will be transferred to the electricity grid of Basra. The Karadeniz Powership Dogan Bey is expected to begin generating electricity for Basra by the end of April. … Continue Reading
Even before a Government is elected in Iraq, ramblings on recent oil contracts awarded to International Oil Companies (IOCs) are starting to get louder. The former Iraqi Oil Minister, Ibrahim Bahr al-Ulum told an Iraqi newspaper :
“I think signing this many contracts, in so short a time, at the end of the government’s term, leaves any future government stuck with long-term contracts that last for 25 years..There is a need to review these contracts.”
The election results and protracted negotiations to form a Government is most probably giving the IOCs sweaty palms and again highlight the persistent risks (not just security) in doing business in Iraq. (RIGZONE)
Iraq oil service contracts bonanza have started with earnest. BP has awarded contracts worth $ 500 m to three companies; Schlumberger /Iraq Drilling Co, Weatherford and China’s Daqing Oil Field Co. It is of note that total service contracts in Iraq last year amounted to $ 500 m and is said to grow to $ 5 billion in the next two yeas. (RIGZONE)
Good interview with Iraq’s Oil Minister, Hussein al-Shahristani. In the interview he points out the following :
- Iraq will be producing 3 milion barrels a day by end of 2011.
- Oil from Kurdistan will resume. Payment mechanism is in place via SOMO & Development Fund of Iraq. Contracts with Oil comapnies operating in the region will need to be renegotiated and cost will be compenasted if they are in line with cost in the South. … Continue Reading
The FT undertakes an in depth look at Heritage which this month will sell its Ugandan operations for $ 1.35 billion after more than a decade of development work in the country. Heritage will focus on other assets in Africa and the Middle East. … Continue Reading
Iraq’s Oil Minister, Husain Al-Shahristani, said that Iraq will be revising its reserves upwards (currently stand at 115 billion barrels as of end 2008).
In addition, Iraq will resume export from the Kurdish region irrespective of dispute with the companies operating in Kurdistan. He elaborated further :
“The deals are not acceptable but the issue of exporting oil from those fields is a completely separate issue from the contracts that were signed.”
Gulf Keystone Petroleum raised $24 million to fund its drilling programme and offset default by its partner in Kurdistan. Its CEO, Todd Kozel said:
The short term Jurassic tests and the extended well test on the discovery zone in Shaikan-1 are expected to provide comprehensive data on potential recovery factors and to provide Gulf Keystone with our first oil production revenue in Kurdistan (Reuters)
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