Date posted Wednesday 21:36
Subject Iraq Oil Report-Q&A:Lukoil's Vitaly Novozhilov
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Q&A: Lukoil's Vitaly Novozhilov
http://www.iraqoilreport.com/business/companies/qa-lukoils-vitaly-novozhilov-6214/
Lukoil's deputy director in Basra, Vitaly Novozhilov. (ALI ABU IRAQ/Iraq Oil Report)
By ALI ABU IRAQ of Iraq Oil Report
Published September 21, 2011
BASRA - The Russian oil firm Lukoil has faced its share of challenges in its quest to develop the super-giant West Qurna 2 oil field, but now the company is confident it can deliver on its massive contract.
Of all the fields awarded in the 2009 bidding rounds, the deal for West Qurna 2, which holds 12.9 billion barrels of proven reserves, will pay out the lowest per-barrel profit. Along with its junior partner, Norway's Statoil, Lukoil's bid included a remuneration fee of just $1.15 per barrel.
Since winning that contract, Lukoil has faced many of the challenges that have slowed the progress of other foreign oil companies in Iraq, where decades of war and sanctions have ravaged the country's infrastructure and institutional capacity. In April, Lukoil announced it would not begin production until 2013, a year behind schedule.
In an interview with Iraq Oil Report, Lukoil's deputy director in Basra, Vitaly Novozhilov, said that the company remains committed to that timetable. He emphasized that Lukoil expects to hit its production plateau target of 1.8 million barrels per day (bpd) by 2017, as its contract stipulates.
Novozhilov also discussed the fate of the oil field's associated gas. Iraq has been negotiating a controversial deal that would make Shell the operator of the prospective Basra Gas Company, which would develop much of Basra's associated that is currently flared due to lack of infrastructure.
Ali Abu Iraq: When did your work begin and when do you expect to begin production?
Vitaly Novozhilov: The first group of Lukoil personnel made it to Iraqi territory in 2010 and began work on the project. Now the company is conducting the preliminary work needed to extract oil, with the help of South Oil Company, and we will continue with our plan, which was ratified by the Iraqi government.
In 2013 we will extract the first barrel of oil, to reach a production rate of 1.8 million barrels a day by the year 2017. But 2013 is the actual beginning of production.
AAI: What challenges need to be overcome before you can meet that goal?
VN: Of course, as I mentioned, the volume of oil production will be very large. At this time the infrastructure currently in southern Iraq is unable to absorb such quantities of oil. Therefore, the project should also consider building new infrastructure, including oil and gas pipelines, storage tanks, and other engineering facilities.
AAI: Does your contract allow Lukoil to develop the associated gas? Or is this the responsibility of the Basra Gas Company, which Iraq expects to establish soon?
VN: All the oil that is extracted, along with the associated gas, belongs to South Oil Company. We have to offer all the gas extracted to the South Oil Company, and it would make a decision in this regard.
AAI: Has the security environment in Basra caused you any problems or concerns?
VN: First of all, I would like to say that the Iraqi people respected and still respect the representatives of the Russian people. We frankly enjoy good hospitality, and we sense there is a good feeling about the Russian staff working in this region. So, as Russians, we have not yet faced any security problems with the people of the region, and our relationship will strengthen over time and become a more profound friendship.
AAI: How is your relationship with the local population near the oil field?
VN: It is well known that the West Qurna 2 area is populated, and there are more than 70,000 people, including a large number of tribes.
In cooperation with South Oil Company, we have established good relationships with both young people and elders. We have a direct frank dialogue, and we have reached an agreement with the tribes located there. If there is anything that requires clarification, we meet and discuss topics that require clarification. Through all the negotiations and dialogues we have had between the company and the community, no problems have been encountered so far. We have overcome all of the difficulties.
AAI: What are the problems that have needed solving?
VN: There are a large number of farmers who grow wheat, barley and other plants, and we cannot execute our project without compensating them for their crops and farms. For the purpose of compensation to local farmers, the Prime Minister (Nouri al-Malki) decided to establish a compensation committee in Basra.
The issue of compensation is up to the Iraqi government and the company is not responsible for this. But we do have the expertise in the issue of compensation in different countries, so we offered our expertise with respect to compensation, which we gained in the rest of the world, to the government of Iraq.
(The committee) started its work in Basra a month ago.
AAI: Is Lukoil supporting any projects to support the development of West Qurna 2, like a power plant? If so, will electricity generation be connected to the national power grid?
VN: According to the development plan of West Qurna 2, there must be a power plant for the development and operation of the field. The development of the field is linked to South Oil Company, so they make their decisions and we have to adhere to their orders. So, if there are decisions and directions to connect the station to the national grid, then of course the company shall abide by such guidance.
Lukoil is also undertaking projects in the local community, including a plan to build sports stadiums in the West Qurna area; to provide hospitals with different medical equipment; and to provide local schools with desks and supplies.
