SHARE FAIR
http://www.rooevents.com/sharefair.php
BP Iraq Share Fair - Rumaila Field Developments
As the lead contractor for the development of the super giant Rumaila field in Southern Iraq, and on behalf of partners PetroChina Company Limited and the Oil Marketing Company of the Republic of Iraq, BP Iraq NV will be holding a Share Fair event at the Conrad Hotel in Istanbul on 22 November 2010.
The objective of this Share Fair event is to provide information to the Global/Local contractor communities on plans to rehabilitate the Rumaila field and specifically on the selection process for following types of contracts:
* Engineering and Project Management Services (EPMS): scope shall include detailed design and engineering of certain facilities at Rumaila; procurement for and on behalf of BP and its partners; logistics management; and site construction management activities.
* Engineering, Procurement and Construction (EPC): Scope shall include design, procurement, installation and commissioning of discrete packages of work.
* Construction: Scope shall include construction and installation works only. May extend to include the supply of some materials.
Due to the high interest shown by the contracting community in attending this event, it is expected that invitations will be restricted to EPMS, EPC and Construction contractors with the capability to support large scale project activities. To this end, when expressing interest to attend this event, contractors are requested to advise proposed attendees (names and positions) and provide a brief company profile and a summary of your statement of accounts for the last 3 years.
Key dates for this event are as follows:
* Closing date for expression of interest to attend the Share Fair event - 20 Oct 2010
* BP to issue formal invitations - 01 Nov 2010
* Share Fair event - 22 Nov 2010
After the Share Fair, Contractors will be invited to declare, via an Expression of Interest process, if they wish to be considered further. A prequalification and competitive bidding process will then be implemented to select the best value Contractors to support the development of the Rumaila field.
Note: Attendance at this Share Fair event is strictly by invitation only and all costs incurred shall be to each Contractor´s own account. BP and its Partners reserve the right to modify or cancel the procurement process described above at any time.
By SINAN SALAHEDDIN, Sinan Salaheddin, Associated Press Writer – Tue Dec 30, 4:34 am ET
BAGHDAD – Iraq will offer 10 undeveloped or underdeveloped gas and oil fields in its second postwar licensing round due to begin Wednesday, the country's oil minister said.
Hussein al-Shahristani did not name all the fields that would be on offer, but said they would include the southern fields of Majnoon and West Qurna Phase 2 which hold reserves of roughly 12 billion barrels of crude each. The two fields currently produce far below their individual output potential of 600,000 barrel per day.
Al-Shahristani, in an interview late Monday night, told the state-run Iraqiyah television station that his ministry has focused on the fields which Iraq shares with neighboring countries, or that are located near borders.
"It is unacceptable that neighboring countries extracting oil from the shared fields while Iraq stands motionless," he said. "We have decided to include these fields in the second licensing round and expedite" investments in them.
Iraq shares several oil fields with neighboring Iran and Kuwait. The Majnoon field, for example, borders Iran.
Al-Shahristani said Iraq's oil exports in December averaged 1.85 million barrels per day, nearly 90,000 barrels a day more than in November.
The second licensing round is seen as crucial for the country, which relies on oil revenue for 95 percent of its budget. Decades of wars, U.N. sanctions, violence and sabotage have battered the industry and impaired the country's ability to ramp up production.
The contracts from the upcoming licensing round, along with those from the previous round, could add another 4 million to 4.5 million barrels a day within four to six years, he said.
Iraq holds the world's third largest proven reserves of crude, with more than 115 billion barrels of oil and an estimated 112 trillion cubic feet of natural gas. It currently produces about 2.4 million barrels of oil per day.
In June, Iraq opened its first postwar round of bidding for contracts to develop six major oil fields and two gas fields, choosing 34 of 120 oil companies that applied to participate. Among those selected were international energy giants Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp., Chevron Corp. and Total.
Ministry spokesman Assem Jihad told The Associated Press that international oil companies which did not qualify in the first round would be eligible for the second round.
The ministry plans to sign the contracts of the first round in mid-2009 while the second round end of the same year, al-Shahristani said.
The government has been grappling with the fallout from the plunge in oil prices, which have dropped about 70 percent from mid-July highs of nearly $150 per barrel. As a results, the Baghdad government was forced to slash its fiscal 2009 budget from $80 billion to $67 billion due to the crisis, and is mulling more cuts.
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Iraqi official: Mitsubishi to join Iraq gas deal
Thursday February 12, 2:41 am ET
Iraqi official: Mitsubishi teams up with Royal Dutch Shell PLC to tap natural gas in Iraq
BAGHDAD (AP) -- Iraq's Oil Ministry says Mitsubishi is joining Royal Dutch Shell PLC in its joint venture deal with Iraq to tap natural gas in southern Iraq.
The ministry's spokesman, Assem Jihad, says Iraqi Oil Minister Hussein al-Shahristani held a meeting Wednesday with representatives from Shell and Mitsubishi.
Jihad spoke to The Associated Press on Thursday.
Iraq and Shell signed a preliminary deal last September that paves the way to establish the joint venture.
Iraq sits on an estimated 112 trillion cubic feet of natural gas reserves, according to the ministry. It flares about 700 million cubic feet of gas every day due to lack of sufficient infrastructure.
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Al Shahristani denies the right of companies to price the gas
Translated by IRAQdirectory.com - [2/22/2009]
The Oil Minister Hussain al-Shahristani, denied the news of the investment companies that have been recently contracted with them, to have the right of specifying the quantities or prices of gas.
Al-Shahristani described in a statement (on Friday) that the work of those companies like the work of oil refineries that do not interfere in determining the price of oil.
He pointed out that the price of oil and its derivatives to be determined by the Ministry of Finance and approved by the Iraqi parliament.
It should be noted that the Ministry of Oil has concluded a contract for natural gas worth billions of dollars through a joint project of the Iraqi South Gas Company and Royal Dutch Shell in addition to Mitsubishi.
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Paris wants to invest in Majnoon oil field
Translated by IRAQdirectory.com - [2/23/2009]
The French Minister of Commercial Affairs, Ann Mary Ederik stressed on the preparation for the first meeting of Economic France-Iraq Commission in Baghdad next month after a cessation of more than twenty years.
Ederik clarified that the priority will go to energy sectors including oil and gas as well as transport, particularly Baghdad Airport and the port of Basra in addition to the railways.
According to close sources to the conducted talks by the French minister with Iraqi officials, noted that France had asked the Iraqi side to renew the signed Memorandum of Understanding in the era of previous regime with the French (Total Company) to invest in the giant oil field of Majnoon , southern Iraq.
It is scheduled that the Iraqi Economic Commission next month will be headed by the French Trade Minister Christian Lagard and the Iraqi Oil Minister Hussain al-Shahristani.
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Iraq invites contractors to drill 30 oil wells in key southern oil fields
* Wednesday March 18, 2009, 7:13 am EDT
BAGHDAD (AP) -- Iraq is inviting contractors to bid for the drilling of 30 oil wells in three key southern oil fields.
State-run Maysan Oil Co. has issued the tender to drill 10 wells each in the Halfaya, Noor and Abu Gharab fields within 18 months from the start date.
The company says bids must be submitted by April 15. The announcement was posted Wednesday on the company's Web site.
The fields have more than 5 billion barrels in reserves and are located around the city of Amarah.
Iraq sits on the world's third-largest reserves with 115 billion barrels, and it produces nearly 2.4 million barrels per day. It plans to add at least 300,000 barrels per day by the end of 2010.
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Foreign companies would get majority stake in Iraq oil and gas projects
By Rod Nordland
Published: March 18, 2009
BAGHDAD: Iraq's new government for the first time is proposing to give foreign oil companies a majority stake in projects to develop oil and gas fields in an effort to greatly expand production at a time of falling oil prices.
A top adviser to Prime Minister Nuri Kamal al-Maliki on Wednesday confirmed statements made by the Iraqi oil minister, Hussain al-Shahristani, in Vienna earlier in the day that foreign companies could bid for as much as 75 percent of the profit from new oil and natural gas development projects. The adviser also confirmed that Iraq might offer new and existing fields for development by foreign oil companies, outside of formal bidding rounds for new fields, which had previously been open to only a small number of major oil companies.
Previously, Iraq had offered foreign companies no more than 49 percent stakes in new oil development projects. Shahristani told Bloomberg News in Vienna, where he was at an OPEC industry seminar, that Iraq would be open to bids from such companies as Exxon Mobil and Royal Dutch Shell for 75 percent stakes in new development projects.
Thamir Alhadban, chief of advisers to Mr. Maliki and a former oil minister himself, confirmed Shahristani's statement. "He has said this before — it is nothing new," Mr. Alhadban said. "Even during the old regime, contracts were offered at 75/25." He was referring to the regime of Saddam Hussein.
But under the current government, there has been stiff opposition in Parliament among "resource nationalists" from many political parties to foreign investment at all, let alone majority stakes. Even a proposed contract with Shell for harvesting natural gas from oil fields in southern Iraq, which gave Shell a 49 percent share, was strongly condemned in Parliament.
What is new now, Mr. Alhadban said, is that some existing, already producing fields would also be offered for development under Iraq's plans to increase production. Iraq has been exempted from OPEC's freeze on oil production because of the damage to its oil sector from the war.
Controversy over foreign involvement in the Iraqi oil industry has been one of many factors preventing the country from passing an oil law. Mr. Maliki's oil adviser, Ibrahim Alolom, said that at a meeting in Baghdad late last month bringing together all top government officials and the Oil Ministry, there was broad agreement that Iraq needed to make new initiatives to attract more interest in foreign development of the petroleum sector. "We agreed we need to open the oil sector to other paths," Mr. Alolom said, "but what those paths are we left to be decided."
Mr. Alolom said that he was unaware of Mr. Shahristani's statements in Vienna Wednesday but that any increase in shares beyond 51/49 would be controversial.
There is no suggestion that Iraq is proposing to offer ownership stakes in oil or gas fields to foreign companies, which would be forbidden under the Iraqi Constitution. Rather, the stakes are for profits from projects to develop and exploit the fields.
Sabah al-Saidi, a spokesman for the contracting and licensing division of the Iraqi Oil Ministry, denied that there had been any change in Iraq's policy or that Mr. Shahristani was opening up bidding outside of the first and second bidding rounds. The schedule for those rounds has been advanced by as much as six months recently in hopes of overcoming investor reluctance attributed to instability in Iraq, the lack of an oil law and poor terms for foreign companies.
But a statement posted on the Oil Ministry's Web site on Wednesday invited bids for digging 30 new wells in three major southern oil fields, including the Halfaya field, which is classified as "super giant" and has five billion barrels of proven reserves. Those bids are due in only a month and clearly fall outside of the existing bid rounds.
Because of falling oil prices, Iraq has had to sharply revise its budget downward. There is a "need for an immediate increase of additional production," Mr. Shahristani was quoted by Bloomberg as saying. Iraq produces 2.4 million barrels per day of oil and hopes to increase that amount to 6 million barrels over the next five years, Mr. Shahristani has said, an effort that will require an investment of $50 billion. Efforts to reach him were unsuccessful.
Alissa J. Rubin and Abeer Mohammed contributed reporting.
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Total, Chevron Preparing Joint Bid for Iraq Oil Field Rights
By Anthony DiPaola and Robert Tuttle
April 6 (Bloomberg) --Total SA and Chevron Corp. will bid together for oil development rights in Iraq as firms search for new crude supplies and the Middle Eastern country looks for investors to pump cash into its economy.
Iraq, holder of the world’s third-largest oil reserves, is running two bidding rounds to attract investors after six years of conflict and prior sanctions destroyed infrastructure. Last year it pre-qualified 35 international companies to take part in the sales and added nine more to the list this month.
“We are preparing our response to the first bidding round and we are together with Chevron,” Yves-Louis Darricarrere, Total’s president of exploration and production, told reporters in the Ras Laffan industrial city north of Doha today.
He declined to comment on whether Total, Europe’s third- largest oil company, had been invited by the Iraqi government to bid directly for the Nahr Bin Umar field, as reported by Reuters earlier. He declined to name the fields Total and Chevron, the second-biggest oil producer in the U.S., aimed to bid for.
Oil companies are set to submit bids for fields in the first round in June and the Iraqi government may decide on the winners in “days,” according to Ladislas Paszkiewicz, Total’s president of exploration and production in the Middle East. Iraq aims to award the field development rights by the end of June.
The Iraqi government is still working on the final contract model for the field developments, Darricarrere said. The government may give oil companies 75 percent stakes in the developments after a fall in oil prices cuts its own ability to invest, Oil Minister Hussain al-Shahristani said in January.
The country aims to boost oil output to about 6 million barrels a day by 2015 from about 2.5 million barrels now as production ramps up after the license bidding rounds.
To contact the reporter on this story: Anthony DiPaola in Ras Laffan, Qatar at adipaola@bloomberg.net; Robert Tuttle in Ras Laffan, Qatar at rtuttle@bloomberg.net.
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PREVIEW-Investors hunt for deals in Iraq reconstruction
29 Apr 2009 16:09:20 GMT
Source: Reuters
By Luke Baker
LONDON, April 29 (Reuters) - Senior Iraqi officials and international business leaders will gather in London on Thursday to explore possible investment deals as the country slowly emerges from six years of conflict.
Representatives from around 250 companies, from Shell
Suicide attacks in the past week have killed more than 150 Iraqis and the political landscape remains rocky, but the head of the Trade Bank of Iraq, Hussein al-Uzri, says trade flows and investment opportunities are increasing.
The bank, set up by the U.S. authorities in July 2003 to finance trade and reconstruction projects, saw 2008 net profit rise 41 percent to $359 million on operating income of $447 million.
Over the same period, the bank's total assets grew by more than 60 percent to $10 billion, from just $2.8 billion in 2006.
From power and cement plants to agriculture projects and fertiliser production, the bank is helping to finance private sector deals that are slowly building up Iraq's economy.
Oil-related deals -- with Iraq currently producing nearly 2 million barrels of oil a day and sitting on the world's third-largest proven reserves -- are expected to be much greater once contracts are finalised.
"The last six years have not been easy for Iraq... but now everything is being put back in its place," U.S.-educated Uzri, who returned to Iraq after the overthrow of Saddam Hussein, said as he announced the bank's results on Wednesday.
MOST INVESTMENT FROM REGION
Uzri, 46, will be a speaker at the Invest Iraq conference sponsored by Britain's Department for International Development.
At the moment, most private investment in Iraq comes from the region -- the Gulf, Turkey and Iran -- or from expatriate Iraqis living in Jordan, Lebanon and Dubai who are looking to gain a business foothold in their homeland.
But there is also steady growth in interest from Britain, France, Germany and the United States, Uzri said, with private equity funds also joining the hunt for investment opportunities.
Fairfax, a London-based fund, is planning to invest up to $200 million in Iraq this year, according to the Financial Times. The Trade Bank of Iraq is looking at setting up its own $250 million investment fund. Fairfax did not respond to calls for comment on Wednesday.
Uzri expects private-sector investment to exceed "tens of billions of dollars" a year in the next 3-5 years, with power, energy and infrastructure projects the main draws.
Claude Hankes, a banker and adviser to the Trade Bank of Iraq, said the drying up of opportunities in established markets due to the global financial crisis would encourage risk-hungry investors to look beyond Iraq's security and political threats. (Editing by Stephen Nisbet)
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The next emerging market? Iraq sets out its stall
Iraq's governing class is in town with a message for Western investors: spend your money with us. Sarah Arnott reports
Thursday, 30 April 2009
Iraq is open for business – such is the message from a stellar line-up including the Prime Minister, Nouri al-Maliki, and the two UK Cabinet ministers at the Invest Iraq conference in London today.
In the aftermath of 20 years of sanctions, strife and upheaval, the post-Saddam state has a pressing need for infrastructure investment – and an oil price back down to the $50-per-barrel mark has left the Baghdad government unable to fund the mammoth reconstruction on its own. But the recession battering economies around the world might just prove to be to the war-torn country's advantage. Notwithstanding the bomb that killed 150 people in the capital last week, the febrile(Of, relating to, or characterized by fever; feverish.
) security situation has improved. And with so much financial uncertainty elsewhere, Iraq's potential is attracting more attention.
Hussein al-Uzri, the president of the Trade Bank of Iraq (TBI) – who is also at today's conference – said: "We want to convey the message that Iraq is open for business and is a unique opportunity for investors. Until 2003, the private sector was on a very short leash, but it is now taking back its role in the economy. The last six years have been very difficult, everything in the country has been taken apart and re-made. But we are moving in the right direction."
The scale is vast. Iraq needs $400bn (£339bn) of infrastructure just to catch up with the needs of its existing population of 28 million. The wish list is endless: from power plants, to water systems, to road and rail networks. The country needs 25 megawatts of electricity but produces less than six; there have been no new hospitals for decades; some 7,000 new schools are necessary just for today's generation of children; 50 years ago Iraq was a net exporter of food, now 70 per cent is imported and it needs fertiliser plants, agricultural investment and food production businesses to restore the balance. Even the world-beating oil sector is sadly undernourished. Iraq's 119 billion-barrel oil reserves constitute the second largest in the world. But with no exploration since the 1980s even that may be a considerable underestimation, and yet sub-standard refinery capacity means the majority of oil products are imported.
Meeting the requirements of even a single sector would be enough to alter the economy radically, says Mr Uzri. The country needs 2.5 million new houses, for example. "That by itself will stimulate the whole economy because it will need cement plants, steel mills, labour, banking, mortgages," he said.
With oil at $147 per barrel last summer, the government in Baghdad had more options. But with less money sloshing around the public sector, a bigger slice of the pie will fall to commercial investors. Private investment has been growing since Saddam Hussein was toppled in 2003. The TBI – which is a state-owned bank established that year to facilitate international trade in the wake of the expired UN oil for food programme – has issued $9.1bn-worth of letters of credit in the past year alone and made a quarter of its $359m profits in 2008 from the private sector.
But tens of billions of dollars of Iraqi capital are still held outside the country – mainly in Oman, Beirut and Dubai – and part of the TBI's job is to convince investors that there are viable prospects behind the continual news reports of lawlessness, violence and chaos. "The role of the banking sector is to attract those funds back home," said Mr Uzri. Infrastructure projects are gathering pace. A new power plant in Erbil – which has upped Kurdistan's electricity capacity from just four hours per day to round-the-clock – is a case in point. Funded entirely from Iraqi capital, the power station went from letter of credit to producing electricity in just 18 months, and investors will see a return within two-and-a-half years.
There is also a major role for foreign investors – hence today's conference, which is expected to be attended by about 250 companies including Royal Dutch Shell, Rolls-Royce and GlaxoSmithKline.
Private equity groups are also sniffing around. Fairfax, a London-based fund, plans to put $200m into Iraq this year, and the TBI is putting together a $250m fund of its own on the strength of interest from sovereign wealth funds. Sir Claude Hankes, an adviser to the TBI, says the potential for Iraq – with its large population, educated middle class and trading ethic – is unmatched since the Far East of the 1970s. And investors are starting to pay attention. "The opportunities are enormous and unlimited," he said. "People were thinking: why have the problems and security issues in Baghdad when we can make billions somewhere else? But the rest of the world is changing, Iraq's security has improved and people are beginning to focus on the opportunities now."
The brave few have already taken the plunge, mainly companies from nearby Gulf states, Iran and Turkey. But Chinese groups are also showing a growing interest, as are the French. British companies are, so far, less well-represented, particularly outside the Basra area where UK troops were stationed. Part of the problem in establishing a secure trading relationship between the two countries is the difficulties Iraqis have in getting a UK visa. As a result, the UK is missing out, both on the huge market for training the Iraqi workforce, and on building strong links with the country's business class. "Not to be training as many Iraqis as we possibly can, right here and right now, is a fundamental error in terms of developing trade with Iraq," said Sir Claude.
But kidnappings and roadside bombs are not the concern for potential investors. A stable economy needs a stable banking sector. The TBI's rapid growth is emblematic of an improving situation. Annual results for 2008, published yesterday, reported profit growth of 41 per cent, total assets up 64 per cent to $10bn and share capital up by more than 340 per cent to $427m. But there is much to do. There are now six state-owned retail banks in the country, and about 32 private banks, including some international institutions such as HSBC.
But only about 2.7 million Iraqis have bank accounts, less than 10 per cent of the population. And between them, there are only about 600 branches in total, a very low per-capita ratio compared with a developed, Western economy. Iraq is still very much an "underbanked" country, says Mr Uzri. "In the UK there is around one bank branch per 1,300 or so of the population, in Iraq that is more like 45,000," he said. "Cash is still king. Most transactions are in cash, from buying groceries to buying buildings."
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Iraq Starts Work on Expanding Southern Oil Export Facilities
By Glen Carey
May 15 (Bloomberg) -- Iraq, holder of the world’s third- largest oil reserves, has started work on a new, 1.5 million barrel-a-day floating terminal to export oil as the country expands its ability to ship crude through the Persian Gulf.
“This is a top priority for us,” Iraqi Oil Minister Hussain al-Shahristani said in an interview today at the Dead Sea in Jordan at the World Economic Forum. “We expect to finish it in less than two years.”
The country is the third-largest producer in the Organization of Petroleum Exporting Countries and exports oil through southern ports and a northern pipeline to Turkey.
“We are going to diversify our routes of export,” he said.
The new facilities will supplement the existing Basra terminal in the south and contracts are already arranged for seabed surveys and the removal of sunken ships, the minister said.
Foster Wheeler AG, a Swiss-based oil services company, said in February that it won an engineering contract by Iraq’s South Oil Co. for work on new oil export facilities.
Separately, the minister said Iraq is planning to have a third bidding round for oil exploration rights before the end of the year. Two have already been announced.
“We are waiting to finish the first bid round,” he said. “We have asked the companies to submit their bids before the end of June. Once we are through with this process, then we will be considering a third bid round, and we will be making an announcement.”
Iraq also plans to make a decision next month on awarding a contract to develop the Nassiriyah field. The three competitors invited to bid on that field are Italy’s Eni SpA, Spain’s Repsol YPF SA and a Japanese group of companies led by Nippon Oil.
Once the Nassiriyah contract is done, Iraq will consider engineering, procurement and construction constracts for the southern part of the East Baghdad field, al-Shahristani said.
To contact the reporter on this story: Glen Carey in Dead Sea, Jordan at gcarey8@bloomberg.net.
Last Updated: May 15, 2009 13:16 EDT
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Iraq Opens Oilfields as Exxon, Shell Seek Foothold
By Anthony DiPaola
June 25 (Bloomberg) -- Iraq is set to welcome back foreign oil companies into the war-torn nation to develop the world’s third-largest crude reserves three decades after expelling them.
Eight of the world’s top 10 non-state oil producers, including Exxon Mobil Corp. and Royal Dutch Shell Plc, are vying for the right to help Iraq develop six oilfields and two natural-gas deposits. More than 30 companies in total are bidding for $16 billion worth of technical service contracts for producing fields that will be awarded in Baghdad on June 29-30.
“Iraq is the big prize in the region,” said Raja Kiwan, a Dubai-based analyst at consultants PFC Energy. “It is one of the only remaining areas that provide the level of upside for companies who want to access reserves.”
The OPEC producer is struggling to increase output and revenue from crude sales after six years of conflict and prior sanctions destroyed the country’s economy and infrastructure. The government, also running a second bidding round for 11 oil and gas fields, aims to boost production to about 6 million barrels a day by 2015, from 2.4 million barrels in May. Saudi Arabia, the world’s biggest oil exporter, produces 8 million barrels a day.
Companies investing in Iraq are looking to take a stake in the long-term potential that the country’s 115 billion barrels of reserves hold after gaining a foothold through the service contracts for operational fields. Iraq may offer foreign companies direct stakes in deposits and allow them to sign production-sharing agreements for future fields, according to Oil Minister Hussain al-Shahristani.
Iraqi Benefits, Security
Iraq will earn 100 times more than the foreign companies it hires to develop the deposits, the minister told parliament in Baghdad on June 23. The deposits being offered in the first licensing round may yield $1.7 trillion in profit for the country, based on an oil price of $50 a barrel, while oil companies seeking service contracts will gain $16 billion over the 20-year life of the contracts, he said.
Winning the oil contracts may be easier for foreign companies than contending with security threats in Iraq and objections to the bid-round by some lawmakers. Irving, Texas- based Exxon is still deciding whether to bid, Chief Executive Officer Rex Tillerson said June 16. The Hague-based Shell was in talks with Chinese companies on bidding jointly for the contracts, CEO Jeroen van der Veer said April 14.
U.S. troops are due to pull out of Iraq’s cities by June 30 and the entire country by the end of 2011, and Iraqi officials have said the nation’s security forces will be able to cope alone. Iraq and Britain signed a draft agreement on June 3 for some U.K. troops to remain in the country to help Iraqi naval forces protect oil platforms.
Government Criticized
Prime Minister Nuri al-Maliki’s government has been criticized by lawmakers for its failure to raise oil production faster and they want the licensing round scrapped because of concerns the deals won’t benefit Iraq.
Al-Shahristani defended government policy in parliament this week, saying foreign investment will raise production and profit while overseas oil companies will get a fee for developing deposits without taking stakes in any fields.
Iraq’s reserves are so large and so little developed that foreign companies are willing to take the risk, said Tariq Shafiq, an adviser with London-based Petrolog & Associates and a former Iraqi Oil Ministry official who helped write the nation’s draft oil law. The country’s parliament has not approved the oil law due to disagreements between the government and lawmakers.
In 1972, Iraq nationalized concessions owned by companies now known as BP Plc, Shell and Exxon. Iraq is the only member of the Organization of Petroleum Exporting Countries not bound by production quotas as the group lowers output to bolster prices amid the global recession. Crude traded above $69 a barrel in New York today, a gain of 55 percent this year.
Vast Reserves
Oil companies are seeking access to new reserves as production declines at aging fields in the North Sea and resources like those in Saudi Arabia and Iran are restricted for foreign firms. The new Iraqi contracts may also increase demand for drilling and engineering equipment as companies compete for equipment to develop fields in Saudi Arabia, Kuwait and other Gulf countries.
“There’s a huge amount of pressure on all international oil companies looking at Iraq to make sure they have the first foot in,” said PFC Energy’s Kiwan.
Saudi Arabia is the world’s largest holder of reserves with 264 billion barrels, followed by Iran with almost 138 billion barrels. Iraq may be a more attractive long-term development for international investors since it has produced only about 8 percent of its oil compared with more than 20 percent by Saudi Arabia and Iran, Shafiq said.
Cash Needs
To supplement income from the contracts, the government is also asking winning bidders to provide a total of $2.6 billion in loans, which will later be repaid. Iraq needs cash to build infrastructure, and the government plans to sell about $5 billion in bonds to help pay for power and water projects. This month it proposed a $70 billion spending plan for housing, agriculture and transport.
Companies including Heritage Oil Ltd. and DNO International ASA are already exploring for and producing crude in Iraq’s semi-autonomous Kurdish region in the north. The Kurdish government pursued development contracts on its own and began exporting crude earlier this month after resolving a dispute with the national government over how revenue would be divided.
ConocoPhillips, Lukoil, Total
ConocoPhillips, based in Houston, was in talks about preparing joint bids with Russia’s OAO Lukoil and other potential partners, Chief Executive Jim Mulva said in a June 5 interview in St. Petersburg. Total SA, France’s largest energy company, will bid for the contracts, the Iraqi prime minister’s office said in a June 10 statement. StatoilHydro ASA, Norway’s biggest oil and natural-gas producer, was also preparing a bid, Peter Mellbye, vice president for international exploration and production, said June 16.
BP, Europe’s second-biggest oil company, is completing plans on whether to bid after being short-listed for the licensing round, spokesman Toby Odone said in an e-mailed statement yesterday.
To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.
Last Updated: June 25, 2009 07:55 EDT
Exxon to Hit West Qurna Target in Weeks
Posted on 04 March 2011. Tags: Exxon, ExxonMobil, oil production, Shell, West Qurna
Reuters reports that ExxonMobil is expected to raise production at Iraq’s West Qurna I oilfield by 10 percent over the agreed baseline this month or in early April.
When asked when Exxon would hit its initial production target in West Qurna, Abdul-Mahdy al-Ameedi, head of the Oil Ministry’s licensing and contracting office, told Reuters,”God willing, during this month or start of April”.
That would qualify Exxon and its partners to start recovering investment costs, Ameedi said.
ExxonMobil and partner Shell won a contract to develop the 8.7-billion-barrel West Qurna I field. The group aims to boost output to 2.825 million bpd after setting baseline production at 244,000 bpd.
An oil source said on Thursday that Exxon has already managed to hit its initial output target in West Qurna by boosting production to more than 268,000 bpd. The increase is being examined by the Iraqi Oil Ministry.
Higher production rates must be sustained for 30 days before the firms are able to recover development costs.
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Big oil steels for worst, hopes for best, in Iraq
28 Jun 2009 15:41:50 GMT
Source: Reuters
(Updates with new date for bidding)
By Missy Ryan
BAGHDAD, June 28 (Reuters) - Pipelines shattered by bombs. Oil terminals crippled by suicide attacks. Officials blown up in roadside blasts or kidnapped from their office at gunpoint. Calamities like those are not just the worst fear of an oil executive in a hostile environment; they are the reality of the last six years of chaos, bloodshed and war in Iraq. The world's biggest oil firms are hoping the past will be no guide to the future when they bid on Tuesday for six of Iraq's biggest oilfields and two gas fields in the war-shattered country's first major tender since 2003. Thirty-two foreign firms will be competing, including Exxon Mobil
The winners will get a foothold in a country with some of the world's largest remaining untapped reserves, but they will also have to take precautions to protect their investment.
Iraq is one of the world's most challenging places for energy firms, one western security consultant said, "because the commercial risk is huge and this is still an unsettled place".
Iraq's oil wealth is both a blessing and curse - its reserves of 115 billion barrels, the world's third largest, should allow it to rebuild after years of conflict. But the lure of oil riches also stirs deep rivalries and suspicions.
Many Iraqis believe foreign firms will plunder Iraq's oil, said Hugh McManners, a spokesman at Erinys, a security firm hired by the U.S. government after the 2003 invasion to rebuild the specialised force protecting Iraq's oil infrastructure.
"We can say this negative perception of international oil companies ... is used quite ruthlessly by terrorists and nationalist agitators. It's a good rallying call," he said.
Violence across Iraq has fallen sharply, but devastating attacks remain common as U.S. combat troops leave the cities this month and hand over security to Iraqi police and soldiers, ahead of a full U.S. withdrawal by the end of 2011.
Since June 20, at least 200 Iraqis have died in bombings.
Diplomats, foreign executives and reporters are still ferried about by heavily armed guards in armoured convoys.
Memories of grainy videos showing western hostages being beheaded will not fade easily, and the threat of kidnapping -- either by Islamic extremists or common thugs -- is high.
Oil firms have already hired security firms to get advice.
OBVIATING RISK
Companies are expected to try to minimize their direct exposure to risk by using service companies and contractors.
They will bypass the dangerous streets of Baghdad by building airstrips near remote oil sites and flying their personnel in and out of the country from there. "Security is a huge expense but then at big oil companies we are used to that. We work in some difficult places, like Nigeria. I would estimate security will add 10-15 percent to the project," said a senior executive from an international oil company planning to bid but unauthorised to speak publicly.
Outlays on security may be offset by Iraq's low extraction costs. Some foreign firms have managed to work without problems in Iraq in the recent past by keeping a low profile.
The companies will rely as much as possible on local labour, in part because they hope to fend off problems by co-opting local sheikhs, government officials and neighbours.
Ihsan Abdul Jabar, head engineer at the state South Oil Co., said Basra, Iraq's oil hub in the south, was ready for foreign firms after shaking the grip of Shi'ite militiamen. "Basra has no more security problems than any major city," he said.
Yet other risks may weigh even heavier than security.
"The physical security is surmountable," a consultant said.
More troubling is the unpredictability of Iraqi politics, opaque ministries, and the untested legal environment.
Kurds, who have signed oil deals with firms that Baghdad has rejected as illegal, have in turn condemned the central government's contracts for fields in the disputed Kirkuk region.
The Kurd-Arab conflict has mired passage of an oil law and there are questions about the legal basis for the contracts. There is also a national election in January.
"If (foreign firms) are going to invest heavily in Iraq, are they likely to see a return for their investment?" the consultant asked. "That's the big question." (Additional reporting by Simon Webb in Dubai and Aref Mohammed in Basra; Editing by Jon Loades-Carter)
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Iraq auction terms deter oil firms
By Missy Ryan And Ahmed Rasheed – 2 hrs 43 mins ago
BAGHDAD (Reuters) – Iraq launched its first major energy auction since the 2003-led invasion on Tuesday, awarding its largest field to a BP-led group but doling out far fewer contracts than expected due to tough payment terms.
Most companies, including firms from resource-hungry China and India eager to get a share of the world's third largest oil reserves, balked at lower-than-expected fees and Iraq failed to strike deals on the remaining seven oil and gas fields on offer.
The controversial auction took place on the same day that U.S. combat troops withdrew from city centers, giving local forces lead responsibility for a nation still gripped by violence and which desperately needs oil income to rebuild.
"Today we have seen that the Iraqi Oil Ministry and international oil companies are living on different planets," oil analyst Ruba Husari said.
Oil Ministry spokesman Asim Jihad said the results were not a disappointment.
"The participation of these well-known, major companies is a good sign and it reflects the desire of these firms to invest in the Iraqi oil sector," he said.
Iraq's Oil Ministry asked firms to submit revised bids at the end of the day in hopes deals could be struck for remaining fields. Seven bids were revised, but were not made public. The bids will now be given to Iraq's cabinet for a decision.
The sale was billed as the first chance since Iraq nationalized its oil in 1972 for major foreign companies to get a run at the country's hydrocarbon reserves, much of which are untapped. But many Iraqi critics said it was a bad bargain.
Foreign companies servicing the fields will be paid per barrel of oil produced above a certain amount.
BP AND CHINESE GRAB SOLE DEAL
A BP-led (BP.L) consortium including China National Petroleum Corp (CNPC) (CNPET.UL) was the only foreign group to strike a deal -- for the 17-billion-barrel Rumaila oilfield, Iraq's biggest, in the Shi'ite south.
The deal was clinched only after an Exxon Mobil-led (XOM.N) group rejected the government's proposed fee. BP, too, was forced to reduce the fee it will accept before it won Rumaila.
The Oil Ministry failed to find takers for another huge field, Kirkuk, and for the smaller Bai Hassan, Maysan and Zubair fields, after Chinese, Italian, British and U.S.-led consortia rejected its terms. The companies also wanted a much higher fee for each extra barrel produced.
No bids were received for Iraq's Mansuriyah gas field and no deal was agreed on the Akkas gas field.
"It's a big disappointment," IHS Global Insight Middle East Energy analyst Samuel Ciszuk said. "Iraq had hinged its whole development on this licensing round ... the fact that only one field has been awarded is very disappointing. It's a flop."
The BP/CNPC alliance had to accept a fee of $2 for every barrel of additional oil produced, compared with $3.99 in its initial offer. It also projected being able to boost output from Rumaila to an ambitious 2.85 million barrels per day, compared to the government's target of 1.75 million barrels per day.
The only group to bid for the Kirkuk oilfield, which lies in a northern region hotly contested by minority Kurds and the Arab-led government in Baghdad, was led by Royal Dutch Shell (RDSa.L). Shell wanted to be paid $7.89 per extra barrel of oil while the Iraqi government offered $2 again.
"The expectations of the Iraqi government and the oil companies are mismatched," one oil executive, who asked not to be named, told Reuters.
SECURITY STILL AN ISSUE
Foreign companies working in Iraq will have to contend with a stubborn insurgency and discontent within ruling circles.
Minority Kurds, and some in Iraq's parliament, condemn the deals as illegal. Even officials in the state-run oil industry have criticized the government for selling Iraq's vast oil wealth short, especially after investing heavily in the fields.
Years after Saddam's removal was supposed to unleash Iraq's oil potential, the auction marked the first big moment for the Oil Ministry, which is under growing pressure to boost disappointing output of around 2.4 million barrels a day.
Tuesday's tender was a central plank of Oil Minister Hussain al-Shahristani's bid to boost oil output to 6 million barrels per day in five years. Shahristani said he was pleasantly surprised at how ambitious some of the projections were from oil companies for potential increases to production at the fields.
Iraq has proven oil reserves of 115 billion barrels but the true amount beneath its desolate deserts could be far greater.
The auction, delayed a day by a sandstorm, was broadcast live from a hotel in Baghdad's fortified Green Zone in a process Iraqi oil officials insisted would be fully transparent.
But some foreign firms present expressed concerns after the bidding about what they saw as a lack of transparency in leaving a decision on outstanding deals to the cabinet.
Later this year, Iraq is due to offer another set of fields that are even more appealing since they are undeveloped.
(Additional reporting by Aseel Kami and Khalid al-Ansary in Baghdad and Tom Bergin in London; Writing by Michael Christie; Editing by Christian Wiessner)
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BP Wins Huge Oil License in Iraq
Business Week - [10/21/2009]
The British energy giant will share exploration rights for the coveted Rumaila field with Chinese and local partners in a sign that Iraq is open for business.
Iraq's cabinet has approved a deal with BP (BP) to develop the huge Rumaila oil field in the country's first international energy deal since the American-led invasion in 2003.
The agreement, which was brokered in June during the first round of tendering for licences to exploit Iraq's enormous and largely untapped hydrocarbon resources, should also send "a strong signal" to other energy groups that the Iraqi administration is keen to secure deals.
Abdul-Mahdy al-Ameedi, the deputy director of Iraq's Petroleum Contracts and Licensing Directorate, said: "We believe that we have a strong pillar now for our work toward realising our plans." Mr. al-Ameedi was speaking in Istanbul, where Iraqi officials are meeting oil companies ahead of a second tender of oil-field contracts due in December.
Separately, Iraqi officials have also reopened talks with Royal Dutch Shell (RDSa) about a revised offer for licences connected to an oil field in the city of Kirkuk in the north of the country.
BP will share the licence to extract oil from the Rumaila field near Basra with China National Petroleum Corporation (CNPC), the state-owned parent of PetroChina, and the Iraqi oil ministry. A spokesman for BP yesterday refused to confirm that the deal had received official sanction, adding that the company had heard only reports of the approval and had not spoken with Iraqi officials directly.
Analysts estimate that the Rumaila field has the potential to produce 17 billion barrels during its lifetime, with Iraq aiming to increase production at the site by 2 million barrels a day.
The country has the world's third biggest oil reserves, but has suffered from a lack of investment and United Nations restrictions on exports during the Saddam Hussein era. In more recent years, insurgent attacks on Iraq's oil fields have also hampered supplies.
Most of the 32 companies that originally joined the tender process for licences connected to six oil fields and two gas fields, including the likes of Exxon Mobil (XOM) and Total (TOT), withdrew complaining that the terms imposed by the Iraqis were not generous enough. BP and CNPC agreed to run the Rumaila field after Exxon Mobil turned it down.
Iraq's oil ministry offered 20-year service contracts, which stipulate that companies would not be paid anything until a minimum level of production, almost the amount already being produced at Rumaila, was reached. Above that point, the companies would be paid a certain amount per barrel up to a maximum level stipulated by the ministry.
