Illustration by Bloomberg View
By the Editors Dec 13, 2011 3:00 AM GMT+0300 Q
U.S. President Barack Obama and Iraqi Prime Minister Nouri al-Maliki had many important issues to discuss yesterday in Washington: the impending withdrawal of the last U.S. troops from Iraq, the fragility of democracy there, the looming presence of Iran on its border and so on.
But an item further down the agenda may well be the most important factor in Iraq’s future: oil.
Iraq possesses the fourth largest proven oil reserves on the planet. That treasure once made the country one of the most economically developed in the region. If it can re-energize itspetroleum industry, Iraq, with its emerging democracy, can become the most advanced nation in the Arab world.
Iraq hopes to increase its oil production from 2.7 million barrels a day now to 13.5 million by 2018. Outside experts think even half that is a stretch. In any case, a major production increase will require significantly more investment by foreign companies, which have the expertise and capital Iraq has lost through decades of war and turmoil. Their enthusiasm, however, has been dampened by bureaucratic holdups, legal uncertainties and the diminished state of Iraq’s pipelines, storage facilities, export terminals and the like.
The red tape companies encounter in Iraq -- when they apply for employee visas, for example, or try to import equipment or seek payment -- seems to reflect attitudes rooted in the past. The oil industry was nationalized in 1972, and the idea of excluding foreign companies still has resonance, including within Maliki’s coalition government.
Time to Decide
Iraq’s leadership has a choice: Either create an administrative environment conducive to foreign investment or accept a slow growth rate for oil production. The latter is bad for Iraq and the former needn’t be. Offshore interests can’t be allowed to plunder Iraq’s reserves. But in the 15 contracts the central government has signed so far, it has made strong deals for itself.
The international companies working in the country, however, have worries that Iraqi officials need to resolve. Iraq’s 2005 constitution promised a hydrocarbon law that would settle who had the power to approve what type of deal. Yet no such legislation exists because the central government and the semi-autonomous Kurdish region in the north, which has oilfields only recently being exploited, haven’t agreed on terms.
In August, Maliki’s Cabinet sent Parliament a draft law that would let a federal council approve only technical-services agreements, the type of contract the central government has granted. With these, companies are compensated for costs plus a fee per barrel of oil produced. But the Kurds, in their deals with 43 companies, have signed production-sharing arrangements, in which the company is responsible for costs but gets a percentage of any oil that is extracted. Contractors prefer such terms, which are higher risk but potentially higher yield. They also seem to make more sense for the northern oil deposits, which are generally fragmented and don’t offer the same ease of production as the larger fields in the south.
In the absence of a law, Maliki’s government has deemed the Kurds’ contracts illegal and banned companies that have signed them from bidding for oil business in the rest of Iraq. Creating more uncertainty, Baghdad, until earlier this year, denied such contractors the ability to export the oil they produced in the Kurdish areas, limiting their sales to the domestic market. For these reasons, the northern oilfields have attracted mainly wildcatters and second-tier companies like Marathon Oil Corp. (MRO) and Hess Corp. (HES)
Shake Things Up
Having angered Kurdish authorities with its draft law, the central government agreed to new negotiations. But Exxon Mobil Corp. (XOM) shook things up in October when it became the first major oil company to sign with the Kurds -- sealing six exploration deals. It did so while also doing business with the central government. In response, Baghdad not only blacklisted the company from the next auction of exploration blocks in Iraq’s south, it threatened to cancel the company’s 60 percent stake in developing the giant West Qurna 1 oilfield, which is already producing 350,000 barrels a day. The U.S. oil giant’s move defied not only Baghdad but also the U.S. government, which has warned companies against signing contracts with the Kurds in the absence of a legal framework.
Still, Exxon’s gambit could prove a positive catalyst, if Maliki’s government makes the right decisions. Expelling the company from the West Qurna 1 oilfield, or forcing it to choose between doing business with the Kurds or the central government, could scare away other potential partners. Baghdad would do better to support a hydrocarbon law that embraces production- sharing contracts for the north and technical-services agreements for the southern fields.
Many Baghdad officials worry that giving in on the issue will feed the Kurds’ desire for more independence. It may. However, refusing to legitimize the Kurdish contracts is already having that effect, while perpetuating the legal uncertainty. The sooner that fuzziness is resolved, the sooner Iraq can get the help it needs to accelerate oil production.
Increasing output will generate the money Iraq requires to renovate its oil infrastructure, which will allow still greater production. Corroded pipelines need to be replaced. A system for bringing water, which facilitates oil flow, from the Persian Gulf to the oilfields needs to be completed. New storage facilities and export terminals, replacing those destroyed as long ago as the 1980s Iran-Iraq war, must be built.
The Iraqis estimate it may take $50 billion in investments in these systems to get production up to 6 million barrels per day. That money will be hard to come by if the Maliki government keeps getting in the way of foreign investment.
To contact the Bloomberg View editorial board: view@bloomberg.net.
==============
An US soldier secures a street in Baghdad on December 9, 2011 (AFP Photo / AHMAD AL-RUBAYE)
(87.6Mb)embed videoDespite the US’s declared withdrawal of its military personnel and contractors out of Iraq, Washington has prepared to control the country's rich oil reserves in any case, shared Ranjit Singh Kalha, former India's ambassador to Iraq in the 1990s.
Having spent $3 trillion in Iraq, a country with harsh weather conditions (+50 C most of the time) and absolutely nothing valuable but oil reserves, the Americans simply cannot give up the plentiful and very high quality oil they went there for.
“It takes $1.50 to take out this oil that’s just below the surface. Anybody who has access to this oil can be a game changer – as far as the politics of oil is concerned,” Ranjit Singh Kalha concluded.
The problem Americans encountered in Iraq is that once given “some symbols” of democracy, the Iraqi voted for a Shia-led government. The headache is that the Shia traditionally have close links with Iran, the core territory of this affiliation.
“That is the present dilemma. If you withdraw from Iraq completely, you leave this vast oil wealth of Iraq in the hands of Shia (Iran-oriented) government. And therefore it upsets the political balance in the Middle East,” Ranjit Singh Kalha explained.
He said that to counter such adverse developments the US will have almost 20,000-strong embassy in Baghdad (the largest US embassy in the world) and consulates in Basra, Kerkuk and in northern Kurd-inhabited territory, each consulate 1,000-strong.
“Americans cannot afford to be completely absent from Iraq,” the former ambassador argued, adding he does not see any lessening of American influence in Iraq.
Iraq is a multi-confessional country and to curb religious extremism all previous country’s rulers had to be very tough with the population, the diplomat stressed. In Saddam’s Iraq most of the military and law enforcement was Sunni and the rule of law was first of all a rule of military power preventing sectarian violence. Today’s Iraq is ruled by Shia government which does not have the necessary experience of ruling with an iron fist, so the country risks a full fledged civil war to start at any time given.
American troops will not go far from Iraq – they will be re-deployed to next door Kuwait.
“This is just a re-shuffle of the cards. Americans could always come back because the bases will be kept intact, while 20,000 personnel means that most of the staff will be there,” Ranjit Singh Kalha said.
The US has made sure Iraq does not have any Air Force whatsoever so Iraqi airspace will remain under American control, “which means you can bring force in whenever you want, however you want, and prevent anyone else from coming in.”
The Iran-Iraq border is very long and porous, the population on both sides is blood-interlinked, so the threat of Iran interfering into Iraqi internal affairs is always present.
As for Afghanistan, occupied by the allied forces, the same tactics might be used there and even if the troops depart, the military bases with thousands of servicemen will stay anyway.
Maj. Gen. Hamid Abdullah Ibrahim, then the director general of the Interior Ministry's Oil Police, in a 2010 smuggler's bust in Baghdad. Ibrahim will now head up a new Energy Police directorate that will include oil, electricity and transportation infrastructure security. (BEN LANDO/Iraq Oil Report)
Iraq is ending an era of patchwork protection for its most important infrastructure, handing responsibility for all energy sector security to a single, new organization: the Energy Police.
Maj. Gen. Hamid Abdullah Ibrahim is leading the effort. The new organization is both an expansion and a reorganization of the Oil Police, which Ibrahim has led since its inception in 2007.
The Energy Police will ultimately protect all infrastructure related to not only oil and electricity, but also railw...
================
INTERVIEW-Iraq's oil police gear up for attacks as U.S. withdraws
Source: Reuters // Reuters
(Adds bombs on oil pipeline in paragraph 5)
By Rania El Gamal
BAGHDAD, Dec 13 (Reuters) - Iraq's oil police have stepped up patrols to protect installations against a possible surge in al Qaeda attacks as U.S. troops withdraw, the head of the force said on Tuesday.
