News wires 19 September 2011 03:17 GMT
Iraq's oil minister said in June Iraq could renegotiate production deals with global oil majors and may cut the country's ambitious goal to expand capacity from below 3 million barrels per day to 12 million barrels per day by 2017.
Dudley also said in June he doubted Iraq's capacity would exceed 6 million bpd by the end of this decade, due to infrastructure problems, Reuters reported.
Production from the Rumaila oilfield – which BP is developing with China's CNPC and which has some 17 billion barrels in estimated crude reserves – is thought to have fluctuated widely in early 2011 due to pressure problems. But BP – one of the biggest players in the push to increase Iraqi oil production to levels to rival Opec's top producer Saudi Arabia – still hopes Rumaila will reach its production target of 2.85 million bpd by 2017.
"We remain committed to heading towards that plateau and we are not in any discussions around changing the terms of our contract," he said, adding that limits on exporting crude from the warn-torn country were the biggest obstacle.
"There is a lot of work to do but there is a lot of potential," he told reporters at a conference in Abu Dhabi, the capital of the United Arab Emirates.
Dudley declined to comment on whether BP was in talks with US authorities over a possible out of court settlement after the latest report into the Macondo well blow-out in April 2010, which led to the death of 11 men and the biggest offshore oil spill in US history, put most of the blame on BP last week.
"It wouldn't be appropriate for me to talk about settlements or non settlements we will just be ready to head to trial as we should next February," Dudley said when asked if BP was in talks with the Department of Justice over an out of court settlement.
"But we are of course cooperating with all authorities and we will be preparing for trial."
Dudley told Reuters there were no active discussions over the case with other companies that have been partly blamed for the disaster in official reports – Transocean and Halliburton, Reuters reported.
Separately, BP has still not found a buyer for the California and Texas refineries it put on the market early this year, Dudley said.
"It always takes time to sell refineries and the process of divesting those two US refineries continues and I'm sure it will take some time," he said.
"We have always said it would take well into 2012."
Published: 19 September 2011 03:17 GMT | Last updated: 7 minutes ago
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Cost hike on Shell Iraq deal
Iraq's gas deal with supermajor Shell, to capture and exploit associated gas from its giant southern oilfields, is expected to produce 2 billion cubic feet per day and cost $17.2 billion, according to an official agreement summary.
Aleya Begum 16 August 2011 09:38 GMT
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The member of the Iraqi List, Jawad al-House of Representatives and the political forces to include in the draft law of oil and gas special material determines each citizen's share of the financial imports from oil exports.
Bolani said in a press statement received by all of Iraq [where] a copy of it today, "the House of Representatives and the political blocs are invited to add substance to the draft law of oil and gas requires the allotment of money on the citizens of imports from oil exports," stressing his support for claims Muqtada al-Sadr, this it because the oil and gas wealth of national and citizens must have a share of the national right."
The claim that the allocation of a financial stake of oil imports and distributed to citizens has increased recently, as the condition of the cleric Moqtada al-Sadr on the government to give financial share of imports from oil exports in exchange for not urge followers to protest.
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BP inks $90m Iraq contractBP has splashed out $90 million on a one-year contract at its huge Iraqi oilfield for a pair of oil infrastructure stalwarts.
Eoin O'Cinneide 29 June 2011 10:48 GMT
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BP, Iraq Differ On Costs Of Water Injection Project
Posted on 14 September 2011. Tags: BP, water injection
Dow Jones reports that Iraq and BP have not yet reached agreement on reimbursement of costs to build a multi-billion-dollar oil field water injection scheme in southern Iraq.
ExxonMobil was chosen to lead the project on behalf of foreign oil companies rehabilitating Iraqi oil fields.
Nihad A. Moosa, head of the State Company for Oil Projects (SCOP) told Dow Jones Newswires that international oil companies (IOCs) interested in the common water injection project include Lukoil and Shell, which is expected to join later.
“BP wants to start reimbursing the costs of the project when foreign firms increase output from these fields by 10%, while the ministry wants to pay back costs when they boost output by 20%,” Moosa said.
But a BP spokesman said that it “strongly supports the common seawater project, the terms for which are defined in the Rumaila Technical Service Contract”, and that it is “working with ExxonMobil and the government of Iraq to move it forward.”
BP is developing Rumaila oil field, Iraq’s largest, which is producing around 1.3 million barrels a day. Under the service contract it signed with Baghdad in 2009, BP would start reimbursing its costs when it increases output from the field by 10%.
ExxonMobil, Shell, Eni and Lukoil have no problem with agreeing to the payment terms of the project, Moosa said.
Foreign companies had suggested the cost would be a little more than $3 billion to build the first stage of the project which is designed to produce 4 million barrels of water a day, she said.
“We rejected the proposed cost of the project as the ministry can build the project at half that price,” she added.
The oil ministry is also considering another solution, namely hiring a separate company to build the project, Moosa said. The ministry has approached a company that has built similar projects in Saudi Arabia, she added, without naming the company.
The foreign firms are, however, “adjusting and reviewing their position” in order to address all these concerns and they reassured the ministry that they are still committed to the project, she added.
The water injection project aims to provide water to maintain reservoir pressure to fields such as, Rumaila, West Qurna Phase 1 and 2, Zubair and Majnoon in southern Iraq.
(S0urce: Dow Jones)
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BP, Iraq Differ On Costs Of Water Injection Project
Posted on 14 September 2011. Tags: BP, water injection
Dow Jones reports that Iraq and BP have not yet reached agreement on reimbursement of costs to build a multi-billion-dollar oil field water injection scheme in southern Iraq.
ExxonMobil was chosen to lead the project on behalf of foreign oil companies rehabilitating Iraqi oil fields.