The maximum amount being offered by the ministry in the case of the Rumaila field was a lot less than the oil companies were initially asking for: Exxon Mobil declined to accept the maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel. They will also be able to bill the ministry for the costs of the work the two groups have to do on the production facilities.
The deal between Iraq's government and the energy companies has caused anger among anti-war protesters, who have argued that the decision to invade Iraq in 2003 and to topple Saddam Hussein's regime was linked to oil, rather than ridding Iraq of weapons of mass destruction, which were not found following the war.
"We always said that this war was at least in part to grab the resources of Iraq, despite the wishes of the vast majority of the Iraqi people and the oil workers' union themselves," said Lindsey German, convenor of the Stop the War Coalition.
"The oil companies and the governments backing them have decided to privatise the oil industry. It confirms exactly why we went to war in the first place. People should look at this and remember all the high-flown moral reasons we were given for going to war."
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BP, CNPC sign Iraq's 1st big post-invasion oil deal
03 Nov 2009 13:35:05 GMT
Source: Reuters
* One of world's biggest oilfields
* Faces political risk with election in January
* Initial investment likely to be slow
(Adds quotes, comment on pace of investment)
By Ahmed Rasheed
BAGHDAD, Nov 3 (Reuters) - British oil major BP Plc
The 20-year contract for the southern oilfield is the first of several deals Iraq expects to sign in the coming weeks and months as it tries to catapult itself to third place from 11th in the league of oil-producing nations.
The deals face huge political risk. There is no guarantee the next government following an election in January will honour them, and Iraq is still wracked by political violence and bomb attacks by Sunni Islamist insurgents, such as al Qaeda.
As Iraq emerges from the sectarian carnage unleashed by the invasion, foreign capital and expertise is crucial to reviving the oil sector and raising the billions needed to rebuild.
The country holds the world's third largest crude reserves but has failed to ramp up production significantly after decades of war, sanctions and underinvestment.
"With these contracts Iraq has started a new phase. In the past, Iraq's oil was used to finance war, to kill Iraqis and to attack neighbouring countries," Oil Minister Hussain al-Shahristani said.
"A fortune was wasted and Iraq's oil was a disgrace to the lives of Iraqis ... This fortune will now fund reconstruction and rebuilding and improve the lives of all Iraqis."
Rumaila, with 17 billion barrels in estimated crude reserves, is the workhorse of Iraq's oil industry, producing almost half its total output of 2.5 million barrels per day. The field's reserves alone are bigger than Algeria's.
BP and its Chinese partner expect to increase Rumaila's output to 2.85 million barrels per day.
BP's chief executive, Tony Hayward, said the company would invest $15 billion. "It is a very significant undertaking, indeed."
OTHER DEALS IN PIPELINE
Iraqi oil experts say they do not expect BP and CNPC to pump billions into Rumaila immediately, partly because of uncertainty over the outcome of parliamentary elections in January.
The contract allows them to start slow -- they must spend $300 million over the first 33 months and ramp up production by 10 percent initially.
That production increase can be easily achieved by repairs to the infrastructure and by going after "low-hanging fruit," said Mahmoud al-Jubouri, an oil expert with Iraq's South Oil Company, which has run Rumaila and will be BP's partner.
"They will try to reduce spending, fearing possible bad surprises in the future," he said.
Rumaila was the only one out of six oilfields and two gas fields on offer that was successfully auctioned off in Iraq's first tender of development contracts at the end of June. Other oil companies balked at Iraq's stiff terms.
But subsequent negotiations behind closed doors and the sweetening by Iraq of its taxation terms have since narrowed the differences between the oil ministry and the companies and several other contracts are expected to be finalised soon.
Among them is the 4-billion-barrel Zubair oilfield in the south. Italy's Eni
Another is the 9-billion-barrel West Qurna oilfield, and Iraq is also talking to Royal Dutch Shell
The Rumaila, Zubair and West Qurna deals alone are expected to add 4.5 million barrels per day to Iraq's oil output capacity, roughly equal to 5 percent of global oil supply.
A second auction of 10 largely undeveloped oilfields will be held on Dec 11-12.
In addition, Iraq is expected to sign a different kind of deal with Japan's Nippon Oil Corp <5001.T> for Nassiriya.
The deals bode well for Iraq's second round of tenders, which analysts expect to attract interest.
"Even if the 'wrong' faction win in January and say, 'we're going to scrap all these contracts,' in that case, the companies would not have had any time to invest anything," said Samuel Ciszuk of IHS Global Insight. So why not bid in December? (Additional reporting by Khalid al-Ansary, Aseel Kami, Jack Kimball in Baghdad, and Barbara Lewis and Tom Bergin in London; Writing by Michael Christie; Editing by Barbara Lewis)
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FACTBOX-Security at oilfields Iraq plans to tender
08 Dec 2009 14:28:45 GMT
Source: Reuters
Dec 8 (Reuters) - Iraq on Dec. 11-12 will hold its second auction since the 2003 U.S. invasion of oilfield service contracts, ramping up its efforts to lure foreign oil companies back into the country after a long absence.
While the violence set off by invasion has fallen sharply, security remains fragile. Below are political risk factors at the fields on offer in the second bidding round:
SOUTHERN IRAQ:
MAJNOON AND WEST QURNA - These two south Iraqi super-giant fields are near the oil hub of Basra, 420 km (260 miles) south of Baghdad.
The Shi'ite south has become one of the most peaceful areas of Iraq as overall violence fades. Sunni Islamists like al Qaeda, who are blamed for most bomb attacks now, find it difficult to operate in the south. Northern areas, where there are larger Sunni populations, are generally more volatile.
Yet Basra was once so violent and dangerous that British troops deployed to enforce security there pulled out to the city's airport and left it in the hands of armed gangs.
Prime Minister Nuri al-Maliki last year ordered a crackdown on the Mehdi Army militia of anti-American Shi'ite cleric Moqtada al-Sadr. That helped quell violence in Basra.
U.S. forces now based at Basra airport, however, still come under relatively regular mortar attack.
GHARAF - The province of Dhi Qar, whose capital Nassiriya is 300 km (185 miles) southeast of Baghdad, has enjoyed relative stability since the clampdown on Sadr's group. Sadr ordered his fighters to become social workers before vanishing into Iran where he is said to be studying to become a senior cleric.
HALFAYA - Maysan province, some 300 km (185 miles) southeast of the capital where this super-giant oilfield is situated, was another former Sadr stronghold that has been relatively stable since Maliki's military operations against the Mehdi Army.
CENTRAL IRAQ:
BADRAH - This field in Wasit, 150 km (95 miles) southeast of Baghdad, extends along the border with Iran. Security is stable, and China's CNPC started developing the nearby Ahdab oilfield in Wasit in March under a revised Saddam Hussein-era deal.
The proximity to Iraq's porous border with Iran might raise security concerns for U.S. oil majors if tensions increase between Iran and Washington. The U.S. military accuses Tehran of arming "Special Groups" of Shi'ite fighters in south Iraq, and these could be used to attack U.S. interests.
KIFIL, WEST KIFIL AND MIRJAN - These three fields 80 km (50 miles) southwest of Baghdad are in the same province as the Shi'ite holy city of Kerbala, which enjoys relative peace.
There have been several smallscale bombings around Kerbala in recent months, and some analysts expect violence to increase ahead of a parliamentary election next year. Some of that violence may be Shi'ite on Shi'ite.
EAST BAGHDAD - This super-giant field is 10 km (six miles) from the centre of Baghdad and adjacent to Sadr City, a slum that houses at least 2 million people, many of whom are loyalists of the Shi'ite cleric of the same name.
The area has seen devastating bombings, including one at a market in June that killed 72 people and wounded 127. As a stronghold of Shi'ite militants, the slum was viewed by Sunni Islamist insurgents as fertile ground for reigniting sectarian slaughter. That has failed to happen, however.
NORTHERN IRAQ:
KHASHM AL-AHMAR, NAUDOMAN AND GULABAT - Collectively known as the Eastern Fields, these are located in volatile Diyala, whose capital Baquba is 65 km (40 miles) northeast of Baghdad.
The religiously and ethnically mixed province has been a hotbed of activity by al Qaeda and Sunni groups that reject Shi'ite domination in Iraq, and the government has struggled to impose full control.
The fields also border areas disputed between Iraq's largely self-governing Kurds and the Arab-led government. U.S. officials fear Kurd-Arab tensions could lead to Iraq's next big conflict.
QAYARA AND NAJMAH - Insurgents and crime networks have made the province of Nineveh and its capital Mosul, 390 km (240 miles) north of Baghdad, the most dangerous place in Iraq.
The strategic pipeline that ships crude from the city of Kirkuk to the Turkish port of Ceyhan runs through Nineveh and has been sabotaged several times since re-opening in 2007.
(Compiled by Ahmed Rasheed, editing by Ayla Jean Yackley) (For a story on the Dec. 11-12 oilfield auction and how foreign oil companies are likely to be welcomed by Iraqis, click on [ID:nGEE5B60EG]
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Shell, Total, Petronas, CNPC buy Iraqi oilfields
Article published on the 2009-12-11 Latest update 2009-12-11 11:05 TU
Workers at Fakka oilfield, near Amara(Photo: Reuters)
Workers at Fakka oilfield, near Amara
(Photo: Reuters)
Oil consortiums headed by Anglo-Dutch giant Shell and China's CNPC won contracts to exploit key Iraqi oilfields in an auction in Baghdad Friday. Prime Minister Nuri al-Maliki contrasted the televised sale to the deals in "darkened rooms" under deposed President Saddam Hussein.
"The second round represents a new era in the history of the Iraqi oil industry," Maliki said, as the two-day auction took place in Oil Ministry offices under tight security.
Among 44 companies involved are France's Total, Britain's BP, the US's ExxonMobil and Chevron and Anglo-DutchShell. Asian nations, including China, India and Malaysia are also present - a sign of their growing energy-hunger.
Bidding for Friday has finished with security concerns meaning that the auction did not sell as much as the government hoped. Five more fields will be on the block on Saturday.
So far decided are:
* China's CNPC, Petronas and Total won the largest field, Halfaya, hoping to produce 535,000 barrels per day (bpd) at 1.4 dollars (0.95 euros) a barrel;
* Shell and Malaysia's Petronas won the Majnon field, hoping to produce 1.8 million bpd for a fee of 1.39 dollars (0.94 euros) per barrel;
* No bids for Baghdad East oilfield and a group of fields known as the Eastern Fields, leaving the government running them;
* A bid for Qairiyah oilfield from Angola's Sonangol was turned down, because it wanted 12.5 dollars (8.5 euros) per barrel while the government offered five dollars (three euros).
Five more oilfields are due to be auctioned Saturday.
In a first round of bidding in June only one deal was reached - with BP and CNPC - because oil companies claimed the government was offering too low a rate of return. Two other consortiums have agreed to the terms since and signed agreements.
Iraq has the world's third-largest known oil reserves, after Saudi Arabia and Iran. At present it produces 2.5 million barrels per day.
Baghdad wants to reach seven million bpd within six years and is aiming for ten to 12 million in the longer term.
The law which opened Iraq's oilfields to international bids sparked international and local opposition, prompting a first draft to be thrown out by parliament.
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Lukoil wins West Qurna-2 contract
Published 12 December, 2009, 18:07
Russian oil company, Lukoil, has won the auction to develop the West Qurna-2 oil field in Iraq.
One of the world’s largest untapped oil fields, West Qurna-2, was awarded to Lukoil by Iraqi Oil Minister Hussein al-Shahristani ending a lengthy bidding process which had been keenly contested.
"We can announce that Lukoil has won the contract to develop the West Qurna-2 oilfield,"
Saturday’s West Qurna-2 boost for Lukoil came a day after consortiums led by Shell and CNPC were awarded contracts for other oil fields. That brings about 7 new development agreements in Iraq which are expected to increase Iraqi oil production by an estimated 4.7 million barrels per day in coming years.
With known reserves of 12.9 billion barrels, West Qurna-2 is west of the Majnoon field, which was awarded to Shell and Petronas, and north of the Halfaya field awarded to CNPC and France's Total on Friday.
Lukoil and Norwegian partner StatoilHydro, won the right to develop the field with a bid of $1.15 for each barrel extracted from the oil field. They expected to produce 1.8 million barrels a day from the field, with the two sharing an 85-15 production split in the Russian company’s favour.
In a statement Lukoil Chief Executive Officer, Vagit Alekperov, hailed the outcome as having strategic importance for the company.
“We have been struggling for this project over these years trying to stick to the word given to our shareholders. We tried hard to achieve this deserved victory and intend to meet all the obligations in connection with the development of West Qurna-2 to the benefit of the Iraqi people and our shareholders. This project has a strategic importance for our company,”
Canadian engineering firm SNC-Lavalin won two contracts worth 170 million dollars to build power stations in Iraqi cities, government spokesman Ali al-Dabbagh said on Tuesday.
(SNC-Lavalin)
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U.S. rivals winning bulk of Iraqi business
American companies appear shy of investing in war-torn country
By Leila Fadel and Ernesto Londono
THE WASHINGTON POST
Updated: 11:14 a.m. Saturday, July 17, 2010
Published: 11:11 a.m. Saturday, July 17, 2010
AL-AHDAB OIL FIELD, Iraq China didn't take part in the U.S.-led invasion of Iraq or the bloody military battles that followed. It hasn't invested in reconstruction projects or efforts by the West to fortify the struggling democracy in the heart of the Middle East.
But as the U.S. military draws down and Iraq opens up to foreign investment, China and a handful of other countries that weren't part of the so-called coalition of the willing are poised to cash in. These countries are expanding their foothold beyond Iraq's oil reserves — the world's third largest — to areas such as construction, government services and even tourism, while American companies show little interest in investing here.
"They have not come in with the force or magnitude we expected from them," said Sami al-Araji, chairman of the National Investment Commission. "The entry is cautious."
In the past two years, Chinese companies have walked away with stakes in three of the 11 contracts the Iraqi Oil Ministry signed in a bid to boost crude output by 450 percent over the next seven years. They also renegotiated a $3 billion deal that dates back to when Saddam Hussein was in power.
Only two American firms won stakes in oil deals, an underwhelming showing that industry analysts and U.S. officials say reflects deep concerns about doing business in a nation besieged by corruption and political turmoil.
"They made a mistake and overestimated the risk," said Ruba Husari, an oil analyst in Baghdad who runs the Iraq Oil Forum, a trade website.
In an effort to meet the rising energy demands of its fast-growing economy, China has invested aggressively in oil-rich nations. Chinese companies have made notable inroads in the Middle East and Africa, in part because of a higher tolerance for risk and a savvy diplomatic corps that has laid the groundwork for advantageous deals.
At the Ahdab oil field in Wasit province, roughly 100 miles south of Baghdad, about 200 Chinese laborers have begun work under a contract renegotiated by a Chinese state-owned consortium, Al Waha Oil Co., in 2008. Workers in red jumpsuits operate imported oil rigs alongside their Iraqi counterparts. Their workplaces are heavily protected by barricades and guards.
"People know they didn't participate in the invasion or the sanctions, and they have an old participation in Iraq that predates Saddam Hussein," said Ahmed Abdul-Redha al-Zanki, the senior engineer for Iraq's North Oil Co., which is working with the Chinese to develop the field. "They work with us as partners," in stark contrast to the condescending practices of Western companies, he said.
The French and Chinese have also made forays into the cement industry. The Chinese have started building a billion-dollar power plant in the south. The Chinese and the United Arab Emirates have negotiated to build residential complexes. The French automaker Renault and Germany's Mercedes-Benz have discussed making trucks for industrial transport, according to Iraqi officials. The South Koreans signed a memorandum of understanding to build a multimillion-dollar steel mill in the south and a power plant, and the Turks have scored a series of construction and government services contracts.
Save a $3 billion contract with General Electric to purchase power-generating equipment for Iraq, Iraqi and U.S. officials are hard-pressed to point to any significant U.S. investment in Iraq. Outside of the two service contracts that U.S. companies were awarded and U.S. government contracts, the United States "consistently ranks in the bottom" among investors, according to a 2009 study by Dunia Frontiers Consultants, which tracks private investment in Iraq. The United Arab Emirates is Iraq's top private investor, followed by South Korea, the study said.
U.S. companies will probably continue to shy away, particularly after the U.S. State Department's latest Iraq investment climate assessment, issued in March.
"Potential investor should prepare themselves for significant security costs; cumbersome and confusing procedures for business visas or new business registrations; long payment delays on some Iraqi government contracts; and sometimes unreliable, non-transparent dispute resolution mechanisms," the assessment said. "Allegations of corruption are still endemic, and the legacy of central planning and inefficient state-owned enterprises continue to inhibit economic development."
By contrast, France, which like China did not participate in the war, recently set up a center in Baghdad to support French companies seeking to test the waters.
"This is a rich country," French Ambassador Boris Boillon said. "In this world of recession, in this period of global crisis, we need to get growth and expansion wherever you can find it."
Those things are not what Americans expect to find in Iraq, he said. "When you tell an American: 'You can go to Iraq and make business, because there are opportunities,' the guy thinks twice and says, 'Oh Iraq — that bloody country.' "
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Sunday, July 4th, 2010 by Ruba Husari
0
Pioneer CNPC
Wasit Province – About 2,000 Chinese workers are about to descend on Al-Ahdab oil field next month to start work on the construction of the central production facility, engineer Ahmad Abdul Redha, the chief of Al-Ahdab section at North Oil Co (NOC) tells me during a tour of the fortress camp that CNPC’s subsidiary, Al-Waha Petroleum, built just 15 km to the west of Kut.
With five rigs on the field, Daqing Drilling, CNPC’s drilling subsidiary, has drilled six new wells and carried workovers on three – out of seven drilled in the 1980’s – since launching work on Al-Ahdab in January 2009. By the end of the year, it’s expected to double the number of rigs in order to achieve…
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1997 . 1st bid round . 2008 . 2nd bid round . Al-Ahdab . Al-Waha . bids . CNPC . Daqing drilling . drilling . export . Kut . licensing rounds . NOC . Nouri al-Maliki . oil ministry . plateau . production . PSA . rigs . service contract . Shahristani . Wasit . Zubaidiya The View from Baghdad
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10-10-2010 10:29 AM #1
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Default Row Over Al-Ahdab Oil Field Continues In Wasit
Ever since the Chinese National Petroleum Company (CNPC) re-worked an old Saddam Hussein era oil contract to develop the Al-Ahdab field in Wasit, it has run into one problem after another. In the latest incident, the Oil Ministry sent federal police to arrest two members of the Wasit provincial council, including the deputy head, on October 7, 2010 for forcing their way into the facility last month. On September 27, council members and local police went to Al-Ahdab demanding to see all of the financial records of the joint Iraq-Chinese company that runs the field, claiming mismanagement. The Oil Ministry condemned the council’s actions, saying that local officials had no authority over the facility. Baghdad has now taken it a step further by arresting some of the politicians involved.
continued
http://musingsoniraq.blogspot.com/2010/10/row-over-al-ahdab-oil-field-continues.htm
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Sunday, October 10, 2010
Row Over Al-Ahdab Oil Field Continues In Wasit
Al-Ahdab Oil Facility In Wasit
Source: Washington Post
Ever since the Chinese National Petroleum Company (CNPC) re-worked an old Saddam Hussein era oil contract to develop the Al-Ahdab field in Wasit, it has run into one problem after another. In the latest incident, the Oil Ministry sent federal police to arrest two members of the Wasit provincial council, including the deputy head, on October 7, 2010 for forcing their way into the facility last month. On September 27, council members and local police went to Al-Ahdab demanding to see all of the financial records of the joint Iraq-Chinese company that runs the field, claiming mismanagement. The Oil Ministry condemned the council’s actions, saying that local officials had no authority over the facility. Baghdad has now taken it a step further by arresting some of the politicians involved.
Just the day before the Wasit council demanded that employees at the field be transferred elsewhere because of corruption and embezzlement charges. The council also accused the Iraq-Chinese company of failing to provide money or jobs for the province, which is one of the poorest in Iraq. The local politicians threatened to turn Wasit into an autonomous region, unless something was done about the Al-Ahdab employees.
Back in 2009, Wasit farmers destroyed some of the oil company’s equipment, saying that it was ruining their fields. That forced Al-Ahdab to shut down for a short period until Baghdad sent extra security. Then as now, locals complained that they were not receiving jobs or money from the field.
CNPC renewed a 1990s deal into a new service contract with the Oil Ministry in August 2008. Under the agreement, CNPC is to raise production at Al-Ahdab to 100,000 barrels a day within five years. They will initially receive $6 per barrel for every one they produce over 100,000. That will eventually go down to $3 per extra barrel.
It’s unclear now whether Al-Ahdab is the exception or will set a trend for how locals view the international oil companies that are beginning to work in Iraq. In 2009 and 2010, the Oil Ministry signed twelve new contracts with foreign corporations to develop its energy industry. They are currently working on fields throughout southern Iraq. Whether their operations will eventually garner the kind of animosity that CNPC has is yet to be seen, but if any of them do, it could be a setback for Baghdad’s plans. Not only has the Oil Ministry promised a huge increase in oil production and exports, but also jobs, something Iraq desperately needs. There are many who questions whether this will ever happen, as petroleum is not a labor-intensive business. Iraq will definitely reap huge profits, and how those are spent will likely determine whether these new deals really help Iraqis or just make it another oil dependent country where the public rarely sees any benefits.
SOURCES
Lando, Ben, “Wasit official arrested for Ahdab raid,” Iraq Oil Report, 10/8/10
Al-Rubaiaa, Salah, “Iraqi province and oil ministry in row over oil field which China is developing,” Azzaman, 10/7/10
Posted by Joel Wing at 8:24 AM
Labels: Oil, Wasit
2 comments:
Maury said...
Just their bad luck to have a Chinese company get the work. These Chinese companies only use Chinese labor. They bring all the food and supplies in from China too. To add insult to injury, the workers stay on the compounds, and spend nothing in town. This way, a town can have a 10,000 man construction crew on its outskirts, and not a single job to show for it.
October 11, 2010 4:11 AM
Joel Wing said...
Yes, at least according to Wasit residents, which of course has to be taken with a grain of salt, the only jobs that have resulted from the Al-Ahdab deal have been security guards and they complained that many of those weren't even given to locals. Otherwise they complained that the Chinese workers were pretty much keeping to themselves.
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Wasit official arrested for Ahdab raid
Iraq’s Oil Ministry has begun a legal process to charge Wasit provincial council members with what some sources are calling terrorism charges after a delegation demanding documents related to a corruption investigation forced their way onto the Ahdab oil field last week.
On Thursday, Mahdi Ali al-Mosawi, the deputy chairman of the Wasit Provincial Council, and one other unidentified member were arrested by a Quick Reaction Force of the Federal Police dispatched from Baghdad, according to a se…
Wasit Governor Latif al-Tarfa offers a gift to Chinese Ambassador Chen Xiaodong at the oil field's opening (AFP)
By Ben Lando of Iraq Oil Report
Published October 8, 2010
Iraq’s Oil Ministry has begun a legal process to charge Wasit provincial council members with what some sources are calling terrorism charges after a delegation demanding documents related to a corruption investigation forced their way onto the Ahdab oil field last week.
On Thursday, Mahdi Ali al-Mosawi, the deputy chairman of the Wasit Provincial Council, and one other unidentified member were arrested by a Quick Reaction Force of the Federal Police dispatched from Baghdad, according to a se…
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Iraqi province and oil ministry in row over oil field which China is developing
By Salah al-rubaiaa
Azzaman, October 7, 2010
The authorities in the southern Iraqi Province of Wasit say Oil Ministry officials supervising the development of Al-Ahab oil field are not doing a good job.
They say they have evidence of corruption and embezzlement of “millions of dollars”.
As a result, they have warned the government that they would declare their province an autonomous region if it did not replace these officials.
Wasit, of which the city of Kut is the provincial capital, has high hopes that the development of the field by the state owned Chinese National Petroleum Company (CNPC) would improve the lot of its impoverished population of more than 1 million.
But according to Mahmoud Talal, the chairman of the provincial council, the Iraqi team administering the project was not doing a proper job.Talal said.
The benefits so far, he claims, have not reached the Wasit’s people but “corrupted officials”.
He said the council has been pressing the government and the oil ministry to move “these people” outside the province but to no avail.
“If the team is not moved and the way it has been operating not investigated properly, we shall declare Wasit an (autonomous) region,”
Such a declaration, if it goes through, would give Wasit’s provincial council the same rights which Iraqi Kurds have in their region.
CNPC has a service contract to develop al-Ahdab which is to produce more than 100,000 barrels of oil a day in five years.
Under the contract, China will get a service charge of six U.S. dollars per each barrel of oil it produces from al-Ahdab’s development. The charge will gradually be reduced to three dollars per barrel.
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Iraq urges oil companies to honor contracts
Sinan Salaheddin and Tarek El-Tablawy, Associated Press Writers, On Sunday July 18, 2010, 7:51 am EDT
BAGHDAD (AP) -- Iraq's oil minister urged international oil companies to move swiftly with implementing their newly-awarded contracts in the country, while assuring them Sunday they have the government's full support in dealing with any obstacles.
Hussain al-Shahristani's call reflects the pressure Iraq faces as it struggles to rebuild following the U.S.-led 2003 invasion that toppled Saddam Hussein. Years of sanctions on the country, home to the world's third largest proven reserves of crude, ravaged its oil industry. Looting, sabotage and perennial security woes following the war battered the sector even more and stunted investor interest.
Developing the 11 fields awarded during the two licensing rounds last year is "the nation's highest priority," al-Shahristani told representatives of the companies.
The oil executives and representatives from various Iraqi ministries had gathered to outline the challenges the companies face, and to ensure that Baghdad gives them all the help they need to meet their targets.
stipulated in the deals, al-Shahristani said, adding that the contracts were awarded transparently and through competitive bidding.
"You have to prove to us, and to the world, your ... ability to implement these contracts in accordance with the timeframe and the conditions"
"Success is not only reaching the production targets, but reaching these targets at a lesser cost, as much as possible," he said. "I hope we work together to reduce the costs."
The companies are seen investing between $150 billion and $200 billion over the course of the 20-year service contracts they were awarded.
The bidding rounds were the first Baghdad has held in decades, and were seen as opening a new era for Iraqi oil. The country relies on crude sales for more than 90 percent of its state revenue, but has been unable to produce more than roughly 2.5 million barrels per day, on average, for years.
Al-Shahristani has said Iraq hopes to boost output to 12 million barrels per day in about six years with the new contracts -- a level that would put it just shy of OPEC kingpin Saudi Arabia's current production capacity. But analysts and others say such targets are too optimistic.
Salah Baker, a Scotland-based Iraqi oil expert, told The Associated Press recently that 6 million barrels per day within the next five years was a more realistic goal.
The courting of international firms was aimed at bringing in companies with deep pockets and ample experience. But concerns about security -- which has improved dramatically since the height of the insurgency in 2006 -- still cast a shadow on development plans, as does Iraq's inability to form a new government, four months after no clear victor emerged from the March 7 elections.
The companies -- which get a fixed price per barrel they produce -- also face a host of other challenges, both logistical and bureaucratic.
"What concerns us is the lack of infrastructure," said an executive with one of the companies, speaking on condition of anonymity because he was not authorized to speak on behalf of his company. "We're afraid that we reach a point when we can't handle the oil and gas we produce."
The Iraqis are working hard to build develop the necessary infrastructure, "but they need to be fast," he said.
A representative from another international firm said officials need to streamline logistics if the development deadlines are to be met.
"The most important issue to us is to get a visa. It's like a lottery," he said, adding that it sometimes takes 40 days to get the visa. He also said they've run into delays getting materials to the site.
Iraqi officials acknowledge that the obstacles are many, but pledged that they will work hard to ensure that they meet their obligations. Al-Shahristani stressed that security at the sites was the government's responsibility
Thamer al-Ghadhban, an energy adviser to Prime Minister Nouri al-Maliki, said while virtually everything needed for the projects would have to be imported, Iraq was committed to clearing the path for the companies to operate.
Al-Ghadbhan cautioned the companies, however, that they also need to ensure that their work brings benefits to the regions in which they would be working.
"The local communities have expectations which I advise the (companies) to take into consideration," he said.
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Reidar Visser said
Tuesday, 5 October 2010 9:37 at 09:37
Iraq is somehow “artificial”. Yes, it is used by uninformed journalists, amateur historians and armchair generalists all the time, but that does not mean it has any empirical basis. You may be interested in the following article I wrote, “Proto-Political Conceptions of ‘Iraq’ in Late Ottoman Times”, International Journal of Contemporary Iraqi Studies, vol. 3 no. 2, autumn 2009. Here is the abstract:
This article criticises the so-called “artificiality paradigm” concerning the emergence of the modern state on Iraq, according to which the kingdom of Iraq that came into being in 1921 was nothing but a random collection of Ottoman provinces that had little in common. Based on documents from the late Ottoman period, the article shows that the opposite appears to be the case: In many ways, the modern state of Iraq had regional antecedents that predated the British invasion in 1914. The article shows that for long periods before 1914 there existed a pattern of administrative centralisation of Basra, Baghdad and Mosul under Baghdad as a paramount regional capital, that this regional entity was often described as “Iraq” in administrative and diplomatic correspondence, and that the local inhabitants often referred to Iraq in a patriotic sense.
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Japan eyes Iraq oil sector, cautious on security
Published: Thursday, 7 Oct 2010 | 9:48 AM ET
By Aseel Kami and Maria Golovnina BAGHDAD, Oct 7 (Reuters) -
Security concerns and political uncertainty in Iraq are discouraging Japanese companies from joining in the race for a slice of the country's lucrative energy sector, a Japanese diplomat said on Thursday. Tokyo's cautious approach contrasts sharply with a more aggressive investment tactic pursued by its rivals such as China, which has made inroads into Iraq's battered economy. Hideyuki Urata, counsellor for economic and commercial affairs at the Japanese embassy in Baghdad, said protracted wrangling over a new government prevented Japanese majors from making swift investment decisions. "We are making efforts to encourage Japanese companies to come here," he told Reuters in an interview at the Japanese embassy compound inside Baghdad's heavily guarded Green Zone. "We cannot say that currently the situation is totally stable and we are waiting for the formation of a new government. ... Most Japanese companies are waiting for the security situation in Iraq to stabilise." As competition over new emerging markets heats up, U.S. Under Secretary of Commerce Francisco Sanchez, in Iraq on a trade mission this week, urged U.S.
firms to hurry up with investments to avoid losing out to others. Iraq has long urged Japan to set up shop on its soil and help rebuild its economy, which is in tatters after decades of violence, sanctions and economic decline. Even though drive-by shootings and explosions still occur daily, overall violence has subsided, and foreign investors are scrambling to grab contracts, particularly in oil and gas. A FEW DEALS Japanese majors such as Nippon Oil Corp, Mitsubishi Heavy Industries and Sumitomo Corp have voiced their interest, and there have been some tentative deals. Japanese companies are mainly looking at the oil and electricity sectors, Urata said. "We can expect a lot of projects in those fields coming in the future." Japan Petroleum Exploration Co, in partnership with Malaysia's Petronas, last year signed a deal with Iraq to develop the Gharaf oilfield, one of several development contracts auctioned by Iraq in 2009. But the overall Japanese presence remains limited. Nippon Oil initially grabbed attention by announcing interest in Nassiriya oilfield, but those talks reached a dead end in February. Japan was a top Iraqi trade partner before the years of war and sanctions. Hundreds of Japanese engineers and managers worked in the country in the 1970s. Now there are just about 30 Japanese left in Iraq, half of them diplomats, Urata said. Urata said the attitude was changing, citing last year's Japanese investment forum held at Baghdad airport. Even though delegates did not venture out of the airport, their willingness to visit Iraq even for a day was seen as a step forward. "Their mindset is changing right now," he said. "I think last year was a good starting point to rethink their attitude towards Iraq." (Writing by Maria Golovnina, editing by Jane Baird) Keywords: IRAQ JAPAN/ (maria.golovnina@reuters.com; +44 20 7542 7968; Reuters Messaging: maria.golovnina.reuters.net@reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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Residents chant slogans during a protest about the auctioning of Akkas gas field in Ramadi, 100 km (60 miles) west of Baghdad October 20, 2010. Iraq auctioned three major natural gas fields to foreign companies on Wednesday as it seeks to shake off a legacy of war, bolster its standing as an energy giant and break into the lucrative global gas market. Wednesday's gas auction kicked off with South Korea's Kogas and Kazakhstan's KazMunaiGas Exploration & Production winning a deal to develop the largest of the three, Akkas gas field in the Sunni heartland of western Iraq. REUTERS/Ali al-Mashhdani (IRAQ - Tags: POLITICS CIVIL UNREST ENERGY)
REUTERS/STRINGER/IRAQ
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Interview: Thamir Ghadhban
The top oil adviser to the Iraqi prime minister talks about the Akkas gas field row, moderated oil production forecasts, and balancing Iraqi potential with market fundamentals.
Thamir Ghadhban (center) and Midland Refineries Co. Director General Dathar al-Kashab in a 2005 tour of the Daura refinery. (SABAH ARAR/AFP/Getty Images)
By Ben Lando of Iraq Oil Report
Published December 9, 2010
LONDON - Few oil men have been so central to Iraq’s oil sector as Thamir Ghadhban. Not only did he serve as oil minister immediately after the fall of Saddam Hussein’s regime, but he was also one of three authors of the draft oil law, and he now advises Prime Minister Nouri al-Maliki on oil and economic policy.
On the sidelines of the recent annual CWC Iraqi Petroleum conference in London, Ghadhban sat down with a handful of oil reporters and discussed his oil production assessment – lower than the Oil Ministry’s – and its effect on IOC contracts, which are paid according to production increases. He also addressed rumors that Zubair’s recent output hike may not be according to the contract.
Q: The initialing of the Akkas gas field contract was delayed. What’s going on with it now?
Thamir Ghadhban: As far as I know there are two issues. One is an internal Iraqi issue – the objection of the governing council of Anbar. I believe they have a legitimate point. The Ministry of Oil should have consulted with them. According to the constitution, there is such a role for the governing council of governorates containing oil and gas.
On the other hand, I don’t take what was on the news seriously. None of them in the governing councils have actually claimed that they have the powers to contract or develop such field by themselves. They wanted their point of view to be heard about the development of the field and to make sure that such development will provide enough opportunity for their people and their sons – the sons of Anbar – to work.
Therefore, when it comes to the points of difference I don’t think it is difficult to overcome it. The Ministry of Oil could sit with them, invite them, exactly in the same manner that it did with Basra, Amara and Kut when they developed the fields in accordance with the first and second bid rounds, and also with Ahdab.
Also, of course, the governing council of any governorate has no constitutional right to do, or unilateral right of decisions, to develop oil fields or sign contracts. It is the authority and the powers of the Ministry of Oil. But the Ministry of Oil should really have them on board.
The second (issue with Akkas) is that there was talk about whether, during the first stage of development, to transport the raw gas to the adjacent processing facilities in Syria, which has ample surplus capacity. This is not new: even during the former regime there was such technical economic idea that could be utilized. (But) the governing council did not know this background. They did not know the merits. They did not know that this would not really affect adversely on the number of opportunities for work. So the company and the ministry are talking about this possibility, whether it would be included in the contract or not. This is a matter of details.
Finally, taking what I said as far as the relationship and position of the governorate council and the Ministry of Oil, and the contractor, I don’t think they have insurmountable difficulties to overcome. We can solve them in the coming weeks. I expect a contract to be initialed soon.
Q: Wouldn’t taking the gas to Syria mean it would be effectively marked for export?
TG: No, not for export. Now nobody can really talk about exports seriously. The number one priority is to satisfy the domestic need. It’s huge. It will be insane to export gas at the time we need gas for power generation. It was supposed to be a temporary measure – process it, bring it back.
Q: You talked about 8 million bpd production capacity at the same time the Iraqi government has talked about 12 million bpd. Is this a new target or your own opinion?
TG: There are a number of independent and reputable experts who say when we take all the factors put together – logistics, time required to do this and that, OPEC membership, world’s supply and demand – such development cannot really be just a simple mathematical addition of contractual targets. We have to take all these factors that will definitely shape the trend of capacity development.
And I did not talk about actual production, just capacity. If we develop a capacity say to 12 million bpd and at the end of the day our production is based on fundamental demands … that means we have paid so much for idle capacity. I don’t think we will reach 12 million. This is also governed by our concern that to maximize revenue. It could be feasible if the government decides that we must get 12 million bpd. It is feasible, but is it in the best interest of Iraq? This is doubtful.
Iraq at present day is not really after market share like what the Saudis did and what they are prepared to do. We will not fight for a market share at any price. We said that we want to maximize revenue and we want fair price of oil to us – the producers – and to the consumers and therefore we will not be willing to see a price collapse.
Q: So wouldn’t you have to renegotiate with the companies?
TG: I don’t think we have to negotiate right now. First of all, none of them have met their 10 percent target. Eni has done some debottlenecking (at Zubair oil field), reducing pressure here, re-perforating there; it is not really sustainable – they have some work to do. Let us see that they are going to reach the 10 percent, let us see production from the green fields, for example get Halfaya and Garraf and Badra flowing. So there is lots of work to be done and, I’m not saying a long time, but a number of years, and let us see their performance, our performance, and our relationship working together.
Q: You mention Zubair and the increased production. Some engineers there say they have reached 251,000 bpd already but some say that it may turn out to be produced in a way that’s a detriment to the field and would not count toward the 10 percent.
TG: I’m not sure about the authenticity of this. We’ve done it before. In 1972-73 the Basra Petroleum Company, when they wanted to increase production without much commitment of investment, what they did was reexamined the wells. So, a strong well, limited by the flow line – they doubled the flow lines. Or they removed a smaller diameter pipeline and added a larger diameter pipeline. They re-perforated the wells. They shortened the tubing. Removed the chokes and put better well heads and so on. Such type of measures decreases the backpressure on wells and allowed wells to flow.
What Eni consortia did, that’s what they did. As an example: two wells tied together to one pipeline, we call it a Y-piece – like the “y” letter – so they separated the two wells and let them flow separately so there’s an increase in production. The second point is that they lowered down the pressure of the second stage of the degassing station and therefore wells started to flow, or at higher flow.
Of course it is our right and our duty in the Ministry of Oil to examine and assess the effect of such measures. But I don’t see any problem in removing bottlenecks and increasing production. But I would say such types of measures are not really the true development plan. They are short terms. But definitely drilling is required, water injection is required, increasing the capacity of separation, handling water production, is required. So I don’t see a problem unless proved to be detrimental to reservoirs.
Q: That’s the concern, though.
TG: They will look at and see. If it is detrimental (the ministry) will stop them. But this is only for reservoir specialists who can decide it, not lay men or, with all respect, journalists.
Q: What’s happening with Rumaila? It’s not even at the 10 percent.
TG: BP faced the decline issue, and they started work. They deployed drilling rigs and whatever services, plus workovers. I am now aware that they are back to the base production. We expect in the coming months they will add. Their efforts, drilling efforts, work-over efforts, re-perforation and so on, and running pumps – we expect that in the coming months, the production rate from Rumaila fields will be above the base production.
Q: Next year what do you think Iraq’s average output will be?
TG: We expect some increase of some 300,000 bpd on top of current production.
Q: What about in 2012?