Multibillion-dollar deals Baghdad signed with energy majors could quadruple oil output capacity to Saudi levels within six years but that depends on the OPEC member securing oilfields, refineries and other vital infrastructure.
Major General Hamid Ibrahim, head of Iraq's energy protection force, said half of all attacks planned by al Qaeda targeted the country's oil sector. His force has so far managed to foil most attempts, he said.
"There is direct targeting of the oil sector ... By the start of the withdrawal there will be attacks not just on oil, but they (insurgents) will try to rattle the situation in the country," he told Reuters in an interview. "We are ready and on alert".
But a bombing attack late on Tuesday on an oil pipeline in the oil hub of Basra raised questions over the ability of the oil police to halt attacks. Three bombs hit a pipeline that transports crude from southern oilfields to storage tanks, setting the pipeline on fire.
Although Iraq took responsibility for the security of its oil sector in 2005, the United States has still been providing aerial surveillance and other support to battle Sunni insurgents and Shi'ite militia, who have plagued the country since the U.S.-led invasion in 2003.
But by the end of December - nearly nine years after the U.S.-led invasion - only a small contingent of civilian trainers and fewer than 200 U.S. military personnel will remain.
HUMMER DELIVERY
The Iraq-Turkey pipeline in the north, which carries around a quarter of Iraq's oil exports, is regularly hit by sabotage, usually blamed on al Qaeda and former members of Saddam Hussein's banned Baath party.
And in early June, militants blew up a storage tank at the Zubair 1 storage facility near Basra, despite tight security.
Ibrahim said Iraqi security forces had foiled more than four plots against the nearby southern Doura refinery and were now coordinating with the Iraqi air force to monitor oil sites and pipelines.
The poorly equipped force has also received Hummer military vehicles and other supplies from U.S. forces as they pack up, he said.
"We used to dream of having a few cars to reinforce our forces, now we have thousands," he said. "Now we have good equipment, guns and bullets. It is a positive thing."
The government has built blast walls and watch towers and installed cameras and is talking to foreign investors such as British major BP to train the force, he said.
But Ibrahim added that his 40,000-strong force was still stretched, especially in the vast west of the country.
"We have shortages and we can't say we are self-sufficient... The worry that we have now is that some oilfields in the western parts are vast fields," he said.
U.S. officials say that Iraq's oil security forces are up to the task but coincide they need to improve further. (Editing by Patrick Markey and Ben Harding)
=====================
Gulf Keystone Issues Oil Estimates
Bermuda’s Gulf Keystone today [Dec.13] provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between eight billion barrels to 13.4 billion barrels with a mean value of 10.5 billion barrels.
An independent oil and gas exploration and production company with operations in the Kurdistan region of Iraq, Gulf Keystone was originally founded by United Arab Emirates, Kuwaiti, Saudi and US private equity.
The company was incorporated in Bermuda in 2001 and listed on the Alternative Investment Market of the London Stock Exchange on 8 September 2004.
Shaikan-4 Appraisal Well
Gulf Keystone has completed drilling of the Shaikan-4 appraisal well, 6 km to the west of the Shaikan-1 discovery well, to a total depth (TD) of 3,387 metres in the middle Triassic with 2,375 metres of total gross pay interval. The well has been drilled through the Jurassic (Sargelu, Alan, Mus and Butmah formations) and the upper and middle Triassic (Baluti, Kurre Chine A and Kurre Chine B formations) with an indication of potential new Jurassic reservoirs in Sargelu sands and Barsarin carbonates.
The company is now embarking on a well testing programme for Shaikan-4 which will target several formations in the Jurassic and Triassic, including the Chia Gara/Barsarin, Sargelu, Butmah, Kurre Chine-A, Kurre-Chine-B and Kurre Chine-C formations.
Preliminary results from Shaikan-4 formed part of the new data used by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, to calculate the most recent significant upgrade of the gross oil-in-place volumes for the Shaikan discovery announced in November 2011.
Shaikan-5 Appraisal Well
The Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, has drilled to a measured depth of 856 metres and 20″ casing is currently being set. The well will then continue drilling to the estimated TD of 3,500 metres subject to technical conditions.
Shaikan-6 Appraisal Well
The move of the WDI 842 rig to the location of the Shaikan-6 appraisal well is ongoing. The well, which will be drilled 9 km to the east of the Shaikan-2 appraisal well, is due to spud in December 2011. Estimated TD for Shaikan-6 is 3,800 metres subject to technical conditions.
Shaikan oil sales
Gulf Keystone has recommenced sales of the Shaikan crude to the domestic market of the Kurdistan Region of Iraq at a rate of about 1,500-2,000 barrels of oil per day. This initial rate for the crude produced at the Shaikan-1 & 3 Extended Well Test (EWT) facilities has been set to meet current domestic oil sales specifications. Volumes of oil production and sales, both into the domestic and export markets, are due to increase significantly after the ongoing upgrade of the Shaikan-1 & 3 EWT facilities has been completed.
Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.
Ber Bahr-1 Exploration Well
The first exploration well on the Ber Bahr block has drilled to a measured depth of 1,765 metres at the top of the Triassic with hydrocarbons indications observed in the well. Wireline logging is underway which will be followed by running of 9 5/8″ casing. The well will then continue drilling to the estimated TD of 2,100 metres.
Gulf Keystone has a 40 percent working interest in the Ber Bahr block operated by Genel Energy, which holds a 40 percent working interest in the block. The Kurdistan Regional Government has a 20 percent carried interest in the Ber Bahr Production Sharing Contract. The Operator’s resource estimate for the Ber Bahr block is 1.5 billion barrels of oil equivalent-initially-in-place.
Bekhme-1 Exploration Well
The testing programme for Bekhme-1, the second exploration well on the Akri-Bijeel block drilled 20 km to the north-east from the Bijell‑1 discovery well, is ongoing. After the testing programme has been completed in December, the Operator will issue an appropriate announcement.
Gulf Keystone has a 20 percent working interest in the Akri-Bijeel block operated by Kalegran Ltd., 100% subsidiary of MOL Hungarian Oil and Gas Plc., which holds 80 percent working interest in the block. Operator’s P50 resource estimate for the Akri-Bijeel block is 2.4 billion barrels of oil-in-place.
John Gerstenlauer, Gulf Keystone’s Chief Operating Officer commented: “Following our recently completed tests at the Shaikan-2 appraisal well, we plan to replicate this successful programme at Shaikan-4.
“Our preliminary results for this well are very promising and we look forward to the Shaikan-4 well testing programme which is yet another step in the process of unlocking the full potential of the giant Shaikan discovery in the Kurdistan Region of Iraq.
“In this regard, the recommencement of our domestic oil sales is particularly significant as we prepare to upgrade the existing test production facilities and ramp up both domestic sales and oil exports of the Shaikan crude in the first half of 2012.”
======================
| Author | Dalesmann View Profile Add to favourites Ignore |
|---|
| Date posted | today 14:06 |
|---|
| Subject | My take on a magnificent RNS |
|---|
| Votes for this Posting | Voted  96 times. |
|---|
| Message |
|---|
Kurdistan Operational Update
***‘Gulf Keystone today provides an update on its ongoing exploration and appraisal programme in the Kurdistan Region of Iraq, which includes the Shaikan block, a major discovery with independently audited gross oil-in-place volumes of between 8 billion barrels to 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.’***
We are so used to these big numbers we forget their significance .
The figures reported represent enough OIP to give between one and two barrels of oil to every man, woman and child on the planet.
Or if you started counting now at a steady rate of one number per second it would take you over 301 years to reach 10.5billion. Incredible figures!
***Shaikan-4 Appraisal Well
Gulf Keystone has completed drilling of the Shaikan-4 appraisal well, 6 km to the west of the Shaikan-1 discovery well, to a total depth (TD) of 3,387 metres in the middle Triassic with 2,375 metres of total gross pay interval. The well has been drilled through the Jurassic (Sargelu, Alan, Mus and Butmah formations) and the upper and middle Triassic (Baluti, Kurre Chine A and Kurre Chine B formations) with an indication of potential new Jurassic reservoirs in Sargelu sands and Barsarin carbonates.***
So we have two new reservoirs one in a sandstone matrix which should have better porosity than in the carbonate reservoirs .
The gross pay interval is 2.4 times that encountered at Shaikan 1.
***The Company is now embarking on a well testing programme for Shaikan-4 which will target several formations in the Jurassic and Triassic, including the Chia Gara/Barsarin, Sargelu, Butmah, Kurre Chine-A, Kurre-Chine-B and Kurre Chine-C formations.***
It’s good to see the Kurre Chine C formation mentioned again here.