Nihad A. Moosa, head of the State Company for Oil Projects (SCOP) told Dow Jones Newswires that international oil companies (IOCs) interested in the common water injection project include Lukoil and Shell, which is expected to join later.
“BP wants to start reimbursing the costs of the project when foreign firms increase output from these fields by 10%, while the ministry wants to pay back costs when they boost output by 20%,” Moosa said.
But a BP spokesman said that it “strongly supports the common seawater project, the terms for which are defined in the Rumaila Technical Service Contract”, and that it is “working with ExxonMobil and the government of Iraq to move it forward.”
BP is developing Rumaila oil field, Iraq’s largest, which is producing around 1.3 million barrels a day. Under the service contract it signed with Baghdad in 2009, BP would start reimbursing its costs when it increases output from the field by 10%.
ExxonMobil, Shell, Eni and Lukoil have no problem with agreeing to the payment terms of the project, Moosa said.
Foreign companies had suggested the cost would be a little more than $3 billion to build the first stage of the project which is designed to produce 4 million barrels of water a day, she said.
“We rejected the proposed cost of the project as the ministry can build the project at half that price,” she added.
The oil ministry is also considering another solution, namely hiring a separate company to build the project, Moosa said. The ministry has approached a company that has built similar projects in Saudi Arabia, she added, without naming the company.
The foreign firms are, however, “adjusting and reviewing their position” in order to address all these concerns and they reassured the ministry that they are still committed to the project, she added.
The water injection project aims to provide water to maintain reservoir pressure to fields such as, Rumaila, West Qurna Phase 1 and 2, Zubair and Majnoon in southern Iraq.
(S0urce: Dow Jones)
Posted in Oil & Gas0 Comments
Shell/Mitsubishi Gas Deal Delayed Again
Posted on 22 August 2011. Tags: flaring, gas gathering, Shell, South Gas Company
Iraq’s Energy Commission announced on Monday that it has decided to postpone its meeting to discuss the Shell gas contract until next week, further delaying the long-overdue signing.
AKnews reports that the commission, headed by Deputy Prime Minister Hussein al-Shahristani, announced last Wednesday that it would discuss the contract to develop and exploit the gas from Iraq’s southern oil fields on Monday.
The delay is so that the deal can be “completely studied” before recommendations are submitted to the cabinet.
On July 12 Iraq singed the initial contract with Shell to develop Basra’s gas fields after originally signalling intent back in 2008. It is now just awaiting approval from the cabinet.
The realization of the contract will see Shell exploit the gas from the giant oil fields in Basra. Rumaila, Zubair and West Qurna can produce 1.05 billion cubic feet of gas per day, but only 450 million cubic feet is currently exploited per day, with the rest being flared off.
(Source: AKnews)
Posted in Oil & Gas0 Comments
Iraq’s Southern Exports Hit 6-month High
Posted on 03 August 2011. Tags: oil exports
Reuters reports that Iraq’s oil exports from its southern ports jumped last month to a six-month high, reflecting efforts by foreign oil companies to boost production.
Exports from the Basra oil terminal and Khor al-Amaya averaged 1.77 million bpd in July, shipping data tracked by Reuters showed. That is the highest since 1.8 million bpd was exported from the south in January.
BP and CNPC have been developing the Rumaila field, where supply is running at about 1.3 million bpd, BP said last week, up from around 1.2 million bpd in May.
More Basra crude than normal is heading to Europe this and next month, according to trading sources, partly in response to a rise in the price of competing Russian Urals.
Iraq’s exports overall actually fell in July from June. According to shipping industry sources, exports of Kirkuk crude shipped from the country’s north averaged 445,0000 bpd, less than in June.
A senior Iraqi official on Monday cited growing local demand, because of hot weather, for the decline in exports overall.
Falah Alamri, head of Iraq’s State Oil Marketing Organisation, said exports dipped to 2.164 million bpd from 2.275 million bpd in June as more crude was used domestically.
Posted in Oil & Gas0 Comments
BP Rewrites Rumaila Oil Contract
Posted on 01 August 2011. Tags: BP, Oil, Rumaila
The 2009 contract between BP and the Iraqi government for oil production at the Rumaila oil field has been quietly rewritten in favour of the oil giant, according to Aknews.
the Iraqi government will now continue to pay BP when production is affected by civil disruption, disruption in oil transportation, political decisions or OPEC cuts.
Platform, which campaigns for social and environmental justice, first reported about the “illegitimate contracts” between BP and the Ministry of Oil when they were signed back in 2009, as workers unions believed this would put 10% of Iraq’s proven reserves effectively under the control of foreign companies – BP and its Chinese partner CNPC.
Now, Platform said these new changes “reveals what subsequently happened behind closed doors to make the contracts much more attractive to the multinational companies, at the expense of the Iraqi people.”
(Sources: Aknews; Guardian)
Posted in Oil & Gas0 Comments
Iraq and China Strengthen Relationship
Posted on 19 July 2011. Tags: ahdab, China, China National Petroleum Corporation, CNPC
Iraq has asked China to set up a fund to help with the reconstruction of the war-battered country, Iraqi government spokesman Ali al-Dabbagh said on Monday during a visit to Beijing by Iraqi Prime Minister Nuri al-Maliki.
Reuters reports that he also said Baghdad was keen to get Chinese companies investing in the country, which was China’s seventh largest supplier of oil last year.
The United States has spent $54 billion in relief and reconstruction efforts since the 2003 invasion, and it and the Iraqi government have spent billions more in Iraqi money, but ordinary people have seen little improvement.