TG: We think there will be an increase in production by 750,000 to 1 million bpd. We have a target. In the next four years we want to add at least 2 million bpd, in the new government. So 2.5 million bpd (of current production) plus 2 million bpd (of added production), that’s 4.5 million bpd. And there will be production from KRG on top of that. Perhaps between 250,000 to 400,000 bpd, perhaps even half a million. So between 4.5 and 5 million bpd, I hope, by the end of the term of this government.
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Kurdish oil demands to Maliki revealed
According to previously undisclosed communiqué, Kurdish leaders want specific oil and revenue laws passed in 2011 and say KRG should decide constitutionality of its oil deals.
Iraqi Prime Minister Nuri al-Maliki (R) speaks to Kurdish leader Massoud Barzani during a congress of the latter's Kurdistan Democratic Party in the northern city of Erbil on December 11, 2010. (SAFIN HAMED/AFP/Getty Images)
By Ben Lando of Iraq Oil Report
Published December 15, 2010
BAGHDAD - In exchange for the decisive support they gave to Prime Minister Nouri al-Maliki’s bid for a second term, the political bloc representing the Kurdistan region demanded measures that would give it significant autonomy within Iraq’s oil sector.
In a previously undisclosed communiqué to Maliki, Kurdistan Regional Government (KRG) President Massoud Barzani called for the passage of a specific revenue sharing law sometime “in the 2011 financial year” and an oil law “at the beginning of next year, 2011.”
The Kurdistan Alliance, which has 57 seats in the 325-member Parliament, also wants the KRG’s laws to trump federal laws in any dispute over the legality of the 37 oil deals signed by the KRG with foreign oil companies, in defiance of Baghdad.
The demands were issued on August 21, 2010, and remained in force as the Kurds pursued a coalition-building dialogue with Maliki in October and November, according to a source familiar with the Kurdish side of the negotiations. Those talks culminated in second terms for Maliki and President Jalal Talabani, a Kurd.
For the past four years, the KRG’s leaders in Erbil have been at odds with Baghdad over key issues, including the proper boundaries of Kurdish territory and the region’s level of control over its oil sector. Maliki’s administration has condemned the KRG’s contracts with foreign oil companies as illegal – a dispute which has effectively locked in a prospective 150,000 barrels per day (bpd) of potential oil exports. The KRG Ministry of Natural Resources Minister Ashti Hawrami said fields in the region could export one million bpd in a few years.
According to officials involved in the government formation negotiations, a final agreement that would sanction the KRG contracts will not be reached until the government is fully formed and the Parliament revisits legislation to govern the oil sector, which has been stalled since 2008.
“It’s a demand (for) recognition of the KRG oil deals and pay the companies,” said independent Kurdistan Alliance Parliamentarian Mahmoud Othman. “All the problems will be solved when there is a hydrocarbons law.” The draft law calls for a federal oil and gas council, “and that council will decide on the (legality) of the contracts,” Othman said. “It will take time.”
Maliki has until Dec. 26 to finalize the formation his government, which includes a tense allocation of key positions to winning parties, including leadership of the ministries of Oil and Finance.
As that deadline looms, nearly all of Iraq’s elected officials are refusing to disclose details of the political jockeying. Maliki ally Abbas al-Bayati ended an interview when questions turned to Kurdish-Arab relations, including Barzani’s recent public statements asserting Kurdistan’s rights to oil-rich and disputed Kirkuk. (KRG officials have said the comments were taken out of context and misunderstood.)
“We will look to the (KRG oil) contracts in a way that will dismiss all the differences,” Bayati said. He wouldn’t get into specifics but alluded to a general agreement that key oil-related laws would provide the path to reconciliation.
Despite pre-government-formation gestures that trend toward political harmony, the underlying disputes that stalled these laws in 2008 have not been resolved.
Iraq’s 2005 Constitution leaves unanswered several key oil-related questions, and calls for a suite of definitive legislation to structure the oil sector. Those laws were pushed hard by the U.S. government and various Iraqi officials beginning in 2006, but faltered first in the cabinet and then in Parliament over two key issues: the federal Oil Ministry’s exclusive right to sign contracts, and the extent to which foreign companies will be allowed into the country’s oil sector.
That stalled legislation seems likely to serve as the starting point for future negotiations. The package comprises four laws: the hydrocarbon law, which would provide a framework for managing the oil sector in Iraq; the revenue sharing law, which determines a mechanism for redistribution of funds; a law reorganizing the Oil Ministry into a purely regulatory body; and a law re-establishing the Iraqi National Oil Company.
Barzani’s communiqué is titled “Kurdistan Region’s negotiation conditions regarding resources and the oil and gas sector,” and it insists on the passage of particular versions of the hydrocarbon framework law and the revenue sharing law.
It calls for “passing the agreed upon draft (revenue sharing) law dated 20/06/2007… This law should be enacted in the 2011 financial year.”
As for the framework law – also known as the hydrocarbons law or the federal oil and gas law – Barzani called for “legislating this law according to the draft dated 15/02/2007… so that this law is to be enacted at the beginning of next year, 2011.”
The communiqué mentions specific amendments to both laws, but the content of those amendments has never been made public. An April 2007 annex to the oil law by Oil Minister Hussain al-Shahristani that divided Iraq’s oil fields into four development and control categories caused the KRG to withdraw support back then.
Barzani also demanded one change to the draft oil law. All KRG oil deals should be considered valid “assuming that they comply with the Iraqi Constitution,” according to Barzani’s recommended language. His provision continues: “Should there be a case where there is a discrepancy with the constitution, then this should be resolved by the relevant authorities in the Kurdistan Region.”
Such language opposes the existing policy of Maliki’s government, which has fought hard to centralize authority over Iraq’s oil sector.
The tug of war between Baghdad and Erbil was particularly strained last year over exports from the Tawke field, which has been developed by Norway’s DNO, and Taq Taq, developed by a joint venture between Turkey’s Genel Enerji and China’s Sinopec. Those fields briefly exported around 50,000 bpd for four months, but that arrangement imploded. The KRG wanted the federal government to pay the companies, while the Oil Ministry contended that the signator of the contract – that is, the KRG – was required to pay from its own budget.
Since then, numerous meetings have taken place, and a nominal deal was even reached by which the Ministry of Finance would assess the KRG’s deals and contractors’ expenditures in order to certify compensation. This didn’t happen for political reasons, and because the Finance Ministry has lacked the capacity to perform such an assessment.
There also remains a possible showdown over the 2011 budget, which in its draft form requires the KRG to send 150,000 bpd through the export pipeline or risk paying that lost revenue through a reduction of its 17 percent cut of the federal budget. The budget legislation also mentions an audit of 2004-2010 revenues that the KRG should but might not have sent to the central government.
The nearly $79 billion budget, which includes a nearly $12 billion deficit, is funded almost entirely by oil exports, as well as loans from the International Monetary Fund, World Bank and Central Bank of Iraq. It remains to be seen whether the budget will force the sides to compromise or drive a wedge deeper in the dispute.
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Reidar Vissar:
Diyala is not a federal state, it is a governorate. Iraq has 18 governorates. In Basra, the qadas of Qurna and Zubayr think they should be governorates of their own. Imagine if each “local government area” in Australia should demand seats in the govt. Add to that the numbers, as you can see from Kermanshahi’s comments above, and they do not even include micro minorities or the claims of Tawafuq or Unity of Iraq. Accommodate all of this, and you will have the world’s biggest government ever, formed after a process that took longer than any other previously recorded. What a democracy!
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Iraq’s Kirkuk earns more than $100 million from the ‘petrodollar project’
By Marwan al-Ani,
The Ministry of Finance has released the sum of 111 billion Iraqi dinars (approx. $104 million) for the oil-rich Province of Kirkuk.
The money is part of the country’s petrodollar project under which oil-producing provinces are entitled to one dollar for each barrel of oil produced by their oil fields.
Oil-producing provinces, namely Kirkuk and Basra, are required to use the money for reconstruction and rehabilitation of their infrastructure.
Kirkuk’s share so far has been more than $200 million. Kirkuk’s oil output averages 500,000 barrels a day.
“The royalties will be invested in strategic projects to develop the province,” Kirkuk’s Governor, Abdulrahman Mustafa, said.
He said Kirkuk had suffered from decades of neglect and lack of sufficient resources for development.
Upgrading municipal services, purchase of vehicles and machinery necessary to keep the province clean and tidy and the removal of debris top Mustafa’s priorities.
But most of the money, according to Mustafa, will be invested in power projects to boost the electricity supplies.
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PetroChina to particiate in developing Halfaya oilfield in Iraq
Thursday,January 28,2010 Posted: 05:02 BJT(2102 GMT)
From:xinhua Article type:Redistributed
A consortium led by the China National Petroleum Corp.(CNPC), China's largest oil company, won a bid to develop Halfaya oilfield in Iraq, CNPC said on Wednesday.
Under the 20-year deal, CNPC, Total, Petroleum Nasional Berhad (Petronas), and Iraq's state-owned South Oil Co. will jointly develop the 4.1 billion barrel Halfaya field.
According to an agreement initialed previously, the consortium will receive 1.4 U.S. dollars of service fee from each barrel.
The consortium plans to boost output from the current 3,100 barrels a day to 535,000 barrels.
CNPC has 37.5 percent of the interests in the project. Total and Petronas will take 18.75 percent each, leaving Iraq's state-owned South Oil Co. with the remaining 25 percent. It is the third important project that CNPC participated in in Iraq after the Ahdab and Rumailia projects.
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China CNPC, BP to develop Iraqi oilfield
Sunday,October 11,2009 Posted: 19:39 BJT(39 GMT)
From:Xinhua News Article type:Reproduced
BEIJING, Oct. 10 (Xinhua) -- China National Petroleum Corp (CNPC), China's largest oil and gas producer, and Britain's oil giant BP signed an initial agreement on Thursday with Iraq's Oil Ministry to develop Rumaila, Iraq's largest oilfield, China Daily reported Saturday.
The signed contract will be referred to the cabinet for approval, the newspaper said, citing Iraq's Oil Ministry spokesman Asim Jihad.
The newspaper said the deal requires an investment of more than15 billion U.S. dollars.
A BP spokesman confirmed that they had signed the initial contract and were waiting approval from the Iraqi government. He said it was an important milestone and BP hoped to be able to sign the final agreement before the end of this year.
CNPC said it was not ready to comment.
BP and CNPC won the Rumaila deal after they cut their proposed remuneration fee to 2 U.S. dollars per barrel. Iraq offered eight contracts in a June auction.
As Iraq's largest producing oilfield, Rumaila accounted for almost half of the country's total output of 2.4 million barrels per day (BPD), with a current capacity of 1.1 million BPD. The field's reserves are estimated to be 17 billion barrels.
BP and CNPC aim to boost its output to 2.85 million barrels per day over the 20-year contract.
Under the service contract, BP holds a 38-percent stake in the Rumaila venture, while CNPC has a 37-percent share. Iraq's State Oil Marketing Organization holds the rest.
The contract for Rumaila aims to inject foreign cash to overhaul dilapidated facilities and outdated practices.
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Sinochem to bid for Iraqi oil and gas fields
Tuesday,September 01,2009 Posted: 05:21 BJT(2121 GMT)
From:xinhua Article type:Redistributed
Sinochem Group, China's fourth-largest oil company, has got permission to participate in Iraq's second auction of oil and gas fields in November, said Tuesday's China Daily.
Sinochem is one of the 45 companies qualified to participate in he second bidding round, the newspaper said, citing a company statement that did not specify which fields it was interested in.
The company had earlier participated in the first bidding round for Iraqi oil fields in June last year, the newspaper said.
Analysts said the move shows that domestic oil companies are increasingly looking towards Iraq, which has the third largest proved oil reserves in the world.
Zhou Jiping, president of PetroChina, the listed arm of China National Petroleum Corp (CNPC), said on Friday that the company was interested in bidding for more Iraqi oil fields in the second round of bidding, after winning a joint bid with BP for the Rumaila field in the first round.
Iraq made its first auction of major oil contracts in June last year since the U.S.-led invasion. China's oil majors all took part in the bidding. Only CNPC, which teamed up with BP, won a contract to develop the Rumaila oilfield.
The CNPC-BP contract was also the only one to be awarded in the first auction, as there were some differences between the Iraqi government and other oil majors over payment terms.
China's other oil majors including CNOOC will also consider participating in the second round, said the newspaper, citing one source close with the deal.
Iraq plans to award contracts for the six partly developed and four undeveloped fields in its second licensing round. It has proposed better contract terms than in the first round, according to the newspaper.
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Iraq adds more than half a million barrel of oil to daily output
By Laith Jawad
Azzaman, December 23, 2010
Iraqi engineers and technicians have raised production at two of the country’s most prolific oil fields by 10%, the new oil minister says.
The minister, Abdulkarim al-Aibi, said the boost in the production of the giant fields of Rumaila and Zubair in the southern Province of Basra, was achieved “through cooperation with foreign firms.”
He did not name the firms but Iraq gets most of its output from the two fields.
If confirmed, the substantial output will be the first tangible hike in Iraqi oil production since the U.S.-led invasion of 2003.
With the latest hike, he said, Iraq’s oil production has jumped to 2.5 million barrels a day from around 2.4 million.
“More hikes in oil production are in the pipeline,” the minister said.
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Oil exports from Iraq's Kurdish north to resume
AP – Iraqi oil minister Abdul-Karim Elaibi talks to reporters after attending an Arab Petroleum Exporting …
By SALAH NASRAWI, Associated Press Salah Nasrawi, Associated Press – Sat Dec 25, 11:05 am ET
CAIRO – Iraq's newly appointed oil minister said on Saturday that oil exports from the country's northern self-ruled Kurdish region would soon resume as part of the country's national oil export policy.
The Kurds have sought greater control over oil in their crude-rich region while Baghdad has argued that the oil is a national resource, under the central government's control.
Iraqi Kurds have unilaterally signed more than two dozens oil deals with Western companies that are deemed illegal by Baghdad. Exports were halted a few months after they started in June 2009 amid a disagreement over payments.
Abdul-Karim Elaibi told The Associated Press the exports from the Kurdish region would be resumed "in the coming few days." He didn't set a date or elaborate on how the exports would be part of the nation's export strategy.
Earlier this month, Elaibi's predecessor, Hussain al-Shahristani, said
a dispute over how private companies accounted for equipment costs and other expenses for reimbursement has been settled, clearing the way for the exports to resume.
Al-Shahristani, who now holds the post of vice president for energy issues in the new government of Prime Minister Nouri al-Maliki, said in comments Dec.6 the Kurds were committed to exporting 150,000 barrels a day by next year.
Iraq plans to raise exports to 2.25 million barrels a day in 2011, up from 1.9 million at present. The current oil exports account for nearly all of Iraq's foreign currency revenues.
The increase is as important psychologically for Iraq as it is economically and practically.
The oil-rich nation, which was the birthplace for the Organization of the Petroleum Exporting Countries, has struggled to raise its oil production and exports after years of sanctions and wars left much of the vital sector in poor shape.
With Saddam Hussein's ouster in the 2003 U.S.-led invasion attention turned again to revamping the sector.
Two international oil licensing rounds last year opened the door for international oil firms to re-enter the Iraq market. Among the tasks they undertook were new seismic surveys of the fields which they were awarded — efforts that have contributed to raising the overall reserve estimate.
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Iraq will iron out oil industry troubles: Maliki (AFP)
28 December 2010 WASHINGTON — Iraq’s Prime Minister Nouri al-Maliki pledged his government would address logistical and other woes plaguing international oil firms in his country, The Wall Street Journal reported.
In his first interview since his cabinet was confirmed this month, Maliki acknowledged oil companies were facing delays to get needed equipment into Iraq due to airport backlogs and troubles at the main border entry points in the southern oil hub of Basra, the report said.
But it added the prime minister indicated he was getting personally involved to resolve the longstanding complaints, including with meetings planned for this week with senior security officials to address logistical hang-ups and to identify alternatives to get equipment into the country.
The premier said Baghdad would welcome not just foreign oil field development work but also international petroleum companies.
“We have no restrictions on their entry. We want them,” Maliki told the Journal, referring to foreign oil companies and oil-services firms. “We need speed. We need money.”
Iraq’s oil output has risen to more than 2.6 million barrels a day, its highest level for two decades, according to Oil Minister Abdulkarim al-Luaybi. But while the country has some of the world’s biggest oil deposits, it has struggled to fully exploit its riches due to prolonged periods of war, sanctions and crippled investment.
“We know that developing Iraq’s economy and providing funds for finishing projects and providing jobs for people all depend on revenue from oil,” Luaybi said in his speech at a ceremony to mark his official takeover of the ministry.
He vowed to meet the challenge.
Luaybi said the ministry would “reactivate the role of the exploration teams and geological surveys in order to strengthen national production,” and also emphasized previously-announced plans to expand oil sector infrastructure.
These plans include “projects to expand oil and gas pipelines, and make good use of the gas that comes out with the extraction of oil,” along with establishing new large refineries, he said.
Maliki told the Journal he expected Iraq’s cash-flow problems to improve by September when one of four new floating oil-export terminals — due to collectively more than double Iraq’s export capacity — becomes operational in Basra.
Work was also due to get underway soon on an agreement to build an oil pipeline from northern Iraq to the Syrian port city of Baniyas that is expected to be able to pump 2.6 million barrels a day when finished.
And Maliki, vowing to protect the country’s oil sector and foreign investors from political interference, said a new raft of proposed amendments to Iraq’s investment law would provide better protection for foreign investors and encourage interest in housing and other sectors.
He also dismissed as “mere opinion” a fatwa by anti-American cleric Moqtada al-Sadr prohibiting his followers from working for foreign oil firms.
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BP gets Iraqi oil field green light
Fiona Bond
19.10.09 15:41
British oil major BP (BP-) and Chinese oil producer CNPC have received the go-ahead from the Iraqi cabinet to develop Rumaila, Iraq's largest oil field.
Estimated to contain up to 15% Iraq's oil reserves, the two oil powerhouses won the 20-year contract to invest and develop Rumaila at the end of June.
Most of the 32 companies that originally bid for the contract withdrew from the tender process due to the lack of generous terms imposed, given the continued violence in the country and disputes that could arise over control issues. It is thought that BP and CNPC halved their asking price in order to secure the contract.
However, analyst Samuel Ciszuk at IHS Global Insight said oil majors such as BP and CNPC are masters of extracting maximum profit: "It is a huge development for the companies because the amounts discussed are so vast in such a short space of time - you don't hear about this type of increment anywhere else in the world.
"The companies are starting at a fairly low point of $2 a barrel but we are talking about such enormous amounts that BP and CNPC will meet production rates very quickly in order to ensure they start making money. In turn, Iraq desperately requires this investment because they must boost their production quota."
The oil field has reserves of 17.8 billion barrels and the pair is expected to boost output from 1,050 million barrels per day to 2,850 million barrels per day, at a reported cost of somewhere between $14 billion and $20 billion.
Under the terms of the agreement, BP will hold a 38% stake, while CNPC will be given a 37% share.
The outstanding amount will be controlled by Iraq's State Oil Marketing Organization. CNPC and BP will conduct the exploration of the area with the Iraqi government providing them with a remuneration fee, however the companies will not own the oil.
The fee will only be paid once 2,850 million barrels a day capacity is met and should the output exceed that level, the pair will be offered $2 for every additional barrel. BP, having originally discovered the field in the 1950s, will benefit from access to low-cost equipment through the Chinese supply chain.
The deal marks the first of its kind for Iraq since the 2003 US-led invasion and signals the return of BP to Iraq after Western companies were pushed out of the country following the nationalisation of the oil industry in the 1970s.
It is reported that it the deal will be finalised within the next three weeks.
Iraq will be hoping to use increased oil revenue to recover from years of conflict. Just earlier this week, three international consortiums agreed to the government's price to develop oil fields in the country and Iraqi officials are also thought to be in talks with Royal Dutch Shell (RDSB) about a licence for an oil field located in the north of the country.
BP's share price was on the rise, gaining 15.20p to settle at 574.30p.
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Shell inks Iraqi deal
Fiona Bond
18.01.10 10:01
Oil titan Royal Dutch Shell (RDSB) has finalised an agreement with Malaysian Petronas and the Iraqi government to develop one of the country's largest oil fields.
The duo will provide technical assistance for the Majnoon oilfield in the southern part of Iraq in a deal set to span 20 years.
Shell and state-run Petronas will work alongside the Iraqi government to target production of 1.8 million barrels of oil per day, considerably higher than the current 45,000 barrels per day.
The deal was initially inked in December after the pair beat rivals Total and Chinese state-owned CNPC to win the contract in what marked Iraq's second bidding round since 2003. Anglo-Dutch Shell and Petronas managed to swing the deal in their favour with a fee proposal of $1.39 per-barrel.
Iraq, owner of the third-largest oil reserves in the world, hopes that foreign investment will help to repair some of the damage caused from years of fighting and also ramp up sales.
The Iraqi council of Ministers, including oil minister Hussain al-Shahristani, approved the deal on 5 January.
Chief executive Peter Voser commented: "Iraq's oil and gas reserves are among the largest in the world and we look forward to applying our experience and technology to support ongoing efforts to rebuild the country's energy infrastructure."
Shell, as lead operator, will hold a 45% stake, with partner Petronas holding 30%. The Iraqi state holds the remaining 25% interest.
The Majnoon deal paves the way for Shell's expansion in the Middle East. In November, the FTSE 100 (UKX) group pledged its support for Qatar and said the country underpins its growth plans to 2012.
Samuel Ciszuk of IHS Global Insight, said: "It is a huge deal allowing Shell access to a very significant future source of crude volumes, although it and Petronas will receive a very low profit margin. Risks -particularly political- are still very high and all companies investing in Iraq will keep their eyes very closely focused on the run-up to the 7 March general elections in Iraq and their outcome, to assess their prospects.
"They need to deploy personnel and start work within three months from signing, leaving them some time after the elections to assess Iraq's political direction for the coming four years, the stability of the future government and whether the overall security situation will continue to improve or start to deteriorate."
Shell's share price was down marginally to 1,775p.
==============
Release date: 03 November 2009
BP, and China National Petroleum Corporation (CNPC), announced today that they have signed a technical service contract with Iraq's state-owned South Oil Company (SOC) to expand production from the Rumaila oilfield, near Basra in southern Iraq
The signing follows BP's successful bid for the contract with CNPC in Baghdad in June.
The consortium led by BP (38 per cent) with partners CNPC (37 per cent) and the Iraq government's representative State Oil Marketing Organisation (SOMO - 25 per cent), has agreed to nearly triple the Rumaila field's output to almost 3 million barrels of oil a day (b/d), which would make it the world's second largest producing oilfield.
BP and CNPC plan to invest approximately $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d in the second half of the next decade. Once production has been raised by 10 per cent from its current level of about 1 million b/d, costs will start to be recovered, and fees of $2 a barrel earned on the incremental oil production.
"We are pleased to have this opportunity to work with the people of Iraq to develop one of the world's great oilfields and we see this as the beginning of a long-term relationship with Iraq," said BP's chief executive Tony Hayward.Hayward added.
"We are also pleased to have the opportunity to help Iraq rebuild its economy after years of war and sanctions. The investment in Rumaila will support Iraq in achieving its ambition of becoming a major player in global oil markets once again and will catalyze training and development opportunities for the many thousands of Iraqi workers on Rumaila,"
The Rumaila Field Operating Organisation (ROO) will manage the rehabilitation and expansion project. ROO will be staffed mainly by employees from South Oil Company and will contain a small number of technical experts and managers from BP and CNPC.
BP has already gained information about the Rumaila field through a three year memorandum of understanding to provide technical assistance from 2005 and historically has knowledge of the field's geology dating back to discovery in 1953.
BP and its partners intend to use their reservoir management expertise to boost recovery and increase production from the Rumaila field, focussing initially on waterflood and gas reinjection optimization.
Since they only "start to recover costs" at the trigger point and only take their 2USD on the increment itseems a pretty mean deal. In fact one analyst wrote that the profit could be negligible and BP are taking a longer term view of the prospects in Iraq.
Let's hope that GKP do not get faced with a similar contract !
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Oil output up, fourth bidding round planned
In less than two weeks on the job, Abdul Karim Luaibi has announced an increase in output from oil fields, which he said is record production, and acknowledged that a fourth bidding round is being prepared for a dozen exploration blocks.
He has given few details, such as from which fields exactly a struggling oil sector has been able to find this boost and what contract models will be used for the exploration round. Yet he’s marked the first days of his tenure with an openness that could bode…
Oil output up, fourth bidding round planned
Iraqi Oil Minister Abdul Karim al-Luaibi gives a speech at the Oil Ministry in Baghdad on December 27, 2010 after officially assuming the post. (SABAH ARAR/AFP/Getty Images)
By STAFF of Iraq Oil Report
Published January 3, 2011
BAGHDAD - In less than two weeks on the job, Abdul Karim Luaibi has announced an increase in output from oil fields, which he said is record production, and acknowledged that a fourth bidding round is being prepared for a dozen exploration blocks.
He has given few details, such as from which fields exactly a struggling oil sector has been able to find this boost and what contract models will be used for the exploration round. Yet he’s marked the first days of his tenure with an openness that could bode well for a transparent look at how the world’s third largest oil patch in the world will make good on its pledge to become the largest producer ever within seven years.
Work is progressing, he said, by the foreign oil companies which signed 11 contracts from the June and December 2009 bidding rounds. The deals, which pair international oil companies with Iraq’s state operators in long-term service contracts, are aimed to boost oil production capacity to more than 13 million barrels per day (bpd) within seven years as foreign.
“The oil contracts are going as it should be and programs that we have for production will be more than we anticipated,” Luaibi said in a press conference Sunday at the ministry. “Oil production today is more than 2.7 million bpd.”
He said the output has recently witnessed a jump of “of more than 250,000 bpd … due to our national effort in some oilfields, and also the efforts of some (foreign) companies.”
The most advanced of the projects are the Rumaila oil field, awarded to BP and the Chinese National Petroleum Corp., and Zubair, awarded to Italy’s Eni, the Korean Gas Corp. (Kogas), and Occidental Petroleum. But Luaibi didn’t announce which fields account for such a dramatic increase in production or exports.
Iraq has its hands tied on numerous fronts, though many bottlenecks are being addressed. Exports are capped by the 500,000 bpd capacity in the northern export route to Turkey and the southern export routes are rated for only 1.6 million bpd. But construction is underway for a new southern system which could see its first capacity increase by year’s end with the first of four single point mooring floating terminals, which are rated for 900,000 bpd capacity each. This would allow Iraq to start studying and either fixing or replacing the existing southern routes to the al-Basra and Khor al-Amaya oil terminals.
Iraq has also begun using a new drag reducing chemical which allows an increase in output without increasing pressure on the pipelines, and could account for an increase in the south to as much as 1.83 million bpd.
He said weather shut-in exports for five days in December – a result of nature mixed with old facilities and equipment – but was bullish on January.
“For the past month, our export of oil was 1.95 million bpd and oil revenues for the last month exceeded $5 billion,” Luaibi said. “According to the case that we have now, oil exports will increase this month to more than 2 million bpd.”
In order to make room of the expected increase in output of 2011, let alone longer-term plans, Iraq is looking at new export routes, including to Syria, as well as the necessary – though expensive – additional and expanded domestic pipeline, storage and refinery networks.
It’s also preparing for a fourth bidding round – the third took place Oct. 20, 2010 with the award of the Siba, Mansuriya and Akkas gas fields – for the long anticipated exploration blocks. Much of the country is under- or un-explored, including the western desert believed to have massive dry gas deposits.
Exploration deals have had foreign oil companies licking their chops since the planning of the Iraq war in 2002 looked as if i
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Iraq weighs building oil pipeline to Jordan
Jan 3, 2011 1:53 PM GMT
By The Associated Press
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BAGHDAD (AP) — Iraq's government spokesman says Baghdad is weighing plans to build a pipeline to export crude oil to neighboring Jordan.
Ali al-Dabbagh said Monday that the issue was raised by a visiting Jordanian delegation led by Prime Minister Samir Rifai.
Al-Dabbagh added that technical committees will be formed soon to study the project.
He didn't divulge more details.
In 2008, the two countries signed a three-year agreement to supply Jordan with 10,000 barrels of Iraqi oil at a discount of $22 per barrel less than the international market price.
The shipments are sent by truck to the border where they're loaded onto Jordanian trucks. The agreement is set to expire next August.
http://www.bloomberg.com/news/2011-01-03/iraq-weighs-building-oil-pipeline-to-jordan.html
http://www.monstersandcritics.com/news/middleeast/news/article_1609078.php/Jordanian-premier-visits-Iraq-for-cooperation-talks
http://www.bloomberg.com/news/2011-01-03/shell-to-build-dock-to-develop-majnoon-iraq-ports-chief-says.html
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Shell to Build Dock to Develop Majnoon, Iraq Ports Chief SaysBy Kadhim Ajrash and Nayla Razzouk - Jan 3, 2011 3:46 PM GMT+0300
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Royal Dutch Shell Plc will build a dock in Iraq’s southern Shatt al-Arab waterway to handle equipment needed to develop the Majnoon oilfield, the head of the country’s state-run ports company said.
The ports company and South Oil Co. signed an agreement to allow Shell to build the dock at its own expenses, Salah Khudair, director general of the General Company for Ports of Iraq, said in an e-mailed statement.
“The dock will facilitate the shipment of energy-related equipment for the international companies that are developing the oilfields, including Majnoon,” he said.
Iraq, home to the world’s fifth-biggest oil reserves, wants foreign funding and expertise to help it boost energy exports and help an economy stunted by years of conflict and sanctions. The government, which gets most of its revenue from oil, plans to build offshore mooring facilities in the south to more than double export capacity to 4.5 million barrels a day by mid-2012.
Together with Petroliam Nasional Bhd of Malaysia, Shell won a 20-year service contract in 2009 to raise output from Majnoon to 1.8 million barrels a day. Shell Chief Executive Officer Peter Voser said Oct. 12 that production from Majnoon had risen to 70,000 barrels a day.
As well as being the lead operator, Shell holds a 45 percent stake, leaving Petronas with 30 percent and the Iraqi state with a 25 percent interest. Majnoon, which straddles the Basra and Maysan provinces, has estimated crude reserves of about 12 billion barrels and 9.5 trillion cubic feet of gas.
To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net.
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2009-12-11
The Big Boys are moving in(Reuters) - Iraq's Oil Ministry on Friday awarded service contracts to international oil companies to develop two of the country's biggest oilfields, part of the second bidding round for oil deals since the 2003 U.S.-led invasion.
Royal Dutch Shell (Amsterdam: RDSA.AS - news) , Europe's biggest oil company, and Malaysia's state-run Petronas together won the contract for the supergiant Majnoon field. A consortium made up of China National Petroleum Company (CNPC (0135.HK - news) ), Total of France and Petronas won a deal to run the giant Halfaya.
Two of the fields -- East Baghdad and the Eastern Fields -- offered on Friday failed to attract any bids, while sole bidder Sonangol of Angola and the Oil Ministry failed to reach agreement on a third, Qayara. The ministry will take bids on five more fields on Saturday.
Here are the details from Friday's bidding:
* MAJNOON
Shell (LSE: RDSB.L - news) and Petronas' winning bid for the field in southern Iraq included a proposed remuneration fee of $1.39 per barrel and a plateau production target of 1.8 million barrels per day (bpd). Majnoon currently produces 45,900 bpd.
Total and CNPC offered the only other bid: $1.75 per barrel and an output target of 1.45 million bpd.
The Oil Ministry's minimum plateau production target was 700,000 bpd, according to a protocol for the tender.
After the deal is ratified, Shell must pay a non-refundable signature bonus of $150 million (92.6 million pounds), according to the tender protocol. The agreement also requires it to invest a minimum of $300 million. The fee just to participate in the bidding for Majnoon was $500,000.
* HALFAYA
CNPC led the consortium, which included Petronas and Total, that won the contract for this giant field in southern Iraq, which currently produces 3,100 bpd. They proposed a fee of $1.40 per barrel and targeted plateau production of 535,000 bpd.
Partners LUKOIL of Russia and Oslo-based Statoil offered $1.53 per barrel and a target of 600,000 bpd.
India's ONGC led a venture, in which TPAO, Turkey's state-run oil company, and Oil India also held stakes, that proposed a fee of $1.76 per barrel. Their plateau production target was 550,000 bpd.
A fourth bid came from a consortium led by Italy's Eni (Milan: ENI.MI - news) . It said it would take $12.90 per barrel and produce 400,000 bpd. Eni owned a 30 percent stake in that venture, while South Korea's KOGAS and U.S.-based Occidental owned 20 percent each and Sonangol of Angola and China's CNOOC (0883.HK - news) each owned 15 percent.
Halfaya's non-recoverable signature bonus is $150 million and the minimum expenditure obligation is $200 million the protocol tender said. The participation fee was $500,000.
* EASTERN FIELDS
This cluster of four fields -- Khashm al-Ahmar, Naudoman, Gulabat and Qamar -- failed to attract any bids. Volatile Diyala province has been plagued with violence and some of the areas are disputed with Iraqi Kurds.The fields have estimated reserves of 3 million barrels, and the minimum production requirement is 80,000 bpd.
The signature bonus is $100 million and the minimum expenditure obligation is $150 million. The fee to participate in bidding was $350,000, according to the protocol tender.
* EAST BAGHDAD (CENTRAL AND NORTH)
No companies bid for this supergiant located adjacent to an impoverished Baghdad district called Sadr City. Some firms may have been deterred by its vulnerability to attack or by its low-quality crude.
With reserves of 8.1 billion barrels, it currently yields 10,300 bpd, and the Oil Ministry had sought a minimum plateau production target of 250,000 bpd.
East Baghdad's signature bonus is $150 million, as is the minimum investment requirement. The protocol tender called for a participation fee of $500,000.
* QAYARA
Despite being the only bidder, Sonangol, Angola's state-owned oil company, failed to win this contract after proposing a remuneration fee of $12.50 per barrel. It declined to lower that to $5, the maximum Iraq was willing to pay.
Sonangol's production target was 120,000 bpd, in line with the ministry's minimum target.
Qayara is located in Nineveh province, one of the most dangerous places in Iraq. It is plagued by insurgent violence and criminal networks, which may have been a reason for the low level of interest.
The signature bonus is $100 million, and the minimum expenditure required is $150 million. The participation fee was $350,000, according to the protocol tender.
(Compiled by Ayla Jean Yackley, editing by Anthony Barker)
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'Fugro NV, the world’s largest surveyor of deepwater oil fields, is about to enter the Iraqi oil and gas business as oil majors are stepping up their exploration and production in the nation.
“The security situation is improving,” Chief Executive Officer Klaas Wester said in an interview in Amsterdam today. “We’re now working on getting a couple of contracts,” mostly in the southern part of Iraq.'
Might be difficult to get deepwater oilfields anywhere in Iraq apart from the South!
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January 10, 2011
Iraq ups output by 300,000 barrels from 3 key oil fields
Iraq has raised crude oil production more quickly than expected-achieving an increase of more than 300,000 bpd above the current 2.4mn bpd, a senior Iraqi oil official said yesterday.
“We are hoping to reach a total of 3mn bpd by the end of 2011,” said Abdul Mahdy al-Ameedi, head of Iraq’s Petroleum Contracts and Licensing Directorate, in an exclusive interview with Dow Jones Newswires.
Production at the supergiant Rumaila oil field, Iraq’s largest, in the southern Basra governorate has reached 1.275mn bpd: a 20% rise on initial output rate which was 1.066mn bpd, said al-Ameedi whose office engineered three bid rounds that led to awarding 15 oil and gas fields in 2009 and 2010.
Production at Rumaila, which is being developed by a consortium of BP and China National Petroleum Corp, is expected to hit a total of 1.5mn bpd by the end of this year, he added.
Output at Zubair, developed by a partnership led by Italy’s giant Eni, has been increased by 83,000 bpd to 265,000 bpd from initial rate of 182,000 bpd, or 45% increase, Ameedi said. While a consortium led by Exxon Mobil Corp has managed to increase production by 11,000 bpd from Iraq’s West Qurna Phase 1 oil field in southern Iraq, he added.
Baghdad’s 20-year service contracts oblige investors in producing oil fields to boost output by 10% above an agreed baseline rate within three years in order to start getting paid back.
Rumaila reached the 10% increase in early December, while Zubair was the first to hit the required increase in November, al-Ameedi said.
Iraq, which sits atop one of the world’s largest oil reserves, signed over the last two years some 12 major oil deals with the aim of boosting its production to 12mn bpdy by 2017. That target, however, is rather difficult to achieve because of some security problems as well as lack of infrastructure.
Analysts believe Iraq can realize no more than 6mn bpd in the next seven years. (Source: gulf-times.com)
http://www.tehrantimes.com/index_View.asp?code=233864
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http://www.zawya.com/story.cfm/sidZAWYA20110109060225
By Mohammed Abdul-Rahman
Erbil - A source from the Kurdistan Region's Ministry of NaturalNatural
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Resources rejected the statements by both the Iraqi Oil Ministry's spokesman and the deputy Iraqi finance minister over the Region's oil contracts.
The source, preferring anonymity, told AKnews Friday his ministry has "evidence" against the statements by the two sides, however, without alluding to any.
'Asim Jihad, the spokesman for Iraqi oil ministry had said Jan.3 the dispute between the Kurdistan and Baghdad over Kurdistan oil contracts continues, describing the issue "the core of disagreements with the Iraqi capital."
The spokesman also stated should the talks over the contracts hit a deadlock; Iraqi parliament will be authorized to settle the difference.
Kurdistan has entered contract with a number of foreign oil companies to drill and pump its oil. However, when the Iraqi government declined to allot the companies compensation, the Region suspended its oil drilling and import until the issue is resolved.
The deputy Iraqi finance minister, Fadhil Nabi's statement over the contracts came in an interview with AKnews Jan.3. The Kurdish deputy by descent referred to an agreement between the Kurdistan Ministry of NaturalNaturalResources and the Iraqi Oil Ministry. Under the agreement, the Iraqi Audition Office is authorized to inspection of the Kurdistan oil contracts, so that the Iraqi Finance Ministry allots the share of the oil companies in the Region.
Nabi also accused the Kurdish ministry for "disallowing for its oil contracts' inspection".
The source said the issue has passed the "media propaganda" stage, stepping into a phase where the Kurdistan Regional Presidency and the Iraqi Council of Ministers are looking into it.
The source criticized the Iraqi officials for making "contradictory statements, which will only complicate the situation further."
The Region officials maintain since the proceeds of Kurdistan oil import goes back to Baghdad; the Iraqi government has to reimburse the foreign oil firms in Kurdistan. Reports also suggest the Iraqi government have demanded Kurdistan to increase its oil production from 100,000 barrels per day (bpd) to 150,000 in order for the foreign oil companies to be paid by the Iraqi government.
© AK News 2011
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The year ahead
The new year brings new leadership of the Oil Ministry. Outgoing minister Hussein Shahristani (L) sits next to his successor Abdul Karim Luaibi during the official handing-over ceremony on December 27, 2010. (SABAH ARAR/AFP/Getty Images)
By BEN LANDO of Iraq Oil Report
Published January 11, 2011
Iraq starts 2011 with a mountain of tasks no less steep than in previous years, but also with a fresh government and robust outlook for oil revenues. More than ever, the country has the potential to ease struggles faced by average Iraqis, balance competing political factions and win foreign investors.