AAI: What has the company done to hire local Iraqi workers?
VN: We have only accepted a small number of locals to our Lukoil staff. However, Lukoil has concluded contracts with several companies, and those companies have approached and appointed a large number of local workers, so the project has up to 500 local staff by now.
(The development contract includes) certain requirements for the purpose of developing the skills of local staff to become professionals, and the company is meeting those obligations
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Call to freeze Kuwiti gas contract - MP
10/9/2011 5:38 PM
BAGHDAD / Aswat al-Iraq: White Iraqiya bloc MP Alia Nsaif called on the government to freeze Seeba Gas Field, which was initially signed with a Kuwaiti investment company, in an attempt to pressure Kuwait into discontinuing the implementation of the Mobarak terminal.
In a media statement made by the bloc today, as was received by Aswat al-Iraq, MP Nsaif added that the "response is to freeze oil contracts, particularly Seeba gas field, of which the contract is scheduled to expire in 2031.
"Kuwait is interested in the revenues of the gas field, making the best way to press Kuwait freezing the contract," she added.
The Iraqi government signed the contract for the Seeba gas field with Kuwait Energy, which was established in 2005.
She pointed out that boycotting Kuwaiti commodities should be attached to governmental directives to freeze these contracts.
Kuwait announced last April the building of Mobarak terminal one year after Iraq's announcement of intentions to build the Greater Fao Port.
Iraq rejected the project and demanded Kuwait abandon the scheme, but the latter refused these demands as "baseless."
Iraq oil hub Basra wants bigger say, more autonomy
BASRA, Iraq |
(Reuters) - Officials in Iraq's southern oil hub Basra are trying to cancel a $17 billion (10 billion pounds) Shell gas deal because they want a bigger say, highlighting the pressure on central government to ease its control over the provinces.
Basra, where dozens of international oil companies signed up to develop some of Iraq's largest oilfields, is increasingly restless with the slow pace of development in the province and wants more control over its natural resources and revenues.
Demands for more provincial power have simmered for years in Iraq, split by ethnic, sectarian and tribal tensions. But the Basra push and an autonomy drive from Salahuddin province threaten to stir tensions as the last U.S. troops withdraw.
The final contract with Royal Dutch Shell and Mitsubishi to capture flared gas in three southern Iraqi oilfields was signed on November 24 despite objections from the Basra local council that it was not included in talks or the deal's signing.
Officials from the Basra Provincial Council filed a lawsuit against the Iraqi Oil Ministry on November 25 demanding the cancellation of the gas agreement.
"In principle, we don't have any problem with developing the gas but when the contract is signed, there has to be an article that shows the provincial council has agreed ... Unfortunately, we did not know anything about this contract," said Sabah al-Bazouni, head of the Basra Provincial Council.
"Basra is the most suitable province to become an autonomous region."
Regional autonomy would give the province more power over finances, administration and laws, and an upper hand in supervising public property, which could loosen Baghdad's grip on the oil and gas sector.
The legal case is unlikely to deter Shell and delay the project, but it raises concerns about future disputes over oil and gas rights in Iraq, which is struggling to rebuild after years of violence just as Washington prepares for a full troop withdrawal by the end of December.
"Just as the constitution gave rights to the region, it also gave similar rights to the producing provinces ... Today, the Kurdish region signs a deal with ExxonMobil and the central government objects, it is double standards," said Bazouni.
Minority Kurds in the north of Iraq have enjoyed semi-autonomy for years since Western powers imposed a no-fly zone after the 1991 Gulf War. The Kurdish north is now seen as a model for other regions seeking more autonomy.
Iraqi Kurdistan was able to attract foreign investment and provide its residents with better security and living standards than in the rest of Iraq, where bombings and power cuts are a part of citizens' everyday lives.
But the Kurdistan Regional Government (KRG) and Baghdad are locked in a row over land and oil. The central government has objected to a recent deal between the KRG and U.S. oil giant ExxonMobil to explore for oil in the northern region.
Despite that, officials in Basra look to the KRG's experience and blame the lack of progress on political wrangling in Baghdad and rivalry among the Shi'ite Muslim, Sunni Muslim and Kurdish parties, each jostling for more power.
"Part of what drove us to demand regional autonomy is that political problems are usual in Baghdad not in Basra, where the governing parties are a known quantity," said Ghanem Abdul-Amir al-Maliki, a member of Basra Provincial Council.
"It is clear that the Kurdistan region is stable to a large degree because the governing parties there are a known factor ... In Baghdad, everyone is trying to please his own party on the account of others. We want to get rid of the political infighting in Baghdad by setting up a region."
SHARE OF OIL WEALTH
Provinces need a public referendum and parliamentary approval to attain regional autonomy. Prime Minister Nuri al-Maliki, who took part in writing the constitution in 2005, supports powerful central government.
