Early Warning updated extensive table with collating all of the recent development with regard to recent contracts to develop Iraq’s oil reserves.

Kurdistan Regional Government (KRG) is reportedly willing to publish the oil contracts it has signed in a move to placate relationship with Iraqi Central Government.

It was reported in earlier post that Central Gov have been blocking revenues from reaching KRG and in turn Oil & Gas companies operating in the region.  (ArabianOilandGas​.com)

A good post on The Oil Drum re Kurdistan and Iraqi production that ignited a lot of debate.  One particular Harry Flashman user had excellent commentory:

Kurdistan Regional Government’s (KRG) production is presently ~200,000 BOPD of Iraq’s 2.3 MM BOPD. KRG’s target is 1,000,000 BOPD by 2012. I don’t think that they will come close, but they will get approximately half way there. 500,000 to 600,000 BOPD is a lot of oil.

In comparison, Sudan produces 466,000 BOPD and exports 388,000 BOPD, Oman produces 715,000 BOPD and exports 632,000 BOPD, Egypt produces 665,000 BOPD and imports 10,000 BOPD, Viet Nan produces 350,000 BOPD and exports 92,000 BOPD … Kurdistan would be a middle ranked exporter. I wouldn’t mind an exploration or development project there.

I notice that Canadian juniors have been very successful in Kurdistan. It has become a core area for Canadian international exploration. The structures in the Kurdistan part of the Zagros Fold Belt are “very interesting” and very large. (Even Exxon couldn’t miss. Oh, on second thoughts … wot about Hungary, he asked? As for Shell, horizontal drilling in Oman, anybody? Oh, thanks WestTexas.).

• Addax Petroleum sold to Sinopec in September 2009 for $7.2 B; Sinopec thus obtained control of Taq Taq oil field and potential production of 180,000 BOPD.
• Heritage Oil Corp. took over their partner Genel Energy International of Turkey, September 2009, to develop Miran giant oil field PSC, containing potentially at least 2.3 to 4.6 B bbls OOIP gross potential resources.
• Niko Resources Canada + Vast Resources + Groundstar Exploration at Oura Dagh PSC, on trend with Miran.
• Western Zagros + Talisman at Kurdamir and Sarquala PSC’s, containing 4.5 to 9.2 B bbls OOIP gross potential resources.
• Longford Energy Ltd + Genel in Chia Sukh PSC. Expecting to spend up to $100 MM on 250 km 2-D seismic and 2 wells.
• Plus Gulf Keystone Petroleum (LSX) + MOL at Sheikh Adi and Ber Bahr PSC’s.

KRG is determined to control Kirkuk Governorate through the ballot box and to make the city of Kirkuk the capital of Kurdistan; the DPAK received 59% of the vote in the last Iraqi election in Kirkuk Governorate (and 91 to 95% of the vote elsewhere in Kurdistan).
Three other disputed Governorates, Siniar, Shikhan, Makhur, have smaller Kurd populations (and lower oil potential) and are of lesser importance to KRG.
On the other hand, Irbil, Kirkuk and Mosul in adjacent Nineveh Governorate are still targets for Al Qaeda. (Nineveh Governatorate has a 38% Kurdish population and is probably not an immediate KRG political target to control). However, no international oil company has yet pulled out of Kurdistan because of terrorist activities.

On the other hand, Irbil, Kirkuk and Mosul in adjacent Nineveh Governorate are still targets for Al Qaeda. (Nineveh Governatorate has a 38% Kurdish population and is probably not an immediate KRG political target to control). However, no international oil company has yet pulled out of Kurdistan because of terrorist activities.

The international Majors are focused on PSC’s involving Super Giant and Giant oil fields in southern and southeastern Shia Iraq, and much less on Kurdistan. I hope they keep it that way.

As of last week, “I was informed that” revenues from Kurdish oil production was still being withheld from the producers, not by the Iraqis in Baghdad, but by the Kurdish government in Erbil, the provisional capital. This is a source of “great concern” to the producers and their investors.

Iraqi production presently 2.4 MM BOPD
Consumption 0.6 MM BOPD
Exports 1.8 MM BOPD
Export capacity presently 2.3 MM BOPD, 1.97 MM BOPD through Basrta Termianl and 0.3 MM BOPD through Kirkuk – Ceyhan
Spare export capacity 0.4 MM BOPD, probably mostly at Basra

Need to reconstruct Kirkuk – Ceyhan oil export pipeline, designed capacity 1.5 MM BOPD, present useable capacity 0.3 MM BOPD. A Russian group associated with Kukoil got a contract in 2007, but pulled out PDQ.
Kirkuk – Banias 0.3 MM BOPD pipeline planned reconstruction approved by both Iraq and Syria but not yet started. Pipeline is presently closed.
Need to reconstruct 1.5 MM BOPD pipeline capacity.

Need for an oil export pipeline across northern Kurdistan into Turkey to link up with the existing Iraq – Turkey Export Pipeline.

1.65 MM BOPD Basra –Saudi Pipeline is closed and likely to remain that way.

With regards to what the Americans or Europeans will or will not do, it’s not their oil, its’ the Kurds’. And if they don’t want you around, you won’t get in – end of story. Besides, the Chinese would probably offer a better deal; it’s not stratigraphically deep enough for the Vietnamese to be interested, and it’s onshore, so the Brazilians don’t give a damn.

The Oil Drum | Iraq Oil & Gas Production: Geopolitical Compromises and Kurdish Autonomy.

From Early Warning, a good scenario analysis of Iraq Oil Production.  The analysis project Iraq Oil production to 2017.

The best case scenario has medium term target of reaching 3.5 m bpd by 2012 (iraqi plateau legacy production) and then IOG investment will kick in to take production to 12 m bpd by 2017.

The low / worst case scenario, assume volatility of production and political upheaval / civil unrest after the March elections, production to hover around the 1 m bpd. In between the two scenarios lies the possibilities.

In our opinion, a lot of parameters are still uncerain such as :

• Kurdistan Oil Production (good results from the likes Gulf Keystone) add to possibiitiy of upwards surprise (potentially Kurdistan can produce 1 m bps.
• Kirkuk – who’s in charge and effect on Arab-Iraq-Turkish relationship with Kurdistan
• Infrastructure – will take much longer to develop required oil infrastructure in riskier environment compared to country like Saudi and continued disruption by insurgency
• Potential Political Upheveal regrading distribution of resources will also impact production (Central Gov / Kurdistan)
• Limiting new contracts / production by Gov as additional oil on the markets depress prices while IOCs will want to continue production to take back investment.
• Iraq membership of OPEC – again a question mark – looks likely that they will likely stay on as an observer – but additional production will have impact on OPEC quotas / influence over oil price. This will need to be assessed with regard to politics / relationship with Saudi & Iran

Ref : Tariq Shafiq on Iraqi Oil Reserves