To be sure, Iraq is a work in progress. Old infrastructure is failing to support the country’s rising ambitions, and basic services languish. The citizenry is frustrated, and the security environment is still worrisome. A tumultuous political process has yet to produce stable governance.
Iraq’s engine of reconstruction continues to be the oil sector, and revenue is slowly increasing as production expands. But billions of dollars in infrastructure needs are sapping the budget, which already projects a $12 billion deficit in 2011. In the absence of such infrastructure, a restive populace has continued to agitate for necessities like reliable electricity – discontent which promises to intensify again with the summer heat.
Meanwhile, the country begins its final official year of an American military presence in the country. Iraqi security forces must become coherent and fully capable of protecting the borders and everything in between, from oil shipments to the more traditional targets of terrorism.
In the long term, the best solution to Iraq’s security problems and the foundation of economic prosperity will come from political reconciliation. The central government finally seems inclined to tackle many of the country’s major divisions, including its disputes with the semi-autonomous Kurdistan region, and also the growing friction with provinces like Basra and Anbar, which are starting to feel that they can do better by cutting ties to the center.
Oil is King
As Iraq faces these challenges, a central question remains: will the country’s oil be a blessing or a curse? In the recent history of the developing world, oil has a well chronicled tendency to undermine nascent economies and democracies. Iraq’s stability hinges on the upcoming fights over oil policy.
There are some positive signs. Despite the ongoing infighting, Iraq has set a rough course for expanding oil production. The past year marked the first steps of the world’s largest oil companies back into Iraq, under 14 oil contracts signed or awarded in auctions. The deals are aimed at boosting capacity to more than 13 million barrels per day (bpd) from current 2.6 million bpd, as well as launching an auspicious natural gas sector. The added production promises to help meet local fuel and petrochemical needs and also boost exports and revenues.
According to the government’s projections, some of that increase will even come from the semi-autonomous Kurdistan Regional Government (KRG), whose disputes with Baghdad to date have enervated Kurdish export capacity. There is a mutual interest in bringing Kurdish oil to market – an estimated $11 million per day in potential revenue from the KRG in 2011 alone – but in order to reach that goal, political leaders will need to work out the foundations of the country’s oil policy. That negotiation is inseparable from Iraq’s larger federalist debate.
The most recent companies to enter the KRG are two big American oil firms, Marathon and Murphy. The KRG now has 37 contracts with foreign companies in its portfolio, but without the ability to export via the Baghdad-controlled export routes, there is no revenue directly coming in from fields in the KRG, and thus foreign investment.
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Ministry presses forward on deals
Iraq’s Oil Ministry has given more details about a new bidding round for exploration blocks and a renewed effort to sign a contract for the Nassiriya oil field.
Speaking at a symposium to help facilitate foreign oil companies’ work, Oil Minister Abdul Karim Luaibi said he expects Iraq’s fourth bidding round – this one for exploration contracts – to draw even more than the 45 companies who qualified for previous rounds.
“The country is more stable now and of course this will be r…
Then-deputy oil minister Abdul Karim Luaibi speaks to the press at the initialing of a contract with Russia’s Lukoil and Norway’s StatoilHydro for the West Qurna-2 oil field, which was signed following Iraq’s first oil auction in 2009. As the country’s new oil minister, Luaibi is now planning to hold yet another bidding round, this one for exploration blocks. (AHMAD AL-RUBAYE/AFP/Getty Images)
By STAFF of Iraq Oil Report
Published January 14, 2011
Iraq’s Oil Ministry has given more details about a new bidding round for exploration blocks and a renewed effort to sign a contract for the Nassiriya oil field.
Speaking at a symposium to help facilitate foreign oil companies’ work, Oil Minister Abdul Karim Luaibi said he expects Iraq’s fourth bidding round – this one for exploration contracts – to draw even more than the 45 companies who qualified for previous rounds.
“The country is more stable now and of course this will be
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Iraq targets logistics hurdles
In the restaurant of the newly opened Lebanese Club, an expensive and modern restaurant in the popular Arasat neighborhood, leaders of Iraq’s new government met Thursday for a conference to discuss the key factors in ensuring the country’s prosperous future.
“It is an undeniable fact that there is need for a huge amount of money for Iraq in order to compensate what it has lost and has missed for years,” said new transportation minister Hadi al-Ameri. “Iraq, with the determination of the natio…
Iraqi Oil Minister Abdul Karim Luaibi (right) next to Transportation Minister Hadi al-Ameri and Vice President Adel Abdel Mahdi at the Transportation Ministry's oil development conference Jan. 12 (STAFF/Iraq Oil Report)
By Staff of Iraq Oil Report
Published January 14, 2011
In the restaurant of the newly opened Lebanese Club, an expensive and modern restaurant in the popular Arasat neighborhood, leaders of Iraq’s new government met Thursday for a conference to discuss the key factors in ensuring the country’s prosperous future.
“It is an undeniable fact that there is need for a huge amount of money for Iraq in order to compensate what it has lost and has missed for years,” said new transportation minister Hadi al-Ameri. “Iraq, with the determination of the natio…
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48 hour subscription free trial nice read
PE Week - 13 January 2011 -
Iraq plans a fourth oil and gas licensing round, as round-one service contracts bear fruit, writes James Gavin
Abdul Kareem al-Luaibi, Iraq's new oil minister, has settled in quickly to the hot seat, announcing within a couple of weeks of his appointment plans to launch a new oil and gas licensing round for this year – the country's fourth hydrocarbons auction since the fall of Saddam Hussein's regime.
Luaibi says the new round, expected to feature a number of gas-prone fields, will offer up to 12 blocks in governorates where no acreage was offered in earlier auctions. These include areas such as Najaf and Kerbala, in the south, along with gas-rich Western Anbar province, home to the Akkas field, which may also be included.
Although Abdul-Mahdi al-Ameedi, head of the ministry's licensing and contracting office, had earlier in January said the new bid round would be only for gas blocks, it is likely now that the round will also include oil concessions. This could include areas such as Nineveh, in the north.
The ambition is to boost proved reserves as Iraq gears up for a massive increase in oil-production capacity up to 2017, which could see it reach 6m barrels a day (b/d), compared with the 2.7m b/d now being pumped (PE 12/10 p6).
Iraq last awarded contracts to develop non-associated gasfields in a third tender in October 2010, with the Akkas field awarded to South Korea's Kogas and Kazakhstan's KazMunaiGaz EP, aiming for production of 400m cubic feet a day (cf/d); Siba, awarded to Kuwait Energy and Turkish TPAO, aiming for 100 cf/d; and Mansouriyah with TPAO as operator with Kuwait Energy, aiming for 320m cf/d (PE 11/10 p37).
The third licensing round was small in scale and didn't attract the majors, which had signed up for the first two licensing rounds' service contracts. Luaibi's intention now is to revive the momentum of 2009, when Iraq managed to pull in international oil companies and Asian state-owned firms under the two auctions held that year.
Those service contracts are now starting to bear fruit, with producers starting to hit their target production rates. Output at the Rumaila field, the first large contract award, to a joint venture of BP, China National Petroleum Corporation and South Oil, is reported to have hit 1.28m b/d, representing a 20% increase, and is on course to reach 1.5m b/d by year-end.
The majors have been ploughing resources into Iraq, with the aim of quickly hitting their targets to boost output by 10% above the baseline rate, which is the trigger for them to reclaim their costs and pick up lucrative remuneration fees.
The oil ministry's worry is that the various service contracts could quickly deplete Iraq's crude reserves.
This means hitherto untapped areas must be explored to ensure that once the country hits its peak production targets by 2017 – even if these are well below the stated 12m b/d level – it will have substantial new prospects to come on stream to compensate for depletion at the bigger fields.
Boosting domestic gas supply is equally pivotal for a country that has trouble maintaining more than four hours a day of regular electricity.
For Luaibi, the long-standing deputy to the previous oil minister – now deputy prime minster for energy, Hussein al-Shahristani – the prospect of a 2011 exploration round is critical to establish his credibility over the country's main economic sector. Shahristani, a close ally of prime minister Nouri al-Maliki, remains a key player in the new Iraqi government, but had become embroiled(To involve in argument, contention, or hostile actions) in factional mudslinging(An attempt to destroy someone's reputation:) with the Kurdistan Regional Government over recent years.
The new minister represents a fresh start for Iraq's oil and gas sector. If he can engineer a successful licensing round this year, focusing on lesser-known provinces, he will do much to bolster his credentials. Luaibi has made a strong start, with production reaching a post-war high of 2.7m b/d. The addition of a licensing round could prove another tonic for a hitherto underachieving hydrocarbons behemoth(Something enormous in size or power.
).
http://www.petroleum-economist.com/default.asp?Page=14&PUB=279&SID=727651&ISS=25734
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Iraq seeks to boost oil reserves through fourth bidding round
14 Jan 2011
Any new oil reserves discovered by companies that win gas exploration contracts in a fourth bidding round planned by Iraq will be used to maintain and boost reserves, an Iraqi oil official said. Abdul-Mahdy al-Ameedi, head of the Oil Ministry's licensing and contracting office, told Reuters the new reserves would be important when it eventually comes for the OPEC oil cartel to set an export quota for Iraq. Ameedi said the ministry had started to prepare for the bid round, which would offer service contracts and 'definitely not production sharing contracts.'
The western province of Anbar, where some experts believe up to 100 billion barrels in undiscovered oil reserves lie beneath unsurveyed desert sands, will be one of around 12 areas opened up to exploration, he said. 'The oil reserves in the exploration rounds will be used to maintain and boost Iraqi reserve levels and this will have a significant importance for future Iraqi quotas in OPEC,' Ameedi said.
The bid round, expected to take place this year, will be Iraq's fourth since the 2003 U.S.-led invasion. In two previous rounds it auctioned off service contracts on 10 oil fields - including some of the world's largest - and three gas fields. The deals have the potential to more than quadruple Iraq's crude output capacity to 12 million barrels per day.
Ameedi said output at the end of 2011 should exceed 3 million bpd compared to 2.7 million currently. He said that expected production in four to five years of 5 million to 6 million barrels per day would start to run down Iraq's crude reserves, currently estimated at 143.1 billion barrels, and it will be important to replace the lost deposits. It will also be important for Iraq to increase its reserve levels to justify the higheqt possible OPEC quota. Iraq has been exempt from an OPEC export quota since the first Gulf War but expects the organisation to start discussing limits to how much crude it will be allowed to ship once its production goes above 4 million bpd.
Iraq expects the fourth bidding round to attract more interest from global oil majors than its first three, said Oil Minister Abdul Kareem Luaibi. 'Definitely the participation will be much higher given the improvement in the security situation in the country and the more stable political situation,' Luaibi told reporters. Iraqi oil officials said oil companies qualified for the previous energy tenders would be automatically prequalified for the fourth, and other companies would be welcome to seek qualification.
Ameedi said the
12 gas exploration blocks would deliberately not be that massive, meaning small and medium-sized oil firms could compete because the required investment would not be prohibitively high. 'We want to give more companies a chance to participate in the fourth bidding round,'Ameedi said.
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By CONTRIBUTING ANALYST THOMAS W. DONOVAN
Published January 31, 2011
http://www.iraqoilreport.com/business/companies/analysis-iraqi-legal-regime-protects-environment-5318/
While the past several years have seen little progress from Iraq’s Council of Representatives on legislation to govern the oil sector, there has been significant headway in developing the environmental law and regulations relevant to oil and gas providers.
Iraq has quickly created a robust environmental jurisprudence that rivals several of its GCC neighbors.
The cornerstone of Iraqi environmental law is the comprehensive and detailed Law No. 27 of 2009, which the Council of Representatives passed before the impasse of the March 2010 elections prevented the cabinet from meeting for the majority of that year.
The new 2009 Environmental Law builds upon a 2008 law, which created the Ministry of Environment – a ministry that either has not existed or has lacked a portfolio for the majority of the past 40 years.
In addition to this most recent legislation, oil and gas providers are beholden to language in the 2005 Constitution, the onerous terms of the petroleum bid round contracts, and Iraq’s unexpected adherence to several international treaties on environmental remediation.
Many of the world’s largest oil companies are now taking their first steps into Iraq, in a combined effort to boost the country’s oil production from 2.7 million barrels per day (bpd) to 13 million bpd. Those companies will find that Iraqi environmental law has taken enormous strides in the past several years to develop a series of definitions, baselines, and enforcement mechanisms stringent enough to deal with such rapid oil development.
The Iraqi Constitution
The 2005 Constitution of the Republic of Iraq provides for shared responsibility between the federal authorities and the producing administrative regions for the management of oil and gas – a concept which extends to environmental regulation.
Just as both federal and local authorities are given the right to ensure distribution of revenues in a fair manner, they are jointly responsible to develop oil and gas wealth in a way that achieves the highest benefit to the Iraqi people.
To that end, the constitution allows for semi-autonomous administrative authorities to cooperate in environmental protection.
The federal government, however, retains supremacy in a wide range of matters, such as generating policies relating to water sources from outside Iraq.
The Environmental Laws of 1997 and 2008
Law No. 3 of 1997, the Law of Environmental Protection and Improvement, provided the initial framework for the protection of the environment in Iraq until being subsumed into the later 2008 and 2009 Environmental laws. Its reach is broad, covering soil, air quality, and water resources.
The specific goal of the 1997 Environmental law is to “protect the environment and to make it better including the territorial waters, from pollution and to extenuate(to lessen) its effects on health, environment and natural resources.” Even though it had broad jurisdictional application, however, it did not create a compliance mechanism.
The subsequent Law No. 37 of 2008 strengthens the 1997 Environmental Law, and created a formal Ministry of Environment. That ministry’s duties are an amalgamation of the earlier regulations, such as the 1997 Environmental Law and other relevant laws and orders. It executes formal ministerial instructions and ministerial orders, creates environmental policy, and initiates compliance and deterrence mechanisms.
Environmental law under the bid rounds
The technical service contracts (TSC) signed in the first bid rounds contained significant language regarding environmental protections.
Article 41.1 of the 2009 TSCs requires the contractors and operators to conduct petroleum operations with due regard to the protection of the environment and to the conservation of natural resources. In particular, it requires them to adopt “best international petroleum industry practices” in conducting and monitoring petroleum operations, and take necessary and adequate steps to:
make all efforts to prevent environmental damage and, should it nevertheless occur, to minimize such damage and the effects on property or people;
prevent harm of degradation of livelihoods or the quality of life of surrounding communities and, should it nevertheless occur, to minimize such damage and provide proper compensation for injury or damage to property; and
comply with Iraqi law and any reasonable requirements of the Iraqi state oil operators.
The TSCs define “best international petroleum industry practices” as:
“all those uses and practices that are, at the time in question, generally accepted in the international petroleum industry as being good, safe, economical, environmentally sound and efficient in exploring for, developing, producing, processing and transporting Petroleum. They should reflect standards of service and technology that are either state-of-the-art or otherwise appropriate to the operations in question and should be applied using standards in all matters that are no less rigorous than those in use by the Companies in other global operations.”
While this standard is called “best” practices, its definition creates some ambiguity.
The most stringent standards in the world are commonly considered to be those environmental and social guidelines mandated under the Equator Principles, the IFC Performance Standards on Social and Environmental Sustainability and the World Bank Guidelines. The TSC, on the other hand, calls for “generally accepted” practices in the international petroleum industry or the company’s own standards used elsewhere in the world, whichever is the higher standard.
An IOC may well already apply the highest standards, as a result of its own corporate policies or those of its financiers. Nevertheless, the TSCs would seemingly allow any lower standard that is generally accepted as good practice in the international petroleum industry, is not lower than the company’s own standards used elsewhere, and does not breach Iraqi law.
Environmental impact assessments under the 2009 Environmental Law
The 2009 Environmental Law expanded the jurisdiction and enforcement powers of the recently chartered Iraqi Ministry of Environment, and added several key definitions.
It describes an environmental impact assessment (EIA) as “a study and analysis of the environmental feasibility of proposed projects that may affect the creation or the exercise of their activities on human health and environmental safety of present and future with a view to protect them.”
The 2009 Environmental Law also includes several criteria required in an EIA. According to Article 10, an EIA must include:
determination of positive and negative impacts of the project on the environment and the impact of the environment surrounding it;
the means proposed to prevent and address the causes of pollution in order to achieve compliance with environmental regulations and instructions;
contingencies for pollution emergencies and potential precautions to be taken to prevent their occurrence;
possible alternatives to the use of technology less harmful to the environment and the rational use of resources.
provisions to reduce waste, such as the inclusion of recycled or reused materials when possible; and
an assessment of the environmental feasibility of the project and an estimate of the cost of pollution relative to production.
The procedure for submitting an EIA is pursuant to Article 11 of the 2009 Environmental Law. Before any work is to commence, an EIA must be submitted to the Ministry of Environment and work is not allowed to start before approval from the ministry.
Penalties for non-compliance
The 2009 Environmental Law also establishes penalties for non-compliance and environmental pollution.
Article 3 states that a “polluter of the environment [must] remove the influencing factor during the ten (10) days from the date of notification warning in the case of non-compliance with the Minister may stop working or closure for a term of not more than (30) thirty days can be extended to the removal of the violation.”
Further, Section II of Article 33 states that “a fine of not less than (1000000) million Dinars and not more than (10000000) ten million dinars repeated each month until the removal.” One million dinars is roughly equivalent to $850.
Imprisonment and further fines are also allowed if the pollution identified is not remedied, “for a period of not less than three (3) months or a fine of not less than (1000000) million dinars and not more than (20000000) twenty million dinars, or both.”
International treaty obligations
Iraq has also signed to a large number of international environmental conventions and agreements in the last few years and is committing new resources to implement them. The new 2009 Environmental Law confirms and requires Iraq’s compliance with such international laws.
Recent Iraqi legislation embracing these laws are:
Law No. 3 of 2009 on the joining of the Iraqi Republic to the Basel Convention
Law No. 7 of 2007 on the joining of the Iraqi Republic to the Convention on Desertification
Law No. 7 of 2008 on the joining of the Iraqi Republic to the Climate Change Convention and Kyoto Protocol
Law No. 12 of 2008 on the joining of the Iraqi Republic to the UNESCO Convention
Law No. 31 of 2008 on the joining of the Iraqi Republic to the Convention for Biological Diversity
Law No. 7 of 2007 on the joining of the Iraqi Republic to the RAMSAR Convention (wetlands)
Law No 42 of 2007 on the joining of the Iraqi Republic to the Vienna Convention and Montreal Protocol to protect the Ozone Layer
An untested environmental regime
Although Iraq is now party to such treaties, environmental regulation in Iraq has traditionally lagged behind international standards and there has historically been no overarching environmental body or significant legislation on the subject.
In some cases, Iraq has only recently signed up to a convention or treaty – such as the Convention on Biological Diversity which it acceded to in July 2009 – and as such the principles of the treaty may not have been implemented into Iraqi law yet.
The recently published United Nations Development Assistance Framework (UNDAF) for Iraq 2011-2014 identifies “environmental management and compliance with ratified international environmental treaties and obligations” as one of its five priority areas.
As Iraq enters the early stages of its massive production increases, it will soon learn whether its enforcement and compliance regime is successful. In practice, short term enforcement will likely take the form of financial and smaller civil penalties for non-compliance and reimbursement for the costs of the Ministry of Environment’s investigation. As the investigative functions of the Ministry of Environment advance and the criminal justice system develops a prosecution medium for enforcement, future enforcement will certainly be more severe and specifically targeted at repeat and egregious offenders.
Thomas W. Donovan, is managing partner of the Iraq Law Alliance, PLLC, and a corporate attorney practicing oil and gas law in Iraq.
Opinions expressed by outside commentators and analysts published in Iraq Oil Report are that of the author and not Iraq Oil Report. Opinion and analysis submissions and queries are welcome at contact [at] iraqoilreport.com.
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Missan Oil Output to Rise 70% in 2011
Posted on 07 February 2011. Tags: CNPC, HaLFAYA, Maysan, Missan, Missan Oil Company, oil production, Petronas, Total
Oil production in Missan [Maysan] will reach 170,000 barrels per day by the end of 2011, compared to 2010’s production of 100,000 bpd, according to a director of the Missan Oil Company on Sunday.
“The 70,000 barrels increase will come from the development of the Halfaya oil field and the drilling of new wells,” Ali Maarij told Aswat al-Iraq news agency.
“A Chinese company and its consortium of other companies have conducted seismological surveys, removed landmines, and set up three drilling towers in Halfaya, 35 km east of al-Amara city, in a bid to drill more wells,” he said.
The Halfaya field was awarded in Iraq’s second licensing round to CNPC (China), Petronas (Malaysia), and Total (France).
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Halfaya to Produce Enough Gas to Supply Power Station
Posted on 13 December 2010. Tags: CNPC, Electricity, HaLFAYA, Kahlaa, Maysan, Missan, Missan Oil Company, Petronas, Total
The development of Halfaya oilfield in southern Iraq’s Maysan province shall insure enough gas for Kahla’a power station, according to the Director-General of Missan Oil Company, who said that the gas produced from the oil field would exceed 60 million cubic feet.
“The development of the Halfaya field shall secure the needs of the Kahlaa Electric Power Station for the gas it needs to operate it,” Ali Mi’arij told Aswat al-Iraq news agency.
Kahlaa power station, opened earlier this year, has a capacity of 180 megawatts. Its total cost reached US$121 millions, although it has been working below capacity due to several problems, including lacking enough gas to operate it.
According to Missan Oil Company’s Director-General, the final phases to develop the said oil field is expected to reach 535,000 barrels per day, which equals five times Missan’s current production capacity.
The Director of Public Relations and Media in Missan Oil Company, Ali al-Tarfi, told Aswat al-Iraq that the oil reserve of Halfaya Oil Field exceeds 15 billion (b) barrels of oil, adding that the plan to develop it includes the drilling of 300 oil wells, along with the establishment of several gas-isolation stations, and gas storage and treatment facilities.
The field is operated by a consortium of CNPC, Total, and Petronas.
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Another Tender to Supply Halfaya Oilfield
Posted on 14 September 2010. Tags: CNPC, HaLFAYA, Missan Oil Company, tenders, Total
China’s CNPC and its partners have invited bids from energy companies to supply a liquefied petroleum gas (LPG) compressor unit for the 4.1 billion-barrel Halfaya oilfield, according to a report from Reuters.
This is in addition to the tenders we reported on last week.
State-run Maysan [Missan] Oil Company has invited bidders to supply and install a liquefied petroleum gas compressor package within a 30-months period to capture gas being flared at the southern oilfield, according to a company statement obtained by Reuters on Tuesday.
The tender closes on Oct. 9 and the offer stays valid for 90 days after the bid closing date.
The winning company should provide job site services and technical support during installation, start-up and test run of the liquefied petroleum compressor unit, a copy of the bidding document showed.
Liquefied petroleum gas from Halfaya would be transferred to Iraqi state-run South Gas Co. for domestic needs and power generation, an oil official at Maysan Oil Co. said on Tuesday.
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KRG financial blackout In his quest to untangle the financial aspect of the long-running oil dispute between Baghdad and the Kurdistan Regional Government (KRG), Iraq’s top auditor says he has gotten no cooperation from Kurdish authorities.
The KRG refuses to provide oil contracts and receipts for oil and fuel produced and sold, according to Abdul Basit Turki Sayid, president of the Board of Supreme Audit (BSA), which is Iraq’s long-standing fiduciary check on various ministries and other government entities. Wit…
Trucks idle near the Bashmakh border crossing between Iraqi Kurdistan and Iran. Oil products have been ferried through such crossings – part of a Kurdish oil trade whose finances have remained opaque, despite the efforts of central government auditor Abdul Basit Turki Sayid, who requested not to be photographed for security reasons. (THIBAULD MALTERRE/AFP/Getty Images)
By Ben Lando of Iraq Oil Report
Published February 16, 2011
In his quest to untangle the financial aspect of the long-running oil dispute between Baghdad and the Kurdistan Regional Government (KRG), Iraq’s top auditor says he has gotten no cooperation from Kurdish authorities.
The KRG refuses to provide oil contracts and receipts for oil and fuel produced and sold, according to Abdul Basit Turki Sayid, president of the Board of Supreme Audit (BSA), which is Iraq’s long-standing fiduciary check on various ministries and other government entities. Wit…
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Contracts Awarded at Badra Oilfield
Posted on 14 February 2011. Tags: ALMCO, Badra, Gazprom, KOGAS, Petronas, TAAZ, Technip, TPAO
Gazprom Neft has completed the tendering process for the front end engineering design (FEED) for the Badra oil field in Iraq, with the contract being awarded to French Technip, according to Penn Energy.
The project preparation is expected to be completed by June 2011.
The tender award decision has also been taken for the road and well site construction, as well as for the construction of a permanent camp. The Iraqi ALMCO was selected as the contractor in both cases.
In January 2011, the mobilisation of manpower and equipment was completed, and geological engineering surveys and future roads laying-out were launched.
In accordance with the latest instructions of the Ministry of Oil of the Republic of Iraq, the ITT(Invitation To Tender) submissions for well drilling and integrated project management in terms of well construction were delivered to the state Iraqi North Oil Company (NOC) and the Ministry of Oil for approval and declaration of winners. The commencement of works is scheduled for April – May 2011.
The results of the first tenders for the selection of contractors for the commencement of the Badra oil field development were summarised by Gazprom Neft in autumn 2010. Within the framework of the contracts awarded, Arabian Gulf Mine Action Company will perform the mine clearance for 3D seismic and road and well site construction till May 2011.
As of the end of January, about 50 percent of scheduled works have been completed with the quality control provided by the Iraqi TAAZ. Oil Exploration Company (OEC) conducts 3D seismic field works. In 2011 a contractor is to be selected to complete the processing and interpretation of the data received during the seismic surveys by the end of the year.
“The FEED development will allow progression to the next stage of the development of the Badra field that is, to select infrastructure construction contractors so that the production can get started in 2013 as stipulated for by the contract. Iraq is one of the significant regions of presence for Gazprom Neft, and the operations at the Badra field will enable the Company to escalate a major international project management experience”, – Deputy Chairman of Gazprom Neft Executive Board stated.
Badra Oil Field
The Badra oil field is located in the Wassit Province in Eastern Iraq with an estimated 3 billion barrels of oil in place. The contract to develop the Badra oil field was signed with the Iraqi Government in January 2010 following submission of a tender in December 2009.
This tender was awarded to an international consortium comprising Gazprom Neft, Kogas (Korea), Petronas (Malaysia) and TPAO (Turkey). Gazprom Neft’s share, as lead operator on this project, is 30 percent, Kogas’ share is 22 percent, Petronas’ share is 15 percent and TPAO’s share is 7.5 percent. The Iraqi Government, represented by the Iraqi Oil Exploration Company (OEC) retains 25 percent.
The Badra development project is expected to last for 20 years with a five-year extension option. The maximum oil production is expected to total about 170,000 barrels per day. The calculated investment is expected to amount to $2 billion.
(Sources: Penn Energy, Iraqi Ministry of Oil)
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Oil Ministry is Developing “Badra” Oilfield Shared with Iranian Side
11 May 2010 - Eye media company
An official source with the Oil Ministry said the ministry is currently developing several oilfields shared with neighboring countries.
The ministry has developed a part of the field, “Badra” common with the Iranian side, affirming ministry to invite the Iranian side of the development of the section in its territory.
The source called to the signing of the Treaty to unify the fields shared with neighboring countries, stressing that the door to the ministry remains open to all States for the distribution of income between countries, each according to his right.
He said the Iranian side promised to study the matter and reply as soon as possible.
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2 Sub-Contracts Awarded at Badra OilfieldPosted on 06 January 2011. Tags: Badra, Gasbromneft, Gazprom, Russia
Two new sub-contracts have been granted for two local companies to participate in developing the Badra oil field in southern Iraq’s Wassit Province, Aswat al-Iraq reports on Thursday.
“The Russian Gasbromneft Company [Gazprom Neft], which won the contract to develop [the] Badra oil field, 90 km to the east of Kut … has decided to grant two sub-contracts for two local companies to participate in the development works of the oil field,” a source told the news agency.
He said the Russian company had also granted “the local Arab Gulf Company, to carry out the works of eliminating mines and war remnants from the oil field’s site and its surrounding areas”. The work is expected to continue until May.
“Another Iraqi company, specialized in oil and gas excavation works, was granted a sub-contract to carry out seismic works at the Badra oil field, to continue till April next,” he said.
Badra is planned to produce 15,000 barrels of oil per day (bpd) by the year 2013, according to the contract concluded between the company and the Iraqi Ministry of Oil.
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Pipeline bombed as protests escalate A pre-dawn bombing Thursday of a pipeline that feeds Iraq’s second-largest refinery spilled thousands of barrels of crude oil into a village in still-deadly Diyala province.
The attack came as Iraqis continued to voice wide dissatisfaction with their government in protests around the country, which have turned violent and deadly.
Two demonstrators were killed Thursday and at least 53 injured in Suleimaniya, the second-largest city in Iraq’s Kurdistan region, according to a source at the l…
Hundreds of protesters in Fallujah's city center marched to demand an improvement in basic services from the government on Feb. 15, 2011.
By Ben Van Heuvelen of Iraq Oil Report
Published February 17, 2011
A pre-dawn bombing Thursday of a pipeline that feeds Iraq’s second-largest refinery spilled thousands of barrels of crude oil into a village in still-deadly Diyala province.
The attack came as Iraqis continued to voice wide dissatisfaction with their government in protests around the country, which have turned violent and deadly.
Two demonstrators were killed Thursday and at least 53 injured in Suleimaniya, the second-largest city in Iraq’s Kurdistan region, according to a source at the l…
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You are here: Home » Energy » Natural Gas » Final month for Shell gas deal
Final month for Shell gas deal
Two and a half years have passed since Iraqi and Royal Dutch Shell officials announced a joint venture company to capture the natural gas being burned away in Basra province. This month, if meetings don't produce a final agreement, the deal will be dropped.
"I think this month is the final meeting," said Ali Khudhier, director general of the South Gas Company. "Either it happens or not."
Late last month Deputy Prime Minister for Energy Hussain al-Shahristani, the former oil minister during…
Iraqi Southern Oil Company engineers look towards the natural gas flares in the Zubair oil field in southern Iraq on January 21, 2010. (ESSAM AL-SUDANI/AFP/Getty Images)
By Ben Lando of Iraq Oil Report
Published March 3, 2011
Two and a half years have passed since Iraqi and Royal Dutch Shell officials announced a joint venture company to capture the natural gas being burned away in Basra province. This month, if meetings don't produce a final agreement, the deal will be dropped.
"I think this month is the final meeting," said Ali Khudhier, director general of the South Gas Company. "Either it happens or not."
Late last month Deputy Prime Minister for Energy Hussain al-Shahristani, the former oil minister during…
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Daqing Oilfield's Ambition of “Going Overseas” 9/17/2009
9/17/2009 Text Size:[Larger][Medium][Smaller]
Daqing Oilfield Press (chief reporter: Zhang Weihong) August 6th, 2009
Daqing Oilfield unswervingly implemented the strategy of “going overseas”, overcame great difficulties caused by global financial crisis and comprehensively promoted the development of overseas markets. The contract in market development with total amount of 10.9 billion yuan has been signed for the first half of the year, which has fulfilled 61.7 percent of the target of the whole year, a year-on-year growth of 21.3 percent.
Daqing Oilfield Company (DOC) always adheres to the principle of “Human Oriented” in the development of overseas markets and made HSE management and antiterrorism as its priority. The Company diligently carried out the principle of “No Bidding Without Safety, No Construction Without Safety and No Production Without Safety”, and took effective measures to ensure the smooth proceeding of overseas projects. In the first half of the year, DOC has made improvement in the contingency program for overseas emergency, established the overseas contingency communication network as well as the system of weekly safety reports. The company also comprehensively promoted the HSE passport management, and intensified management in certain areas such as HSE training, antiterrorism training, regular health check up and accident insurance, and the above programs have effectively ensured the safety and health of the working staffs.
Subjected to the global financial crisis, overseas markets are faced with severe situation and uncertainties in the future. Under the requirements of DOC, relevant departments gathered and analyzed the situation, came up with and carried out effective measures to eliminate or reduce the influence brought by the crisis and ensured the smooth operation of overseas projects.
In the first half of 2009, DOC took the Sudan project as a turning point, enhanced the communication and cooperation with Sudan Nile Company of CNPC. The company set up subsidiaries in Sudan and implemented an integral administration in the market development of Sudan, which marked the market development in Sudan has reached a new period. In the first half of the year, DOC has carried out 33 projects in Sudan, and realized a benefit of 45,778,000 USD, the market in Sudan showed an unprecedentedly bright future.
DOC’s market in Middle East has enormous potentialities and is continuously expanding. Daqing Oilfield Drilling Engineering Company strengthened the development in Iraq market and enhanced the communication with CNODC. On April 14th, the Company signed the contract and a startup was carried out smoothly for the integral service project of Al-Ahdab Oasis in Iraq which comprehended drilling, clean out, cementing, orientation well, coring and drilling fluid; Businesses of Water Supply Company such as water well drilling, car repair services saw a great progress in United Arab Emirates; Daqing Oilfield Drilling Engineering Company successfully carried out cementing projects in Oman as well; Daqing Oilfield Construction and Designing Institute, Power Pump Company Limited exported their products to Oman for consecutive years and established a good cooperation relationship with PDO of Oman. Pump products of Power Pump Company Limited also has an influence over countries like Saudi Arabia, Iran, Syria and received the order of trial product.
The market share in Mongolia is growing further. In the first half of the year, DOC has signed 12 contracts on integral service project of Tamtsag in Mongolia which comprehended services like geophysical prospecting, drilling, cementing, well logging, logging, transportation, capital construction, communication, with a total amount of 130 million USD. Businesses in all aspects showed a growth than ever, especially the Construction Group which signed 3 contracts with a total amount of 80,212,000 USD and made a great breakthrough.
Storage, Transportation and Sales Company, Down-hole Service Company and Well Logging Technology Service Company fully employed the advantages of the brand effect and geography in the surrounding areas of Daqing Oilfield and Jilin Oilfield, great efforts were made in the development of engineering service market, product sale market and social service market, and the domestic market share showed a steady growth by years.
6th August 2009
Source: Daqing Oilfield Press
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Political row annulled oil field development - KBC
Wednesday, 30 Mar 2011
A member of the Iraqi parliament from Kurdistan Blocs Coalition said that the reasons that led the parliament to vote to abolish the ratification to develop and produce the Ahdab oil field are purely political and propaganda of the former regime in Iraq while the Oil ministry indicated that the abolition of the law came at its request.
The Iraqi parliament voted at its 45th session on canceling the law of ratification on a contract to develop and produce Ahdab oil field and the draft law of ratification of the Republic of Iraq to amend the crude oil pipeline convention signed in 1973 between Iraq and Turkey.
Mr Mahma Khalil MP of Iraq said that the contract to develop the Ahdab oil field was signed in the nineties during the rule of the former regime between Iraq and a Russian company and it is political propaganda for the former regime and a support for the Russian company at the expense of Iraqi citizens. The oil ministry has signed a service contract with a Chinese company that began working in the field last year.
Mr Khalil said that the parliament voted on the ratification of the Republic of Iraq to amend the Convention on the pipeline of crude oil signed in 1973 between the Republic of Iraq and the Republic of Turkey was the result of Iraq's need for the continued operation of the pipeline carrier of oil between Iraq and Turkey.
He said that Iraq considers Turkey its economic gate and Turkey consider Iraq as its gate to the Arabian Gulf. Voting on the amendment of the law will increase the amount of oil exported through the pipelines with Turkey. There is a need for the two countries to increase the volume of investment between them.
While the Ministry of Oil said that the decision of the parliament to cancel Ahdab field signed with the Chinese company in 1997 came at the request of the ministry indicating that the contract signed after 2003 with the same company continues.
Mr Assem Jihad spokesman for the Ministry of Oil said that the Iraqi Oil Ministry signed in 1997 a partnership with the Chinese company to work in Ahdab province of Wasit noting that the Iraqi government was unable during the rule of former Iraqi President Mr Saddam Hussein's from implementing the contract because of the economic blockade.
He said that the Federal Oil Ministry after 2003 entered into negotiations with the Chinese company and was able to transfer the contract of partnership to a service one, his ministry called the parliament with its legislative authority to cancel the contract of former company. The cancellation of the previous decade, issued by Law No 22 of 1997 does not affect the contract with the company pointed out that the company continue its work according to the terms of the signed contract and does not need to pass a law from the parliament as it is a service contract.
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Iraqi Oil and Gas Recruiter Opens in Basra
Posted on 04 March 2011. Tags: jobs in Iraq, SES
Oil and gas companies now have another source for qualified Iraqi oil and gas workers. Al Sabah for Employment Services (SES), an Iraqi-owned company, now has a full time office in Basra with representatives in Baghdad and Kurdistan, all supported by a team of international recruiters.
SES is owned by Dr. Sabah Ali, a medical doctor from Basra who successfully grown his last recruiting agency to the 2nd largest in the United Kingdom. Returning to Iraq, his desire is to support his country by assisting oil and gas companies find the right candidates for their critical positions.
In doing so, his focus is on getting Iraqis back to work supporting this key sector. SES brings with it more than twenty-five years of experience in recruiting, and an in depth knowledge of the Iraqi labor market. More information can be found at www.ses-iraq.com.
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Interview: Ali Khudhier of South Gas Company
Iraq’s crude oil extraction also produces huge volumes of associated natural gas, the majority of which is currently burned off as a waste byproduct in flares like these, at the Rumaila oil field in Basra provicne.
South Gas Company chief Ali Khudhier says Iraq is taking steps to capture and process this associated gas.
(ESSAM AL-SUDANI/AFP/Getty Images)
By BEN LANDO
Published March 7, 2011
KHOR AL-ZUBAIR, IRAQ -
Iraq's massive oil sector typically casts a shadow over another key natural resource: natural gas.
The country plans to turn the world's 12th largest natural gas reserves into ample supply to Iraq's growing fuel demand for power stations, industry and domestic consumer use.
Then, when local demand is met, Iraq plans to export gas to Europeans and other countries.
In his office at the South Gas Company headquarters, director general Ali Khudhier told Iraq Oil Report that pipelines to Kuwait, to Europe via Syria, and onto tankers in the north Arabian Gulf, are all possibilities.
Oil output is set to expand drastically over the coming years, and with it will come more natural gas, which flows with crude from the wells.
Most of this so-called “associated gas” is currently flared off as a waste byproduct.
Khudhier said the country will only wait through this month for Royal Dutch Shell to agree to its terms for capturing and processing Basra’s associated gas.
(The main dispute, he said, is over the rights to export.)
In Basra, about 1.1 billion cubic feet (bcf) of associated gas is produced each day. Only 400 million cubic feet (mmscf) is being utilized, leaving 700 mmscf to be burned, sicne there are no facilities to capture, treat and transmit it.
While the Shell deal would bring large investment to such a project, Khudhier said Iraq is in the process of installing compressor stations which could allow it to use associated gas in existing processing facilities.
Ben Lando: What is the production of gas right now?
Ali Khudhier: The production of gas now is 1,100 mmscf per day.
We utilize around 400 mmscf and 700 is burned; burned because there are no facilities to introduce these gases (to be processed).