The Iraqi government, which gets most of its $72 billion budget from oil revenues, says it is committed to improving basic services, but progress is painfully slow.
“We are asking the China side to make a fund, for … reconstruction and to guarantee and assure the investment in Iraq for Chinese companies,” Dabbagh told reporters in Beijing.
“Koreans they did the same; they had to create a fund [with] which they support their companies to work in Iraq. Germany is going to make such a thing. Iraq is requesting from China to have such (a) fund,” he added, speaking in English.
Chinese oil firms from have been working hard to rebuild their presence in Iraq since several big contracts signed by Chinese oil firms were cancelled in 2003 following the toppling of former president Saddam Hussein.
In 2008, the state-owned China National Petroleum Corporation (CNPC) successfully renegotiated a contract originally signed by the previous regime to develop the al Ahdab oilfield, becoming the first country to sign an oil service contract in Iraq under the new U.S.-backed regime.
CNPC completed construction of the first phase of the oilfield in June this year, and it is also developing Iraq’s Halfaya oilfield with France’s Total and Malaysia’s Petronas. CNPC also has a 37 percent stake in a service contract to develop the Rumaila oilfield, which pumps out almost half of Iraq’s total oil output.
Posted in Industry & Trade, Oil & Gas0 Comments
Shell-BGC Contracts: Inked but not yet approved!Posted on 13 July 2011. Tags: Ahmed Mousa Jiyad, Basra Gas Company, BGC, Centre for Global Energy Studies, gas gathering, Mitsubishi, Shell, South Oil
Ahmed Mousa Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES). He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN. He is now based in Norway. The opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
Media sources provide today (12th July 2011) conflicting reports on the deal with Shell regarding Basra Gas Company (BGC): some say it has been signed today others say the ministry has postponed the signing. However, signed or not, the BGC contracts according to the ministry’s known procedure is subject to the approval by the Council of Ministers.
Industry sources keep stating that Iraq produces 1.5 billion cubic feet per day (cftd) or so, out of which about 700 million cftd is flared for lack of infrastructure. Flared gas is both a waste of valuable finite energy source, and also damaging to the environment. This problem is not a new phenomenon; rather it has been a feature of the oil industry start from the beginning of the industry in the country.
But this must come to an end. Accordingly, there are two camps: a pro Shell-BGC on one side and inquisitive critics on the other.
The ministry of oil, few politicians and oil technocrats are among the pro Shell-BGC camp, while the majority of expressed professional opinions, officials and politicians are on the other camp.
The first camp argues in support of signing the BGC contracts and approving them by the executive branch and authority. The inquisitive critics, on the other hand, argue that any decision regarding such contracts could only be made after the said contracts have been thoroughly analysed and assessed by competent and professional bodies in an open and transparent way, and the federal parliament should be the ultimate authority to accept or reject these contracts.
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You are here: Home » Oil » Production & Exports » Rumaila production reduced after explosion
Rumaila production reduced after explosion
An explosion at a degassing station in South Rumaila has injured dozens, though casualty count is unclear, and curtailed some oil output.
Excess gas is flared at the Rumaila oil field in Basra, as workers look on. (ATEF HASSAN/Reuters)
By Ali Abu Iraq, Ben Lando and Staff of Iraq Oil Report
Published September 20, 2011 Oil production from Iraq's largest producing Rumaila oil field will be temporarily curtailed as a result of the accidental explosion and eight-hour fire at a degassing station near the Kuwaiti border Tuesday.
At least 15 people were sent to the hospital, though the Oil Ministry says no one was killed in the blast. Earlier reports from officials were that as many as eight people died, including the crane operator unearthing corroded equipment, a statistic which the Oil Police still stands by.
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Large fire may reduce Rumaila oil productionby Patrick Osgood on Sep 20, 2011
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Fire broke out at associated gas compression plant, killing one and injuring nine. GETTY IMAGES
BP has confirmed a South Oil Company (SOC) announcement that there has been a "big" fire at an associated gas compression plant adjacent to crude processing facilities at the Rumaila oil field.
Initial reports state that 6 workers have been killed, with Reuters relaying an Irai police report that one worker is dead, nine injured and three missing at the plant. A BP spokesman has told the Wall Street Journal that none of their staff were involved.
"A big fire erupted in the central crude processor facility in Rumaila south", sources from the South Oil Company told Reuters. Firefighters were immediately called to the scene of the ongoing blaze, the sources said. "The fire is still burning, we are trying to control it", they added.
Reuters, quoting unnamed sources from the South Oil Company (SOC), says the fire may curb production form the supergiant field. Rumaila, which currently pumps 1.2 million barrels per day and is slated to pump 2.85 million bpd by 2017, accounts for 40% of total Iraqi oil exports.
BP says its crude processing unit is not on fire, and that the blaze is at a neighbouring gas compressor plant run by SOC, according to James Herron of Dow Jones Newswires. However, becaue the gas unit receives associated gas from the neighbouring oil facility, oil production may be affected.
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Iraq Rumaila Output Resumes; Fire Out - Officials
Hassan Hafidh | Wednesday, September 21, 2011
AMMAN (Dow Jones Newswires), Sep. 21, 2011
Iraq is Wednesday resuming normal crude oil production from its supergiant Rumaila oil field, after emergency teams extinguished a fire which broke out Tuesday in a gas facility, two senior Iraqi oil officials said.
"We are resuming gradually normal production from Rumaila today," Dhiaa Jaafar, head of Iraq's largest state company the South Oil Co., told Dow Jones Newswires by telephone from Basra. "We haven't reduced our exports even one drop because of the fire."
Rumaila, operated by BP and China National Petroleum Corp., produces between 1.2 million-1.3 million barrels a day, while Iraq exports around 1.8 million barrels a day from its southern terminals in the Persian Gulf.