At SH2 this interval held a surprise. As we went deeper gas was expected and indeed there was plenty of gas in the KC A&B but C had excellent high quality light crude with a good GOR. I look forward to seeing if the high API light crude is found again at SH4.
***Preliminary results from Shaikan-4 formed part of the new data used by Dynamic Global Advisors (DGA), independent Houston-based exploration consultants, to calculate the most recent significant upgrade of the gross oil-in-place volumes for the Shaikan discovery announced in November 2011.***
That’s PRELIMANARY results. Actual results may well add to the total OIP numbers.
So far we have concentrated on the vertical columns encountered but the lateral extent of these reservoirs is also mind blowing.
This well is 6km away from SH1. How long would it take you to walk this distance?
Lets assume you stand at the centre of a 1m square. If each step is one meter then you have walked 6000m. If you then multiply that by the net pay interval of say 500m beneath your feet you have just walked over 3million barrels of OIP! Just by walking a 1 meter corridor from Shaikan 1.
I’ve put that in just to underline the enormity of this RNS!
***Shaikan-5 Appraisal Well
The Shaikan-5 appraisal well, 6 km to the north-east of the Shaikan-2 appraisal well, has drilled to a measured depth of 856 metres and 20" casing is currently being set. The well will then continue drilling to the estimated TD of 3,500 metres subject to technical conditions.***
Well done GKP. So often drilling conditions in the highly fractured cretaceous have held up progress. John G and his team have obviously learnt from past experience and they are making good time at SH5.
***Shaikan-6 Appraisal Well
The move of the WDI 842 rig to the location of the Shaikan-6 appraisal well is ongoing. The well, which will be drilled 9 km to the east of the Shaikan-2 appraisal well, is due to spud in December 2011. Estimated TD for Shaikan-6 is 3,800 metres subject to technical conditions.***
I wonder if this will be the last well GKP will ever drill?
Again it is a huge step out.
9 km east of the SH2 well which in turn was 9km east of SH1. So we are 18km or around 12 miles away from our initial well. Think again of walking this distance and the volume of oil contained beneath your feet is staggering!
***Shaikan oil sales
Gulf Keystone has recommenced sales of the Shaikan crude to the domestic market of the Kurdistan Region of Iraq at a rate of about 1,500-2,000 barrels of oil per day. This initial rate for the crude produced at the Shaikan-1 & 3 Extended Well Test (EWT) facilities has been set to meet current domestic oil sales specifications. Volumes of oil production and sales, both into the domestic and export markets, are due to increase significantly after the ongoing upgrade of the Shaikan-1 & 3 EWT facilities has been completed.***
We have sustained production and sales!
We have a CONSIDERABLE INCOME which is set to: “INCREASE SIGNIFICANTLY after the ongoing upgrade of the Shaikan-1 & 3 EWT facilities has been completed”
***Gulf Keystone is the Operator of the Shaikan block with a working interest of 75 per cent and is partnered with Kalegran Ltd. (a 100 per cent subsidiary of MOL Hungarian Oil and Gas Plc.) and Texas Keystone Inc., which have working interests of 20 per cent and 5 per cent respectively.***
The award of the BIR is long over due – how much longer will we have to wait and WHO has got them. I have my own theories on this one, which I will keep quiet on for now.
***Ber Bahr-1 Exploration Well
The first exploration well on the Ber Bahr block has drilled to a measured depth of 1,765 metres at the top of the Triassic with hydrocarbons indications observed in the well. Wireline logging is underway which will be followed by running of 9 5/8" casing. The well will then continue drilling to the estimated TD of 2,100 metres.
Gulf Keystone has a 40 percent working interest in the Ber Bahr block operated by Genel Energy, which holds a 40 percent working interest in the block. The Kurdistan Regional Government has a 20 percent carried interest in the Ber Bahr Production Sharing Contract. The Operator's resource estimate for the Ber Bahr block is 1.5 billion barrels of oil equivalent-initially-in-place.***
The operators resource estimate is 1.5bbls but not GKPs.
GKP issued 1.9bbls.
The potential upside at BB was given by GKP as potentially 1.5 X Shaikan, So the potential upside could be 20b+.
It appears we have oil shows. We need more detail here.
As someone has pointed out, it is very unusual for a company that is not the operator to put out ANY information during a drill. GKP has broken that convention – I await the results of the wire-line logs with not a little anticipation!
***Bekhme-1 Exploration Well
The testing programme for Bekhme-1, the second exploration well on the Akri-Bijeel block drilled 20 km to the north-east from the Bijell--1 discovery well, is ongoing. After the testing programme has been completed in December, the Operator will issue an appropriate announcement.
Gulf Keystone has a 20 percent working interest in the Akri-Bijeel block operated by Kalegran Ltd., 100% subsidiary of MOL Hungarian Oil and Gas Plc., which holds 80 percent working interest in the block. Operator's P50 resource estimate for the Akri-Bijeel block is 2.4 billion barrels of oil-in-place.***
“After the testing programme has been completed in December… ” so we have very little time to wait and then we can start reworking the figures for the sale of our interest in the Akri- Bijeel block, if indeed the intension to sell it, still remains.
***John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:
"Following our recently completed tests at the Shaikan-2 appraisal well, we plan to replicate this successful programme at Shaikan-4. Our preliminary results for this well are very promising and we look forward to the Shaikan-4 well testing programme which is yet another step in the process of unlocking the full potential of the giant Shaikan discovery in the Kurdistan Region of Iraq. In this regard, the recommencement of our domestic oil sales is particularly significant as we prepare to upgrade the existing test production facilities and ramp up both domestic sales and oil exports of the Shaikan crude in the first half of 2012."***
Well don’t John in ramming home the message.
“yet another step in the process of unlocking the full potential of the GIANT Shaikan discovery in the Kurdistan Region of Iraq.”
Some poster on advfn said this RNS was boring! It is anything but boring in my book!
It is yet another chapter in the magnificent success story that is GKP!
Kind regards
Dalesmann ==================== |
Posted on 13 December 2011. Tags: KOGAS, Korea Gas Corporation, Occidental, Zubair
Korea Gas Corp (Kogas) said on Tuesday that it will receive 500,000 barrels of crude oil on 15th December as “remuneration fees” and as a return on investment for helping develop Iraq’s Zubair oil field.
Kogas plans to sell the crude in the international market, according to a report from MarketWatch.
Its project partner, Occidental Petroleum (Oxy) will also receive 500,000 barrels.
Kogas and Occidental will likely keep receiving a combined 1 million barrels of crude for a while, with the next batch possibly coming in the first quarter of next year, a Kogas official said.
The amount of crude the companies get is expected to increase in the longer term as the field is fully developed.
(Source: MarketWatch, Reuters)
====================
| 16:15 | | | 17 |
|---|
Bombs hit southern Iraq oil pipeline-sources
Source: Reuters // Reuters
(Adds details, quotes, background)
BASRA, Iraq, Dec 13 (Reuters) - Three bombs hit an oil pipeline that transports crude from Iraq's southern oilfields to storage tanks around the oil hub of Basra on Tuesday, an oil police source said.
The impact on oil production or exports was not immediately clear, but firefighters were working to put out the blaze caused by the blast, the source who was at the explosion site said.
"The explosions happened in succession and caused an enormous fire," he said.
"We cannot go near the explosion site because the fire is still raging ... we fear the fire might extend to other nearby oil pipelines."
The source said the oil police were checking other pipelines for more bombs.
An oil official in Basra confirmed the blast was caused by a bomb attack. The pipeline was carrying crude to the Zubair 1 storage facility near Basra, the two sources said.
In early June, militants blew up a storage tank at the Zubair 1 storage facility, despite tight security.
Basra, which handles the bulk of Iraq's oil exports, has generally seen fewer attacks this year than other cities in the country following an overall decline in levels of violence since the peak of sectarian conflict in Iraq in 2006-07.
In October, two bombs hit pipeline networks transporting crude from Iraq's Rumaila oilfield, the country's biggest, cutting output from the field to 530,000 barrels per day from about 1.24 million bpd.
Iraq's oil police have stepped up patrols to protect installations against a possible surge in al Qaeda attacks as U.S. troops withdraw before Dec. 31, the head of the force said on Tuesday. (Reporting by Aref Mohammed; Writing Rania El Gamal; Editing by Louise Ireland)
Iraq pipeline bombed -- testing 40,000 oil troops
By Reuters
BASRA, Iraq -- Three bombs hit an oil pipeline in southern Iraq on Tuesday, just as the general in charge of Iraq's 40,000 energy protection troops said patrols had been stepped up due to concerns of an al-Qaida surge ahead of the U.S. pullout on Dec. 31.