Many of these gases are produced with pressure under our equipment’s work (capacity). First the separation, some of these fields produce oil in the first stage with 200 PSIG.
Our section for our facilities are not less than 400 PSIG.
We plan to buy a new compressor to utilize all flared gas now.
BL: To utilize all flared gas?
AK: All flared gas.
BL: When are you purchasing the compressor?
AK: Last year.
Maybe it will be installed in two years.
BL: So in two years, all of the flared gas, the 700 mmscf will be utilized?
AK: Not all gas will be utilized.
There is going to be additional production of oil and gas and also we plan for that.
BL: What is your estimate for the amount of gas production at the end of this year, two years, with the increase in oil production?
AK: Our factories here, we can utilize 1,050 mmscf per day.
We have three NGL plants, each one with 350 mmscf per day.
And also we have three LPG factories, each one the capacity is 6,250 tons each.
BL: Right now, all of the gas that you are getting is associated gas?
AK: Yes.
BL: Oil production is supposed to be increasing.
What do you expect that gas production – associated gas production – to reach at the end of this year and next year, with the increases?
AK: There are two parts: The first (oil bidding) round, includes West Qurna 1, Rumaila south and north, and Zubair.
In West Qurna 1 we cannot utilize any gas at this year because our equipment is being built now and we haven't finished it.
Maybe next year, in the middle of next year we can operate these facilities.
In south Rumaila and north Rumaila, already any increase in gas we can utilize.
It is a must that it is 400 PSIG, though, and the other burned.
We are waiting for the compressor to come (online).
In Zubair, it's the same idea, but any gas must be utilized by compressor, because it is new and not installed yet.
We need maybe one more year.
The second round, this is all the companies working in Majnoon and West Qurna 2 and Halfaya and in Garraf, they built already gas facilities.
We will receive the gas and LPG in this completed process.
BL: The contracts signed in the second round require them to capture all the gas, a no flare policy?
AK: No flaring, sure.
BL: In the first round fields, over the next two or three years, the fields are supposed to increase oil production by hundreds of barrels a day.
How much associated gas are you expecting?
AK: I think more than 25 percent increase of the gas production now.
BL: Twenty-five percent more than 1,100 mmscf?
AK: Yes, near that.
BL: How much will be flared and how much will you be able to capture?
AK: It depends on the compressor stations.
BL: What will be the capacity of the compressor stations installed?
AK: One-thousand and fifty mmscf.
BL: Where will it be installed, at the south gas company facility?
AK: No, at Rumaila and West Qurna and Zubair.
At the fields.
Because already these plants, NGL plants, are ready.
But they need gas.
BL: What is the production now of gas products?
AK: Our products are dry gas, 85 percent of the feed gas (400 mmscf).
So three-hundred and forty mmscf is dry gas. 2,000 tons of LPG. And 800 tons of natural gasoline, condensate.
BL: Where does it go?
AK: All this is for domestic use.
BL: The biggest feedstock for electricity is natural gas, in Iraq. Most of the power stations are run by natural gas.
In Iraq there is the problem with electricity right now.
What is going to be the demand in the future – especially as power plants are built – what will be the demand for the South Gas Company's product?
AK: Gas production from now through the next five years, maybe will reach 6,000 mmscf per day.
When each power station will be complete, I think we have enough to operate the power stations.
But maybe some of them will be delayed, due to the delay of building the compressor stations.
BL: Because there is so much gas here, associated gas and dry gas fields, a lot of the other countries want to purchase Iraqi gas.
Pipelines to Turkey from the north, exports down south, perhaps by pipeline…
AK: Maybe LNG plants.
BL: Maybe LNG plants, which Mitsubishi wants to build.
What does the export of Iraqi gas look like in the future?
AK: First of all, it is for domestic use.
Then when we complete all the gas going to our power stations, fertilizer plants, petrochemicals, anything domestic, then the excess to export.
We plan for LNG plant in the Arabian Gulf, and maybe we export gas to Kuwait.
The ministry is planning to connect with the Iranian-European line, because it is passed through Iraq.
Maybe a connection through these lines to export to Europe.
BL: The pipeline from Iran to Iraq to Syria and then to Turkey?
AK: Yes.
BL: Is there a commitment yet or just talking about it?
AK: No, not yet.
Just planning.
BL: Where would it come from, the gas down south?
AK: Maybe fields from the South Gas Company, maybe from Majnoon or West Qurna 2 or Halfaya.
BL: And to Kuwait, it will go by pipeline?
AK: There was a pipeline between south Rumaila and Kuwait, but it was damaged on the border; the Kuwaitis damaged it (in 1991).
We closed it near the border and we operate this line to transfer gas from south Rumaila to the NGL plant in north Rumaila.
BL: What is the plan for the pipeline to Kuwait? Will it come on line and how big will it be?
AK: This is between the governments.
It is political.
BL: What about the LNG plant?
AK: This is to transfer gas to the Gulf and refrigerate it, it becomes liquid, and then export it to Asia or Europe or America.
BL: By tanker?
AK: By tanker.
BL: Who is building it?
AK: We will, South Gas Company.
If Kuwait imports the Iraqi gas for them, yeah maybe this problem will be solved.
BL: When will the deal be signed, with Shell, on the joint venture for capturing the flared gas?
AK: All agreements will be finished between us and Shell, but there are some legal points we discussed with them, maybe this month.
If they agree to our conditions, circumstances, then we agree to the deal and pass it from the Ministry of Oil to the Cabinet.
BL: What are the legal issues that remain?
AK: Many points. Some of them have been solved already.
BL: One of them is the export issue, I heard.
The agreement without the State Oil Marketing Organization (SOMO), which has the authority.
AK: This is one of them.
Because Iraqi law, this is Iraqi law, no company can export from the production of oil except SOMO.
BL: Is that the number one issue still?
AK: It is one of them.
BL: Can you give me general understanding what the other legal issues are about?
AK: No, I can't.
BL: What about the financial problems? There was some dispute as to how much money Iraq would be required to put into it.
AK: No, there is no problem.
Also the technical issues have been solved.
Just the legal points.
BL: What about the political issues? That's one of the reasons it has taken so long to get to this point.
AK: I think it's not a problem.
South Gas Company can sign with any company if the company is coming to improve our production and give more money to the country.
But on our conditions.
What we need, not what the company needs.
BL: What are the needs, what Iraq wants to make sure they maintain in this long-term contract? What are the principles that Iraq is looking to keep in this joint venture company?
AK: First of all, the gas for domestic use.
The excess gas to the exports.
Shell needs the exports with them, not the Basra Gas Company, the new company.
And under our Iraqi law, this is a problem for us, because it must be SOMO to export this production.
BL: So the companies, Shell, Mitsubishi, how do they make money off of this deal if they aren't allowed to export?
AK: The (former oil) minister, Dr. Shahristani before, last year, said they would have complete money from SOMO, not going to the DFI (Development Fund for Iraq).
There's no losing five percent to Kuwait.
All money from quantity exported would come from SOMO directly, within one month.
BL: So SOMO would export it but the value of it, the money would go to Shell?
AK: Not to Shell, to the Basra Gas Company.
BL: To the Basra Gas Company but split between the shareholders.
AK: Yes, it's a joint venture company.
BL: But won't you have some complaints from Kuwait, from the United Nations, if the money doesn't go to the DFI?
AK: Maybe money goes to the DFI, but the Basra Gas Company receives the money from SOMO within one month.
BL: So the money would go to the DFI but the value, the Basra Gas Company would still get that, and this is what they are still negotiating?
AK: Yes.
But Shell doesn't agree to that.
BL: Why? Because they want to do it themselves?
AK: Yes.
BL: If they do it themselves, they have to build the facilities, correct, or the Basra Gas Company builds the facilities for export?
AK: Shell.
BL: And they want the compensation.
AK: Yes, but the production is from the Basra Gas Company, not Shell. The LNG also would not be Shell's money but for the whole joint venture.
But Shell needs the export for the LNG gas to them only.
BL: What do you mean?
AK: The exporting of gas, Shell needs to buy this gas and pay to the Basra Gas Company the money for this exported gas.
We have no problem about that.
The problem is it must be SOMO controls all this exported gas.
BL: When is the next meeting?
AK: I think sometime this month.
BL: The agreement, the joint venture was announced in September 2008. It was said that maybe one year with a six month extension, we'll have a final deal.
Now it is two and a half years later.
Will it happen?
AK: I think this month is the final meeting.
BL: So either it happens or it doesn't happen?
AK: Either it happens or not. Yes.
http://www.iraqoilreport.com/energy/natural-gas/interview-ali-khudhier-of-south-gas-company-5448/
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Oil sector under attack
A unit at the Beiji refinery Feb. 27, a day after a bomb was exploded beneath it.
(STAFF/Iraq Oil Report)
By BEN LANDO of Iraq Oil Report
Published March 10, 2011
BAGHDAD - A bomb exploded on Iraq's northern export pipeline, taking the crucial link offline, as Iraq’s oil sector continues to suffer a wave of threats and attacks.
A bomb exploded on Iraq's northern pipeline on Tuesday night or early Wednesday morning, putting a quarter of the country's exports in jeopardy.
Meanwhile, on Tuesday, another bomb was discovered and defused at Beiji, the country’s largest refinery.
And one top investigator said the previous bombing attack at Beiji on Feb. 26 was likely an inside job.
The pipeline explosion took place early Wednesday morning on the northern export pipeline, in Hader, near Mosul, in Ninewa province, according to Oil and Interior ministry officials.
(Oil Ministry spokesman Assem Jihad said the bomb exploded at 9:30 pm on Tuesday.)
The pipeline averages between 500,000 bpd and 700,000 bpd of Iraq's 2.2 million barrels per day (bpd) in oil exports.
A top Oil Ministry official said it can likely be repaired in two days.
The most recent Beiji bomb was found, disabled and dismantled at 1:30am on Tuesday, and is now being studied in Baghdad.
According to a police report and an Interior Ministry official, the bomb was planted near the control board of the Salahaddin 1 unit, the only unit at Beiji still fully operational after an attack less than two weeks ago.
Authorities are still trying to determine how the bomb was brought into the refinery.
The Iraqi Oil Police, a directorate with in the Interior Ministry, is still investigating the Feb. 26 bombing attack, which killed two employees and took the refinery off line.
The authorities now suspect collusion among the refinery staff.
"Yes, there was some collaboration from inside,” said Maj. Gen. Hamid Abdullah Ibrahim, the chief the Oil Police.
Iraq's oil sector security has generally improved along with the rest of the country's stability since 2008.
However, attackers have targeted Iraq’s oil infrastructure several times in the past three weeks.
In addition to the two Beiji attacks and the northern pipeline bombing, a pre-dawn bombing attack on Feb. 17 destroyed a section of pipeline that feeds Iraq’s second-largest refinery, Daura.
Security forces have also recently found weapons caches near oil facilities.
On Feb. 16, the police chief of Kirkuk announced the discovery of 180 improvised explosive devices and 520 detonators, and on March 5 police in Missan province found a stockpile of weapons 2 km from the Al-Teeb oil field, including 119 missiles and 19 bombs.
Targeting the northern pipeline
From 2003 to 2007, Iraq’s northern oil pipeline was nearly always offline due to attacks.
But as security has improved, Iraq has come to rely on the line to export a quarter of its oil, which flows through Turkey’s Mediterranean port city of Ceyhan.
In September, Iraq signed an agreement with Turkey to keep exporting through the pipeline for another 15 to 20 years.
Iraq’s rising production is threatening to outgrow its export capacity, so the country desperately needs the pipeline.
Official accounts of the most recent attack have varied.
An official in the Iraqi Oil Ministry initially said the pipeline had suffered "an accidental explosion."
A senior North Oil Company official said the problems were a result of “cracks in a part of the pipeline.”
However, the Oil Police spokesman later said, "There was a bomb on the strategic oil pipeline in Ninewa province," and clarified that "the area of the bomb is not under the protection of the Oil Police. It is under Iraqi Army protection."
Oil Ministry spokesman Assem Jihad confirmed that “a bomb targeted the strategic oil pipeline.”
Jihad added that repairs have already begun, and claimed, “It did not affect Iraqi oil exports.”
A top Oil Ministry official, however, said the pipeline has ceased exporting, but should come back on line within a couple of days.
Another official at the North Oil Company also confirmed that the pipeline is currently off line.
Inside job at Beiji
On Feb. 26, two stealthy assailants killed two workers and exploded bombs under two key units of the Beiji refinery, in Salahaddin province.
Under cover of early morning darkness, at 4 a.m., two men in plain blue coveralls cut through a chain link fence and walked five kilometers to their target.
They placed bombs at two key sections of the North Refinery unit of Beiji.
“The signs are it was planned, for specific targets," said Oil Police Chief Ibrahim.
An engineer confronted them.
The attackers shot him twice in the chest with a silencer pistol, according to witnesses and Interior Ministry accounts.
Another worker interfered.
They shot him twice in the torso.
He died Friday in a Baghdad hospital.
The bombs were rigged to a timer.
They exploded, and the assailants escaped amidst the fire, smoke and confusion.
"What happened at Beiji was a very big security violation,” Ibrahim said. “
It was deep into the facility. We need to check the employees' records.”
An inquiry is under way at the refinery, the Oil Ministry, the local police, and the Oil Police.
The refinery went offline after the Feb. 26 attack, slowly came back online, and on March 9 processed 120,000 barrels of crude oil, according to a senior North Oil Company official.
The Oil Ministry official in Baghdad said it is closer to 164,000 bpd. The refinery has a nameplate capacity of 310,000 bpd.
Urgent solutions
The Council of Ministers has given the Oil Ministry approval to fast-track repairs to the refinery and to enhance refinery security, allowing the ministry to bypass traditionally time-consuming contracting rules.
Ibrahim said the focus is on "urgent solutions," such as improved lighting, perimeter reinforcement and reconstruction, and cameras.
The attacks "focus on services, and the services come through the oil," he said.
The area around Beiji has long been a hotbed for nefarious characters.
A 2007 crackdown on fuel smuggling in Beiji resulted in more fuel for Iraqi consumers and less funds for an insurgency, security officials say.
But both the northern pipeline and the Beiji refinery are in areas still subject to insurgent activity.
Officials have publicly blamed al-Qaida, though the attacks don’t bear the hallmarks of an organization that typically attempts to maximize bloodshed, and then claims responsibility.
And so some officials have privately voiced fears that the uptick in attacks marks a resurgence of internecine political conflict, possibly linked to armed mafias.
"Some things didn't make some people happy," Ibrahim said, referring to government efforts to combat smuggling and lawlessness.
"As much as we're working to make necessary precautions, we find some people make their own plans to prevent our work."
http://www.iraqoilreport.com/security/energy-sector/oil-sector-under-attack-5452/
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Maliki's office stalling oil company visas
Oil companies say they've been waiting more than a month for visas, threatening critical projects, and the visa purgatory appears to be the prime minister's office.
Then-Iraqi Oil Minister Hussain al-Shahristani (center) with officials from the ministry and Exxon Mobil after the signing of the West Qurna Phase 1 contract Jan. 25 (BEN LANDO/Iraq Oil Report)
By Ben Lando and Ben Van Heuvelen of Iraq Oil Report
Published March 17, 2011
BAGHDAD - Since early February international companies, including those charged with performing urgent work in Iraq’s oil sector, have been largely unable to secure visas for essential personnel. The prime minister’s office is responsible for the blackout, according to two high-level officials in the Interior Ministry.
As a result of the visa stoppage, international companies of all stripes — oil companies, embassy contractors, security firms, and prospective investors — are facing an imminent crisis. Key people cannot do their jobs because they cannot enter the country.
And officials for oil companies contracted by the Iraqi Oil Ministry have said it's only a matter of time – fast approaching – before their work in the field will slow down.
“These companies, and especially the important oil companies — the last couple of months their applications for their visas don’t just go through the Interior Ministry but should go through the prime minister’s office,” said a senior official at the Interior Ministry, speaking on the condition of anonymity.
“This is especially for the important companies, investing companies, like the oil companies."
This account was confirmed by a second senior official at the ministry, who said, “These instructions came directly from the office of the prime minister to the Interior Ministry.”
The prime minister’s office did not give a rationale for the new policy or explain the reason for the delays.
When asked about allegations that prime minister’s office was responsible for the eight-week-long visa delay, Ali al-Mousawi, the prime minister’s media advisor, said: “His Excellency Prime Minister Nouri Al-Maliki is aware of that, and there have been some measures issued to ease the process of getting visas.”
At the time of publication, Maliki’s office had not provided details of such measures.
Foreign investors have long complained about Iraq’s byzantine officialdom, which can take several weeks to process visas. But in the last two months, many foreign organizations say the bureaucratic machinery has ground to an unprecedented halt.
“It’s become a big issue,” said one senior international oil company (IOC) official. “Probably within another two or three weeks it’s going to directly impact our ability to get people in and do work. There are others in worse conditions than us, too.”
The visa blackout has already delayed the rotation of personnel out of and into the country. Contractors say personnel are being held in country longer than originally scheduled to cover the gaps left by replacements who are waylaid in transit hubs like Dubai and Amman.
"The visas are paralyzing us. We've got no new visas" since early February, said a manager at one service company working for IOCs in southern Iraq. "If we go out, when do we go back in?"
In an effort to boost local employment and training, Iraq has an established policy of restricting visas for unskilled laborers. But the recent blackout is affecting a different tier of foreign visitors — prospective investors, top executives, managers, and technicians with specialized skills.
Oil Ministry officials involved with contracting said they don't have visa problems on their radar. But such problems threaten to undermine Iraq’s multi-billion dollar oil investment strategy.
According to the Technical Service Contracts signed by the Oil Ministry and approved by the Iraqi Cabinet, the government is to "provide assistance … to secure and renew all entry visas or work permits for employees of Contractor and Operator or Sub-Contractors." Without such assistance, oil companies – which have already encountered delays in importing basic supplies and equipment – are now largely unable to put their own people on the ground.
The government has projected that Iraq will increase its oil production from its current 2.7 million barrels per day (bpd) to over 13.5 million bpd within seven years. Such figures, which many have criticized for being overly optimistic, assume that the government will do its part to ease the logistical and bureaucratic burden on companies.
“I don't know the reasons (for the visa delays),” said Sami al-Araji, head of Iraq’s National Investment Commission. He said he's been able to process visas for investors and that the months-long lag was just raised to him by a private security company. “This is outside the normal business standards. Anything beyond the normal range is unacceptable.”
One oil industry official estimated each company operating in Iraq’s southern oil hub of Basra is waiting on “hundreds” of visas.
“The backlog is building, the backlog of sending people is growing,” said a senior IOC official.
Iraq has many incentives to woo foreign companies. The country’s reconstruction needs far outweigh even a budget bolstered by oil revenues, so the government’s strategy for economic growth depends heavily on attracting international capital, technology, and expertise. The visa problems, however, are literally keeping investors out of the country.
“If these (oil companies) can't get visas, a small British businessman coming out on spec doesn't have a hope in hell, which is why we all need to work to reverse the current obstacles,” said Alice Walpole, the top British diplomat in Basra. The visa shortage, she said, “will have done irreparable damage, in terms of discouraging some companies."
Now, however, instead of throwing the full weight of their human resources behind Iraq’s oil ambitions, oil companies are being forced to make backup plans.
"People will eventually get reassigned to other projects around the world,” said Mike Townshend, president of BP’s operations in Iraq, when asked what will happen to personnel who aren’t being allowed into the country.
Neither the prime minister’s office nor the Ministry of Interior announced any change of policy. Indeed, almost nobody — from senior diplomats, to company executives, to Iraqi officials responsible for foreign investment — could explain where the bureaucratic pipelines were blocked, let alone why.
“We’re all a little mystified," said an IOC official. "We get different answers depending on who we talk to."
In the absence of clear information from the government, rumors have been flying.
Sources at the Interior Ministry dismissed speculation that the visa delays are the result of a slow government-formation process. Visa applications are still being accepted – and, to be sure, visas are still being issued. Lower-level Interior Ministry officials say they've been given no order to deny or stall visas.
It’s not just oil companies who are affected. Private security companies have not been able to rotate in new personnel. Even companies supporting the U.S. Embassy have been held up.
“We are experiencing visa problems for our contractors,” said a U.S. Embassy official. “We have been assured by the (Government of Iraq) that a solution is in the works, but until the solution is realized, it is an area of concern.”
Iraqi staff reporting from Baghdad and Basra are anonymous for their security.
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China National Petroleum Corporation (CNPC) is a state-owned fuel-producing corporation and the largest integrated oil and gas company in the People’s Republic of China. It has its headquarters in Dongcheng District, Beijing.
CNPC is the parent of PetroChina, the second highest evaluated company in the world in terms of market capitalization as of June 2010.
Type Government-owned corporation Industry Oil & Gas Founded Beijing, PR China (1988 (1988)) Headquarters Dongcheng District, Beijing, PR China Area served Global (27 countries) Key people Jiang Jiemin (President)
Wang Guoliang (CFO) Products Oil (fuels, lubricants)
Natural Gas
Petrochemical
Oil Exploration Services
Oil Exploration Equipments Revenue $110.552 billion USD (2006) Net income $13.256 billion USD (2006) Employees 1,618,393 (2009) Subsidiaries PetroChina Website www.cnpc.com.cn
Corporate structure
CNPC is the government-owned parent company of public-listed PetroChina, a company created on November 5, 1999 as part of the restructuring of CNPC. In the restructuring, CNPC injected into PetroChina most of the assets and liabilities of CNPC relating to its exploration and production, refining and marketing, chemicals and natural gas businesses.
CNPC and PetroChina develop overseas assets through a joint venture, CNPC Exploration & Development Company, which is 50% owned by PetroChina.
History
CNPC can be traced from the beginning as a governmental department of the PRC government. In 1949, the Chinese government formed a Fuel Industry Ministry dedicated to the management of fuel. In January 1952 a sub department of the fuel ministry was formed to manage petroleum exploration and mining, it was called the Chief Petroleum Administration Bureau. In July 1955 a new ministry was created to replace the Fuel Industry Ministry, it was called the Ministry of Petroleum. From 1955 to 1969, approximately 4 oil fields were found in 4 areas in Qinghai, Heilongjiang (Daqing oilfield), Bohai Bay and Songliao basin. CNPC was finally created in 17 September 1988 when the government decided to disband the Ministry of Petroleum and created a state owned company to handle all Petroleum activities in China.
1993 marks the beginning of CNPC international operation. CNPC sign a service contract with the government of Peru to manage the Talara oilfield. It was followed by an oil contract with the government of Sudan to manage Block 1/2/4 in the Muglad oilfield. Then in June 1997 the company bought a 60.3% stake in the Aktobe Oil Company of Kazakhstan, the next month CNPC won an oil contract for the Intercampo oilfield and East Caracoles oilfield in Venezuela.
Further In July 1998, the company was restructurized by the government in accordance with the upstream and downstream principle of oil industry.
In August 2005 it was announced that CNPC agreed to buy the Alberta-headquartered PetroKazakhstan for US$4.18 billion. This would be the largest overseas acquisition by a Chinese company. The acquisition was successfully completed 26 October 2005 after a Canadian court turned down an attempt by LUKoil to block the sale. In 2006 67% of shares were sold from the parent company to PetroChina
On 5 November 2007, CNPC’s HK listed subsidiary PetroChina was also listed as an A share in the Shanghai Stock Exchange.
Operations
CNPC holds proved reserves of 3.7 billion barrels of oil equivalent. In 2007, CNPC produced 54 billion cubic metres of natural gas. CNPC spun off most of its domestic assets into a separate company, PetroChina, during a restructuring. CNPC has 30 international exploration and production projects with operations in Azerbaijan, Canada, Indonesia, Myanmar, Oman, Peru, Sudan, Thailand, Turkmenistan, and Venezuela.
Iraq
Main article: Rumaila field
CNPC began development of Ahdab, an oil field in Wasit Governorate holding a modest one billion barrels, in March 2009, becoming the first significant foreign investors in Iraq. The project progressed despite security problems although CNPC encountered problems with local farmers. Dozens of farmers complain of damage to property because of work on the site and Iraqi oil officials claim thievery from the oil site by local farmers. Adhab is not expected to be a major profit center, earning the company a projected 1 percent profit. Instead development of the field was seen as an entry strategy into Iraq. Following Adhab, CNPC obtained a contract to develop the much larger Rumaila field with joint venture partner British Petroleum and it is expected that crude oil production from Rumaila will expand by 10% by the end of 2010 once the BP PLC/CNPC consortium takes over development of the field in June 2010.
Syria
CNPC with Indian state oil firm, ONGC created a joint venture to acquire minority stakes ranging from about 33.3% to 38% in several mature Syrian oil and natural-gas properties. The combined entity was a notable instance of cooperation between two state oil firms that regularly competed for assets around the world.
Kazakhstan
CNPC is heavily involved in the development of Kazakh oil after the acquisition of Alberta-based PetroKazakhstan, a company with all operations in Kazakhstan. The company was purchased for $4.18 billion. Political resistance in Kazakhstan to the deal was placated by the sale of a minority stake in PetroKazakhstan by CNPC to KazMunaiGaz, the Kazakh state-owned oil company.
Uzbekistan
In 2006, CNPC formed an international consortium with state-run Uzbekneftegaz, LUKoil Overseas, Petronas, and Korea National Oil Corporation to explore and develop oil and gas fields in the Aral Sea.
Xinjiang Pipeline
In October 2004, CNPC began construction of a pipeline from the Middle East to Xinjiang.
Accidents and incidents
Jilin Chemical Plant
Main article: 2005 Jilin chemical plant explosions
In 2005, there were explosions at a CNPC owned petrochemical plant causing six deaths, a mass evacuation, and a massive oil spill over the Songhua River.
The Jilin chemical plant explosions were a series of explosions which occurred on November 13, 2005, in the No.101 Petrochemical Plant in Jilin City, Jilin Province, China, over the period of an hour. The explosions killed six, injured dozens, and caused the evacuation of tens of thousands of residents.
The blasts created an 80 km long toxic slick in the Songhua River, a tributary of the Amur. The slick, predominantly made up of benzene and nitrobenzene, passed through the Amur River over subsequent weeks.
Explosions
The cause of the blasts was initially determined two days after the blast: the accident site is a nitration unit for aniline equipment. T-102 tower jammed up and was not handled properly, hence the blasts The blasts were so powerful that they shattered windows at least 100 to 200 meters away from the scene of the explosions. At least 70 people have been injured and six were killed The fires were finally put out early in the morning of November 14. Over 10,000 people were evacuated from the area, including local residents and students at the north campus of Beihua University and Jilin Institute of Chemical Technology, for fear of further explosions and contamination with harmful chemicals. The CNPC, which owns the company in charge of the factory, Jilin Petrochemical Corporation, has asked senior officials to investigate the cause of the incidents. The explosions are not thought to be related to terrorism, and the company told a press conference that they had occurred as a result of a chemical blockage that had gone unfixed.
The municipal government asked hotels and restaurants in the city to provide rooms for the evacuated people. Taxi companies also aided in the evacuation.
Water pollution
The explosion severely polluted the Songhua River, with an estimated 100 tons of pollutants containing benzene and nitrobenzene entering into the river . Exposure to benzene reduces white blood cell count and is linked to leukemia.
An 80 km long toxic slick drifted down the Amur River, and the benzene level recorded was at one point 108 times above national safety levels. The slick passed first on the Songhua River through several counties and cities of Jilin province, including Songyuan; it then entered the province of Heilongjiang, with Harbin, capital of Heilongjiang province and one of China’s largest cities, being one of the first places to be affected. After traversing the eastern half of Heilongjiang including the city of Jiamusi, the slick converged into the Amur River at the mouth of the Songhua on the border between China and Russia. It passed by the Jewish Autonomous Oblast in Russia, then entered the Russian region of Khabarovsk Krai in the Russian Far East, passing through the cities of Khabarovsk and Komsomolsk-on-Amur before exiting into the Strait of Tartary, itself a bridge between the Sea of Okhotsk and the Sea of Japan portions of the Pacific Ocean.
Jilin Province
On November 13, a water plant in Jilin city, Jilin, was closed. Several hydropower stations in the upper reach of Songhua River began to increase their discharge flow. On November 15, Songyuan, Jilin, stopped using water from Songhua River. By November 18, water supplies in Songyuan, Jilin, were partially suspended. Water supplies in Songyuan, Jilin, were restored on November 23.
[edit] Heilongjiang Province
Harbin, the capital of Heilongjiang, is one of China’s biggest cities with nearly ten million urban residents. It is also dependent on the Songhua River for its water supply.
On November 21, the city government of Harbin announced that water supplies would be shut off at noon November 22 for four days for maintenance. Some residents of Harbin have complained that water in some parts of the city had been shut off much earlier than announced. The city also ordered all bathhouses and carwashes to close. At the same time as the enigmatic announcement, rumours ran wild about the possible cause of the shutoff, with some suggesting that an earthquake was imminent (causing some people to camp outdoors) and others claiming that terrorists had poisoned the city’s water supply. The news of the shutoff caused panic buying of water, beverages, and foodstuffs in the city’s supermarkets, while train tickets and flights out of the area were soon sold out. Meanwhile, dead fish were appearing along the banks of the Songhua upstream from Harbin, further compounding the fears of Harbin residents.
Later on the same day, the city government issued another announcement, this time explicitly mentioning the Jilin explosions as the reason for the shutoff. The four-day shutoff was postponed to midnight on November 24. From 9 a.m. to 8 p.m. on November 23, the city temporarily restored the water supply to allow residents to stock up on water, since the slick had not yet reached the city. In the afternoon of the same day, schools in Harbin were closed for one week. Also on November 23, Harbin residents began to receive water from fire trucks, and began voluntary evacuation.
The slick itself reached Harbin before dawn on November 24. On that day, the nitrobenzene level at Harbin was recorded at 16.87 times above national safety level, while the benzene level was increasing, but had not yet exceeded national safety level. The nitrobenzene level doubled on November 25 (0.5805 mg/L), 33.15 times the national safety level, and began to decrease. The benzene level stayed under national safety level. At the same time, the tail of the slick left Zhaoyuan, Daqing, Heilongjiang. Premier Wen Jiabao of the State Council visited Harbin on November 26 to inspect the current situation, including the status of water pollution and water supply.
In response to the crisis, trucks transported tens of thousands of metric tons of water from surrounding cities, and thousands of tons of activated carbon from all over the country to Harbin. The government of Harbin also ordered the price of drinking water to be frozen at the level of November 20, in order to combat overpricing. In addition, Harbin is boring ninety-five more deep-water wells, to complement the existing 918 deep-water wells in the city. Fifteen hospitals were on stand-by for possible poisoning victims.
Harbin was not the only city to be affected. The slick passed through the city of Jiamusi, which, however, relies more heavily on underground water supply, and thus did not cut off water supplies. Nevertheless, on December 2, Jiamusi shut down its No. 7 Water Plant, which supplies around 70% of the city’s water supply, and evacuated half of the population on its Liushu island.
It is reported that the entry of several tributaries into the Songhua, such as the Hulan River and the Mudan River, diluted the slick.
Water supply in Harbin was resumed in the evening of November 27.
Khabarovsk Krai
The slick reached the Amur River at December 16 and arrived at the Russian city of Khabarovsk four to five days later. In readiness, a communications hotline had been set up between Chinese and Russian agencies, and China offered water testing and purifying materials, including 1,000 tons of activated carbon to Russia. Khabarovsk planned to shut off its water supply in “extreme circumstances”, prompting residents to stock up on water.
Maritime pollution
After exiting the Amur river, the contaminants entered the Strait of Tartary and then the Sea of Okhotsk and the Sea of Japan, which have Japan, Korea and Far-East Russia on its littorals.
Political fall-out
Xie Zhenhua, China’s Minister of State Environmental Protection Administration, resigned and was succeeded by Zhou Shengxian, former director of the State Forestry Administration .
Criticism
The Chinese press were critical of the authorities’ response to the disaster. Jilin Petrochemicals, which runs the plant that suffered the explosions, initially denied that the explosion could have leaked any pollutants into the Songhua River, saying that it produced only water and carbon dioxide. The media has focused mostly on Harbin, with almost no information on the slick’s effect on cities and counties in Jilin province. Heilongjiang responded to the crisis a full week after the explosions occurred: their initial announcement attributed the impending shutoff to “maintenance”, and gave only a day’s notice; it was the second announcement on the next day that clarified the reason for the shutoff and postponed the shutoff. In response, Vice Governor Jiao Zhengzhong of Jilin province and Deputy General Manager Zeng Yukang of CNPC have visited Harbin and expressed their apologies to the city. On 6 December, the vice-mayor of Jilin, Wang Wei, was found dead in his home. This followed a threat by the Chinese government to severely punish anyone who had covered up the severity of the accident. The threat applied only to the initial explosion and not the extended cover up of the benzene slick.
Chishui River diesel spill
Yellow River oil spill
In 2009 a CNPC pipeline burst, spilling 150 m3 (5,300 cu ft) of diesel oil into the Chishui River in Shaanxi province.
The Yellow River oil spill was an oil spill in the Yellow River in Shaanxi, China which took place due to the rupturing of a segment of Lanzhou-Zhengzhou oil pipeline on December 30, 2009. Approximately 150,000 l (40,000 US gal) of diesel oil flowed down the Wei River before finally reaching the Yellow River, the source of drinking water for millions of people, on January 4, 2010.
Background
The Lanzhou-Zhengzhou oil pipeline project was approved in 2007 and opened for operation in March 2009. It is a part of the 2,070 km (1,290 mi)-long Lanzhou-Zhengzhou-Changsha pipeline with a capacity of transporting 15 million tons of oil per year.[3] According to China National Petroleum Corporation (CNPC), the rupture took place on December 30, 2009 due to an accident near Weinan where construction was underway by third-party workers. However, the incident was not publicized until January 3, 2010. The deputy director of the Yellow River Water Resources Commission called for an investigation into the accident, refuting CNPC’s claim that the accident was caused by third-party construction workers.
Spill control efforts
About 150,000 litres of diesel had already leaked out before the pipeline was closed by CNPC. According to Pacific Environment China’s co-director Wen Bo, 700 workers were quickly mobilized by the government to control the spill as soon as its occurrence became known. They dug diversion channels and built floating dams to stop the pollutant from advancing further downstream. Solidifying chemicals were also used to remove the fuel from the stream. Despite these efforts, officials found traces of diesel in the Yellow River on January 4, 2010, 200 km upstream of Zhengzhou. No pollution was detected downstream of Sanmenxia, although the Sanmenxia reservoir was found to contain traces of toxic diesel. Sanmenxia dam and its six hydroelectric generators were shut down to prevent the flow of pollutant further downstream. On 5 January, Zhang Xun, an official of the Ministry of Environmental Protection confirmed that the spill had been contained in the Sanmenxia reservoir and was no longer a threat to the river water downstream.
Xingang Port oil spill
Main article: Xingang Port oil spill
In July, 2010, two pipelines exploded at an oil storage depot belonging to China National Petroleum Corp near Dalian’s Xingang Harbour in Liaoning province which spilled an estimated 1,500 tonnes of crude into the sea. The worst of the spill initially covered 180 km2 (69 sq mi).
source:wikipedia
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Luaibi announces Nov bid round, export and production forecastsIraq Oil Report
Iraq's Oil Minister is pressing ahead with an auction of exploration blocks as the country gears up for big oil output increases amidst soaring oil prices. Iraq's Deputy Prime Minister for Energy Affairs Hussain al-Shahristani (L) and Oil Minister …
Iraq To Auction 12 Exploration Blocks In NovemberWall Street Journal
Iraq To Hold 4th Energy Bidding Round In NovemberNPR
Iraq to Hold 4th Energy Bidding Round in NovemberABC News
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Iraq to hold 4th energy bidding round in November
BAGHDAD (AP) -- Oil prices could climb to $120 per barrel this year, a level that would be "acceptable," Iraq's oil minister said Tuesday while announcing that the country would hold its fourth energy bidding round in November.
Abdul-Karim Elaibi said that current prices for crude "indicate that the (oil price) will reach $120, which is an acceptable price."
Oil prices, currently at about $102 per barrel for the U.S. benchmark crude futures contract, have climbed as fighting in Libya raised concerns about supplies. Exports from the North African nation, which before the ongoing crisis produced about 1.6 million barrels per day, have largely been halted.
Also factoring into prices were worries that the unrest that has gripped the Arab world could spread to the oil rich Gulf Arab region, affecting supplies from other key members of the Organization of the Petroleum Exporting Countries.
For Iraq, rising prices are a business booming boosting bonanaza & boon of burning Bloody Bombed Baghdad, Basra .
The country relies on oil sales for the overwhelming majority of its budget, and the new licensing round he announced Tuesday was the latest push by the OPEC member state to boost its ailing energy sector, which was hammered by decades of war, neglect and sabotage.
Earlier licensing rounds drew limited interest, with some of the biggest Western majors steering largely clear of the offerings as Iraq's security concerns weighed heavily on interest in investing in the country that sits atop the world's fourth largest proven reserves of conventional crude.
Elaibi said 12 exploration blocs would be offered up for bidding, with 70 percent of them natural gas blocs and the rest a combination of oil and gas. He did not specify which fields would be offered.
Elaibi said he expected Iraq's daily oil production to hit 6.5 million barrels by 2014, with output to stand at 2.75 million barrels per day in 2011. Output is projected to climb to 3.3 million barrells per day in 2012 and 4.5 million barrels per day in 2013.
The blocs on offer are expected to add about 29 trillion cubic feet of natural gas to the current 126.7 trillion cubic feet in reserves, and about 10 billion barrels of oil to the current 143.1 billion barrels of oil, Elaibi said.
He also said that the proven oil reserves could be boosted by an additional 30 billion barrels based deposits in the self-ruled Kurdish region in the north of the country. Those reserves have yet to be included in the overall figures put out by the government.
The central government in Baghdad has been arguing for years with the Kurds over nearly two-dozen production sharing contracts that the Kurds signed independently with foreign firms. The Baghdad government has deemed such deals illegal.
http://customwire.ap.org/dynamic/stories/M/ML_IRAQ_OIL?SITE=NDBIS&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-03-22-10-54-49
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Subscription im happy sharing with my fellow investors
Luaibi announces Nov bid round, export and production forecasts
By BEN LANDO of Iraq Oil Report
Published March 22, 2011
BAGHDAD - International oil and gas companies will compete for access to another 12 oil and gas projects in November, this time to prospect on exploration blocks.
The date for the upcoming bid round, Iraq’s fourth since 2009, was announced by Oil Minister Abdul Karim Luaibi on Tuesday.
He also outlined a 4-year plan that would see both oil production and export capacity more than double through 2014.
Details about the bid round have not been revealed, including what type of contract model will be used and exactly which blocks – likely in the western and southwest desert of the country – will be put up for tender.
Oil Minister Abdul Karim Luaibi also said an additional 10 wells outside of the exploration blocks but believed to contain reserves will be offered as well.
He expects at minimum the exploration will increase the country's 143.1 billion barrels of oil reserves – the world's third largest – by 10 billion barrels, and the 126.7 trillion cubic feet (tcf) of natural gas reserves by 29 tcf.
Iraq's entire economy is riding on the country's oil wealth, a trend expected to intensify as oil prices skyrocket amidst regional upheaval, and foreign oil companies begin executing contracts to boost Iraq’s biggest fields.