Ali Hussein Khudhier, head of the state-run South Gas Co. which operates the damaged gas facility, said that he had asked BP to delay output from one station because it is linked directly to the damaged gas facility.
Khudhier said fire was extinguished at 1850 local time Tuesday, but said he didn't yet know when the compressor would be repaired.
Both Jaafar and Khudhier denied news reports that one worker was killed in the fire Tuesday.
"No one [died] at the incident as the media has reported," Khudhier said. "Between 15 and 16 workers were injured and have already left hospital after receiving treatment."
Jaafar attributed the cause of fire to a gas leak at a compression station. However, an official from the South Oil Co. said Tuesday the fire was ignited by welding operations on neighboring oil production facilities. The reason for the discrepancy wasn't immediately clear.
The damaged compressor supplied natural gas from Rumaila for local consumption in the city of Basra, officials said.
In July the South Gas Co. initialed a deal with Shell and Japan's Mitsubishi, worth up to $17.5 billion, to produce gas from Rumaila, West Qurna phase 1 and Zubair oil fields, all located in Basra.
Iraq, holder of the fifth-largest gas reserves in the region estimated at 112.6 trillion cubic feet, produces 1 billion cubic feet a day. However, some 70% of this is flared due to a lack of infrastructure.
The Rumaila field produces almost half of Iraq's oil output and has more than 17 billion barrels in estimated crude reserves.
U.K.-based supermajor BP, one of the biggest players in Iraq, is involved in a push to increase the country's oil production level to rival Saudi Arabia's 9.76 million barrels a day. Iraq currently produces 2.7 million barrels a day.
Copyright (c) 2011 Dow Jones & Company, Inc.
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Iraq asks China to set up reconstruction fund
18 Jul 2011 12:26
Source: reuters // Reuters
By Ben Blanchard
BEIJING, July 18 (Reuters) - Iraq has asked China to set up a fund to help with the reconstruction of the war-battered country, an Iraqi government official said on Monday during a visit to Beijing by Iraqi Prime Minister Nuri al-Maliki.
Iraqi government spokesman Ali al-Dabbagh also said Baghdad was keen to get Chinese companies investing in the country, which is China's seventh largest supplier of oil last year.
The United States has spent $54 billion in relief and reconstruction efforts since the 2003 invasion, and it and the Iraqi government have spent billions more in Iraqi money, but ordinary people have seen little improvement.
The Iraqi government, which gets most of its $72 billion budget from oil revenues, says it is committed to improving basic services. But progress is painfully slow.
"We are asking the China side to make a fund, for ... reconstruction and to guarantee and assure the investment in Iraq for Chinese companies," Dabbagh told reporters in Beijing.
"Koreans they did the same, they had to create a fund, which they support their companies to work in Iraq. Germany is going to make such a thing. Iraq is requesting from China to have such (a) fund," he added, speaking in English.
"We left it to the Chinese to check and to find out how they could manage this one. It's especially dedicated to Iraq."
Several big contracts signed by Chinese oil firms in Iraq were cancelled in 2003 following the toppling of former president Saddam Hussein, but oil firms from the world's second largest economy have been working hard to rebuild their presence.
In 2008, the state-owned China National Petroleum Corporation (CNPC) successfully renegotiated a contract originally signed by the previous regime to develop the Ahdab oilfield, becoming the first country to sign an oil service contract in Iraq under the new U.S.-backed regime.
CNPC completed construction of the first phase of the oilfield in June this year, and it is also developing Iraq's Halfaya oilfield with France's Total SA and Malaysia's Petronas. CNPC also has a 37 percent stake in a service contract to develop the Rumaila oilfield, which pumps out almost half of Iraq's total oil output.
HELP ON MILITARY TRAINING
Dabbagh said Iraq wanted more than just Chinese investment in the energy sector.
"In oil, they have a good investment but we want to have more than in oil, more than energy. In reconstruction ... I think there are huge opportunities for Chinese to participate in construction," he said.
"Petrochemicals and steel, there is a good chance. And refineries as well, there is a good chance."
But increasing political tension could hamper Iraq's fractious governing coalition as it tries to stabilise the country after years of war and decide whether to ask U.S. troops to stay beyond an end-year deadline for their withdrawal.
U.S. forces officially ended combat operations in Iraq last August but have come under increasing fire in recent weeks.
Dabbagh said Iraq was open to Chinese help in providing training for its military, and maybe weapons.
"Iraq is going to take over and Iraq is going to take the full responsibility and we don't think there is going to be any gap. Training, we are negotiating with many countries. I think that China could have training support if we buy some weapons and equipment from them."
China traditionally has had limited diplomatic sway in the Middle East, even as it relies heavily on energy imports from the region.
Analysts say China wants to avoid messy entanglements with Middle East countries and has no appetite for turning the regional upheaval into a point of confrontation with the United States. (Additional reporting by David Stanway and Jim Bai; Editing by Yoko Nishikawa)
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Gas Fire at Rumaila to Hit Oil Production
Posted on 20 September 2011. Tags: BP, China National Petroleum Corporation, CNPC, Rumaila, South Oil Company
Reuters reports that a fire has broken out at a state-run gas compression unit at Iraq’s Rumaila oilfield on Tuesday, killing one person and hitting oil production.
“We have stopped exporting gas that would have been exported into this compressor and this will have an impact on our production from Rumaila,” BP spokesman David Nicholas said in London, without offering figures for the cut in oil output.
The incident occurred after excess pressure in one of the storage units and high temperatures caused a gas leak, sources at Iraq’s South Oil Company said. A chief oil engineer at the South Oil Company said the fire erupted while workers were carrying out maintenance work at the gas compression facility.