The blasts hit a pipeline that transports crude from Iraq's southern oilfields to storage tanks around the oil hub of Basra.
The impact on oil production or exports was not immediately clear, but firefighters were working to put out the blaze.
In Iraq's oil rich southern region, the United States is building a massive consulate in Basra. The consulate is situated just miles from Iraq's border with Iran. One security officer says it's like building a consulate on Omaha Beach. Some of the 1,320 people who work there call it "Fort Apache." If Iranian backed militias were to launch a full scale attack on this consulate, would the U.S. military ride to the rescue? Ted Koppel reports.
"The explosions happened in succession and caused an enormous fire," one source at the scene said. "We cannot go near the explosion site because the fire is still raging ... we fear the fire might extend to other nearby oil pipelines."
The source said the oil police were checking other pipelines for more bombs.
An oil official in Basra confirmed the blast was caused by a bomb attack.
In early June, militants blew up a storage tank at the Zubair 1 storage facility, despite tight security.
Basra, which handles the bulk of Iraq's oil exports, has generally seen fewer attacks this year than other cities in the country following an overall decline in levels of violence since the peak of sectarian conflict in Iraq in 2006-07.
Atef Hassan / Reuters
An Iraqi policeman stands guard near oil that leaked from a pipepline bombed a day earlier, on Oct. 7, in the Rumaila oilfield near Basra.
In October, two bombs hit pipeline networks transporting crude from Iraq's Rumaila oilfield, the country's biggest, cutting output from the field to 530,000 barrels per day from about 1.24 million bpd.
Multibillion-dollar deals Baghdad signed with energy majors could quadruple oil output capacity to Saudi levels within six years, but that depends on the OPEC member securing oilfields, refineries and other vital infrastructure.
Maj. Gen. Hamid Ibrahim, head of Iraq's energy protection force, said half of all attacks planned by al-Qaida targeted the country's oil sector. His force has so far managed to foil most attempts, he said.
"There is direct targeting of the oil sector ... By the start of the withdrawal there will be attacks not just on oil, but they (insurgents) will try to rattle the situation in the country," he told Reuters. "We are ready and on alert".
Although Iraq took responsibility for the security of its oil sector in 2005, the United States has still been providing aerial surveillance and other support to battle Sunni insurgents and Shiite militia, who have plagued the country since the U.S.-led invasion in 2003.
But by the end of December -- nearly nine years after the U.S.-led invasion -- only a small contingent of civilian trainers and fewer than 200 U.S. military personnel will remain.
The Iraq-Turkey pipeline in the north, which carries around a quarter of Iraq's oil exports, is regularly hit by sabotage, usually blamed on al-Qaida and former members of Saddam Hussein's banned Baath party.
PhotoBlog: Suspicious Iraqi minds in a squatters camp
Ibrahim said Iraqi security forces had foiled more than four plots against the nearby southern Doura refinery and were now coordinating with the Iraqi air force to monitor oil sites and pipelines.
The poorly equipped force has also received Hummer military vehicles and other supplies from U.S. forces as they pack up, he said.
"We used to dream of having a few cars to reinforce our forces, now we have thousands," he said. "Now we have good equipment, guns and bullets. It is a positive thing."
The government has built blast walls and watch towers and installed cameras and is talking to foreign investors such as British oil major BP to train the force, he said.
But Ibrahim added that his 40,000-strong force was still stretched, especially in the vast west of the country.
"We have shortages and we can't say we are self-sufficient ... The worry that we have now is that some oilfields in the western parts are vast fields," he said.
Iraq oil exports unaffected after bombing - official
Source: Reuters // Reuters
BAGHDAD, Dec 14 (Reuters) - Iraq's oil exports will not be affected by a bomb attack on a southern crude pipeline network on Tuesday, an oil ministry spokesman said on Wednesday.
"We have enough storage until we repair these pipelines. We will bypass the oil pumping operations through another pipeline network until repairs are done," spokesman Asim Jihad told Reuters. It will take a week or less to repair the damage done to the pipelines, he said.
Three bombs hit an oil pipeline operation that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra, causing a fire that raged all night and was put out on Wednesday morning. (Reporting by Rania El Gamal; editing by Tim Pearce)
================
Iraq asks oil firms to trim crude output after bombing-source
Source: Reuters // Reuters
BAGHDAD, Dec 14 (Reuters) - Iraq has asked international oil companies working in its southern oilfields to reduce production after a bomb attack on Tuesday night on an oil pipeline network, an industry source said on Wednesday.
Three bombs hit an oil pipeline operation that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra, causing a fire that raged all night and was put out only on Wednesday morning.
It was not immediately clear if the request to reduce oil production was taken as a precautionary measure or was due to damage to the pipelines, the source said. (Reporting by Rania El Gamal; Editing by Tim Pearce)
Iraq's Rumaila output cut by 700,000 bpd after bomb-official
Source: Reuters // Reuters
BASRA, Iraq, Dec 14 (Reuters) - Oil production at Iraq's Rumaila oilfield has been cut by around 700,000 barrels per day from about 1.4 million bpd after a bomb attack on southern crude pipelines on Tuesday, a senior Iraqi oil official said on Wednesday.
Salah Mohammad, general manager of the Rumaila Operating Organisation, told Reuters production from Rumaila oilfield was partially shutdown since Tuesday due to the bombing on the pipelines network.
Three bombs hit an oil pipeline operation that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra, causing a fire that raged all night and was put out on Wednesday morning. (Reporting by Aref Mohammed; writing by Rania El Gamal)
======================
Iraq oil exports unaffected by pipeline bombs-ministry
Source: Reuters // Reuters
* Repairs after bombing to take about a week
* Iraq asks foreign companies to trim southern output (Adds details)
BAGHDAD, Dec 14 (Reuters) - Iraq's oil exports will not be affected by a bomb attack on a southern crude pipeline network on Tuesday, an oil ministry spokesman said on Wednesday.
"We have enough storage until we repair these pipelines. We will bypass the oil pumping operations through another pipeline network until repairs are done," spokesman Asim Jihad said.
It will take no more than a week to repair the damage done to the pipelines, he said.
Three bombs hit a pipeline network that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra, causing a fire that raged all night.
Iraqi officials said the blaze had been put out on Wednesday morning, but an oil police source later said strong winds had reignited the fire.
An industry source said international oil companies working in the southern oilfields had been asked to reduce production after the attack, but was not sure if this was a precautionary measure or because of damage to the pipelines.
The companies will look at ways of bypassing the damaged sections of pipeline if necessary, the source said. (Reporting by Rania El Gamal; Editing by Tim Pearce)
=================
Bombs halve Iraq's Rumaila output; exports OK-officials
Source: Reuters // Reuters
* Rumaila production down by 700,000 bpd
* Repairs after bombing to take about a week
* Iraq asks foreign companies to trim southern output
* Exports at normal rate, enough storage for 2-3 days (Adds Rumaila output, details, background)
By Aref Mohammed
BASRA, Iraq, Dec 14 (Reuters) - Output at Iraq's Rumaila oilfield has been halved from about 1.4 million barrels per day after a bombing hit southern pipelines, but crude exports were normal, Iraqi officials said on Wednesday.
Iraq is looking to its vast oil resources for future stability as it emerges from years of war. But renewed attacks on its oil infrastructure are a challenge to Iraqi security forces as U.S. troops withdraw by Dec. 31.
Salah Mohammad, general manager of the Rumaila Operating Organisation, told Reuters production from Rumaila oilfield was cut by around 700,000 bpd since Tuesday due to the bombing on the pipelines network.
Total production from Rumaila was at around 1.4 million before the bombing, he said.
"We halted production in Rumaila South because of the explosion. It has been halted until now since yesterday," he said. "The pipeline network was a main one."
Rumaila, the workhorse of Iraq's oil industry, has estimated reserves of around 17 billion barrels and produces the bulk of Iraq's total output of 2.95 million bpd now.
The field is being developed by British oil major BP and Chinese partner CNPC.
Three bombs hit an oil pipeline network that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra, causing a fire that raged all night.
Iraqi officials said the blaze had been put out on Wednesday morning, but an oil police source later said strong winds had reignited the fire.
Iraq's oil exports from Basra will not be affected, an oil ministry spokesman said.
"We have enough storage until we repair these pipelines. We will bypass the oil pumping operations through another pipeline network until repairs are done," spokesman Asim Jihad said.