Those deals are supposed to catapult Iraq’s total production to 13.5 million barrels per day (bpd) in seven years, though many believe that target is overly optimistic.
According to the estimates released Tuesday, the Oil Ministry anticipates 6.5 million bpd of oil production in 2014, of which 5.65 million bpd will be exported. (Full 4-year-plan forecasts at the end of the story)
Those numbers were part of the oil minister’s four-year plan, which he submitted to Parliament as part of a good governance initiative mandated by Prime Minister Nouri al-Maliki, who is seeking both to keep protesters at bay and to ensure there is some noticeable increase in government services.
With oil revenues bringing in more than 95 percent of state income, the success or failure of the Oil Ministry could be the most crucial bellwether of this still-unsettled country.
Iraq's roughly $82 billion 2011 budget estimates 2.2 million bpd of exports at an average $76.5 per barrel.
This year Iraq has already earned $15 billion in oil sales through March 11, according to the latest U.S.State Department Iraq Status Report.
Luaibi said consumers could handle prices up to $120 per barrel before producers need to increase supply.
"This increase in oil exports will be able to provide to the budget what it needs in order to enable the government to provide important projects," said Luaibi.
Government spokesman Ali al-Dabbagh said the plan was conservative. "The oil production will be much more than the plan states," he said.
Wishful thinking?
Skeptics say that Iraq’s oil plans are, from a technical perspective, overly optimistic – and, from a macroeconomic perspective, misguided.
Outside energy forecasters have highlighted the many bottlenecks that stand between Iraq and its production goals.
The Energy Information Administration, a division of the U.S. Dept. of Energy, projects that Iraq won’t reach 6 million bpd until 2030 – a decade and a half behind the ministry’s new projection.
“Although ambitious work has started on several of the (oil field) projects, much basic infrastructure, including roads, bridges, airports, power and water supply is in need of repair and expansion,” the EIA said in its latest International Energy Outlook report.
Political and government officials have touted the oil sector as the savior of Iraq, providing much needed jobs and money to solve all woes – by funding government jobs, increasing government aide, and expanding social projects.
But increasing the country’s dependence on oil could harm the economy.
"That revenue is not going to be sufficient to generate economic prosperity in Iraq," Stephen Rimmer, senior private sector development specialist at The World Bank, told a local business association this week.
Oil workers account of 1 percent of the labor force now, and will reach as much as 3 percent in the future.
"You still have 97 percent of the labor force who need jobs," he said, and they're not going to come from oil.
Iraq has yet to produce achievable plans to diversify its economy and develop a private sector.
“The oil industry is not the kind that absorbs a high number of workers,” said Mustafa al-Hiti, a former parliamentarian and current advisor to Deputy Prime Minister Saleh al-Mutlaq.
“Use oil revenue for agriculture.
Then you can build a country.”
Political hurdles
Before the Oil Ministry can boost natural gas production, it faces several pressing domestic political hurdles.
An agreement with Royal Dutch Shell to capture and process 700 million cubic feet per day (mmcf/d) of natural gas has not yet been approved, despite a draft agreement reached in September 2008.
Crude oil production in Basra province generates enormous volumes of associated natural gas, most of which is currently flared off as a waste byproduct because Iraq lacks the facilities to process it.
Ali Khudhier, the director general of the South Gas Company, said the dispute now centers on Shell's demands for rights to and control over exports.
Khudhier said meetings this month will be final, whether the deal is approved or not.
Luaibi said the Cabinet energy committee met earlier Tuesday and "recommended a review of the draft of this (contract) and study the economic points.
After that it will be discussed and sent to the Council of Ministers."
Iraqi law says that only the State Oil Marketing Organization (SOMO) can sell and export Iraqi oil. Details of the most recent draft contract have not been released, and it’s not clear how any prospective deal would meet both Shell’s export demands and the requirements of Iraqi law.
Meanwhile the draft contract for the Akkas gas field, awarded to the Korean Gas Corp. (Kogas) and Kazakhstan's KazMunaiGaz in the third oil and gas auction on Oct. 20, 2010, has yet to be ratified.
Officials in Anbar province, where the field is located, have demanded terms to limit exports and ensure the gas is used to meet provincial demand first.
Company officials, oil and electricity ministers, and a delegation led by the provincial governor all gathered at the Oil Ministry Feb. 24 to initial the draft deal before sending it to Cabinet for approval, but the ceremony was aborted at the last minute.
"There are some delays, but we are going to sign Akkas," Luaibi said on Tuesday.
"We are going to tell the Council of Ministers to put it on its schedule soon."
The two other fields from the third bidding round – Mansuriya, in Diayala province, awarded to the Turkish Petroleum Corp. (TPAO), Kogas and Kuwait Energy; and Siba gas field in Basra province, awarded to Kuwait Energy and TPAO – are not being sent to the Cabinet until Akkas is ready.
Highlights from the four-year plan
Oil production capacity (in million bpd):
* 2011 – 2.75
* 2012 – 3.3
* 2013 – 4.5
* 2014 – 6.5
Oil export capacity (in million bpd):
* 2011 – 2.4
* 2012 – 3.25
* 2013 – 5.09
* 2014 – 5.65
Natural gas production capacity (in mmcf/d):
* 2011 – 1,775
* 2012 – 2,375
* 2013 – 3,075
* 2014 – 4,500
Refining capacity (in bpd input):
* 2011 – 575,000
* 2012 – 640,000
* 2013 – 680,000
* 2014 – 700,000
Ben Van Heuvelen contributed.
http://www.iraqoilreport.com/politics/oil-policy/luaibi-announces-nov-bid-round-export-and-production-forecasts-5509/
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http://online.wsj.com/article/BT-CO-20110329-708771.html
* MARCH 29, 2011, 10:13 A.M. ET
Iraq, Shell Resolve Last Obstacle To $12 Bln Gas Deal -Official
By Hassan Hafidh
Of DOW JONES NEWSWIRES
BASRA, Iraq (Dow Jones)--The Iraqi Oil Ministry and Royal Dutch Shell PLC (RDSB) have resolved the last obstacle that was preventing them from signing a long-awaited $12 billion joint-venture deal, a senior Iraqi oil official said Tuesday.
The main dispute was over the rights of export. Shell, along with its partner Japan's Mitsubishi Corp. (8058.TO), wanted to handle export, while under current Iraqi hydrocarbon law; the Iraqi State Oil Marketing Organization, or SOMO, should do so.
"The issue is nearly solved," Ali H. Khudhier, head of the state-run South Gas Company told Dow Jones Newswires in an interview in his office in Zubair, south of Basra.
"Shell wanted to handle export, but now it is agreed that SOMO would handle export," he said. Shell, however, has asked for further discussions, he said.
Last week, the energy committee at the Iraqi council of ministers asked the Oil Ministry to review the Shell draft deal which aims at capturing and exploiting millions of cubic feet a day of gas flared from four supergiant oil fields near Basra.
-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com
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Ok it isn't Kurdistan but it's all moving along nicely i'd say. GLA.
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Iraq Ministry of Oil: Parliament will discuss the oil and gas law in future meetings
Posted: March 30, 2011 by THE CURRENCY NEWSHOUND - Just Hopin in Iraqi Dinar/Politics
Tags: Baghdad, Council of Representatives of Iraq, Iraq, Law, Ministry of Oil, Pipeline transport, Republic of Iraq, Turkey 0Baghdad (news) ..
Oil Ministry confirmed that the parliament will discuss the oil and gas law in future meetings.
The spokesman said the media ministry spokesman Assem Jihad, (the Agency’s news), the House of Representatives announced that he is among his priorities will be to discuss the oil and gas during the next phase of the planning process of running the oil sector and the best investment of the oil wealth.
He added: that the law aims to regulate the relationship between the Centre and the provinces and territories, adding that Alaguenon will put an end to many interpretations, interpretations, and working to stabilize the process of developing plans for the advancement of the oil industry because it represents the main source of the central state treasury.
The House of Representatives may at its fifth session to abolish the law on ratification of contract Ahdab oil and ratification by the Republic of Iraq to amend the Convention on the crude oil pipeline, signed on 27/08/1973 between the Republic of Iraq and the Government of the Republic of Turkey.
The counting oil expert Halim Kazem in an earlier statement (for news) licensing rounds, the three concluded by the Ministry of Oil with a number of companies (b Incorrect) because it circulated prior experience on the small fields and knowledge gaps.
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Oil Ministry rejects provincial oil deals
Work is ongoing at the tank farm at the Fao peninsula in southern Iraq. (ALI ABU IRAQ/Iraq Oil Report)
By BEN LANDO of Iraq Oil Report
Published April 1, 2011
SULEIMANIYA - Iraq’s great federalist debate over control of the oil sector is spreading throughout the provinces, as the Oil Ministry stands its ground against local governments pressing for greater control of their crude.
Karbala and Dhi Qar provinces are pushing to develop local oil fields, but Iraq's Oil Ministry says its stance has not changed: it alone has the authority to sign oil contracts.
"No provincial council has the right to sign any of these contracts alone,” said Oil Minister Abdul Karim Luaibi in a press conference Wednesday. He said that companies should do business with his ministry, and “are not allowed to do any direct negotiations with any other side."
Authorities in Karbala, a holy seat of Shia Islam, have signed a "Joint Participation Agreement" with the London Stock Exchange-listed San Leon Energy and its Iraqi partner, al-Meinaa Oil Services Co., to develop three oil fields under a production sharing contract (PSC) – a contract model that has been rejected by the Oil Ministry in Baghdad.
(SOURCE: www.pcld-iraq.org)
Unnamed American, Chinese and Japanese companies are also coordinating with officials in southern Dhi Qar province in bids to develop the al-Qatiaa oil field, according to a report by Bloomberg. A local municipal official told the news wire that the field would produce 300,000 barrels per day (bpd), and the contract – the model not disclosed – would include a refinery.
Iraq's Oil Ministry has begun to boost the country’s oil sector through a series of licensing rounds.
It awarded Technical Service Contracts for the development of 11 oil projects in two bidding rounds in 2009, to companies such as Exxon Mobil, BP, Italy's Eni, the Chinese National Petroleum Corp. and Russia's GazpromNeft and Lukoil.
It's part of Baghdad's plan to increase oil production capacity from 2.7 million barrels per day (bpd) now to more than 13.5 million bpd in seven years, largely on the backs of the TSC deals. Last week, Oil Minister Abdul Karim Luaibi announced that a licensing round for exploration blocks would take place in November.
On Thursday Royal Dutch Shell announced two deals worth $270 million with London's Petrofac to expand the capacity of the super-giant Majnoon field in Basra, which was awarded through the licensing rounds, from 60,000 bpd to 175,000 bpd by the end of next year.
Officials in Iraq's oil sector, including former oil minister and current Deputy Prime Minister for Energy Affairs Hussain al-Shahristani, said any oil fields not awarded in the licensing rounds would be developed by Iraq's state oil companies, though bidders who didn't meet Iraq's bidding round requirements would be welcomed to resubmit amended offers.
Many provinces have pushed for developing oil fields that are off the ministry's short-term radar, and have established contact with a variety of oil companies from around the world, according to sources who confirmed discussions have taken place with officials in Missan, Dhi Qar, Anbar, Wassit, Diyala and Salahaddin provinces.
There are several incentives for such talks, and at least one powerful precedent. Iraq's Kurdistan Regional Government (KRG) has defied central authority and signed dozens of PSCs with foreign oil companies since 2004.
The semi-autonomous northern region is a unique case, distinguished by its ethnically-charged, historical abuse at the hands of Baghdad-based rulers. Yet it has also demonstrated that the Oil Ministry’s authority is not absolute: two KRG fields, whose development deals the ministry has condemned as illegal, are now exporting oil in a tentative agreement with Baghdad.
The PSC contract model has been rejected by the ministry and was a powder keg for unions and more nationalist oil campaigners in Iraq, who feared the contract gives foreign firms too much access to and control of Iraqi oil.
The three fields proposed in the San Leon-Meinaa-Karbala PSC, Kifl, West Kifl and Merjan, , were offered in the second licensing round in December 2009 but received no bids.
San Leon, which holds oil and gas licenses in Europe, Morocco and the United States, signed an Iraq-focused joint venture with Meinaa in January 2010.
Meinaa's only other known work is as a partner with Norway's Petronor in a vast oil and gas logistical hub in Basra called Energy City.
"For us, as the Oil Ministry, and according to the constitution and according to the valid current laws, the Oil Ministry is the only side developing the oil fields and signing contracts, with coordination with the provincial councils," said Luaibi.
The companies should be pre-qualified, there should be technical studies to decide the prices, and holding a public bidding round should be held."
In response to provincial oil ambitions, central government policymakers established a so-called “petro-dollar project.” Starting with the 2010 budget, provinces began receiving $1 for each barrel of oil produced or refined and for every 150 cubic meters of natural gas produced. This was carried into the 2011 budget.
Still, many provinces have complained they are being kept from planning and contracting talks.
The Iraqi Constitution requires the central government to coordinate with local officials on oil development, but those clauses – like the sections that have been interpreted by the KRG as allowing it oil self-determination – are ill-defined and vague. Legislation intended to clarify the oil strategy and management have been stalled by political fighting since 2006.
Luaibi has said publicly numerous times that local officials will be consulted and included and, according to sources, this practice has been implemented.
Complaints of local exclusion, among other critiques, have delayed a joint venture between state-run South Gas Company, Shell and Mitsubishi to capture and utilize the 700 million cubic feet of natural gas that is produced in the crude oil extraction process, but is currently flared due to lack of infrastructure.
The joint venture plan was first announced in September 2008.
More recently, the award of the Akkas gas field in Anbar province in an October 2010 bidding round roiled local leaders.
Their protests were so intense that the draft contract has not even been initialed.
Both the governor and council members say they want better assurances the gas will be kept in the province to feed local demand for power plants, industry and local consumption before being sent elsewhere.
They've vowed to prevent the winners, Korean Gas Corp. (Kogas) and KazMunaiGaz of Kazakhstan, from beginning work.
The Akkas dispute has at least temporarily stalled the two other gas fields awarded in the same auction – Basra's Siba gas field, which went to Kuwait Energy and the Turkish Petroleum Corp. (TPAO), and Diyala's Mansuriya gas field, won by TPAO, Kuwait Energy and Kogas. The ministry is waiting until all three get draft signatures before submitting them to the Cabinet for approval.
Iraqi staff reporting from Baghdad and Basra are anonymous for their security.
http://www.iraqoilreport.com/politics/oil-policy/oil-ministry-rejects-provincial-oil-deals-5569/
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Iraq’s Visa Madness
Posted on 31 March 2011. Tags: Employment, jobs in Iraq, Unemployment, visas
Visa problems for foreign workers in Iraq continue to make the headlines.
Last week we reported on the difficulties caused by a decision to channel visa applications through the office of the Prime Minister, Nouri al-Maliki; now we hear that the Basra Investment Commission has imposed its own restrictions, with the intention of reducing unemployment.
While the restrictions do not appear to be limited to specific sectors or levels of employment, the main game in town is clearly oil and gas, and in this area there are many foreign workers whose expertise is required in Iraq.
But when we say ‘many foreign workers’, that is relative – in the context of an unemployment rate between 15% and 39% (depending on whose figures you choose to believe), the number of foreign experts who need to enter Iraq is trivial. While the energy sector accounts for as much as 90% of Iraq’s GDP, it employs only about 1% of the workforce, and the number of non-Iraqi experts required would be a very small fraction of this 1%.
It’s also worth noting that native Iraqi oil workers are the cheapest in the world, so companies would be inclined to employ them first, if they have the required skills.
If Iraq is to thrive, it must allow companies to bring in the talent they need to development the country’s biggest asset.
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Iraq Negotiating $500m New Pipelines
Posted on 28 March 2011. Tags: BP, China National Petroleum Corporation, CNPC, ENI, Nahr Ben Umar, pipelines, Rumaila, Tuba
Iraq’s state-run South Oil Company is holding talks with international oil companies to build three pipelines worth up to $500 million [600 billion Iraqi dinars], according to a report from Dow Jones Newswires.
SOC’s director-general said on Monday that the intention was to link key oil fields to the export system in southern Iraq.
“We are talking to CNPC [China National Petroleum Corporation], BP, Eni and others to build three pipelines,” Dhiaa Jaafar told Dow Jones Newswires in an exclusive interview in his office in Basra.
Jaafar said the three lines would link the Rumaila North, Tuba and Nahr Ben Umar fields with oil deposits in the Faw peninsula, before crude oil is shipped via the sea terminals in the Gulf.The length of the pipelines will range from 105 kilometer to 145 kilometers each, he said.
Many of Iraq’s oil pipelines are old and eroded.
(Source: Dow Jones Newswires)
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http://www.new-fields.com/usogd/
Delegation Goals_ To top>>
The USOGD/Iraq delegation’s goal is to provide market entry or increased sales in Iraq for U.S. oil and gas
equipment and services as well as fi rst-hand market information and access to potential business partners.
Delegates will be holding a series of meetings with government
agencies, officials and oil and gas companies operating in the
Region.
How Participating in the U.S. Oil and Gas Delegation to Iraq Will Benefit You?_ To top>>
New-Fields will ensure that your trip to Iraq through USOGD is the most productive and result-oriented way to bring yourcompany to the Iraqi oil and gas market. During your trip to Iraq, you will:
• Brief key oil and gas industry decision makers about your equipment and services
• Present your products and technologies to international
companies operating in the Iraq
• Establish relationships with Iraqi procurement specialists
• Conduct one-on-one meetings with top officials and decision makers from key Iraqi oil, gas and petrochemical industries
• Identify profitable opportunities and new markets for your
company and increase your export potential
• Receive by Iraq officials on the opportunities in the oil, gas and petrochemical industries
• Gain first-hand market information
• Learn about Iraq's requirements of equipment, and financial support needed to meet the region's long-term strategic plans
• Familiarize yourself on how current economic, political, defense and security challenges in Iraq will affect your business opportunities
• Develope high-level, close working relationships with Iraqi
• Lay the foundation for successful long-term relationships
One-on-One Meetings_ To top>>
Prescheduled one-on-one meetings with Iraqi officials, international agents, distributers and end-users whose requirements, capabilities and services are evaluated and targeted to each delegate’s expectations.
New-Fields Advance team will be on the ground three weeks prior to your arrival to ensure a perfect success. You will get the bio and all available information on every official that you will be meeting to decide the value of that particular meeting.
Deliverables_ To top>>
• 30 Pre-scheduled One-on-One Meetings with Iraqi oil, gas and
petrochemical industries (30-90 minutes each)
• Follow-up Meetings with the Iraqis whom shown interest or
requested additional information, with New-Fields knowledgeable staff available on site to assist, as needed.
• The support of knowledgeable New-Fields staff focused on
furthering company-specifi c objectives
• Logistical Support
• Interpretation Services available throughout the week
• Ground transportation to & from Baghdad International Airport including security services.
• Listing in the USOGD/Iraq Official Directory
• Interpreters for pre-scheduled One-on-One meetings
(if required)
Your Own Coordinator on the Grounds_ To top>>
Knowledgeable New-Fields staff will work closely with each
participant to help further company-specifi c objectives. You will be designated a Coordinator who will work with you to ensure a full success for your trip including scheduling and rescheduling any appointments that are necessary.
Who should participate?_ To top>>
Oil and Gas drilling and production equipment; turbines,
compressors and pumps for pipeline applications; measurement
and process control equipment for pipeline applications; industrial automation, control and monitoring systems for refineries, gas processing and petrochemical plants, seismic processing and interpretation, petroleum software development, sulfur removal and disposal technologies, well stimulation, and
field abandonment services.
Participation Requirements
All companies interested in participating in the USOGD/Iraq must complete and submit an application package along with full payment, payable to New Fields Exhibitions by March 21 for consideration by the Iraqis and the Relevance of the company’s business line to the USOGD/Iraq goals.
Should New-Fields fail to get the minimum pre-scheduled
appointments, applicants will be informed by April 4, 2011 with a full refund. United States companies already doing business in Iraq as well as U.S. companies seeking to enter Iraq markets for the first time encouraged to apply.
Delegation Scenario
Activities are scheduled to take place within a single work week. The USOG delegation will arrive in Baghdad on Saturday April 23. Then there will be a company briefing on Sunday April 24. On Monday April 25 and Tuesday April 26, USOGD/Iraq will benefit from pre-scheduled meetings (with up to 30 appointments per company) with Iraq senior government officials from the oil, gas and petrochemical industries. On Wednesday, April 27 delegates will be able to hold their own independently scheduled follow up meetings, with New-Fields knowledgeable staff, available on site to assist, as needed.
Proposed Timetable_ To top>>
Saturday, April 23, 2011
• Companies arrive in Baghdad, Iraq
Sunday, April 24, 2011
Networking Breakfast with Iraq Government
Officials
Iraq Officials will provide market knowledge and “how to”
information. (Breakfast Presentation)
Experienced fi rms that have been operating in Iraq as well as project operators, will provide market knowledge and “how to” information.
• Pre-scheduled One-on-One meetings
• Networking Lunch
• Pre-scheduled One-on-One meetings, meetings continue
• Networking Reception
Monday, April 25, 2011
Networking Breakfast with Iraq Government
Officials
Iraq Officials will provide market knowledge and “how to”
information. (Breakfast Presentation)
Experienced fi rms that have been operating in Iraq as well as project operators, will provide market knowledge and “how to” information.
• Pre-scheduled One-on-One meetings
• Networking Lunch
• Pre-scheduled One-on-One meetings, meetings continue
• Networking Reception
Tuesday, April 26, 2011
Networking Breakfast with Iraq Government
Officials
Iraq Officials will provide market knowledge and “how to”
information. (Breakfast Presentation)
Experienced fi rms that have been operating in Iraq as well as project operators, will provide market knowledge and “how to” information.
• Pre-scheduled One-on-One meetings
• Networking Lunch
• Pre-scheduled One-on-One meetings, meetings continue
• Networking Reception
Wednesday, April 27, 2011
Opportunity for Individual follow-up and/or site visits
Thursday, April 28, 2011
Leave Baghdad for Home
Excellent Business Opportunities_ To top>>
The U.S. Catalogue Expo in Iraq is a cost effective method for
U.S. exporters to promote their products and technologies in the Iraq.
New Fields: Your doorway to Iraq
How will the U.S. Catalogue Expo in Iraq work?
New-Fields will allocate a display unit on the networking floor
for each company to present its catalogues. Iraqi buyers and
distributors will view the displays and request catalogues that
are of interest to them in exchange for their full contact details.
New Fields will email these details to individual exhibitors on a
daily basis.
Why You Should Participate_
To top>>
• A cost-effective way to generate new business opportunities
from Senior Iraqi officials from iraqi Air, Sea and Land as well
as the Internal Security Forces Offcials.
• We present your catalogues to a highly targeted audience of
Iraq’s leading buyers and distributors.
• Daily delivery of generated sales leads via email.
• You will be represented by New Fields professionals who are familiar with the Iraqi business community.
How to Register?_ To top>>
Since space is limited for this oil and gas delegation, rush in your registration form today!
Click here to download the registration form. Please fax the
completed form to 202-280-1239
For further information, contact us.
New Fields
1101 Pennsylvania Avenue NW
6th Floor
Washington, DC 20004
Tel: (202) 536-5000
Fax: (202) 280-1239
==================
Iraq News & Tenders
Date: Sunday, April 03, 2011
Source: IranOilGas.com
Shell to start drilling at Iraq Majnoon oilfield in July: Dow Jones
Royal Dutch Shell along with its partners, Malaysia's Petronas and the Iraqi state Missan Oil Co., will start drilling the first new well in the super-giant Majnoon oil field in July. Between 15 and 20 wells will be drilled in Majnoon oil field and some 27 others will be refurbished to bring output to 175,000 bpd by the end of next year from the current 60,000 barrels a day. Shell has opened a new office in Basra to manage its projects in Iraq. Shell also will start constructing a 75 kilometer pipeline to connect Majnoon with the crude oil depots in Faw.
Iraq’s West Qurna oilfield hits output record: TradeArabia
The West Qurna I oil field in Southern Iraq has achieved a major production milestone, according to developers ExxonMobil and South Oil Company, and co-venturers Shell and Oil Exploration Company. Initial field production of 244,000 barrels per day has now increased to 285,000 barrels per day, which exceeds the 10 per cent improved production target established under the technical services contract.
Petrofac awarded $240m Shell contract in Iraq: Iraq Business
Petrofac has confirmed it has been awarded a contract in excess of US$240 million by Shell Iraq Petroleum Development B.V. for developments in the Majnoon Field, Southern Iraq. Under the contract, Petrofac is providing engineering, procurement, fabrication and construction management services for the development of a new early production system comprising two trains each with capacity for 50,000 barrels of oil per day, along with upgrading of existing Brownfield facilities.
Swiss company reveals oil storage plans in Basra: Iraq Business
Dome International has met the chairman of Basra Investment Commission (BIC) to discuss the possibility of constructing warehouses for oil derivatives in Basra. The preliminary study of the project includes the construction of oil warehouses near Khor Al-Zubair port on an area of 40 acres with an investment cost of 250 million dollars.
IMF skeptical of Iraq oil targets: AFP
The International Monetary Fund Monday expressed doubts over Iraq's ability to meet its long-term targets for oil production, currently the source of nearly 90 percent of government income. The IMF said infrastructure constraints were likely to prevent Iraq from boosting production from 2.5 million barrels now to its goal of 13 million barrels by 2017 -- more than oil king Saudi Arabia's current production. "While these production goals could be feasible in the longer term, the main risks in the coming years will be bottlenecks in the export infrastructure that will need to be addressed," the IMF said, in a review of its $3.7 billion support program.
Iraqi-British conference to encourage oil investment: Aswat al-Iraq
The Iraqi-British Business Council and the Iraqi Businessmen Union – Basra Branch, have held a 2-day Investment Conference to encourage investment in the oil field, attended by officials in the oil sector in Basra and a number of private companies, specialized in oil and gas, as well as members of the local administration in the Province.
U.S., Japanese, Chinese companies bid for South Iraq oilfield: Bloomberg
U.S., Japanese and Chinese companies submitted bids to develop the al-Qatiaa oil field west of the southern Iraqi city of Nassiriya. The Oil Ministry is studying the offers from the three companies, Hussein Aziz, head of the municipality of al-Shatra in Nassiriya province, told reporters. The oil field will produce about 300,000 barrels a day, he said. The contract also involves the establishment of a refinery and the drilling of 10 wells, he said.
Iraq Says Last Obstacle to Shell Gas Deal Removed: WSJ
The Iraqi Oil Ministry and Royal Dutch Shell PLC have removed the last obstacle preventing them from signing a long-awaited $12 billion joint-venture deal, Ali H. Khudhier, head of the state-run South Gas Co. said. The main dispute was over the rights of export. Shell, along with its partner Mitsubishi Corp. of Japan, wanted to handle exports, while under current Iraqi hydrocarbon laws the Iraqi State Oil Marketing Organization should do so.
http://www.iranoilgas.com/news/details2/?newsID=7475
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Roadblocks slow Lukoil, IOCs
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Deputy Prime Minister for Energy Hussain al-Shahristani (L) and Adnan Janabi, the head of Parliament's oil and energy committee, brief the press on February 23, 2011 in Baghdad. (BEN VAN HEUVELEN/Iraq Oil Report)
By BEN LANDO of Iraq Oil Report
Published April 7, 201
BAGHDAD - Since entering Iraq’s immensely promising oil sector, foreign companies have faced a number of hurdles, including political disputes, bureaucratic red tape, logistical difficulties, and infrastructure shortfalls.
The Russian oil firm Lukoil is the latest to stumble. On Wednesday the company announced that its development of Iraq’s 12.9 billion barrel West Qurna Phase 2 oil project has fallen behind. It’s not clear what has caused Lukoil’s delays.
The field will hit 150,000 barrels per day (bpd) in 2013 instead of 200,000 bpd next year, said Lukoil President Vagit Alekperov in a video on the company’s website. The company projects it will still hit its 2017 target of 1.8 million bpd.
Alekperov met with Iraqi Oil Minister Abdul Karim Luaibi earlier this week. According to an Oil Ministry press release, they reinforced their dedication to the project, and confirmed the developer of the super-giant West Qurna Phase 2 oil project "will stick to the production plateau and the timeframe to achieve peak production."
Since late 2008, Iraq has signed a dozen oil deals with the world’s largest oil firms, including ExxonMobil, BP, Royal Dutch Shell and others. The projects aim to boost fields that are already producing half the country's crude, as well as those virtually shut in but ready to be tapped, such as Lukoil's West Qurna Phase 2 project.
Iraq is also seeking to tap its natural gas resources. It has awarded, but not yet signed, deals for three dry gas fields, and is preparing another auction in which companies will bid to explore for more gas fields. Iraq currently has the world’s 11th-largest natural gas reserves.
A draft gas deal with Shell has been languishing since 2008. The joint venture with the state-run South Gas Company would capture the 700 million standard cubic feet of associated gas being flared in Basra every day. The deal hit a snag, however, because Iraq says its State Oil Marketing Organization must be the sole exporter of oil and gas, while Shell has been holding out for export rights.
Officials have said a ministry review of an amended deal was complete and sent to the Cabinet's energy committee to review. On Monday, the committee did not take it up.
Deputy Prime Minister for Energy Hussain al-Shahristani said Iraq is committed to servicing local demand for natural gas as well as exporting to both Europe and Asia. Export routes have not yet been established, but the main options appear to be pipelines north through Turkey, west into Syria, or south via Kuwait. Iraq could also liquefy the gas and export by tankers. None of the requisite infrastructure is even in design phase.
A Kuwaiti newspaper quoting unnamed sources said Kuwait is directly negotiating with IOCs for gas exports, though that scenario seems unlikely, since only SOMO has the right to export, relations with Kuwait are still rocky, and there has been no firm commitment on any gas export routes. Shahristani, talking to reporters at an oil conference in Paris, backed away from a previous verbal commitment that Iraqi gas would go to the planned Nabucco pipeline.
Iraq claims 143 billion barrels of oil reserves, second to Saudi Arabia and Iran. Shahristani said that Iraq could add an additional 30 billion from Iraq's semi-autonomous Kurdistan Regional Government (KRG), but only after being vetted by international oil auditors. This would move Iraq above Iran in the world’s oil-reserves rankings.
The KRG has signed oil deals with 37 foreign firms in defiance of Baghdad, which claims ultimate authority over Iraq’s oil sector. Two of the KRG fields are currently exporting, through a tentative deal aimed to earn extra cash for the country and pave the way for a comprehensive agreement. A senior Oil Ministry official said Wednesday the two fields are currently exporting about 115,000 bpd into the northern export pipeline to Turkey.
The KRG-Baghdad dispute has delayed passage of oil-related laws that promise to clarify the lines of control over Iraq’s oil sector and alleviate the political infighting. Bayazzid Hassan, a member of the Parliament Oil and Energy Committee, said one key law, which would re-establish the Iraqi National Oil Company, has received its first reading but isn't on the schedule for upcoming sessions.
The KRG's limited success has inspired numerous provinces to demand more of a say over their oil fields. One of the gas deals, for Akkas field, has been delayed due to disputes between Anbar province officials, the Oil Ministry, and the consortium set to develop the field, a joint venture between Korea’s Kogas and Kazakhstan’s KazMunaiGaz.
The latest province to agitate for greater oil autonomy is Muthana, where a key provincial council member told the Aswat al-Iraq news agency it feels "ignored" by Baghdad and publicly urged foreign investors to "invest and develop" its fields. Muthana is a large province with little oil profile.
In total, Iraq’s existing contracts aim to raise the country’s oil production from 2.7 million bpd to 13.5 million bpd. If successful, Iraq would become the world’s largest oil producer.
That production will come disproportionately from four fields: West Qurna Phase 2, along with Phase 1 (Exxon, 2.825 million bpd), Zubair (Italy's Eni, 1.2 million bpd), Majnoon (Shell, 1.8 million bpd) and Rumaila (BP, 2.85 million bpd), will together account for 78 percent of Iraq's projected increase. Rumaila would be the second-most productive oil field in the world.
Source
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Iraq plans fourth bidding round for energy projects
Iraq: Thursday, April 14 - 2011 at 09:17
Iraq's oil ministry plans to invite international energy firms to show interest in new gas exploration contracts in a fourth bidding round, with responses due on May 19, Reuters has reported.
Iraq said last month that 12 exploration blocs, including the first sea exploration bloc, would be tendered in the auction, to be held in November.
Around 46 pre-qualified companies will be able to take part in the gas auction, especially companies that have signed development contracts, Abdul-Mahdy al-Ameedi, head of the ministry's licensing and contracting office, told the news service.
http://www.ameinfo.com/262111.html
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Secret memos expose link between oil firms and invasion of Iraq
By Paul Bignell
Tuesday, 19 April 2011
Reuters
A British Army soldier investigates a large fire near Basra's Shuiba refinery
Plans to exploit Iraq's oil reserves were discussed by government ministers and the world's largest oil companies the year before Britain took a leading role in invading Iraq, government documents show.
Iraq's burgeoning oil industry: Click HERE to upload graphic (160k)
The papers, revealed here for the first time, raise new questions over Britain's involvement in the war, which had divided Tony Blair's cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction.
Related articles
•Patrick Cockburn: They denied it was about Iraq's resources. But it never rang true
•Alistair Dawber: Black gold rush was fuelled by enormous untapped potential
The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time.
The documents were not offered as evidence in the ongoing Chilcot Inquiry into the UK's involvement in the Iraq war. In March 2003, just before Britain went to war, Shell denounced reports that it had held talks with Downing Street about Iraqi oil as "highly inaccurate". BP denied that it had any "strategic interest" in Iraq, while Tony Blair described "the oil conspiracy theory" as "the most absurd".
But documents from October and November the previous year paint a very different picture.
Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq's enormous oil and gas reserves as a reward for Tony Blair's military commitment to US plans for regime change.
The papers show that Lady Symons agreed to lobby the Bush administration on BP's behalf because the oil giant feared it was being "locked out" of deals that Washington was quietly striking with US, French and Russian governments and their energy firms.
Minutes of a meeting with BP, Shell and BG (formerly British Gas) on 31 October 2002 read:
"Baroness Symons agreed that it would be difficult to justify British companies losing out in Iraq in that way if the UK had itself been a conspicuous supporter of the US government throughout the crisis."
conspicuous:Easy to notice; obvious.
Attracting attention, as by being unusual or remarkable; noticeable
The minister then promised to "report back to the companies before Christmas" on her lobbying efforts.
The Foreign Office invited BP in on 6 November 2002 to talk about opportunities in Iraq "post regime change". Its minutes state: "Iraq is the big oil prospect. BP is desperate to get in there and anxious that political deals should not deny them the opportunity."
After another meeting, this one in October 2002, the Foreign Office's Middle East director at the time, Edward Chaplin, noted: "Shell and BP could not afford not to have a stake in [Iraq] for the sake of their long-term future... We were determined to get a fair slice of the action for UK companies in a post-Saddam Iraq."
Whereas BP was insisting in public that it had "no strategic interest" in Iraq, in private it told the Foreign Office that Iraq was "more important than anything we've seen for a long time".
BP was concerned that if Washington allowed TotalFinaElf's existing contact with Saddam Hussein to stand after the invasion it would make the French conglomerate the world's leading oil company. BP told the Government it was willing to take "big risks" to get a share of the Iraqi reserves, the second largest in the world.
Over 1,000 documents were obtained under Freedom of Information over five years by the oil campaigner Greg Muttitt. They reveal that at least five meetings were held between civil servants, ministers and BP and Shell in late 2002.
The 20-year contracts signed in the wake of the invasion were the largest in the history of the oil industry. They covered half of Iraq's reserves – 60 billion barrels of oil, bought up by companies such as BP and CNPC (China National Petroleum Company), whose joint consortium alone stands to make £403m ($658m) profit per year from the Rumaila field in southern Iraq.
Last week, Iraq raised its oil output to the highest level for almost decade, 2.7 million barrels a day – seen as especially important at the moment given the regional volatility and loss of Libyan output. Many opponents of the war suspected that one of Washington's main ambitions in invading Iraq was to secure a cheap and plentiful source of oil.
Mr Muttitt, whose book Fuel on Fire is published next week, said: "Before the war, the Government went to great lengths to insist it had no interest in Iraq's oil. These documents provide the evidence that give the lie to those claims.
"We see that oil was in fact one of the Government's most important strategic considerations, and it secretly colluded with oil companies to give them access to that huge prize."
Lady Symons, 59, later took up an advisory post with a UK merchant bank that cashed in on post-war Iraq reconstruction contracts. Last month she severed links as an unpaid adviser to Libya's National Economic Development Board after Colonel Gaddafi started firing on protesters. Last night, BP and Shell declined to comment.
Not about oil? what they said before the invasion
* Foreign Office memorandum, 13 November 2002, following meeting with BP: "Iraq is the big oil prospect. BP are desperate to get in there and anxious that political deals should not deny them the opportunity to compete. The long-term potential is enormous..."
* Tony Blair, 6 February 2003: "Let me just deal with the oil thing because... the oil conspiracy theory is honestly one of the most absurd when you analyse it. The fact is that, if the oil that Iraq has were our concern, I mean we could probably cut a deal with Saddam tomorrow in relation to the oil. It's not the oil that is the issue, it is the weapons..."
* BP, 12 March 2003: "We have no strategic interest in Iraq. If whoever comes to power wants Western involvement post the war, if there is a war, all we have ever said is that it should be on a level playing field. We are certainly not pushing for involvement."
* Lord Browne, the then-BP chief executive, 12 March 2003: "It is not in my or BP's opinion, a war about oil. Iraq is an important producer, but it must decide what to do with its patrimony and oil."
patrimony: An inheritance from a father or other ancestor.
* Shell, 12 March 2003, said reports that it had discussed oil opportunities with Downing Street were 'highly inaccurate', adding: "We have neither sought nor attended meetings with officials in the UK Government on the subject of Iraq. The subject has only come up during conversations during normal meetings we attend from time to time with officials... We have never asked for 'contracts'."
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Iraq News & Tenders
Date: Tuesday, April 19, 2011
Source: IranOilGas.com
Heritage plans Kurdistan spud
: Upstream
London-listed Heritage Oil has secured a rig and plans to begin a multi-well exploration programme in the Kurdistan region of Iraq in July. Heritage said it had signed a deal with DaQing International to use the Chinese company’s DQ037 2000-horsepower rig for exploration and appraisal drilling on the Miran Block. The Miran West-3 well, to be spudded in July, will be a four-kilometre step-out appraisal of the major Jurassic gas discovery made by the Miran West-2 well. Miran West-3, with an expected total depth of 3800 metres, will take about 160 days to drill.
Secret memos expose link between oil firms and invasion of Iraq: The Independent
Plans to exploit Iraq's oil reserves were discussed by government ministers and the world's largest oil companies the year before Britain took a leading role in invading Iraq, government documents show. The papers, revealed here for the first time, raise new questions over Britain's involvement in the war, which had divided Tony Blair's cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction.