“As a result of the gas compression unit fire, we have nine workers seriously wounded. Some of them are suffering from severe burns,” an oil police source said. “Three others are still missing … and one worker was killed.”
Oil major BP, which is developing Rumaila along with CNPC, said the gas compression facility supplied the city of Basra with fuel and was not part of its operations at the oilfield.
“It was an explosion at the South Gas Company … which is next door to our facilities but they are not run by Rumaila at all,” Michael Townshend, president of BP-Iraq, told Reuters. “We are lending all the assistance we can and our priority is to assist all those injured at the moment.”
Another BP spokesman said: “As a precautionary measure Rumaila Operating Organisation (ROO) has shut in some oil production to stop supplies of associated gas to the affected Southern Gas Company gas compression plant. No further details for the time being.”
“As a result of the fire, BP should now halt production at some oil wells until making sure the gas pipeline is totally closed and no gas leakage still exists,” an SOC engineer said. “Then they can resume operations at their degassing station by flaring the gas that was being supplied to the Iraqi gas compressor before the fire.”
(Sources: Reuters, Iraq Oil Report)
(Picture: A de-gassing station at Rumaila)
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http://uk.reuters.com/video/2011/09/21/fire-at-iraqs-rumaila-gas-unit?videoId=221720979
ROUGH CUT - NO REPORTER NARRATION A fire at a state-run gas compression unit in Iraq 's major southern oilfield Rumaila on Tuesday killed one person and hit oil production, police and oilfield developer BP said. Fire crews extinguished the blaze on Tuesday evening, oil ministry spokesman, Asim Jihad said. Sources at Iraq's South Oil Company earlier said excess pressure in a storage unit and high temperatures caused a leak that fueled the fire. Jihad said 15 workers were injured. BP said the gas compression facility supplied the city of Basra with natural gas and was not part of its operations at the oilfield. A chief oil engineer at the South Oil Company said the fire erupted while workers were carrying out maintenance work at the gas compression facility. The Rumaila oilfield pumps almost half of Iraq's output, and has some 17 billion barrels in estimated crude reserves. BP is one of the biggest players in Iraq, involved in the push to increase the country's oil production levels to rival OPEC's top producer Saudi Arabia
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Goldman Sachs Says Oil Prices Will Soar to $130 in 12 Months … We Told You That Weeks Ago
SEPTEMBER 22, 2011
http://bit.ly/oLuuk9
BY WILLIAM PATALON III, Executive Editor, Money Morning
Wall Street heavyweight Goldman Sachs Group Inc. (NYSE: GS) is now predicting that oil prices will soar in the next 12 months, with London-traded Brent crude reaching $130 a barrel and U.S.-traded West Texas Intermediate (WTI) crude reaching $126.50.
The fact that oil prices will soar wasn't a surprise to readers of Private Briefing - we made a similar prediction to the charter subscribers of our new premium investment-advisory service six weeks ago.
Furthermore, we showed subscribers how to profit.
Goldman analysts really believe that oil prices will soar: From Monday's closing prices ($110.30 for Brent and $86.92 for WTI), the heavyweight investment bank's 12-month target prices for oil would represent an 18% gain for the London-traded crude and a 46% gain for its U.S.-traded counterpart.
Worries that the U.S. malaise and Eurozone debt crises would sap global demand have caused oil prices to fall from higher levels back in the spring. In its forecast, Goldman echoed some of the same points that we have made repeatedly to Private Briefing readers since it debuted back on Aug. 11 - namely that demand in China, India and other emerging markets would compensate for weak growth in the developed economies.
The bottom line: There's little doubt oil prices will soar. That makes oil-related stocks - and energy investments in general - "must have" portfolio holdings.
The only question is: How do you play it?
And there's plenty of upside to come.
In Private Briefing, we told readers first - and we showed them how to profit.
Given our repeated predictions that oil prices will soar, you can expect that many recommendations are still to come.
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Tags: goldman, Goldman Sachs, oil prices will soar, private briefing.
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Two blasts target south Iraq oil pipeline
Sapa-AFP | 08 October, 2011 09:40
Explosion. File photo.
Image by: Gallo Images/ Thinkstock
Two explosions struck an oil pipeline overnight in southern Iraq, starting a fire and diverting crude transport, security and energy officials said on Saturday.
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The blasts occurred in the Safwan bridge area southwest of the port city of Basra, and the Qarenat area west of there, near the massive Rumaila oil field, a police officer and an official at state-owned South Oil Co said.
They did not affect oil production or exports, and the fire was put out on Saturday morning.
"This oil pipeline transports oil from southern Rumaila to Zubair," the police officer said. Transport was switched to another pipeline that connects the two fields.
The Rumaila field is the country's biggest, with proven reserves of 17.7 billion barrels of oil. Britain's BP and China's CNPC have had a contract to extract crude there since 2009.
Zubair is another field in Basra province and is exploited by an ENI-led consortium, which includes Occidental Petroleum Corp of the United States and Korea Gas Corp of South Korea.
Oil sales account for the lion's share of government income in Iraq, with the country exporting around 2.2 million barrels per day. That figure is set to rise by around 300,000 bpd early next year, according to the oil ministry.
Iraq currently produces around 2.9 million bpd, and says it will be capable of output of 12 million bpd by 2017.
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Two blasts target south Iraq oil pipeline
AGENCE FRANCE-PRESS OCTOBER 8, 2011 1:10 AM
BASRA, Iraq — Two explosions struck an oil pipeline overnight in southern Iraq, starting a fire and diverting crude transport, security and energy officials said on Saturday.