It will take no more than a week to repair the damage done to the pipelines, he said.
On Wednesday, export flow was at normal rates of 1.68 million bpd from Basra, a shipping source told Reuters. An oil official said Iraq had enough crude stored to keep exports at same levels for two-three days.
The pipeline that was hit was carrying crude to the Zubair 1 storage facility near Basra.
In early June, militants blew up a storage tank at Zubair 1, despite tight security.
OIL SECURITY WORRIES
Basra, which handles most of Iraq's oil exports, has generally seen fewer attacks this year than other cities in the country following an overall decline in levels of violence since the peak of sectarian conflict in Iraq in 2006-07.
In October, two bombs hit pipeline networks transporting crude from Iraq's Rumaila oilfield, the country's biggest, cutting output from the field to 530,000 barrels per day from about 1.24 million bpd.
Iraq's oil police have stepped up patrols to protect installations against a possible surge in al Qaeda attacks as U.S. troops withdraw before Dec. 31, the head of the force said on Tuesday.
An industry source said international oil companies working in the southern oilfields had been asked to reduce production after the attack, but it was not clear if this was a precautionary measure or because of damage to the pipelines.
The companies will look at ways of bypassing the damaged sections of pipeline if necessary, the source said. (Additional reporting by Rania El Gamal and Ahmed Rasheed in Baghdad; writing by Rania El Gamal; Editing by Alison Birrane)
=================
BAGHDAD (Reuters) – A large fire started by a bomb attack on a southern Iraqi oil pipeline network Tuesday has been put out, an oil official said Wednesday.
"The fire was put out at 7 a.m. A network of pipelines was damaged," the oil official told Reuters.
Three bombs hit an oil pipeline operation that transports crude from southern Iraqi oilfields to storage tanks around the oil hub of Basra Tuesday. The impact on oil production or exports was not immediately clear.
(Reporting by Rania El Gamal; writing by Patrick Markey; editing by Tim Pearce)
===================
By Mohammad Tayseer and Nayla Razzouk
Dec. 14 (Bloomberg) -- Iraq will uphold agreements with
Exxon Mobil Corp. “for now” after the company signed energy
contracts the government considers illegal with the country’s
semi-autonomous Kurdish region, an Oil Ministry official said.
The central government in Baghdad “is considering
measures” in response to Exxon’s contracts with the Kurdistan
Regional Government, Abdul Mahdy al-Ameedi, director general of
the ministry’s licensing department, said in an interview today
in Amman, Jordan. He declined to specify the measures or to rule
out punitive steps at a later date.
Exxon, which has not commented publicly on the matter, is
producing crude with Royal Dutch Shell Plc at the West Qurna
field in southern Iraq.
=================
| 11:03 | | | 20 |
|---|
==============
Baghdad frets over rash of autonomy moves
by Staff Writers
Baghdad (UPI) Dec 12, 2011
|
Amid growing security fears as U.S. forces withdraw from Iraq, the shaky coalition government in Baghdad is grappling with another problem: growing demands for autonomy by oil-rich regions.
The issue is at its thorniest with the already semi-autonomous Kurdish enclave in the north -- a holdover from the 1991 Gulf War -- after the world's largest oil company, Exxon Mobil, signed an exploration agreement with it in October.
By doing so, the U.S. oil giant defied the government, which insists that it's the only authority when to comes to awarding energy contracts.
Baghdad's ire is such that Oil Minister Aldul Karim al-Luaibi has warned the Kurdistan Regional Government that it must decide whether it wishes the three provinces that form the Kurdish zone to remain part of Iraq or become independent.
"It's up to the Kurdistan region to decide whether it has made a strategic decision to stay part of Iraq or whether it has made up its mind to establish an independent state," he declared Friday.
The ultimatum was remarkable in that Luaibi mentioned the prospect of Kurdish independence, a subject that's generally taboo.
The Kurds have long dreamed of -- and fought for -- an independent homeland. But the "i" word is rarely spoken aloud in political discourse as the country struggles to rebuild following the ousting of Saddam Hussein's grotesque regime in 2003.
But now, as other regions join the clamor for autonomy, the very mention of Kurdish independence causes political tremors in a state riven by deep sectarian and ethnic divisions that could erupt into open warfare once U.S. forces have departed.
The KRG has repeatedly challenged the central government's authority to award oil and gas contracts. Over the last three or four years the KRG has signed production-sharing deals with 42 foreign companies, most of mid-level or small outfits.
Its terms are far more generous than the Oil Ministry's 20-year agreements with international majors, which are paid a scant $2 for every barrel produced.
The Kurdish enclave sits on 45 billion barrels of oil, a substantial chunk of Iraq's national oil reserves of 143.1 billion barrels.
Exxon Mobil was the first oil major to openly defy Baghdad and sign with the KRG, boosting the Kurds' drive to develop an oil industry that would form the economic backbone of a future independent state.
In retaliation, Baghdad has removed Exxon from a list of companies prequalified to bid in a new auction of oil and gas fields scheduled for January. It has also threatened to scrap the company's 2009 deal to develop the giant West Qurna field in the south, where two-thirds of Iraq's oil reserves lie.
Since Exxon's committed to investing around $60 billion in West Qurna Phase 1 that could involve years of litigation that will only slow Baghdad's drive to quadruple production to 10 million barrels per day by 2017.
But Baghdad must do something to nullify the Exxon-KRG partnership, both to maintain its authority and to impede the Kurds developing a viable oil industry.
The Kurds also claim the Kirkuk oilfields in the north. Baghdad cannot afford to relinquish Kirkuk and tensions are high there.
Now the majority Shiites in Basra province in the south are threatening to push for autonomy. That would further threaten Baghdad's control over Iraq's oil wealth and encourage the fragmentation of a country that Saddam Hussein held together by force and repression.
Southern politicians are suing the central government because they weren't included in negotiations that resulted in a $17 billion gas deal between Baghdad and a consortium of Royal Dutch Shell and Mitsubishi of Japan.
Basrans have long complained of neglect by Baghdad even though the region produces two-thirds of Iraq's oil revenue.
Iraq's Sunni minority is pushing for semi-autonomy "within a unified Iraq" in Salahuddin province in the north. Diyala and Anbar provinces may not be far behind.
The Turkomen minority is demanding Baghdad create two new northern provinces for them and give the territory regional status.
All this doesn't bode well for the future, since autonomy for Shiites in the south and Kurds in the north would leave the disgruntled Sunnis, the pillar of Saddam's regime and now a virtual underclass, in the center, helpless, weak -- and with no oil.
Iraq: The first technology war of the 21st century
============
| Vinson & Elkins and Cleary Gottlieb Steen & Hamilton are advising Iraq's oil ministry in a $17.2 billion deal with Royal Dutch Shell and Mitsubishi to develop the infrastructure required to process natural gas in the southern part of the war-torn country. |
| The transaction agreements, which were signed on Nov. 27, came as;Iraq attempts to rebuild its oil and gas industry following years of sanctions and conflict. |
| The 25-year contract, one of the biggest deals that Iraq has signed in recent times, will see the creation of a new company, the Basrah Gas Company (BGC). The BGC will process gas from three large fields near Basrah in Southern Iraq in order to satisfy domestic consumption requirements, and will also have the right to pursue a Liquefied Natural Gas (LNG) or other gas export project for any remaining gas. |
| Currently, an estimated 700 million standard cubic feet per day of natural gas is being burned. The project, aside from halting the environmental damage and economic waste, is expected to provide reliable domestic electricity generation and promote economic and industrial development. |
| The Vinsons team includes partners Christopher Strong and Ahmed el-Gaili, while the Cleary Gottlieb team includes partners Andrew Bernstein and Gamal Abouali. ;We are thrilled to be working with the Ministry on such an innovative and large-scale project,; said Ayman Khaleq, Middle East managing partner at Vinson & Elkins, in a statement. “The signing… was a key milestone for this deal, which is significant to the overall gas industry in Iraq, and it’s a privilege to be a part of that.; ALB |
| Other related stories: |
=============
FEATURE-Nine years on, Iraq's economic potential still untapped
http://reut.rs/vN6ZbA
Wed Dec 14, 2011 9:00am EST
* Oil output target unrealistic, big rise still likely
* Foreign non-oil firms follow oil majors into Iraq
* IMF forecasts rapid growth through 2016
* But politics, security, bureaucracy remain obstacles
* Legal uncertainty over some oil resources
By Ahmed Rasheed and Aseel Kami
BAGHDAD, Dec 14 (Reuters) - Four years ago, Iraq's oil minister Hussain al-Shahristani confronted a stark choice: should he risk opening Iraq's ailing oil industry to foreign companies?