His government has tried to quieten the autonomy movement, partly out of concern that it could lead to instability as the U.S. troop withdrawal picks up pace. The remaining 10,000 troops are scheduled to leave before December 31.
In October, the mainly Sunni Salahuddin province symbolically decided to declare the area autonomous. The move was criticised by Maliki.
In the mainly Shi'ite oil hub of Basra, autonomy talk has bubbled for years. Basra sent a formal request for autonomy more than a year ago, but has had no response from Baghdad.
The southern city used to be called "The Venice of the Middle East," but now, Basra's crisscrossed canals are filthy pools of stagnant water filled with heaps of rubbish.
Roads are damaged and only a few hours of electricity are provided every day.
Most of Iraq's oil exports come from the fields around Basra, but residents are fed up with shortages of power, water, jobs and housing. They complain they have seen little benefit from the oil wealth.
"Federalism is the solution. It has been eight years and Basra is still the same. The central government was not able to solve the problem of the electricity, water and other services in Basra," said Raied Khoudair, 34, a government employee.
"Until when Basra will remain the cow that Iraq milks for everything, and gets nothing from Iraq? We see the development in the Kurdistan region and the prosperity they live in, we are no less than them."
(Additional reporting by Aref Mohammed; writing by Rania El Gamal; editing by Elizabeth Piper)
====================
===\\Tuesday, May 29, 2012 | 07:01 Beirut Subscribe to NOW Lebanon RSS feeds
NOW News
Iraq's Basra to make renewed push for autonomy
May 28, 2012 share
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A top politician in Iraq's oil-rich Basra province moved on Monday to give the area more autonomy from the central government, three years after the failure of a similar bid.
Basra provincial council chief Sabah al-Bazzouni told reporters he was making the push because of a prolonged political crisis that has seen Prime Minister Nuri al-Maliki threatened with a vote of no confidence and criticism that he has centralized power.
"We will call the members of the provincial councils, and the heads of the provincial councils, to announce a southern region," Bazzouni told a news conference in Basra.
The vast majority of the country's oil exports, upon which Iraq's budget is almost entirely dependent, pass through Basra.
"If they do not respond to this call, we will announce the region of Basra," Bazzouni said.
Iraq's constitution allows for any province or provinces to become an autonomous region, like the three-governorate Kurdish region in the country's north, by way of a referendum.
All that is required to trigger such a plebiscite is the approval by a tenth of the province's voters, or a third of that province's provincial council members.
In January 2009, Basra launched a petition to turn itself into an autonomous region, but failed to collect enough signatures.
Bazzouni said he was launching the effort for greater autonomy because of a protracted political crisis in Iraq, which has seen the Shia-led authorities issue an arrest warrant for the Sunni vice president.
Several key political leaders from various ethnic backgrounds and political parties have accused Maliki of violating the tenets of a power-sharing deal, and have threatened him with a vote of no-confidence.
In the run-up to the row, three majority Sunni Arab provinces in Iraq's north and west either voted to become regions or threatened to do so, but their calls for a referendum have so far languished.
@yesar @Annahar Most interesting aspect is Buzuni talks abt governors and councils in plural, signifying 3-governorate scheme back on agenda
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12h Reidar Visser Reidar Visser @reidarvisser
@yesar @Annahar Noteworthy that some Maliki allies in Basra are in habit of reviving federalism scheme whenever Maliki is in serious trouble
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12h Reidar Visser Reidar Visser @reidarvisser
@yesar @Annahar وقال صباح البزوني في مؤتمر صحافي في البصرة: "سندعو المحافظين ورؤساء مجالس المحافظات لاعلان اقليم الجنوب"
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13h yesar yesar @yesar
@Annahar #Annahar #Iraq source for Basra region tweet plz? @reidarvisser
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12h Reidar Visser Reidar Visser @reidarvisser
@yesar @Annahar Headline seems exaggerated. Same old Buzuni saying we will call for the southern region (future tense)
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11:14 AM - 28 May 12 via web · Details
13h Reidar Visser Reidar Visser @reidarvisser
@yesar Could you RT the southern federal region tweet please?
-AFP/NOW Lebanon
To read more: http://www.nowlebanon.com/NewsArticleDetails.aspx?ID=402317#ixzz1wECrWeKd
Only 25% of a given NOW Lebanon article can be republished. For information on republishing rights from NOW Lebanon: http://www.nowlebanon.com/Sub.aspx?ID=125478 == Shell to start pumping gas at southern Iraq project Wed, Jul 11 11:08 AM EDT BAGHDAD, July 11 (Reuters) - Royal Dutch Shell plans to start pumping gas from its southern gas joint venture in Iraq in the next three weeks at 60 million cubic feet per day, Iraq said on Wednesday. Hans Nijkamp, Shell vice president and country chairman for Iraq told Iraq Deputy Prime Minister for Energy Hussain al-Shahristani that output would be increased by another 40 million cubic feet several weeks after pumping starts, a statement from Shahristani's office said.
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