Iraq offers Armenia to participate in petrochemical projects: PanARMENIAN.Net
On April 11-13, Armenian Ambassador to Iraq Murad Muradyan visited Basra to meet with acting governor Ahmed Hasan, chairmen of Barsa Chamber of Commerce, Association of Entrepreneurs and Investment Commission to discuss the Armenian-Iraqi trade and economic cooperation. Besides, Muradyan met with Director General of the largest petrochemical corporation in Iraq, who offered Armenian businessmen to participate in implementation of joint programs and expressed willingness to export wide variety of the corporation products to Armenia.http://www.iranoilgas.com/news/details2/?newsID=7579
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Basra hotels welcome influx of investors
A view of the courtyard of the Basra International Hotel. (BEN VAN HEUVELEN/Iraq Oil Report)
By BEN VAN HEUVELEN of Iraq Oil Report
Published April 19, 2011
From an oil company’s perspective, Basra can inspire optimistic exuberance.(Full of unrestrained enthusiasm or joy.
) But among the sobering logistical questions any foreign business must ask before entering this promising market, the most basic one is: where to stay?
Until recently, most foreigners had to stay on the Contingency Operating Base (COB) near the airport, a sprawling maze of concrete blast walls and pre-fabricated structures planted in the desert and guarded by American and British forces. There, executives live in trailers — containerized housing units, or CHUs, in military speak — and endure long commutes in armored convoys.
Now, however, foreign companies are seeking housing off the COB for two main reasons. First, the U.S. military is forcing many tenants off the base, in preparation for a partial hand-over to Iraqi forces. Second, as violence falls in Basra, more and more viable housing venues are becoming available.
Two five-star hotels are already open for business downtown — the Basra International Hotel and the Mnawi Basha. They thrive on a stream of business travelers, from prospective investors making their first trips to regular guests attending one of Basra’s many conferences and trade fairs. Some companies with a permanent in-country presence are also renting long-term blocks of rooms and office space.
Basra seems poised for an economic boom. The province supplies 80 percent of Iraq’s oil, and the world’s largest oil companies are pumping in billions of dollars to boost that production even higher.
Not only have behemoths(Something enormous in size or power.
) like ExxonMobil, Shell, and BP come to Basra, but a variety of related companies have followed. Oil-services companies have won sub-contracts for oilfield development. And other businesses, such as law advisors, consultancies, and employment agencies, have also begun to set up shop.
Haidar Fadhel, the chairman of the Basra Investment Commission, is responsible for facilitating private-sector development. He sees growth potential even beyond the economic ecosystem of the oil sector.
“The infrastructure for the industrial sector is here, but it has not been functioning because it has been neglected since Saddam,” said Haidar Fadhel, the chairman of the commission. “Factories, petrochemical, fertilizer factories, refineries, cement factories — there is a huge industrial sector rising up here.”
Since its founding in July of 2008, the commission has awarded 19 investment licenses, for the construction of everything from residential housing projects to a $20 million family fun park.
Basra doesn’t yet have a central business hub. Large oil companies like BP and ExxonMobil are building camps outside of the city, near their oilfield facilities. Some companies are still headquartered on the COB.
In addition to Basra’s two luxury hotels, the Basra Investment Commission is facilitating a few other projects to accommodate international businesses.
The Kufan Group, an Iraqi company, is teaming up with Northern Gulf to build an all-purpose business hub about three miles north of the port of Um Qasr. The project aims to transform a former prison, Camp Bucca, into “Logistics City,” which will feature warehouses, a commercial center, residential units, and hotels.
More such projects are on the horizon. The Norwegian oil-services company Petronor has contracted with the South Oil Company to build another logistics hub called Energy City just south of Basra city, near the Zubair oil field.
In the meantime, many companies are flocking to Basra’s hotels. According to Matham Jebbar Shghit, the general manager of the Mnawi Basha, his hotel has rented long-term blocks of rooms and office space to the Russian firm Lukoil, the oil-services company Weatherford, and Hitachi. Other companies, such as the Italian oil firm ENI and oil-services company Schlumberger have also inquired about long-term lodging and office space.
Like the COB, the hotel facilities provide security and reliable electricity — essential services that would be logistically complicated and prohibitively expensive for many companies to obtain on their own. Both the Mnawi Basha and the Basra International Hotel are surrounded by concrete blast walls and guarded by security teams wielding assault rifles and metal detectors.
Inside the hotels, their spacious reception halls and well appointed furnishings reflect Basra’s attempts to move past its violent history to become a premier destination for international business. The hotels feature large several large conference rooms, banquet halls, business centers, swimming pools, and restaurants.
The Mnawi Basha is bustling and busy, especially in the summer months when its reliable electricity and air conditioning attract guests willing to pay a premium for relief from the heat. The Basra International Hotel — sometimes referred to as “the Sheraton,” even though it’s no longer affiliated with that chain — recently reopened in October, 2010. Its shiny marble floors and cavernous atrium create an atmosphere of comfort that feels a world away from the city outside.
Basra was once controlled largely by militias loyal to the radical cleric Moqtada al-Sadr. But Prime Minister Nouri al-Maliki led a large military offensive in March of 2008 that eventually reclaimed the city. Now, although Basra still suffers from regular bombings and attacks — the influence of the militias and their Iranian patrons is still palpable — the streets are far safer than they once were.
Five years ago, for example, one of the city’s main commercial streets, Al Jezar, was the scene of several horrific car bombings. Now, in the evenings, Iraqis gather at outdoor cafes and sip tea beneath decorative neon lights shaped like flowers. Some shops have even begun discreetly selling alcohol.
While the hotels offer more creature comforts than any other venues in Basra, their “five star” designation belies the slightly lower standards of a post-conflict environment.
Recently at the Mnawi Basha, for example, executives from an international company were alarmed to hear an explosion. They were soon relieved to learn that the hotel hadn’t been bombed — a boiler had merely blown up inside one of their rooms. (The spontaneous combustion of hotel-room appliances, however, was still worrying.)
In the Basra International Hotel, many of the bathtubs drain onto the floor as well as into the pipes. When asked whether every room in the hotel was afflicted with malfunctioning plumbing, the front desk manager denied any defects whatsoever.
“The problem is not with the room,” he said. “It is with life.”http://www.iraqoilreport.com/business/companies/basra-hotels-welcome-influx-of-investors-5607/
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COMMODITIES & FUTURES
Iraq To Announce 4th Oil Bidding Round Monday -OfficialBy Hassan Hafidh
Published April 20, 2011 | Dow Jones Newswires
AMMAN -(Dow Jones)- The Iraqi Oil Ministry is planning to officially announce a fourth bidding round next week at a news conference hosted by the oil minister, an Iraqi oil official said Wednesday.
"The Oil Minister Abdul Kareem Luaiby will announce officially the fourth bidding round at a news conference that he will hold on Monday, April 25," the official told Dow Jones Newswires.
Iraq has held three bidding rounds in the last few years to auction off 15 of the country's most prized oil and gas fields.
The minister is expected to offer international companies 12 exploration blocks located in various parts of Iraq, the official said.
The ministry had set May 19 deadline for receiving documents from international companies willing to participate in the new licensing auction.
Luaiby is also expected to announce locations of these exploration blocks, he said.
Iraq also needs to boost gas production and build more gas-fired power plants to increase its power output, currently at 6,500 megawatts, which is less than half the country's needs, he said.
Iraqi oil officials are optimistic that major international oil companies will meet their pledges to significantly increase the country's oil production. They say Iraq could increase oil output to up to 8 million barrels a day by 2018, though oil analysts expect that target to take longer to achieve.
Copyright © 2011 Dow Jones Newswires
===============
The Middle East Institute Presents
Joining the Global Oil Sector:
Challenges and Opportunities for Iraq
Featuring
Ben Lando
Iraq Bureau Chief - Iraq Oil Report
Thursday, April 28
12:00-1:00pm
MEI Boardman Room
1761 N St., NW
Washington, DC
The Middle East Institute is proud to host Ben Lando, Iraq Bureau Chief of the Iraq Oil Report, which provides business, political and security analysis on Iraq.
Lando will discuss Iraq's potential within the global oil sector, as well as the political and security concerns that could affect oil supply, growth, security and policy in Iraq now and in the future.
Lando will also touch upon relations between Iraq and its neighbors, as well key domestic issues such as the Arab-Kurdish conflict.
Bio: Ben Lando is founder and Iraq bureau chief of the Iraq Oil Report, the premiere news and information source about Iraq's oil sector and related issues, including the country's economic, political, and security conditions.
Lando's reporting has taken him to many of the key oil infrastructure and other facilities, and he regularly interviews key officials in the Iraqi oil, political and security sectors.
Lando is also a contributing editor to the global energy news service Platts, and a freelance reporter for The Wall Street Journal. Lando has briefed both US government officials and members of Congress about the oil industry in Iraq, as well as corporations like Credit Suisse.
Prior to the Iraq Oil Report, Lando was energy editor for UPI, based in Washington, D.C.
http://www.mei.edu/Events/Calendar/tabid/504/vw/3/ItemID/332/d/20110428/Default
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Q&A: Joost Hiltermann
By BEN LANDO of Iraq Oil Report
Published April 21, 2011
One of Iraq’s most fragile areas is north of the capital, along the swath of disputed land once decimated by Saddam Hussein and now in a geographic limbo.
The residents of the disputed territories haven’t been properly represented in local, provincial and national governments since 2005. And it’s this contested political front that many there say is to blame for the instability.
Amidst the dispute between Arab and Kurdish leaders – as well as the Turkomen minority – are the billions of barrels of oil that flow below ground.
The situation is so tenuous that U.S. forces have been carrying out a training mission, designed partly to build trust, conducting joint patrols with both the Arab and Kurdish military.
Last month, the International Crisis Group released a report saying that a deadline is fast approaching to resolve key issues, so that the friction doesn't spark and ignite the powder keg= small cask for holding gunpowder or other explosives
Iraq Oil Report’s Ben Lando talked to Joost Hiltermann, ICG’s deputy programs director for the Middle East and North Africa, about the political ramifications in the debate over whether U.S. troops should remain, and the stark consequences if a solution to the “trigger line” is not found.
Ben Lando: There have been some currents of conversations that there may be a U.S. military presence in Iraq after the 2011 deadline for withdrawal. What are the ways this could take place?
Joost Hiltermann: The Maliki government would have to invite the U.S. government to keep a certain number of U.S. troops in Iraq beyond 2011, and the two sides then would have to successfully negotiate a follow-on treaty to the current Security Agreement signed in 2008, presumably a Status of Forces Agreement, such as the U.S. with other governments in the region. We are talking about something in the order of 10,000-20,000 troops. However, for this to happen, Prime Minister Maliki would have to take a deep breath and overcome some serious political obstacles that will be thrown in his way by the Sadrists as well as by Iran, both of whom have made it crystal clear they strongly oppose a continued U.S. military presence. There is a lot of silent support among Iraqi leaders for an extension, but they are apprehensive about the political fallout should they come out openly in favour of continuing a foreign military presence on Iraqi soil, an issue that taps a wellspring of nationalism.
BL: What would be the consequences, negative and positive, of this?
JH: Once the extension has been agreed, the actual presence shouldn’t be too difficult to accomplish, as U.S. troops are already invisible to most Iraqis even today, and we are talking about an even further reduced number. U.S. troops could continue to fulfil some important support functions in the fields of border and airspace control, logistics, intelligence, and counter-terrorism. They could and should also continue to play the psychologically very important role of monitoring the “trigger” line between Iraqi and Kurdish forces in disputed territories in the north, and thus prevent an escalation of conflict.
BL: If the US troops do leave as scheduled, would there be any gap in security or even a security vacuum?
JH: Hard to say how things will play out. We know there are gaps, but it is unlikely that a U.S. troop withdrawal would send Iraq into a tailspin because of these vulnerabilities. We have to watch the “trigger” line very closely, however, and encourage the creation of interim mechanisms and confidence-building measures that could help Baghdad and Erbil manage the transition.
BL: One of the major stated concerns of the U.S. government has been the inability to overcome the ethno-sectarian fighting in the disputed territories in northern Iraq, primarily between the Kurdish and Arab citizens and their leaders. What is the status of such disputes in terms of the current status of Iraq's domestic disputes?
JH: Little has happened to resolve the status of the disputed territories, but (the United Nations Assistance Mission to Iraq) has initiated a round of discussions to address this. A political solution is the only way to prevent a conflict in the north once U.S. troops are gone.
BL: Did the joint patrols organized by the US military help at all? if so, how? if not, why?
JH: By encouraging communication and coordination between Baghdad and Erbil and their respective security forces deployed along the “trigger” line, they helped prevent small sparks from escalating into a larger conflict. But the Combined Security Mechanism always was an interim measure: a way of keeping the peace while the politicians worked out a deal. The problem has been that the politicians have been in no hurry.
BL: What are the risks or potential direction the conflict will take over the coming months and after US troops leave?
JH: I make no predictions. I hope that the two sides will be able to reach an interim deal that will keep things stable on the ground while a broader deal is worked out.
BL: Would you say the disputes are more security or political?
JH: They are political, of course, but the security dimension is the hardest for the politicians to resolve.
BL: We've seen attacks, such as at the provincial council building in Tikrit, or the regular bombings and assassinations in Baghdad and elsewhere, that seem to demonstrate the inability of Iraqi security forces to prevent all attacks from insurgents, or have we perhaps reached a violence plateau? If the latter, what will it take to get beyond this plateau?
JH: Violence has been at a fairly stable level since 2008, even if we can all agree that this level is far too high. To reduce violence, the government and its security forces will have to become both more cohesive and stronger. We have a broadly inclusive government, but it has yet to function with a unified vision, so I doubt there will be rapid progress on the security front. However, there is no reason to fear a sharp deterioration in the security situation, unless the government collapses or violence breaks out along the trigger line.
BL: As politics evolve in Iraq, what is the future of the fight over the oil sector?
JH: The conflict over the oil sector is a conflict over the nature of the Iraqi state, in particular the type of federal system Iraqis can settle for. Much of it remains undefined, and this has been one of the primary obstacles to progress on a hydrocarbons law and a revenue-sharing law. Baghdad and Erbil will have to strike a compromise deal on how they divide powers between them, including powers to manage the oil industry. They will also have to agree on a defined boundary for the Kurdistan region. Besides that, a conflict could arise sometime in the future if Iraq’s oil production exceeds Iran’s and the question of OPEC quotas is raised.
BL: How do you see the Arab-Kurd oil issues being resolved, such as Article 140/Kirkuk, the oil law, the KRG oil deals, transparency in the oil sector, and the extent of federalism?
JH: Through long and difficult negotiations. There is no alternative, at least not a peaceful one.
BL: Are you optimistic or pessimistic about the near future of Iraq, and why?
JH: Iraq is far from out of the woods, but there is no reason to believe that things will deteriorate rapidly once U.S. troops depart. I expect a decade of muddling through, with spasms of violence and unremittingly poor governance. Still, if Iraq manages to jack up oil production and curb corruption, it might start to emerge from the difficult period of the past eight years.
http://www.iraqoilreport.com/oil/interview-joost-hiltermann-5612/
==============
Friday, April 22, 2011
Iraq discussing plan to share crude oil reserves with Iran, Kuwait
ABU DHABI — Iraq has been discussing an arrangement for the sharing of border oil fields with neighboring Iran and Kuwait
Iraqi Oil Minister Hussein Al Shahristani said Baghdad has launched an effort to share proven crude oil reserves with Iran and Kuwait. Al Shahristani said such an arrangement would be highly profitable amid record oil prices.
"Iraq has entered negotiations with Kuwait and Iran," Al Shahristani told the London-based A-Sharq Al Awsat. "We have informed them of the necessity of signing an agreement to unify the oil fields and avoid a situation where each side controls its side — as that will bleed these fields in an uneconomical way."
Iraq has been steadily increasing oil production and exports, and in May 2008 reached its highest level since the ouster of the Saddam Hussein regime in 2003. Iran and Kuwait have not publicly responded to the Iraqi offer of border oil sharing.
http://scooby-iraqdinarnews.blogspot.com/2011/04/iraq-discussing-plan-to-share-crude-oil_22.html
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INTERVIEW-Iraq legal obstacles delay $12 bln Shell gas deal2011-04-25 12:25:36 GMT (Reuters)
* SOMO to handle exports, buyers to be agreed with partners
By Ahmed Rasheed
BAGHDAD, April 25 (Reuters) - Legal hurdles have delayed Iraq's $12 billion deal with Royal Dutch Shell and Mitsubishi to capture flared gas, but agreement on a final draft contract may be only a few weeks away, a senior Iraqi oil official said.
"I cannot give a timeframe for when we will finish it," Deputy Oil Minister Ahmed al-Shamma said on Monday. "I expect by the end of next week we will be very close to settling these issues and reaching agreement on a final draft deal in order to refer it to the cabinet."Shamma said the lack of modern oil and gas laws was standing in the way of the deal
"Now we are discussing a mechanism, and I think it will be agreed by all parties including Shell, that SOMO (State Oil Marketing Organisation) will be responsible for exporting the gas for the benefit of the joint venture," he said.
"But the marketing process -- and I mean selecting the beneficiaries or the buyers -- should be done in consensus between SOMO and the newly established joint venture."
He said a key meeting would be held next week by lawyers for the parties to "reach an agreement on the final draft deal".
Officials had expected months ago to formalise the Shell deal, first agreed in 2008.
, which would help Iraq capture some of the 700 million cubic feet of natural gas now flared at its oilfields every day.
Iraq needs to capture flared gas to fuel electricity generation. Eight years after the U.S.-led invasion that toppled Saddam Hussein, Iraqis receive only a few hours of power a day from the national grid and the shortage has been a key complaint at recent nationwide protests.
The transfer of ownership of oil and gas facilities to the joint venture and the export of produced gas are among the major sticking points, Shamma told Reuters.
"The lack of legislation and the current, valid laws are standing as a hurdle to reaching a final deal with Shell and Mitsubishi. This is the major issue which has delayed the Shell gas deal," he said.
Under a deal, Shell would capture associated natural gas at oilfields near the southern hub of Basra, including Rumaila, Iraq's workhorse.
Shamma said current law prevents Iraq from transferring ownership of facilities to the three-party joint venture and from exporting gas.
Separately, Abdul-Mahdy al-Ameedi, head of the oil ministry's licensing and contracting office, said he expected Iraq's cabinet to approve deals for the Siba and Mansuriyah gas fields this week or next.
Ameedi also told reporters the ministry expected to sign an initial agreement for the Akkas gas field next month.
Iraq auctioned the three fields last October in its third bidding round since the 2003 invasion.
(Additional reporting by Muhanad Mohammed; Writing by Jim Loney)
http://www.futurespros.com/news/futures-news/interview-iraq-legal-obstacles-delay-$12-bln-shell-gas-deal-1000010458
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TD when spudded was 3850m+plus 400mtrs of slip fault ???
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At 7th april we were at 2685m and into the Jurasic
GKP will already know what they have encountered and along with the 2D/3D siemics all should be very interesting , although with its complications as SH-1 revealed .
Still approx 1165mtrs to go at 10.65m a day to reach TD
, having drilled the extra 400mtrs.
= 109 days to go approx at the current rate of 10.65m p/d
With 1500m still to go thats at least 140 days from 7th April which would take us to end of August. Unless of course we are now drilling a bit faster than those early sections?
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When SA-1 was spudded, the TD was said to be 3850m:
'Gulf Keystone announces the commencement of drilling operations on its Sheikh Adi-1 exploration well effective August 4, 2010. This is the first exploration well to be drilled on the Sheikh Adi Block immediately to the west of the Company's Shaikan Block, site of last year's discovery of the giant Shaikan oil field. The Company has an 80 percent working interest in the Block and is carrying the Kurdistan Regional Government's 20 percent working interest.
The well design for Sheikh Adi-1 has been modified to drill through the geopressured sections of the Triassic. This high pressure interval forced the cessation of drilling on Shaikan-1, at the point when the well experienced the inflow of significant volumes of oil and gas from this section of the Triassic. The Sheikh Adi-1 is designed to drill through the Cretaceous, Jurassic and the Triassic age rocks, to a planned total depth, depending on well results, of 3,850 meters. Drilling is expected to take 6 months. The Company's estimated oil-in-place resource potential for the Sheikh Adi structure is in excess of one billion barrels.'
Reverse Fault
http://screencast.com/t/SjWykE5eBnK
Hanging wall vs Foot wall - faults are classified by how the two rocky blocks on either side of a fault move relative to each other. The one shown here is a reverse fault. The hanging wall block is always above the fault plane, while the foot wall block is always below the fault plane.
http://en.wikipedia.org/wiki/File:Hanging_%26_footwall.jpg
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Key thing is they've already found oil (below:number of encouraging oil shows...) - they wouldn't have attempted any tests if the oil shows were of no significance!
Sheikh Adi Block
The Sheikh Adi-1 exploration well was spudded on 6 August 2010 and immediately began to experience borehole stability problems while trying to drill the long Cretaceous interval. There were a number of encouraging oil shows in the Cretaceous (not a primary target for this well) and several attempts were made to test particularly interesting zones. However, in each case the borehole was too unstable to get any kind of meaningful flow test.
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I would try working out the average drill time based on discounting at least 60 days.
They went fishing in the early stages and were lucky to retrieve the main 'bits' unlike poor old SEY who had bits everywhere.
That early issue on SA-1 has been put behind us, but I wouldn't carry forward the average drill time based on that blip. I'd discount it.
From here on - the deeper levels should be less fractured and more stable thus, they could easily being making SH-2 type progress.
My guess is that they are doing closer to 20m to 25m per day. I'd have them into the 3000+m level by now.
I am not a drilling expert, but I would have thought that the drill rate for SA-1 will have picked up significantly beyond the painfully slow rate as they went down to the Jurassic. The cretaceous instability issues presumably had to be managed twice over with the 12.25inch pilot bore followed by the 17.375inch hole opening exercise to lay the first casing.Now that the Cretaceous section is cased and they are into the more stable Jurassic, you would expect the drill bit to be moving much faster downward. Consequently I would expect TD to be reached rather sooner than July.
I'm no expert though so any technical view would be very welcome.
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Shouldn't TD be 3850 + 400 (reverse fault cretaceous)?
= 130 days @ 10.35 m/day
2685 divided by 252 days roughly from spud date = 10.65m/day
The 17.5" hole on Sheikh Adi-1 eventually reached what was anticipated to be just above the Jurassic and casing was set. Upon drilling out of the casing into what was expected to be the first of the primary target intervals it was discovered that the borehole had crossed a reverse fault and approximately 400 metres of Cretaceous interval still remained to be drilled before reaching the Jurassic.
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Iraq Petroleum 2011, 12‐14 July, London
Posted on 29 April 2011. Tags: conferences, CWC, Iraq Petroleum 2011
Iraq Petroleum 2011, 12‐14 July, London
Following the announcement by the Iraqi Ministry of Oil that 12 exploration blocs, including the first sea exploration bloc, will be tendered in next year’s auction and alongside the current influx of hundreds of companies to Iraq, the development of its oil and gas industries look set to continue.
The latest edition of CWC’s Iraq Petroleum conference in July, therefore, will focus on the upstream opportunities and the next phase of development of this activity.
Abd Al‐Karim Laibi [Luaibi, Elaibi], Iraq’s Federal Minister of Oil recently commented “Iraq expects more than double the oil production capacity over the next four years.”
Iraq Petroleum 2011 features a post conference workshop, with Clyde & Co organising a negotiator roundtable discussion focusing on Iraq’s oil and gas contracts. This one day interactive workshop will update investors on the upcoming fourth bid round, the right joint ventures and will take delegates through a step by step guide on forming joint ventures and managing the after contract signature challenges.
Conference sponsors to date include upstream principle sponsor Baker Hughes, service principle sponsors Crescent Petroleum, and conference sponsors ExxonMobil, Statoil, Total, OXY, Oil Serv, IAG, Huawei, Oilve Group, Mott MacDonald, Standard Chartered, Technology Partners and SKA.
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Beyond the Headlines: May 9-15
Workers survey the Halfaya oil field, which is being developed by China’s CNPC, with junior partners Petronas of Malaysia and Total of France. The Chinese oil services company CPEEC has just won Oil Ministry approval on a $162.5 million subcontract, which will help the consortium bring the field to a production plateau target of 535,000 barrels per day. (ESSAM AL-SUDANI/AFP/Getty Images)
Iraq Oil Report gathers troves of information and analysis, much of which never makes the news - until now. In this weekly feature, we highlight key incidents and developments, giving readers a ground truth view of Iraq.
By STAFF of Iraq Oil Report
Published May 16, 2011
UAE investors bid for Basra refinery
BASRA — Bin Khalid Investment Group, of the United Arab Emirates, is making a bid to invest in a Basra oil refinery with a projected production capacity of 300,000 barrels per day (bpd).
“Our investment project will be one of the major projects in Iraq,” said Firas Jabar al-Saadi, the director of Bin Khalid.
Haider Ali Fadel, the head of the Basra Investment Commission, said the project “will enable the development of oil pr...
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raq 4th Bidding Round: New Opportunities for IOCs
Thursday, May 12 2011 by EvaluateEnergy
4 comments
3
Iraq 4th Bidding Round New Opportunities for IOCs
Iraq is one of the few countries where a high volume of reserves remains yet resources have vastly been under exploited. Although Iraq ranks highly as an oil producer, major fields are yet to reach their expected peak production rates and only a few fields are in development. In early 2011, the Iraq Oil Ministry announced a fourth licensing round. Included in the round are twelve licenses that were not previously on offer in the provinces of Najaf, Karbala, Samawa, Diwaniya and Anbar. The fourth license round is on track with the ministry’s plan to pursue unexploited reserves. Development of infrastructure will be needed in order for Iraq to achieve a target production capacity of almost 12 million b/d by 2017.
The Iraq oil industry has of course been heavily hit by U.S sanctions, war and weak infrastructure. At the end of 2010, the United States voted to lift sanctions against Iraq opening the country up to foreign investment. The last few years have seen the Iraq Oil Ministry pursue an ambitious development program to develop fields and increase production. There have been three license rounds in Iraq since 2008 and twelve contracts were signed with International Companies (IOCs). A two phased development is being pursued in which current producing fields are being developed to maximize their potential, followed by the development of non-producing fields.
Megaprojects
Terms of the contracts on offer by the Iraq Oil Ministry are by no means favourable (service contracts in which companies earn a fee for each barrel of oil produced) but the appeal of high prospective reserves has so far held the interest of IOCs. The first phase to boost current production sees the involvement of various IOCs in three major fields. The table below shows a list of the fields awarded in June 2009, ownership, remaining reserves, current production, and the 2017 expected crude production capacity.
Asset Name Operator Asset Ownership Reserves Crude/NGL - Remaining (mln bbls) - Crude Oil Production (000 b/d) - Estimated Capacity - Crude/NGL (000 b/d) -
2009 2010 2017
Rumaila Rumaila Operating Organization BP 38%, CNPC 37%, SOMO (Iraqi State Oil Marketing) 25% 17,300.0 960.0 2,850
West Qurna Phase I ExxonMobil ExxonMobil 80%, Royal Dutch Shell 20% 8,600.0 270.0 1,500
Zubair ENI ENI 32.81%, Occidental 23.44%, KOGAS 18.75%, Missan (Iraq State Oil) 25% 7,810.0 201.0 730
Source: Evaluate Energy
The Rumalia, West Qurna Phase 1 and Zubair fields all contain a high level of reserves but are not yet being exploited to their full capacity. The Iraq Oil Ministry has enlisted IOCs to boost production at these major fields. The second phase of Iraqi oil development aims to generate production from future major oil fields. Concessions were awarded for seven fields out of ten on offer in December 2009. A list of major fields with International Oil Companies involved is provided in the table below.
Asset Name Operator Asset Ownership Onstream Date Reserves Crude/NGL - Remaining (mln bbls) - Estimated Capacity - Crude/NGL (000 b/d) -
2009 2017
Discovery Shaikan Gulf Keystone Gulf Keystone Petroleum (LON:GKP) 75%, Kalegran (MOL) 20%, Texas Keystone 5% 2009 4900
-
Akkas KOGAS KazMunaiGas 37.5%, Korea Gas Corporation (KOGAS) 37.5%, Iraqi State 25% 2001 - -
Onstream Halfaya CNPC CNPC 37.5%, Petronas 18.75%, Total 18.75%, South Oil (Iraq) 25% 2008 4,940.0 535
Majnoon Shell Shell 45%, Petronas 20%, Misan Oil (Iraq State) 25% 2002 2,300.0 1,800
Qaiyarah Sonagol Sonagol 75%, Niveveh (iraq state) 25% 1936 1,520.0 120
Takwe DNO DNO 55%, Genel 25%, KRG 2009 230.0 90
Planned Ahdab CNPC CNPC, Zhenua Oil 2012 1,060.0 115
Badra Gazprom Neft Gazprom Neft 30%, Kogas 22.5%, Petronas 15%, TPAO 7.5%, Midland (Iraqi State) 25% 2014 760.0 170
Gharaf Petronas Petronas 45%, Japex 30%, North Oil (Iraq state) 25% 2014 860.0 230
Najmah Sonagol Sonagol 75%, Niveveh (iraq state) 25% 2015 1,120.0 110
West Qurna Phase 2 Lukoil Lukoil 63.75%, Statoil 11.25%, North Oil Company 25% 2012 12,880.0 1,800
Source: Evaluate Energy
The fourth bid round has on offer licenses over twelve exploration areas. Companies that can participate in the round are IOCs that qualified for the previous three rounds, whether a contract was signed or not. Companies that have not previously bid for Iraqi licenses will apply through a new prequalification process announced by the Ministry. The areas on offer have not previously been explored but are part of the Ministry’s plan to optimize Iraq’s resources. The blocks on offer are in the table below:
Asset Name Resource Type
Block 1 (Ninawa) Gas The first exploratory area is located in the province of Nainawa and the area is estimated with 7300 km 2 with hydrocarbon prospects (gas).
Block 2 (Ninawa & Al-Anbar) Gas The second exploratory area is located in the province of Anbaar & Nainawa and the area is estimated with 8000 km 2 with hydrocarbon prospects (gas).
Block 3 (Al-Anbar) Gas The third exploratory area is located in the province of Anbaar and the area is estimated with 7000 km 2 with hydrocarbon prospects (gas).
Block 4 (Al-Anbar) Gas The fourth exploratory area is located within the borders of Anbar province and the area is estimated with 7000 km 2 with hydrocarbon prospects (gas).
Block 5 (Al-Anbar) Gas The fifth exploratory area is located in the province of Anbaar and the area is estimated with 8000 km 2 prospects with hydrocarbon prospects (gas).
Block 6 (Al-Anbar & An-Najaf) Gas The sixth exploratory area is located between the provinces of Najaf & Anbaar and the area is estimated up to 9000 km 2 with hydrocarbon prospects (gas).
Block 7 (Al-Qadisyah, Babil, An- Najaf, Al-Muthanna & Wasit) Oil The seventh area is in the provinces of Qadisia, Babel, Najaf and Muthanna and the area is estimated with 6000 km 2 with hydrocarbon prospects (oil).
Block 8 (Diyala & Wasit) Gas The eighth exploratory area is located in the province of Diala & Wasit and the area is estimated with 6000 km 2 with hydrocarbon prospects (gas).
Block 9 (Al-Basrah) Oil The ninth exploratory area is located in the province of Basra and the area is estimated with 900 km 2 with hydrocarbon prospects (oil).
Block 10 (Al-Muthanna & Thi Qar) Oil The tenth exploratory area is located in the province of Muthanna & Thiqar and the area is estimated with 5500 km 2 with hydrocarbon prospects (oil).
Block 11 (An-Najaf & Al-Muthanna) Oil The eleventh exploratory area is located in the province of Najaf & Muthanna the area is estimated up to 8000 km 2 with hydrocarbon prospects (oil).
Block 12 (An-Najaf & Al-Muthanna) Oil The twelfth exploratory area is located in the province of Najaf & Muthanna the area is estimated up to 8000 km 2 with hydrocarbon prospects (oil).
Source: Evaluate Energy
Iraq’s Oil Future
A push by the Iraq Oil Ministry to promote oil production shows Iraq’s determination to become major oil producing nation. With a vast amount of resources, a push to exploit major oil fields and interest from international companies, Iraq is heading in the right direction to reaching its 2017 production target. But before Iraq can reach this success, many challenges lie ahead. A history of wars and violence has left the infrastructure weak and in need of modernization and investment. Estimations on the reconstruction of Iraq’s infrastructure are as high as $100 billion (Source: EIA). Furthermore, tensions within Iraq as well as with neighbouring countries mean that companies will have to invest in heavy security, a costly and logistical nightmare. Extensive repair work is also required on existing fields that have been damaged in conflict and through poor management.
Companies that have invested so far in Iraq have shown that the rewards outweigh the risk. Even the unfavourable no-bid deals whereby companies are paid for their work rather than entering into a production agreement, are being signed as companies see this as a way of establishing themselves with the ministry. Companies that have previously bid for contracts, pre-qualify for the fourth licensing round. The fourth licensing round will close on May 19th, 2011. Pre-qualified firms will be announced in June, with further details on the acreage to be provided to bidders in August (Source: Evaluate Energy). IOCs have once again shown a keen interest in Iraq with the fourth bid round.
Evaluate Energy tracks all Licensing rounds worldwide at www.evaluateenergy.com
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Rumaila blockade averted
Governor meets with oil workers to hear grievances, forestalling a major labor interruption at Iraq’s biggest oil field.
Iraqi, BP and CNPC officials at the Rumaila oil field Technical Service Contract signing in 2009. (STAFF/Iraq Oil Report)
Iraqi, BP and CNPC officials at the Rumaila oil field Technical Service Contract signing in 2009. (STAFF/Iraq Oil Report)
By Ali Abu Iraq of Iraq Oil Report
Published May 18, 2011
The governor of Basra province averted an imminent blockade of Iraq’s largest oil field, offering a meeting with oil union members to discuss grievances that have fueled intensifying protests.
Unionists had planned to stop foreign oil workers from entering the Rumaila field Tuesday by shutting down main roads and entrances to facilities. But late on Monday, the governor of Basra, Khalaf Abdul Samad Khalaf, sent an eleventh-hour appeal to the organizers, offering an audience with hi...
By Staff of Iraq Oil Report
Published May 13, 2011
Oil professionals protest for jobs
MISSAN — About 50 graduates of the Basra Oil Institute held a protest to demand appointments with the Missan Oil Company, the state-run entity responsible for developing the province’s oil. One of the graduates, Ahmed al-Rubaie, said that the Missan Oil Company had promised it would recruit graduates of the institute, but has not yet followed through.
Electricity Ministry discusses Iran debts
BAGHDAD — Minister of Electricity Raa...
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Political Council of the Arab in Kirkuk: Article 140 has expired
Political Council of the Arab in Kirkuk: Article 140 has expired
Kirkuk, May 17 (Rn) - A member of the Political Council in Kirkuk, said that Article 140 of the Iraqi Constitution has expired, and re-grant of trust and the formation of a special parliamentary committee to follow up and implementation of the article was illegal.
He said Abdul Rahman Morshed the sinner for the Kurdistan News Agency (Rn) announced today that "the constitutional article 140 has expired, and re-grant of confidence and form a special committee of the substance in the House of Representatives is an illegal act, it would marginalize the rights of Kirkuk's Arabs."
He added, "we demand the suspension of constitutional article 140, and the abolition of the Special Committee, and not to allow the work of the Commission at the expense of people of Arab nationalism in Kirkuk."
And the voice of the Iraqi parliament in May 13 of this majority, to form a special parliamentary committee of constitutional article 140, the task of monitoring and follow-up steps the 140-governmental organizations, on the implementation of the constitutional article.
On the other hand, said the political council in Kirkuk, in his recent statement has been received (Rn) a copy of it today, "The President and members of the Supreme Committee for the implementation of constitutional article 140, they know only the interests of people of Kurdish nationalism, and aim to serve the Kurdish parties and the areas inhabited by the majority of Kurds in Kirkuk. "
The Council of Arab political in Kirkuk, a number of members of boards of districts, counties, and a number of notables and Arab tribes inhabiting south-west of Kraków.
The statement added that he "should stop the operation of rule 140, and the abolition of the Special Committee to rule, of the Iraqi Council of Representatives, came the Arab political demands of the Council on the basis of the deadline for the implementation of the constitutional article."
On the other hand, said a member of the provincial council in Kirkuk, Fouad Hussein, for (Rn) "It is not necessary to reply to the statement of the Council of Arab political, because the president and members of the Council are of the characters chauvinism accustomed to issuing statements hostile and letters are not based on factual basis."
He continued by saying that "each relay for Kirkuk were compensated $ 10 million Iraqi dinars (8500) U.S. dollars, and in return got all the family and beneficiaries previously imported 20 million Iraqi dinars, and this reveals whether Kurds or Arabs is the beneficiaries."
Article 140 of the Iraqi constitution, the normalization of the situation in the province of Kirkuk and disputed areas in other provinces, such as Nineveh and Diyala, and identified the time period ended in atheist and the thirtieth of December 2007 to implement all provisions in the said article of action, as I left for the people of those areas of freedom self-determination of both survival and independent administrative unit or attached to the Kurdistan Region of Iraq through the holding of a referendum, but the obstacles: the delay in the implementation of some essential items in the above-mentioned article, for reasons the politicians say the Kurds are politically motivated, while Baghdad says that the delay is deliberate, knowing that he had of the Commission the application of the relevant ministerial material, that carried out some of its clauses, such as compensation for the victims, and nothing has been implemented mainly a referendum on the fate of the city.
While it supported the Kurds strongly the implementation of Article 140 of the Constitution, showing the section of the Arabs and Turkmen in Kirkuk and other areas, an objection to the implementation, for fear of the possibility of incorporating oil-rich province to the Kurdistan region of Iraq, after being accused of Kurdish parties to bring hundreds of thousands of Kurds to the city to change its identity demographic, which was Saddam Hussein's regime, others may also bring hundreds of thousands of Arabs to it, in the seventies and eighties of the last century, under a policy of Arabization, which applied in these areas at the time.
The Article 140 Committee, formed in 2006, and chaired by the former science minister Raed Fahmi, and to oversee the normalization of the situation in Kirkuk.
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BP-getting payment for Iraq oil investme...
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http://kuwaitsamachar.com/index/news/bp-starts-getting-payment-iraq-oil-investment
Submitted by News Editor1 on Wed, 2011-05-18 12:29 Forex, Gold & Stocks
LONDON: British Petroleum (BP) Plc has started to receive payment for the millions of dollars it has invested in Iraq with the loading of its first shipment of Iraqi oil last week, industry sources said on Tuesday.
London-based BP and its Chinese partner China National Petroleum Corporation (CNPC) have been developing the Rumaila field, which pumps almost half of Iraq's output, as part of the member of the Organization of Petroleum Exporting Countries (OPEC) ambitious plans to expand its oil industry. BP and CNPC are owed more than one billion US dollars for work at Rumaila over the past year or so, where production has been increasing. On Saturday, the tanker Oceanis sailed from Basra Oil Terminal in southern Iraq carrying two million barrels of crude for BP, a shipping agent said.
The cargo of Basra Light oil is worth at least $200 million at current prices. "This is the first cargo that Iraq has allocated to pay for the oil service contracts that were signed a couple of years ago," an industry source said. At Rumaila the companies have drilled new wells, overhauled and connected existing ones and installed electric submersible pumps to boost production at the field, which holds an estimated 17 billion barrels of oil reserves.