The blasts occurred in the Safwan bridge area southwest of the port city of Basra, and the Qarenat area west of there, near the massive Rumaila oil field, a police officer and an official at state-owned South Oil said.
They did not affect oil production or exports, and the fire was put out on Saturday morning.
"This oil pipeline transports oil from southern Rumaila to Zubair," the police officer said. Transport was switched to another pipeline that connects the two fields.
The Rumaila field is the country's biggest, with proven reserves of 17.7 billion barrels of oil. Britain's BP and China's CNPC have had a contract to extract crude there since 2009.
Zubair is another field in Basra province and is exploited by an ENI-led consortium, which includes Occidental Petroleum Corp. of the United States and Korea Gas Corp. of South Korea.
Oil sales account for the lion's share of government income in Iraq, with the country exporting around 2.2 million barrels per day. That figure is set to rise by around 300,000 bpd early next year, according to the oil ministry.
Iraq currently produces around 2.9 million bpd, and says it will be capable of output of 12 million bpd by 2017.
© Copyright (c) AFP
Read more: http://www.vancouversun.com/technology/blasts+target+south+Iraq+pipeline/5521902/story.html?utm_medium=twitter&utm_source=twitterfeed#ixzz1aBCObMYw
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Fire in 2 oil pipelines extinguished in Basra
10/8/2011 2:16 PM
BASRA / Aswat al-Iraq: Southern Oil Company fire squads were able to extinguish a fire which erupted in two oil pumping pipelines today in Southern Ruamila oil field, the company's Director General said.
In a press conference, attended by Aswat al-Iraq, Dhia al-Mussawi said that the fire squads rushed to the site of the explosions and extinguished the fire.
"Oil exports were not affected due to secondary lines," he added.
He noted that the work in the two pipelines will be halted for the coming two days for maintenance.
Mussawi disclosed that the explosions were an act of terrorism.
The two pipelines pump about 600,000 b/d.
Earlier, oil security sources told Aswat al-Iraq that the reasons for the explosions were not yet known.
Basra city, the center of the province, lies 590 km south of the capital, Baghdad.
============
October 16th, 2011
2012 Production Challenge
By Ruba Husari
Iraqi oil production has been slowly, but steadily, ramping up in the last three years, from an average of 2.336 million b/d in 2009 to 2.358 million b/d in 2010, to an average of 2.66 for the first eight months of this year, according to oil ministry official figures. With this, exports have also risen by almost 300,000 b/d, from a 2009 average of 1.9 million b/d in 2009 to 1.89 million b/d in 2010, to 2.19 million b/d by the end of August 2011. However 2012 is going to be the ultimate challenge in the short term as the oil ministry is seeking to achieve 3.4 million b/d next year with the aim to export an average of 2.6 million b/d, oil ministry officials in Baghdad tell me. The target is dictated by the need to cater for the huge expenditures in the 2012 federal budget. The price forecast currently being considered for next year’s budget is $90/bbl.
The onus next year will be big on IOCs, especially those who were awarded service contracts in the first bid round, to deliver on their plans, based on “real” work as opposed to “patch up” work, in oil ministry officials’ terms, carried out this year. So how did IOCs fare in 2011?
Official figures show BP-operated Rumaila field’s average production for the first eight months of the year at 1.1 million b/d as opposed to the planned 1.3 million b/d. Though Rumaila recently achieved even 1.4 million b/d but those rates were not sustainable and there were other times when production rates were disappointing. By contrast, West Qurna-1, operated by ExxonMobil, was expected to deliver 300,000 b/d on average but so far did 310,000 b/d. Zubair field, where ENI is in charge, was also 10,000 b/d above the targeted average of 220,000 b/d for 2011, delivering an average of 230,000 b/d in the first eight months of 2011, according to oil ministry official figures.
While expressing disappointment with the results on Rumaila – even though they admit the field management has been facing acute problems to stop the natural decline, in addition to the difference in scale with other fields – oil ministry officials however, are not impressed by the figures of Zubair and West Qurna-1 which they consider were not reached by “proper rehabilitation according to development plans” of the fields, but rather by quick fixes to ramp up to the 10% incremental output stipulated in their contracts. That 10% was crucial to IOCs’ book keeping in order to start receiving payment from Iraq in line with their contracts.
Oil Minister Abdul Karim Luaybi was also disgruntled during a recent tour of the south by the black smoke covering the horizon across the three fields, a sign of poor gas-oil separation, officials tell me.
According to 2012 ministry plans, southern fields should deliver 2.4 million b/d next year of which Rumaila is expected to account for at least 1.4 million b/d. Zubair should be producing at least 300,000 b/d and West Qurna-1 about 400,000 b/d. Majnoon, which has been oscillating between 45,000 b/d and 65,000 b/d this year, should add another 75,000 b/d. The balance should come from smaller fields being developed by South Oil Co under the national effort program.
The northern fields are expected to deliver 600,000 b/d next year; Missan fields, Ahdab and East Baghdad another 250,000 b/d; and the balance will come from the Kurdistan fields at a rate of 150,000 b/d for the year.
Another big challenge for the oil ministry for next year is the production – and by extension the import- of refined products. The last three years have seen some improvement in the local supply of refined products by the 700,000 b/d capacity refining network, according to the official oil ministry figures (See table below), but the country is still way below pre-2003 rates, especially where gasoline is concerned. Baghdad is still importing almost 30% of its gasoline needs and about 15% of the much needed gasoil for power generation.