Iraq's oil sector was limping along after years of sanctions and conflict following the U.S. invasion in 2003, and badly needed more investment. But bringing in Big Oil could expose a vulnerable country to rapacious(
Taking by force; plundering. Greedy) bids and exploitation.
Ignoring sceptics, public criticism and threats from his political opponents, Shahristani made his choice and negotiated oil contracts that he believed would eventually allow Iraq to reconstruct its economy and begin to rival fellow OPEC member Saudi Arabia.
"I was convinced the world would need Iraqi oil...So, I took my decision to offer service contracts despite all the problems and threats from inside and outside Iraq," says Shahristani, who has since become deputy prime minister for energy.
Now, nearly nine years after the invasion that toppled Saddam Hussein and with U.S. military forces close to completing a withdrawal from the country, Shahristani's hopes have been only partially realised.
Major foreign oil companies are helping Iraq develop the world's fourth biggest reserves, slowly ramping up its output, but the country faces severe obstacles and a frail economy needs investment in almost every sector.
The country is still plagued by shaky security, decades-old laws, a Saddam-era centralised bureaucracy, crumbling infrastructure and a sectarian social and political divide. Although violence is down from the bloody heights of 2006-2007, almost daily bombings, attacks and assassinations remain a major deterrent to investment.
The country has also been forced to curb some of its oil ambitions. Iraqi officials have begun to talk about 8 million barrels per day as their implied long-term target for output, down from the 12 million bpd they previously pledged.
International oil companies working in Iraq grapple with many challenges, from security to logistical bottlenecks and bureaucracy.
Iraq's financial system is slowly embracing the free market after years of tight control under Saddam; a fledging stock market is attracting foreign money while the banking and telecommunications industries are growing rapidly.
But the national grid provides only a few hours of intermittent power a day, forcing Iraqis to live off noisy diesel-fueled generators.
"Do we consider it fast economic development? No, it is a very slow development, but it is developing," said Fadhil Nabi, deputy minister of finance.
OIL OUTPUT
Shahristani has been criticised in parliament for not having raised Iraq's oil output faster. Although his deals with foreign companies could theoretically see Iraq quadruple its output capacity to 12 million bpd by 2017, many analysts say 6 or 7 million bpd is more realistic.
Even reaching 6 million bpd, however, would give Iraq much more weight in OPEC, currently dominated by the world's top oil exporter Saudi Arabia. Revenue from the additional millions of barrels that Iraq is hoping to pump would also give it the economic strength to rebuild; oil revenues account for more than 95 percent of state income.
So far, deals with over a dozen foreign oil companies have taken national production to 2.95 million bpd, the highest level in two decades.
The entrance of major oil firms into Iraq has encouraged other foreign investors who had been sitting on the sidelines. Household names such as General Electric Co, Siemens , France Telecom and HSBC are operating in the country, foreseeing that with its oil wealth and population of 30 million, Iraq could become an attractive retail market and industrial power.
The government has ambitious plans to ramp up electricity generation, build hundreds of thousands of new homes, expand ports, renovate roads, build railroads and introduce high-speed trains.
After economic growth of just 4.2 percent in 2009 and 0.8 percent last year, the International Monetary Fund projects expansion of 9.6 percent this year and that growth will be around 9 percent or higher every year through 2016.
UNCERTAINTIES
But Iraq still struggles with issues that could prevent such growth rates. Political infighting in the government is contributing to delays in many infrastructure projects, while there are legal uncertainties over some of its choiciest oil assets in the semi-autonomous Kurdish region. The Kurdistan Regional Government is locked in a feud with the Arab-dominated central government in Baghdad over territory and oil rights.
When U.S. oil giant Exxon Mobil signed with the KRG in mid-October for six exploration blocks, the Iraqi oil ministry said the deal was illegal and could result in termination of Exxon's contract to develop the major West Qurna Phase One oilfield in the south.
And despite a modest rise in foreign investment over the past few years in sectors such as telecommunications and electricity, Iraq remains a state-centric economy; beyond oil, private businesses have yet to play a large role in rebuilding.
Twenty-three percent of the population lives below the poverty line, according to the Ministry of Planning. The official unemployment rate is 15 percent but a further 28 percent of the workforce is estimated to be in part-time jobs.
Popular anger over power outages, food ration shortages, corruption and government ineffectiveness has sent thousands of Iraqis onto the streets to protests during the past summer. But people still dream of enjoying the untapped wealth of their country.
"I know Iraq still has a long way ahead, but I believe one day our children will live in luxury like the people in the Gulf," said Mahmoud al-Obeidi, a Baghdad university professor. "My hope is as big as Iraq's oil reserves."
============
Statement by IMF Managing Director Christine Lagarde on Iraq
Press Release No. 11/465
December 13, 2011Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement after a meeting with H.E. Nouri Al-Maliki, Prime Minister of Iraq in Washington today:
“It was a pleasure to meet Prime Minister Al-Maliki today. Over the past several years, Iraq and the International Monetary Fund have engaged in a very successful partnership, anchored by successive IMF-supported economic programs. This partnership has facilitated substantial debt relief and helped achieve macroeconomic stability, including a strong dinar, low inflation, and a resumption of economic growth, in a very challenging political and security environment.
“Prudent fiscal policies are essential to maintaining macroeconomic stability and fostering inclusive growth. In this context, I am very encouraged by the government’s new budget proposal for 2012 that was recently submitted to the Iraqi Council of Representatives. The proposal aims to restrain the growth of current spending, thus freeing up resources for infrastructure investment and social support, while limiting the size of the budget deficit. The proposed budget would allow the current Stand-By Arrangement (SBA) to continue to provide a safety net to the budget in case oil revenues were to fall sharply.
“Promoting policies that lead to more inclusive growth is central to our engagement with Iraq. We are working closely with the Iraqi government to rebuild its essential economic institutions to help improve economic management and public service delivery. The current SBA offers a framework for Iraq’s structural reform agenda, by promoting better public financial management, including the management of Iraq’s hydrocarbon resources, and developing a financial sector that can support private sector activity and job creation. We look forward to further progress in these areas.
“We remain committed to helping Iraq in its efforts to foster sustained and inclusive economic growth, generate viable employment opportunities, and improve living standards for all Iraqis. An IMF staff mission is scheduled to meet the authorities in January to discuss progress under the program and next steps.”
IMF EXTERNAL RELATIONS DEPARTMENT
| Public Affairs | | Media Relations |
|---|
| E-mail: | publicaffairs@imf.org | Phone: | 202-623-7100 |
| Fax: | 202-623-6278 | Fax: | 202-623-6772 |
================
| Sun 20:48 | | | 159 |
|---|
| Thu 07:52 | | | 145 |
|---|
Obama said that with oil production rising, Iraq can again become “one of the region’s leading oil producers.”
******** “We hope that the American companies will have the largest role in increasing our wealth in the area of oil and other aspects as well,” Maliki said. **********
Also …
The deal to sell Iraq additional F-16s, which the administration formally announced today, is worth about $2.3 billion, according to the White House.
==============
Excess gas is flared at the Rumaila oil field in Basra, as workers look on. (ATEF HASSAN/Reuters)
UPDATE: On Thursday morning, Olive Group emailed a statement that the Iraqi driver had died from injuries in the attack and the British citizen is still receiving treatment.
"An Olive Group Protective Security Detail was transiting a Main Supply Route west of Basra when one vehicle was struck by an explosive device resulting in injuries to two of the occupants," the statement said.
Iraq Oil Report's story about the attack appears in its original form, as published on June 21, 2011, below....
===================
| 07:05 | | | 74 |
|---|
Maliki Calls on US Firms to Help Rebuild Iraq
Posted on 15 December 2011
http://bit.ly/tnYCHu
Prime Minister Nouri al-Maliki has called on U.S. companies to help rebuild Iraq, according to Reuters.
In a speech at the U.S. Chamber of Commerce, Maliki said:
“As much as we committed to defeat terrorism, we are now committed to grow the private sector … It is now not the generals, but corporations and business leaders who will be at the front of this stage.“
He told the packed crowd of U.S. business officials Iraq has the opportunity to work with companies from all over the world to rebuild itself after three decades of war, but it believes the United States has the “best companies” to help it help it diversify its economy away from one heavily dependent on oil.
“We are not satisfied with the number of American companies in Iraq,” he said, adding the Iraqi government would make it “as easy as possible” for U.S. companies to invest.
Maliki led a delegation that included top Iraqi trade, investment and transportation officials and about 30 to 40 business leaders from energy, construction, health care and other sectors eager to make deals with American companies.