"Production is running at close to 1.2 million barrels per day (bpd) at Rumaila, at least 100,000 bpd more than when the companies took on the service contract to increase flows at the field," the industry source said. Service contracts awarded to foreign oil companies stipulate they start to be paid and to recover costs once they boost production by 10 percent above agreed baselines. Boosting output at Rumaila, which BP helped to discover in 1953 and where output has fallen from its 1980 peak of 1.6 million bpd due to years of war and sanctions, is not without its challenges.
Official Iraqi figures obtained by Reuters in March showed that production had fallen from peaks hit in December and early January, in what could be a sign of challenges ahead. Iraq has allocated another crude cargo to CNPC, and BP will probably receive a second later in May or in early June, the industry source said.
Source : Reuters
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Iraq Needs More Statesmen and Fewer Politicians
Posted on 18 May 2011. Tags: Akkas, Kazakhstan, KazMunaiGas
Iraq Needs More Statesmen and Fewer Politicians
We reported last week on the withdrawal of the Kazakhstan-based KazMunaiGas from negotiations on the Akkas gas field in Anbar province.
This week the head of KMG, Askar Balzhanov, shed more light on the background to the company’s decision, and it reflects very poorly on the Iraqi authorities:
“One of the reasons for our withdrawal from the Akkas project in Iraq is that the local authority, where the field is located, and the central government of Iraq had different points of view on the project. And this disagreement caused our withdrawal.“
While the nature of the internal wrangling has long been known, it is significant that a major international company has chosen to make public the fact that political bickering is costing the country and its people money.
It can be argued that politicians at the parliamentary level have put their differences aside in the national interest in order to form a government, but it is also undeniable that the result is a bloated cabinet that took far longer to put together than anyone thought reasonable.
One economist estimates that nearly $500 billion has been lost over the past eight years in the oil sector alone, due to poor public sector administration standing in the way of progress.
It’s clear that Iraq needs more statesmen and fewer politicians.
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Next Iraqi Oil and Gas Licencing round could legitimise KRG oil contracts
By: Shwan Zulal
The oil and gas laws in Iraq are set to be delayed once again and there seems to be no political will to resolve the issues holding back some companies investing in Iraqi energy sector. A dispute is brewing and this time is between the Iraqi parliament and Al-Maliki's (Nuri Al-Maliki, Iraqi Prime Minister) Government. Oil and Energy Parliamentary Committee headed by Adnan Al-Janabi appears to be trying to delay January round of Gas and Oil licence auction. The parliamentary committee have threatened to take the issue to the lawmakers and try to block the government's attempt to go ahead with auctioning the licences before the Iraqi Petroleum law is in place.
Al-Janabi, told Reuters that, "he had asked the Oil Ministry to postpone the auction but it had refused, and any contracts that resulted would be illegal." He added that his committee would ask parliament to forbid "the carrying out of new bid rounds or the signing of any new contracts until the necessary petroleum legislation is passed". Iraqi oil ministry has issued a brief statement in response saying that the ministry is holding the auction in compliance with Iraqi laws. However, the committee has been threatening to ask parliament to pass a law preventing the government from signing any new contracts.
Referring to Kurdistan oil contracts, Al-Janabi, has been quoted by the news agency that the contracts needs to be "brought into line". Kurdistan Region has been in the centre of this political squabbling. There are nearly 40 companies operating in the region and their contracts with KRG (Kurdish Regional Government) has been and still in question. Although many international legal experts have rendered the contract constitutional and there has been political agreement. The position remains unclear and the latest remarks by Al-Janabi, does not make it any clearer.
The latest dispute between the Al-Janabi and Al-Maliki's government highlights the lack of political direction in Iraq. Nevertheless, if the government wins the argument -which is very likely as previous attempt to stop the auctions in Court has failed- and goes ahead with granting the new licenses in January without the oil and gas legislation, it will certainly give legitimacy to the KRG oil contract.
The argument against the validity of Kurdish oil contract has always been whether the contracts are constitutional. The constitution stipulates, oil and gas legislations must be passed to regulate the industry and grant licenses must be carried out accordingly. It is likely that the new round of licenses will go ahead as oil ministry planed and the Energy Committee in charge of the new legislation will oppose it. As Al-Janabi said, the contracts will be "illegal" hence; the contracts are invalid and unconstitutional according to the committee. This will automatically set precedent and put the new and old contracts granted by the Iraqi government in par with contracts granted by KRG.
The process of granting KRG licences has been far from transparent, but it has brought expertise and money for a much-needed infrastructure in the region. Only yesterday, the Kurdish opposition were asking for more transparency from the Kurdish government when dealing with oil companies and their contracts. Granting licences to oil exploration companies and attracting investors have been successful in Kurdistan Region. Despite disagreement over the validity of the contracts in Baghdad, investors have poured money into the region in excess of $10Billion.
Investors in Kurdistan are somewhat reassured by the recent payment of outstanding amounts for exporting oil from Kurdistan, which was long overdue. Furthermore, Al-Maliki's attempt to grant licences without the oil and gas law being passed will politically make it difficult to render Kurdish contracts granted under the same conditions invalid while giving legitimacy to other contracts granted by central Iraqi government.
AL Janabi also told Reuters "If the Oil Ministry proceeds with its plans, it will not be acting legally, and any signing parties will do so at their peril". The uncertainty has spooked some investors and cast doubt on the future supply projection of the Iraqi oil production. The Iraqi government oil production targets by 2017 was 12 million barrel per day, but many experts and even ministers doubt this could be achieved, while the political turmoil continues.
Iraqis are suffering and have neither basic services nor security. Meanwhile, the country has been rundown by rampant corruption. Division and lack of trust among politicians has lead to incongruity and disagreement on how to sell the only commodity Iraq depend on and its main source of income.
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http://www.zawya.com/story.cfm/sidZAWYA20110524042545/UAE_Group_to_Invest_in_Oil_Refinery_in_Iraq
23 May 2011
UAE Group to Invest in Oil Refinery
THI QAR: A United Arab Emirates Group Wants to Invest in a Refinery with the capacity of 300 thousand b/d, Thi Qar Investment Commission announced today.
Head of the Investment Commission Dr. Loay Al-Kheirallah told Aswat al-Iraq that the UAE group proposed erecting the refinery to cover the local shortage.
"The group will submit its request to the Iraqi Ministry of Oil", he added.
Head of the UAE delegation announced that this project will provide 6000 work opportunities in addition to building 750 housing units and power generation station with the capacity of 250 megawatts.
Media director of the commission Muheeb Al-Hilali that the delegation met with the governor Talib Al-Hassan who expressed his full support for the project and readiness to extend all assistance in accordance with Law 64 of 2007 of special investments in the oil sector.
The UAE group, Kahlid Group, is specialized in trading and services of oilfields and gas.
It is stationed in Abu Dhabi.
Thi Qar province has proven oil reserves about 20 billion barrels in five un-invested oil fields. Nasiriyah, center of the province, lies 380 km south of the capital, Baghdad.
© Aswat Aliraq 2011====
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article is huge...here goes:
The world’s most profitable company was the first of two American international oil companies (IOCs) to win an oil field contract with the Iraqi government. Now, leading a consortium that includes Royal Dutch Shell and Iraq’s Oil Exploration Company and South Oil Company, Exxon has boosted production at West Qurna 1 by over 10 percent, triggering its first payday.
The newly formed West Qurna 1 Field Operating Division will effectively run the field for the next 20 years, ultimately aiming to boost its output to 2.825 million barrels per day (bpd). The work has just gotten started, and James Adams, vice president of ExxonMobil Iraq, is leading the effort.
The challenges of operating in Iraq are perhaps as great as the enormous opportunities. In a conversation with Iraq Oil Report, Adams discussed some of the issues on the horizon — potential export constraints, the status of southern oil infrastructure, security after the U.S. withdrawal, and the upcoming bidding round for exploration blocks.
Ben Lando: In late April, ExxonMobil held a meet and greet with Iraqi journalists, locals, sheikhs, and Iraq’s South Oil Company (SOC), about the newly reached production target. What is the snapshot of the field's status right now?
James Adams: We're pretty pleased with the process. We've gotten most of the operational level contracts awarded and we've gotten three rigs operating in the field plus a number of workover rigs, and also we're undertaking a number of rigless workovers. The average production is currently a little over 330,000 barrels per day.
BL: Is that on target then, according to your plans?
JA: We're ahead of plan at this point.
BL: Tell me about that. A year ago, May 2010, where did you think you would be at this point?
JA: I don't have those details at hand. I can say pretty honestly right now we are running about three or four months ahead of plan. The last few months have been particularly positive in terms of our relationship with the South Oil Company. One of the biggest milestones is the fact that we've formed the West Qurna I Field Operating Division (WQIFOD) and seconded in excess of 1,200 people into it, in addition to the ExxonMobil staff. Our teams are really enjoying the relationships that are being forged with SOC. It's a good organization and we're very proud to be a part of it.
BL: What's next for developing the field?
JA: We're still mobilizing rigs. We've got drilling rigs under hire that are moving into the fields. We'll be ramping up drilling. We've got two different efforts going on right now to assess potential options for water injection from available water sources.
BL: Early reinjection work?
JA: The early reinjection work relates to initial injection activities that will allow West Qurna 1 to build and sustain production for several years until the Common Seawater Supply Project (CSSP) comes online.
BL: Needing access to water, are there new techniques you are trying out?
JA: It’s fairly conventional technology, but as you are aware all of the southern Iraq fields will require huge volumes of water. As of now, no water has been re-injected into West Qurna 1, so we're going to start with a couple different options that are each less than a 100,000 barrels a day, and then we'll be working up from there to the eventual total which will more than likely be in the range of one and a half to two million barrels a day.
BL: Are you doing this in lieu of progress on the big water pipeline project?
JA: No, these water sources are for an interim period until the CSSP comes online. We’ve always anticipated the need for interim water injection while the large project was being built.
BL: Exxon is supposed to be the lead on it in conjunction with the ministry. What is the status?
JA: We have just gone out to the market with a number of invitations to tender for field surveys and pre-FEED and FEED work.
BL: For the pipeline?
JA: For more than the pipeline. CSSP involves a large facility down south, including water inlets, pumping stations, treatment facilities, and of course the pipeline to bring the water north to the fields.
BL: What are the contracts for this project that are being put out right now?
JA: Field surveys. Pre-FEED and FEED.
BL: When will they be awarded?
JA: Current planning anticipates they will be awarded in stages over the next two to four months.
BL: This is a dual phase of a sort. You are moving forward on this especially as West Qurna 1 is concerned, and working with the ministry to overcome whatever obstacles happen to be there to get the whole project rolled out.
JA: Yes, but it's hard for us to judge what the internal approval requirements are. It's better to talk to the ministry about that.
BL: Is it a matter of them handling their thing and then you get involved when they're finished, or are you just not clear what they are going to require of you?
JA: I don't think it's an issue of what is required. I think that this is a big step for the country and they have their own internal work to do to ensure that governance and associated financial and other plans are in place.
BL: Has the cost changed at all?
JA: Cost estimates are something that develops over time. They go up, they go down, depending on what you learn, the concepts selected, and level of engineering. I don't see that being a big issue.
BL: What is the price tag right now for the project?
JA: We're not going to advertise prices. That would affect bidding.
BL: What are the key benchmarks for the coming year for West Qurna 1, when you are developing the field?
JA: We don’t have granular benchmarks as much as the approved work plans developed with SOC. We know how many wells we're planning to complete and how many workovers and what stage we'd be at in terms of the engineering and new production facilities. But I'm not going to share the details of the joint project plans.
BL: Do you have any production benchmarks? Obviously you're way ahead so that buys you some breathing room.
JA: I don't think I'm going to share that. I would suggest that is something that should come from SOC.
BL: Looking into the seven year production plateau target, are there key contracting benchmarks, to understand what it takes and what opportunities there are?
JA: We don't really talk about our plans at that level of detail. In rough terms you can think of the project as being divided into two phases: an early works project, which is primarily focused on refurbishing the equipment and the systems that are present and adding wells into the production mix to fully utilize the limits of existing production facilities, flowlines, separation equipment and so on. And then the next phase is an enhanced rehabilitation effort where we will be adding a significant amount of new production facilities. That second phase is still in a very early stage of engineering.
We're at the point now where we're starting to make some decisions along with SOC about what those facilities will look like and once those decisions are made then we'll be out in the market fairly quickly with tenders to provide the majority of those facilities. Like all of the projects, that will also be done in a phased approach.
Our target for West Qurna 1 under the contract, including both the discovered developed and discovered undeveloped, is about 2.8 million bpd. West Qurna 1 is producing today about 330,000 bpd, and it can produce significantly more than that if we upgrade some of the existing equipment, add wells, workovers, etc.
But there's still going to be a huge gap between what the existing facilities can handle and 2.8 million barrels. We won't add 2 million barrels of facilities all at once. That will be broken up into phases so we can achieve the target without investing too much any sooner than necessary.
BL: At your event last month, you announced a $1 million gift to Basra University. Explain what that will go to.
JA: We're very pleased about this. In our company, education and health are two of the most important core values and areas where we like to invest in local development. Once we started working with Basra University it became apparent that this was a place where small amounts of money could do an awful lot of good. Not just for Basra but also for the industry in that area, simply because of the expanding need for qualified engineers. What we've agreed to do is fund the university for $500,000 a year this year and next year and that money will be used to enhance the laboratories primarily associated with petroleum engineering. The funds will also be used to run faculty development programs so that the existing faculty there will have access to resources in ExxonMobil and elsewhere to be able to expand their capabilities.
BL: Which part of the contract requirements does that money come from? There is a certain dollar amount required for training, and then the inherent corporate social responsibility issues.
JA: Wherever we operate, we strive to make a positive contribution to the local communities. This is part of ExxonMobil's global effort to support science and technology education.
BL: What about the training, I believe it's $5 million a year — have you made any decisions on how that will be spent?
JA: No, we haven't. We're working currently with SOC and the Ministry of Oil. The ministry is trying, and I think rightly so, to organize an intelligent strategy for making those investments. We have some ideas. They have some ideas. And we haven't yet finalized plans going forward.
BL: West Qurna 1 has been, although in the news for its work, notably out of the news in ways that some of your colleagues have not been. I haven't heard too many issues of protests in or around the fields, complaints by sheikhs, etc. How have you avoided what it seems that West Qurna 2, Rumaila and Majnoon have not avoided — the protests over a variety of different issues?
JA: I can't speak about any of the other projects. I can tell you that we're very focused on the local community and we've got a dedicated team of people who spend a lot of time in the community working with community leaders and also the provincial government to make sure that we're undertaking our work and our activities in the most responsible way that we can. I would say that we spend a lot of time communicating. And we also spend a lot of time with our people and our contractors to make sure that everybody understands how we should engage with the residents near our field and our operating areas.
I don't know that we've found any magic bullet other than we're very careful and spend a lot of time thinking about what we're going to do before we do it and we try to advertise well ahead of the point that we actually move into an area, what we're going to do and what the possible impacts might be.
BL: There has been an uptick in attacks on security personnel. Going forward does this concern you?
JA: Security is one of the biggest challenges that anybody faces in Iraq. The security situation will continue to be a challenge for some period of time. I'm sure you know that this is our number one obligation to people associated with our project, to protect everybody that's involved. I'm sure you also know how much effort we spend to mitigate risks and ensure our people can work safely. While there continue to be incidents, the mitigation and procedures we have in place are effective. Security is something we watch very carefully and look for the Iraq security forces to make continued gains.
BL: How do you operate when there's no US military presence? How does the planned withdrawal affect your confidence in being able to do your work safely?
JA: We don’t discuss the security precautions that we have in place, or how we're going to operate as the situation changes.
BL: In general, you don't feel that it's creating any problems for you?
JA: I think everybody assumes that (the U.S. leaving is) inevitable, the question is when. We're looking to the Iraqi government to continue to lead in this area while ensuring our own planning and mitigations are in place.
BL: The U.S. ambassador to Iraq recently pointed to IOCs hitting the 10 percent production target mark ahead of schedule as a sign of success for IOCs and for Iraq's oil strategy and future. But he said that it also highlighted the growing pains of Iraq's oil sector, saying that production from fields has had to be curtailed because the internal and export capacity required to handle the increasing production just isn't there. How does West Qurna 1 feel this specific reality?
JA: So far it really hasn't affected us that we're aware of. Nobody ever expected this would be easy, much less the Government of Iraq. The Ministry of Oil identified the potential export constraints two or three years ago. The ministry has had a plan in place for a long, long time to try and address it. I don't know that it's representative of anything other than the fact that when the country decides it's going to completely transform its industry and dramatically raise production in a short period of time, that's tough.
BL: In terms of the production capacity meeting handling and export capacity, where is that at for West Qurna 1?
JA: Today the bottlenecks that exist are in different locations of the country and affect different portions of the export infrastructure. Right now the main bottleneck is obviously with the export systems. The Basra terminal and the Khor al-Amaya terminal and the facilities leading up to those are key. Those constraints only kick in when total production from the south exceeds a certain level. And that's not just a result of West Qurna 1 but it’s a result of the cumulative production of all the producing fields. In order for the bottlenecks to be a problem it means that all the fields will have to be producing at high levels at the same time. I really couldn't tell you whether that situation has occurred or not, because I don't have access to the production data of the other fields.
BL: If we're looking at the plans and lumping all the fields all together, everyone's plans are to increase production. And the southern export capacity is at or nearing this limit. This would mean that either fields would have to be curtailed or export capacity expanded. And the first one is much easier and quicker to do and much more feasible than expanding capacity the next day.
JA: Of course. Shutting in a well is a lot easier than installing a single point mooring, but the fact is that the government has these export programs underway and is moving forward with contract awards and construction. I know you're aware of the work that's going on with the additional marine pipelines and single point moorings that are in the process of being constructed and installed in the south. Also, the work going on at Fao and within the country in terms of installing different pipelines and pumping stations is widely known. There's a lot happening simultaneously and like with everything else, there's a bit of a race: will the fields add cumulative production before some of the new facilities can be completed or will those facilities be completed before the production can be added. I think only time will tell.
BL: So what I understand is that this is just one of these temporary issues that is bound to happen in a good scenario, which Iraq may be turning into, and that all the plans are being put into place, contracts being let to expand capacity, but it's still a few months away before you're going to see that.
JA: We believe that's the case. We don't have people out there involved in the engineering and construction of these export facilities. We don't have hard data. But we certainly meet regularly with the Ministry of Oil and we're aware that they're working this very, very hard and as a high priority. If the project schedules are met I don't think the impact is going to be huge.
The real problem is a lot of the existing infrastructure in the country is very old and the condition of that equipment, pipelines, tanks and pumping stations is uncertain. It's not necessarily a lack of knowledge but it's just you can't know some things. When equipment reaches the end of its useful life, nobody is able to tell how much longer it's going to run, or work or continue to operate – at least without very detailed tests and surveys. There is a lot of uncertainty.
I know that the Ministry is working hard to try to understand the actual condition of the facilities that are out there, and we've offered to help them with that. So there may be some joint work in the coming months to try to survey some of the existing facilities that are important. Until that's done you just don't know, there's always going to be that risk.
BL: So what you do at West Qurna 1 is you keep moving forward, increasing production or building up capacity, and when you're ready to turn on the spigots — when Iraq finishes its pipelines, pumping stations, storage tanks, etc. — then you kind of turn it on and start producing the oil to the capacity that you've been building up to?
JA: Yes. We obviously have a contract that we and Iraq committed to and that contract stipulates we will reach a certain plateau at a certain point in time. In addition to that we have development plans that are approved by SOC, and so we're going to continue to work to deliver what we've committed to deliver under those approved development plans and according to the contract.
BL: Has West Qurna 1 been asked to shut in or curtail production at all or notified they will in the future?
JA: No, other than as everybody is aware, you can have periods of high winds and inclement weather in the south that impacts the ability of the crude carriers, tankers, to offload and when that happens there's not enough storage in the country to allow that to happen for long without the requirement to reduce production in the field. That's happened on a couple of occasions.
BL: That's external then, weather related, it's not because the government has been unable to take custody?
JA: Not that I'm aware of.
BL: In the contract, your profit comes from being able to produce the incremental increase in production of oil. Do you get compensated if you're asked to curtail at all?
JA: I'm not going to discuss the commercial aspects of the contract.
BL: What is ExxonMobil's strategic perspective on Iraq?
JA: Obviously, we're here and so that means we have a pretty positive outlook on Iraq and on Iraq's ability to continue to work towards achieving its vision. ExxonMobil is committed to building a long term strategic partnership with the Iraqi government in support of its energy priorities.
BL: Are you participating in the fourth bidding round?
JA: I won't tell you that ahead of time. I will tell you that it will depend a great deal on the terms and contract types that are offered.
BL: And if it's similar terms (to the first three rounds)?
JA: We're not a big fan of service contracts.
BL: Especially for exploration, I would assume.
JA: Especially.
======
http://af.reuters.com/article/energyOilNews/idAFLDE74N1GF20110524?sp=true
INTERVIEW-Iraq's draft oil law needs major work -deputy PM
Tue May 24, 2011 4:05pm
* Iraq needs to review existing hydrocarbon draft
* KOGAS agrees to develop Akkas gas field
* Iraq, Shell have agreed on gas contract terms
By Ahmed Rasheed and Waleed Ibrahim
BAGHDAD, May 24 (Reuters) - Iraq must overhaul the draft of its long-delayed oil law but will press ahead with developing its petroleum industry while debate on the divisive legislation drags on, Deputy Prime Minister Hussain al-Shahristani said.
Investors have been waiting for approval of a hydrocarbon law to guarantee a more solid legal framework for exploration. The law has also been seen as pivotal to reconciling Iraq's political factions as the country rebuilds after years of war.
But Iraq is nevertheless already developing oilfields, signing billions of dollars in service contracts with international companies, under old legislation.
The draft oil law was approved by the cabinet in 2007 but has faced opposition, mainly from semi-autonomous Kurdistan.
"Frankly, the hydrocarbons draft approved by cabinet in 2007 is not fitting to become law. It requires major changes," Shahristani, who has special responsibility for energy, told Reuters in an interview on Tuesday.
"We signed contracts with global oil majors and no one asked if there is a hydrocarbon law or not," Shahristani said.
Work began on the law in 2005 under a new constitution. It has remained stymied by differences between majority Arabs and minority Kurds over revenue-sharing and control over some fields in their region.
Besides deciding who controls the country's oil reserves and setting up a new state oil company to oversee the industry nationwide, the law aims to provide a more solid legal framework for attracting foreign investment.
OPEC PRODUCTION
The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) is due on June 8 and Shahristani said he saw no need for the body to reconsider its production target.
He said he expected world oil prices to stay at an average of more than $100 a barrel for the rest of the year.
On Tuesday, July Brent rose $2.47 to a high of $112.57 per barrel, before slipping back a little to trade around $112.25 by 1324 GMT. U.S. light crude futures rose $2.12 to $99.82.
Shahristani said Korea Gas Corp (KOGAS) has also agreed to sign a development contract for the Akkas gas field and the deal could be finalised next month. Akkas, the country's largest gas field, has estimated reserves of 5.6 trillion cubic feet.
"KOGAS informed us about them agreeing to come to Baghdad and sign the Akkas contract. We told them they could choose a partner to jointly develop the gas field," Sharistani said.
Iraq earlier this month had asked Korea Gas whether it could develop the Akkas field on its own after KazMunaiGas Exploration Production withdrew from the deal.
Shahristani said Royal Dutch Shell and Mitsubishi had now also agreed on all technical and contractual aspects of another gas deal and expected the oil ministry to present a final draft of the accord to cabinet this month.
Iraq has been negotiating a $12 billion deal with Shell that would give the country access to more than 700 million cubic feet of gas associated with oil production at three oilfields that could be used for power generation.
Shahristani said Iraq has set its future production targets of 12 million barrels per day based on his expectation that world oil demand would increase by 20 million bpd over the next 20 years and Iraq would be key to meeting new demand.
"We expect market demand for oil to increase by one million bpd from now into the next 20 years and Iraq's production will be the main source meeting this demand," Shahristani said.
Iraq is currently producing 2.75 million barrels per day (bpd), including 130,000 bpd from oilfields in northern Kurdish region.
Shahristani stressed that Iraq would not discuss the country's future quota in OPEC until reaching production of more than four million barrels per day.
Iraq is one of OPEC's founder members but has been exempt from quotas for years due to sanctions and war. Reaching its proposed capacity target of around 12 million bpd would put Iraq alongside OPEC giant Saudi Arabia.
Baghdad holds ambitious deals with the world's biggest oil majors that envisate boosting output to that level in around seven years. But most analysts say a target of around 8 million bpd output is more realistic. (Editing by Patrick Markey and Anthony Barker)
© Thomson Reuters 2011 All rights reserved
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http://www.independent.co.uk/news/business/news/iraq-opens-its-doors-for-business-2288557.html
Iraq opens its doors for business
With growth forecast to hit 11.5 per cent this year, investors are finally looking beyond the oil sector.
Sean Farrell
Wednesday, 25 May 2011
As populations across the Middle East demand democracy and freedom, Iraq – for so long the region's horror story – looks to be ahead of the game.
The Arab Spring that has swept Iraq's neighbours has coincided with a new-found sense of order in the country under the coalition government. That relative stability offers the prospect of greater prosperity in the region's sleeping giant.
Increased oil production and prices and deals with international oil companies prompted the International Monetary Fund to up its 2011 growth forecast to 11.5 per cent from 7.9 per cent with no let-up next year.
That rate of growth puts Iraq ahead of the famous Bric giants – Brazil, Russia, India and China – and ranks it with plenty of smaller emerging markets courted by Western companies.
What's more, Iraq has a young population of potential consumers, huge infrastructure needs and 115 billion barrels of oil to pay for them.
Roads, ports, airports, water treatment, housing – the list of planned upgrades after years of neglect is huge. Investment spending for the next three years amounts to an estimated $186bn on 2,700 projects.
And the country's relative stability and potential growth offer big opportunities to British companies that get in early to build relationships ahead of their competitors.
That was the message at yesterday's Iraq Britain Business Council summit in London, where more than 200 business people and professionals gathered at the Mansion House.
Hussein al-Urzi, chairman of the Trade Bank of Iraq (TBI), says: "Our democracy is new and is taking root in the sense that if someone is unhappy with the government, they don't say there should be a military coup – and this is very important for us."
TBI was set up soon after the 2003 invasion to finance trade and investment. The bank recorded record profits of $361m for 2010 as increased private sector investment boosted loan demand. Mr Urzi says the government now realises it needs a blossoming private sector to finance, build and operate the infrastructure and services to fulfil its potential as a regional commercial hub.
The Kurdish region is an example of how the private sector can step in. While the rest of the country struggles on with electricity operating five or six hours a day, the private Kurdish energy company has electricity flowing almost 24 hours a day.
The major British success story in Iraq is BP's deal, signed in late 2009, to develop the giant Rumaila oil field with its 16 billion-barrel capacity. Along with China's CNPC, BP will pump $15bn into the field over the next 20 years to boost production.
Other big UK companies operating in Iraq include the banks Standard Chartered and HSBC.
BP's deal capitalises on Iraq's greatest asset – energy. The country's plans to capitalise on its huge oil and gas reserves will dominate Iraq's growth story and present big opportunities for Britain's energy sector as well as the bankers, lawyers and consultants that work on such projects.
But the conference heard that oil can be a danger as well as a benefit by leaving an economy unbalanced.
Andrew Nevin, a strategy consultant at PwC, says: "The size of Iraq's economy should be between $500bn and $1 trillion in 10 to 15 years. The aspiration is there and it's attainable.
"Countries need to think carefully about their economies. If you are wholly dependent on one commodity – oil – you feel good at the moment because prices are high but it creates challenges in creating a healthy economy and society."
Mr Nevin and others at the conference argue that agriculture (wheat production almost doubled last year), mining, and services – from restaurants to the professions – should all be on Iraq's list of industries to encourage. Mr Urzi says tourism could be a major industry because Iraq has thousands of historic sites.
However, despite the country's improved prospects, it faces problems.
A key factor in the renewed stability is improved security. Compared with three or four years ago, civilian casualties are down 90 per cent. But the threat continues and last year 20 central bank staff and 26 TBI employees were killed in separate attacks.
The financial system also remains underdeveloped – only about 15 per cent of Iraqis have bank accounts and staff at big international companies are still paid in cash. Access to capital markets for funding major projects is still negligible and there is no significant mortgage lending to help finance the two million homes Iraq needs to to plug a housing gap.
Iraq is also still rife with bribery and bureaucracy. It ranks 153rd out of 183 countries in the world for ease of doing business and is near the bottom in the rankings for corruption.
Chris Frost, a consultant at PwC, says: "For foreign companies, there are still enormous challenges but the Iraqis are tackling them. They need regulation, legislation and a rule of law that works. Dealing with the bureaucracy of government requires enormous patience but I'm hearing that if you are patient the system works and you can get things done quicker than you'd think."
But if companies smaller than BP and the big banks want to tap into Iraq, they cannot afford to wait until everything is sorted out. There are plenty of German, Scandinavian and French businesses there putting down roots already.
An executive from a large UK-based multinational warned the conference: "Many of your international competitors are in Iraq doing business and Britain is in danger of being left behind if it isn't in Iraq."
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UPDATE 1-Iraq to sign Akkas gas deal with KOGAS in 2 days
Mon May 30, 2011 9:18am
BAGHDAD May 30 (Reuters) - Iraq plans to sign a deal with Korea Gas Corp (KOGAS) (036460.KS: Quote) in two days time to develop its Akkas gas field, the country's oil minister said on Monday.
Iraq had asked KOGAS to develop the Akkas gas field on its own after Kazakh company KazMunaiGas Exploration Production RDGZ.KZ withdrew from the deal earlier this month following a row with local authorities. [ID:nLDE74A0EF]
"God willing, we will sign the Akkas contract in two days," Abdul-Karim al-Luaibi told reporters.
Akkas, Iraq's largest gas field, located in Anbar province near the border with Syria, has estimated reserves of 5.6 trillion cubic feet. Luaibi also said current oil prices were acceptable for both producers and consumers and added Iraq's oil exports in May have averaged around 2.2 million barrels per day.
Brent crude LCOc1 was trading at $114.68 a barrel and U.S. crude CLc1 was at $100.07 at 0804 GMT on Monday. [O/R] (Reporting by Ahmed Rasheed and Khalid al-Ansary; writing by Rania El Gamal; editing by James Jukwey)
© Thomson Reuters 2011 All rights reserved
====
CNPC Gets First Oil Payment for Rumaila
Posted on 30 May 2011. Tags: BP, China, China Natational Petroleum Corp, CNPC, Rumaila
CNPC Gets First Oil Payment for Rumaila
China National Petroleum Corp (CNPC) has started to get paid for developing Iraq’s Rumaila oilfield, according to reports from the China Petroleum Daily.
The company received its first cargo of oil as payment for helping to develop the oilfield on 28th May, two weeks after partner BP loaded its first shipment.
A crude oil carrier carrying 2 million barrels of oil left Basra Oil Terminal in southern Iraq on Saturday en route to China.
BP holds 38%, CNPC has 37% and Iraq holds 25% stakes, respectively, in the 20-year service contract for Rumaila oilfield.
(Source: China Petroleum Daily)
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Chinese company begins construction of 100,000 bpd oil field in southern Iraq
6/25/2011 9:34 AM
MISSAN / Aswat al-Iraq: A Chinese company has began construction of a large oil field in southern Iraq’s Halfaya area, with a productive capacity of 100,000 barrels per day (bpd), Missan Oil Company’s Director said on Saturday.
“The Chinese Oil Firm for Engineering & Construction has began setting the concrete bases for the construction of the first production network of southern Iraq’s Halfaya Oil Field, with a production capacity of 100,000 barrels per day (bpd),” Engineer Ali Maarij told Aswat al-Iraq news agency.
Maarij said that the productive capacity of the new oil field shall be equal to that of Missan’s total oil production of 100,000 bpd, and for a total cost of US$174 millions, expected to start production on the first quarter of next year.
Missan, with its center city of Amara, is 390 km to the south of Baghdad and covers a geographic area of several productive oil fields, called Bazergan, Abu-Arab, Fekka and Halfaya, as well as the Majnoun Oil Field, sharing with Southern Iraq’s Oil Company, along with 5 discovered but not yet productive oil fields of Huwiza, Rafi’e East Rafidain, Dujeila and Kumeit.
===============
Exxon risks West Qurna on new Kurdistan deals
Exxon Mobil executives and then-Iraqi Oil Minister Hussain al-Shahristani (right) at the Jan. 25, 2010, signing ceremony for the West Qurna 1 field. (BEN LANDO/Iraq Oil Report)
By BEN LANDO of Iraq Oil Report
Published November 11, 2011
Exxon Mobil has signed six monumental deals with Iraq's Kurdistan Regional Government (KRG), effectively risking its 2.825 million barrel per day (bpd) West Qurna 1 project in southern Iraq's Basra province if Baghdad upholds its blacklist on companies that contract with the KRG.
The production sharing contracts, signed in October, are a major coup for the semi-autonomous northern region that is stuck in a five-year dispute with the central government over the right to ink oil deals.
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Exxon risks West Qurna on new Kurdistan deals
http://www.iraqoilreport.com/oil/production-exports/exxon-risks-west-qurna-on-new-kurdistan-deals-6596/?utm_source=feedburner
By BEN LANDO of Iraq Oil Report
Published November 11, 2011
ERBIL - Exxon Mobil has signed six monumental deals with Iraq's Kurdistan Regional Government (KRG), effectively risking its 2.825 million barrel per day (bpd) West Qurna 1 project in southern Iraq's Basra province if Baghdad upholds its blacklist on companies that contract with the KRG.
The production sharing contracts, signed in October, are a major coup for the semi-autonomous northern region that is stuck in a five-year dispute with the central government over the right to ink oil deals.
The KRG has signed more than 40 contracts to explore for and develop oil and gas in its three northern provinces, but has struggled to bring in A-list companies that fear being shut out of the rest of Iraq.
The largest of the oil companies signed with the KRG had been American firm Marathon Oil, which was disqualified from bidding in Baghdad's oil, gas and exploration block auctions after it signed in 2010.
Iraqi government and Exxon Mobil officials could not be reached at the time of publication.
The Exxon deals go public in the run-up to a large oil conference to take place in the capital of KRG, Erbil, organized by London-based CWC.
Two different sources, intimately familiar with the contracts and negotiations, confirmed the deals to Iraq Oil Report, ending days of rumors.
The KRG's deals and investors are expected to be part of a massive merger and acquisition season once the dispute between Baghdad and the KRG is solved, which has thus far restricted investment without a means to make payments to the companies.
A proposed oil law has been stuck in politics, thought to be legislation that could end the disagreement. A KRG delegation met with their counterparts in Baghdad late last month and said the sides would present a mutually acceptable law to Parliament by the end of the year.
Central and regional leaders struck a deal in January of this year on numerous oil-related issues, which led to the restart of oil exports from four KRG-administered fields flowing into the northern pipeline to Turkey.
The exports began in February on the agreement that the dollar value of half of the oil sales would be specifically given back to the KRG in order to pay the costs of the contractors. The KRG is exporting about 50,000 bpd, down from a July high of 181,000 bpd.
Baghdad refuses to pay profits to contractors, per their contract, let alone sign off on the KRG deals it says usurps its sole authority to sign oil contracts.
Exxon has a 60 percent stake in developing the 8.6 billion barrel West Qurna 1 field, currently producing 350,000 bpd. Shell is a junior partner at 15 percent and state-owned Oil Exploration Company has 25 percent. The technical service contract, offered in a 2009 auction in Baghdad, includes cost recover and a $1.90 per barrel remuneration fee.
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07:00
Exxon signs Kurd exploration contracts
SpikeyDT
1
http://www.krg.org/articles/detail.asp?anr=42217&rnr=&areanr=60&smap=02010000&lngnr=12
The Financial Times 03:03:42 11 Nov. 2011
Exxon signs Kurd exploration contracts
By Sylvia Pfeifer, Energy Editor
ExxonMobil has become the first of the “supermajor” oil companies to venture into Kurdistan, in a controversial move that will be seen as a huge vote of confidence in the semi-autonomous region of Iraq but could spark a backlash in Baghdad.
Exxon, the largest international oil company, signed contracts with the Kurdistan Regional Government (KRG) last month to explore for oil and gas in six blocks in the region, according to an adviser to the KRG.
“The KRG has for the last few months been in discussions with a number of major oil companies. This resulted in the recent signing by ExxonMobil of contracts to explore in six blocks,” Michael Howard, an adviser to the KRG, told the Financial Times.
Iraq’s central government has been informed of the agreements, said another person familiar with the situation. ExxonMobil declined to comment.
Independent oil and gas companies, including US players Marathon Oil and Hess, have flocked to Kurdistan in recent years, attracted by its relatively untapped hydrocarbon wealth – the region is estimated to hold 45bn barrels of oil and between 100,000bn-200,000bn cubic feet of gas. Tony Hayward, the former chief executive of BP, recently emerged at the helm of Genel Energy, a Kurdistan-focused player.
Until now, however, the world’s supermajors such as Exxon, BP and Royal Dutch Shell, have held back from signing contracts for fear of antagonising Baghdad, which has said it believes the contracts are illegitimate.
ExxonMobil’s surprise decision could prompt calls from some political factions for the company to lose its position in Iraq. The company led the first US consortium to re-enter Iraq’s oil industry in more than 30 years in 2009 by agreeing to develop the giant West Qurna field. ExxonMobil is also building a multibillion-dollar water injection system that will be used by other foreign oil companies in diferent oil projects in southern Iraq. Oil companies inject water in the reservoirs to increase pressure and production rates.
However, people aware of the agreements said Exxon’s decision to agree contracts with the KRG could prove to be a catalyst for the region. The decision to invest comes just weeks before an end-of- December deadline for the US to withdraw its troops from Iraq.
Expectations have been rising that a long-awaited hydrocarbons law – which would involve the sharing of revenues – could be finalised by year’s end . Iraq’s prime minister, Nouri al-Maliki, and the KRG’s prime minister, Barham Salih, met in Baghdad last month and agreed to either amend a 2007 hydrocarbons law as agreed by all political factions or adopt the 2007 law as is, officials said at the time.
Exports from Kurdistan, which had been stymied amid the disagreement, have begun to flow, albeit slowly. At the moment, Kurdistan exports an average of 175,000 barrels of oil equivalent per day through Iraq’s state oil marketing board. Under a landmark deal negotiated with Baghdad in February, Kurdistan currently receives half of all revenue from the oil it exports. The deal allows producing companies such as Genel Energy, China’s Sinopec and Norway’s DNO, to recoup their investment costs.
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Not sure under international law if Bagdad would be able to rescind these. It would certainly scare those majors already operating in south. Seems to me Exxon have taken a bold calculated gamble here which they would not have done without clear knowledge that O&G law would be passed
08:29
Re: Exxon's contracts with Baghdad
mrgreystone
5
There was a rumour a few weeks back that Baghdad was considering sending one of the majors to Kurdistan to help set up the infrastructure and ramp up production.
Where better to start than Exxon? Also may be why Exxon has decided to make no comment as yet.
For sure, Exxon will have to make a comment this weekend. Sunday, Erbil sounds like a good occasion. May even get some news via the O&G law prior, not likely, but possible?
What a weekend!
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mrg
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