2009 2010 2011*
LPG (tons/day) 3,300 3,700 3,860
Gazoline (m3/d) 10,300 12,200 12,400
Kerosene (m3/d) 7,600 8,200 7,400
Gasoil (m3/d) 13,400 16,500 19,700
*January to August average
Gazoline 1.36 million tonnes
Gas oil 773,500 tonnes
Kerosene 292,000 tonnes
The specific gravity (or relative density) of gasoline ranges from 0.71–0.77 (719.7 kg/m3 ; 0.026 lb/in3; 6.073 lb/US gal; 7.29 lb/imp gal), higher densities having a greater volume of aromatics.[8] Gasoline floats on water; water cannot generally be used to extinguish a gasoline fire, unless used in a fine mist.
Read more: http://www.answers.com/topic/gasoline#ixzz1bDXOOvmc
Demand out stripping supply,open them flood gates
Iraq Seeks to Buy 2.43m Tonnes of Oil Products
http://www.iraqenergy.org/news/?detailof=4018&content=Iraq-Seeks-to-Buy-2.43m-Tonnes-of-Oil-Products
Iraq has tendered to buy a total of around 2.43 million tonnes of oil products for delivery in the first half of 2012. Iraq’s State Oil Marketing Organisation (SOMO) is seeking to buy around 1.365 million tonnes of gasoline, 773,500 tonnes of gas oil and 292,000 tonnes of kerosene to cover its needs in the first six months of the year.
Iraq’s State Oil Marketing Organisation has tendered to buy unleaded 92 RON gasoline and wants all the fuel to be delivered to Iraq’s Khor Al Zubair terminal.
In early 2011, Iraq’s State Oil Marketing Organisation tendered to buy around 1.3 million tonnes of gasoline for the second half of 2011.
Baghdad, October 18, 2011 ( The Gulf Today )
THE VIEW FROM BAGHDAD
=============
ExxonMobil, BP, Eni in $100B Iraq Invest...
2
By HASSAN HAFIDH
ISTANBUL—Exxon Mobil Corp., BP PLC and Italy's Eni SpA will spend around $100 billion to upgrade three oilfields in southern Iraq, the top energy advisor to the Iraqi Prime Minister said Wednesday.
Thamer Ghadhban said some $50 billion would be spent to upgrade the supergiant West Qurna Phase 1 oilfield which is being developed by Exxon Mobil. The remaining $50 billion will be spent by BP and Eni to upgrade the Rumaila and Zubair oil fields respectively, he said.
"We have $100 billion for the three fields," Mr. Ghadhban told reporters on the sidelines of an Iraqi energy conference in Istanbul organized by the London-based CWC Group. "The bulk (of the finance) is for West Qurna 1 because the Rumaila and Zubair fields were well advanced in terms of development, such as number of wells, oil field facilities, other infrastructure, while West Qurna phase 1 needs more," he said.
The three fields are now pumping around 2 million barrels a day, which is the bulk of Iraq's total oil output of 2.9 million barrels a day.
According to the deals signed with these companies two years ago, production from the three fields should reach at least 6.8 million barrels a day in 2017.
The 20-year contracts stipulate that international companies should spend money developing these fields, then will receive costs and remuneration for the extra barrels produced when they reach a 10% increase in baseline output.
A BP spokesman said it was too early to forecast the exact size of the group's investment in Rumaila.
"We're working with our partners and the Iraqi government on a detailed field development plan. Obviously, our plan is to invest enough to reach the production targets agreed in our contract," said the spokesman.
—Alexis Flynn in London contributed to this article.
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
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Date posted today 11:53
Subject Hydrocarbon Reserves in Iraq
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Hydrocarbon Reserves in Iraq
http://www.iraq-businessnews.com/category/oil-gas/
Posted on 19 October 2011. Tags: oil reserves, Thamir Uqaili
By Dr Thamir Uqaili
Dr Uqaili is E&P Consultant and CEO of Petroconsult Canada & Associates. He has BSc in Oil Technology and PhD in Petroleum Engineering form the Imperial College in addition to MSc in Water Resources Technology from Birmingham University. Dr Uqaili worked in over ten countries including some 35 years in Iraq, in the hydrocarbon upstream sector and has been concentrating on Iraq during the last 10 years
Background
The ministry of oil, last year declared that Iraq has about 142 Billion B recoverable oil reserves (P1) compared to the old official figure of 112 BB, without giving details where the increase came from. Information obtained from personal source in the Ministry suggested that the increase was due to upgrading oil in place in W Qurna and possibly Zubair fields.
Such increase should be based on new seismic data acquisition and reservoir delineation by wells that were not achieved by then.
This article discusses what increase of the reserves is likely to be according to a detailed reassessment done by the author, noting that more reserves are expected as outcome of Bid Round-4 in addition to the likely revision of reserves in the known fields and discoveries.
A review is also made on the optimum production plateaus of the Iraqi Fields taking into consideration the reservoir limits and achievable size of work on ground.
Sources of reserves upgrade
The main sources for the extra reserves are from the increase in:
Oil in place of W Qurna-2 whether in the producing reservoirs or discovered but undeveloped reservoirs
Oil in place in Majnoon Field due to delineation of the northern extension
Hydrocarbon in place in other discovered reservoirs but not delineated yet. These are awarded fields of Bid Rounds-1, 2 and 3; and those still with the national operators
Hydrocarbon in place as result of Bid Round-4
Recoverable reserves of the known fields and discoveries by revising the Recovery Factors ‘RFs’ as result of better reservoir management and applying EOR techniques
Hydrocarbon in place as result of deep drilling especially in the southern part of Iraq
Discoveries in new blocks or exploration by Iraq’s Oil Exploration Company ‘OEC’
Items 1 to 5 will depend on the results of assessment by the operators that will probably take at least two years of data acquisition including 3D seismic, drilling and testing.