The U.S. Commerce Department hosted a “matchmaking session” on Wednesday to allow interested U.S. and Iraqi companies to meet one-on-one.
“In the coming years, it’s estimated that Iraq’s economy will grow even faster than China’s or India’s. With oil production rising, Iraq is on track to once again be one of the region’s leading oil producers,” President Barack Obama said.
Commerce Secretary John Bryson added that Iraq’s plan to spend about $186 billion over the next five years on more than 2,700 development projects is a promising opportunity for U.S. companies that will also help put people back to work in the United States.
The United States currently trails other countries in investing in Iraq, despite the heavy price it has paid over the past decade in the country.
“I sense, however, with this visit this week, we are poised for a reversal of that trend,” said Lionel Johnson, vice president for Middle East at the U.S. Chamber of Commerce.
U.S. exports of mainly farm goods, drilling and telecommunications equipment to Iraq are on the rise this year and could total about $2.5 billion, the highest since the United States invaded the country in 2003.
But that is still small compared to U.S. exports to Saudi Arabia or the United Arab Emirates, which will exceed $12 billion in both markets this year.
U.S. companies, worried about security and financial risk, have largely stayed away from doing business in Iraq. But there are some signs that could be changing.
A report prepared by Dunia Frontier Consultants, based in Washington and Dubai, estimated that U.S. companies accounted for just 1.7 percent of non-energy-related foreign commercial activity in Iraq in 2010, but preliminary estimates for 2011 show the U.S. share of foreign commercial activity in Iraq has risen to 11.6 percent, or $8.085 billion, Dunia said.
That includes Lockheed Martin’s sale of F-16 fighter aircraft, an expected Boeing deal to sell 45 civilian airplance and contracts signed by Hill International and one of its subsidiaries to provide housing construction management services, Dunia said.
The same report estimated overall foreign commercialactivity could double the 2010 figure of $42.7 billion.
==========
Ridder Visser wrote today, Dec 15th and same day Al-Maliki spoke about disputed territories:
The Kurds now claim they have supported the federalism request in the governorate council on the provision that Khanaqin will be kept separate an will be annexed to the Kurdistan Regional Government!
But can they do that? Absolutely not. Not as part of a federalisation project as such. It is absolutely critical to appreciate that, constitutionally and legally, region formation and disputed territories are entirely separate concepts in Iraq. There is no legal relationship between them whatsoever and an attempt to intertwine the two concepts - as seen in the latest Diayla move - is bound to come up against insurmountable judicial problems.
other than the vague provisions that relate to "disputed territories" under article 140 of the constitution. Those provisions, in turn, are interpreted to mean "referendums" on the status of areas whose status is contested - but as long as there is no general progress towards article 140 settlement, region formation must remain a separate theme.
If a referendum for the establishment of a federal region in Diyala is called for (as it should be, legally speaking, regardless of Shiite-led counter-demonstrations of some size), inhabitants of Khanaqin - just like all the other citizens of Diyala - will have to vote on whether Diyala including Khanaqin should become a single federal region or remain as an ordinary governorate as per today. No other option can or will be on the table.
==
Al-Maliki Said same day
BAGHDAD (AFP)--Iraqi Prime Minister Nouri al-Maliki told AFP Thursday that oil giant ExxonMobil Corp (XOM) has promised to reconsider an exploration deal with Iraqi Kurdistan that Baghdad has strongly opposed.
"We had a meeting with (Exxon) in Washington and we discussed the contracts, some of which are located in disputed areas," Maliki told AFP in an exclusive interview as he flew back to Iraq from Washington.
"They promised to reconsider their decision," Maliki said.
Kurdistan, a semi autonomous region, on Oct. 18 inked a deal with Exxon for it to explore six areas, but Baghdad regards any contracts not signed with the central government as invalid.
An official with the Iraqi oil ministry said that two of the areas--Al-Qosh and Bardarash--are actually parts of Nineveh province that Kurdistan wants to annex into its autonomous region, a move Baghdad opposes.
The Kurdistan contract potentially puts an Exxon contract with the Iraqi government in jeopardy.
In January 2010, Iraq's oil ministry completed the deal with Exxon and Anglo-Dutch giant Royal Dutch Shell PLC (RDSA) to develop production at West Qurna-1, which with reserves of about 8.5 billion barrels is the country's second-biggest field.
(END) Dow Jones Newswires
December 15, 2011 05:18 ET (10:18 GMT)
It will finally come down to areas bordering kurdistan and rest of iraq. All the contracts which are in undisputed kurdistan will be ok. 3 out of 6 blocks which Exxon signed up are in the disputed border areas which may end up in negotations and Exxon will continue to hold the rest. Face saving for all sides. GKP blocks are in undisputed part of kurdistan. AIMVHO.
==============
| 10:58 | | | 12 |
|---|
| 12:01 | | | 31 |
|---|
Security forces criticized after oil pipelines explosions in Basra, South Iraq 12/15/2011 12:47 PM BASRA / Aswat al-Iraq: ;The explosions that took place against a number of oil pipelines, carrying Iraqi crude oil west of southern Iraq's Basra Province,
stretching from Rumeila Oil Fields to Burjisiya area on Tuesday, have faced a series of criticism to the Iraqi security bodies, whilst a Basra official said
the explosions were linked to foreign and local interests, because they took place with the close departure of the US forces from the country.
"The said explosions are linked to foreign and local problems, especially because they took place with the final departure of the US forces from Iraq,
scheduled to take place by the end of the current month, especially that the most important thing for the foreign reasons is the competition Iraq
would occupy in the world economy after the increase of its oil production and exports, along with the fact that the terrorist forces have changed their
strategy from attacks against persons to attacks on the oil interest and the infrastructure," the Chairman of Basra Province's Council, Sabah al-Bazzouni
told Aswat al-Iraq news agency on Thursday.
"It is true that the oil pipelines stretch for large areas in the Province, including remote areas close to townships and villages, not far from housing compounds,
but this does not exclude the responsibility of the security bodies, despite fact that the protection forces of the oil installations are not enough for
the whole area," he said.
Bazzouni said that the solution lies in "laying down a strong security plan and the activation of the intelligence work, whilst certain international companies
have promised to lay observation and control appliances, in order to set up a system that controls those oil pipelines and installations."
"There are a lot of charges against the security companies that would fall under investigation, especially that those involved in previous explosions have
been arrested and we believe that they might have some relationship with the Tuesday explosions," he stressed, whilst the Chairman of Basra's Security
Committee, Ali Al-Maliki, had charged that the said explosions have taken place due to the weakness of the security bodies, also accusing al-Qaeda
and Baath Party organizations with having been involved the with those explosion.
"The area, where the explosion took place at 09:00 pm local time last Tuesday night in the oil pipelines coming from Rumeila is a strongly protected
area and movement is completely prevented for everybody, but those working in the oil sector; that is why it is clear that those who carried out the
explosion must have been among workers in the oil sector and did not come from outsiders of foreign security protection companies," Maliki said.
================
===============
12/18/2011 12:46 PM
BAGHDAD / Aswat al-Iraq: A member of the Iraqi Parliament's Oil & Energy Committee, Suzan al-Saad, has said on Sunday that the poor administration of the Director of Oil Police in Southern Iraq was the reason for the continuous attacks against oil pipelines there, demanding his substitution, especially after the withdrawal of the American troops from the country.
"There is a need for the government to be keen to follow up on the activity of the said Police Directorate, and to assign the mission of its administration to competent persons, intent on the protection of the people's fortune," Saad said in a news conference, attended by Aswat al-Iraq news agency.
"The continued attacks against the oil-pumping pipelines by subversive elements fall on the burden of responsible elements in the Ministry of Oil and the Directorate-General of the Oil Police," she added.
"A request should be raised to the Committee of Security and Defense and the Oil & Energy Committee, to open an investigation into the said violations, including the substitution of the Director of Southern Oil Police and holding those accountable who are behind such violations, including officers and other elements, along with the further activation of the Security Directorate of Oil Installations," she demanded.
Last week, three explosive charges blew up targeting the pipeline that carries crude oil from southern Iraq's Rumeila Oil fields and Zubeir Oil Reserves Facilities.
==============
Oil Majors in Iraq Set Sights High, Add More Muscle
http://online.wsj.com/article/SB10001424052970204844504577098153573074364.html
DECEMBER 15, 2011, 7:36 P.M. ET
BASRA, Iraq—Oil companies active in the south of Iraq have beefed up security to deal with fears over the security implications of the U.S. troop withdrawal, but they say the pullout hasn't caused them to change plans to significantly ramp up production.