Deep drilling, slightly touched on by the Minister of Oil in the road show of BR-4 in Amman on the 11th Sept 11, remains a dream for a while due to its cost. The main target here is the equivalent of the Khuff Formation that is gas prone in the Gulf Area.
New exploration in a fifth Round or by OEC looks limited noting absence of strategy. Following a request from the DG of OEC to the author, condensed strategy guidelines in 5 pages ware presented to him over a year ago, nevertheless Bid Round-4 came out unsupported by any strategy apart from the motive of increased production.
In this article the increase of reserves as result of re-evaluation of Recovery Factor will be discussed and the production capacity of Iraq, based on realistic optimum production plateau targets (PPTs) will be suggested.
Revising the RFs and PPTs
The first estimate of the RF is made on field’s discovery based on:
Drilling results Well testing
Reservoir geology
Reservoir and fluid properties
Presence or absence of water drive
Performance of similar fields
Initial estimate is subject to continuous revision when the field/ reservoir is put into production following further testing, monitoring and studies. Static reservoir data alone is the beginning but as more dynamic data becomes available the better reserve estimate is derived.
In Iraq, the large number of wells and the long production history of Kirkuk, Bai Hassan, Jambur, Rumaila (S & North) and Zubair Fields allowed better control of reservoir performance. The results of repeated reservoir simulation studies enabled refined and higher estimate of the RFs. In contrast to that, the reservoirs in those fields that were discovered and either not put into production or had short production periods retained conservative estimate of the recovery factor.
Further reservoir modeling should be based on new 3D detailed seismic and other data acquisition that would decide more supported reserve estimates than the current official reserved figures.
In the case of the discovered fields that were not connected or put on limited pilot production:
Some fields/ reservoirs were not fully delineated that means the estimate of OOIP and eventually the recoverable reserves (P1) is conservative
The number of wells was small imposing a restriction on knowledge of reservoir geology and reservoir characteristics in addition to insufficient well and reservoir testing
No or limited possibility of monitoring and reservoir modeling
In those fields, 3D detailed seismic drilling, well testing and may be selective Pilot Production for at least one to two years is a pre-requisite to reservoir studies. All is required to assess the reserves and assist achieving full development.
Independent analysis of the RFs of the 63 fields containing 84 reservoirs (Figure-1) showed that there is definitely appreciable margin of justifiable increase. The low RFs were upgraded to 35%-45% ( well achievable) assuming future enhancement techniques to be carried out after obtaining further specific data and performing reservoir studies of almost all the fields/ reservoirs of Iraq. The recoverable total reserve P1 from the study (146 BB, Annex-1) is very close to last official figure of 142BB MoO announced last year
The western Desert and Jezira Area would probably add 20TCF gas (2 BSCFD) within 5-7 years, from Blocks 1 to 5 and possibly part of Block-6 in addition to some condensate. Other blocks are expected to add more reserves, probably in the region of about 500 million B. The current estimate of P1 in Kurdistan of 1.45 BB is likely to increase by 50%-70% in the next few years following extra delineation of the new discoveries and further well and reservoir testing.
However if the increase of some 30 BB reported by MoO is genuine then the overall P1 reserves are over 175 BB. The author in a study for CGES entitled ‘Hydrocarbon Exploration and field development in Iraq’ issued early 2009 estimated the reserves as 130-150 BB in seven year time.
Production Plateau Targets
Contracted oil PPTs of Rounds 1 and 2 as compared to those revised by the author are shown in Annex-2. The planned targets are much higher than the revised in the first three fields.
The fields are multi reservoirs some of which are not developed and little is known about their behavior so it is too early to assign high PPTs for them.
The independent study by the author estimates that the Peak Potential PPT (million B/D) of Iraq is as shown below. However it is not feasible to assume possibility of developing all the reservoirs of Iraq to arrive to this figure. The estimate of potential should be looked at as a positive sign to quote high but practically achievable targets.The overall reserve potential can aid in offsetting the production decline hence prolonging the plateau period.
A modest increase in the reservoir depletion rate, compared to what has been practiced in Iraq pre-2003, was assumed comprising two options:
Option 1: 5%-7% depletion rate hopefully maintaining a plateau for 5-7 years
Option 2: 4%-5% depletion rate hopefully maintaining a plateau for 7-10 years
Plateau level and period are subject to observation of reservoir performance in the first two years
In the light of the current speed of progress in implementing the field development, production and export plans and the limitation of local capabilities, the following two scenarios of production capacity are suggested:
Option 1: Sustained production 8 MMBD, Surplus of 2 MMBD
Option 2: Sustained production 10 MMBD, Surplus of 2 MMBD
An average GOR of 700cft/B=GOR - Gas Oil Ratio
gives 5.6 and 7.0 Billion SCFD sustained gas production for the 2 options. New gas reserve from the 12 Blocks of BR-4 may be around 20TCF supporting an extra 2000 mmscfd. Deep drilling in south of Iraq will most probably increase the gas amounts that can be exported outside Iraq whether through Nabucco pipeline or Arab pipeline.
Even with the proposed PPTs compared to the contracted, there are the following main challenges:
Overall management of Iraq Oil sector
Absence of effective Federal Hydrocarbon Law
Implementation of the Iraqi Hydrocarbon Conservation Law
Transparency in contracts and subcontracts awards and monitoring especially quality and cost issues
Coordination of field, transportation and export of Oil and Gas
The water Injection project
Gas gathering, processing, transportation and utilization
Strong army, security forces and government to maintain reasonable stability and security enough to coupe up with the level of coming hydrocarbon activities
Inquiries can be sent to the author at tuqaili@yahoo.co.uk
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