"We have to wait and see.…If the security situation deteriorates that means we will hire more security personnel to protect us," said an executive of one of the oil majors.
The challenge was highlighted when executives from BP PLC, Royal Dutch Shell PLC, Exxon Mobil Corp., Eni SpA and Lukoil Holdings withdrew from an industry conference in the southern oil hub of Basra starting on Nov. 25, after bombings at a busy market the previous day killed 25 people, including the deputy police chief.
Security contractors working for the companies warned the executives not to travel from their heavily protected compounds to the city center, where the exhibition and conference were held.
Despite a sharp drop in violence from the height of sectarian strife in 2006-07, bombings and killings are still a daily occurrence in Iraq.
"On a personal human level, everybody's got concerns, no one knows what will happen," said Branko Pecar, vice president and general manager of St. Louis-based Emerson, an oil services company operating in Iraq.
BP, ExxonMobil and Eni are critical to the future of the Iraqi oil industry due to their roles in developing Iraq's massive southern oil fields of Rumaila, West Qurna and Zubair, which hold proven reserves of more than eight billion barrels.
The three fields are expected to be the nation's largest producers within six years, with a combined output of 6.8 million barrels a day, according to deals signed by the companies two years ago that involve total investment of about $100 billion.
That compares with output from the fields of 1.6 million barrels a day during the era of former Iraqi President Saddam Hussein.
The development work on the three fields is part of wider plans by Iraq's oil ministry to ramp up total Iraqi output to as much as 12 million barrels a day by 2017 from three million. Saudi Arabia, the world's top oil exporter, pumps about 10 million barrels a day.
The oil companies active in the south already contend with bombing campaigns against their infrastructure, which the government blames on al Qaeda in Iraq and loyalists to Saddam Hussein. On Tuesday, BP said it temporarily halted output from the southern half of the Rumaila field after a bomb blast hit pipelines in the area, the second such attack in the Basra region in two months.
Iraq's army and police, as well as Western security contractors hired by foreign oil firms, are responsible for security in these areas. Executives travel in convoys of armored four-wheel-drive vehicles and armed security personnel armed with guns.
"We will do everything we can to ensure the safety and security of our staff," said Toby Odone, a spokesman for BP.
The smaller oil service companies are most vulnerable to any deterioration in security because they have fewer resources to pay for extra protection, say security consultants AKE Group.
"Many firms, particularly some of the smaller service companies, may decide to pull out completely if conditions worsen considerably," said John Drake, a risk expert at AKE—adding that it is too early to say whether this will in fact happen.
Iraqi Prime Minister Nouri al-Maliki has vowed to protect oil companies after the U.S. troops withdraw. "Thank God nothing has happened to them so far, and we are guaranteeing their safety, whether through security companies or by assigning police and army to protect them," he said in an interview last week.
One telling sign of security concerns is the growing interest in much smaller oil fields in the semiautonomous Kurdistan region in the north of the country.
Better security in the north and more favorable development terms have been a draw. While the south's large fields and familiar geology have attracted oil majors, recent large discoveries by wildcat explorers have changed the way they view the north, says Manouchehr Takin, an analyst at the London-based Centre for Global Energy Studies.
The opportunity in the north to sign production-sharing contracts rather than the technical-services contracts employed in the south are also an incentive, Mr. Takin said.
But the central government in Baghdad and Kurdistan have been at loggerheads for years over who should be authorized to sign oil deals.
After Exxon Mobil signed an exploration deal last month with the Kurdistan Regional Government, Iraqi Deputy Prime Minister for Energy Hussein al-Shahristani threatened to terminate the deal. Mr. Shahristani has strongly opposed Kurdistan's moves to develop oil resources.
Mr. Maliki dialed back the threats in last week's interview, saying the contract wouldn't be terminated and suggesting that negotiations are possible.
A number of smaller foreign companies already produce oil in Iraq's Kurdish region, but Exxon Mobil was the first of the majors to reach such an agreement. Exxon Mobil declined to comment on the Kurdistan deal.
The Exxon Mobil deal highlights a lingering problem: the lack of comprehensive legislation for the energy sector. Politicians in Baghdad have squabbled for years over the drafting of an oil-and-gas law that stipulates how different regions and ethnic factions will share the revenue.
Draft legislation first surfaced in 2007, but was derailed by disputes between the central government and the government of Kurdistan.
—Sam Dagher
contributed to this article.
Write to Hassan Hafidh at hassan.hafidh@wsj.com
========================
Iraq talks tough with Exxon
http://bit.ly/tkEMOx
By BEN VAN HEUVELEN of Iraq Oil Report
Published December 16, 2011
BAGHDAD - The Iraqi government is maintaining a hard stance against ExxonMobil even as the two sides have begun talks to resolve a dispute over the company's controversial contracts with the semi-autonomous Kurdistan region.
Prime Minister Nouri al-Maliki met with Exxon CEO Rex Tillerson at the tail end of his trip to Washington, DC, according to Deputy Prime Minster for Energy Hussain al-Shahristani. The negotiations have apparently only just begun.
"The prime minister has met with ExxonMobil, and (Tillerson) has promised to reconsider their contracts in the KRG, but I haven't heard from the prime minister directly what was the commitment made by Tillerson to him," Shahristani said in an interview with Iraq Oil Report.
Iraq's central government enters the negotiations deeply entrenched in its opposition to any of the 48 deals the Kurdistan Regional Government (KRG) has signed with foreign oil companies. Baghdad claims sole responsibility to sign oil contracts and has called Kurdistan's oil contracts illegal, including its new deals with Exxon.
"Before they signed the contract, and after they signed the contract, (Exxon) received a letter from the prime minister and from the minister of oil telling them that signing contracts without the approval of the federal government is a breach of their contract for West Qurna Phase 1," Shahristani said. "That remains to be the position."
Exxon's Oct. 18 deals, made public in early November, make it the largest company to sign with the KRG and signify an enormous vote of confidence in the region. Exxon's move also represents the first time a company has signed contracts with the central government and then defied Baghdad's policy banning oil deals with the KRG.
Under a technical service contract signed in 2010 with the federal Oil Ministry, Exxon is developing the 8.6 billion barrel West Qurna 1 oil field in Basra, which is to reach 2.825 million barrels per day (bpd) in seven years – more than the entire country produces currently.
Exxon has also been in negotiations to lead the construction of a water pipeline that is needed to boost production at several southern oil fields. And the company is currently qualified to bid in a March 7-8, 2012, licensing round for 12 exploration blocks.
These projects and prospects in the south are now in jeopardy – and their fates may be linked.
"Iraq has not taken its decision vis-à-vis ExxonMobil (regarding) the contract that was signed without the approval of the central government," Shahristani said. "Once that decision is taken, of course it will be implemented, in all other areas of bilateral obligations."
As oil minister from 2006 to 2010, Shahristani pioneered a strict blacklist policy, barring companies that signed with the KRG from doing oil deals with the central government.
Exxon's defiance of this policy seemed so brazen – and Exxon had such a well established reputation for being conservative – that many observers speculated the company must have received some type of advance approval from Baghdad.
But Shahristani categorically denied that anyone representing Baghdad had given Exxon a "yes" or even a quiet "maybe."
"Nobody in the central government – from the minister of oil, to the deputy prime minister for energy, to the prime minister himself or the Council of Ministers – ever have given any such indication or signal," Shahristani said.
Shahristani said that the Iraqi government had sent a letter to ExxonMobil seeking to bring them to the negotiating table, but he also suggested that Iraq had not been willing to negotiate without an important pre-condition.
"They have been told that they are welcome to come and discuss it with the Minister of Oil, but first and foremost, they have to acknowledge the authority of the federal government, and to accept the fact that their contracts are not valid without the approval of the central government," Shahristani said.
"Otherwise, what's the point of coming to talk with the central government, if they consider the (KRG) contracts to be valid?"
It's unclear how the dispute might be resolved. Earlier this week, Maliki reportedly suggested that Exxon's KRG contracts could be renegotiated with the involvement of the Oil Ministry, but Shahristani said no such process was in the works.
"This hasn't been discussed," he said. "Those contracts have not even been presented to the Ministry of Oil, so the Ministry of Oil has not studied them – they have no views on that. The sure stand of the central government is that anything that is not approved by the Council of Ministers has no legal value in Iraq."
Exxon's Kurdistan play is the latest episode in a larger story about control over the country's oil and the shape of the Iraqi state. Maliki's government has advocated for strong central powers, while the Kurdistan region has pointed to provisions in the constitution that guarantee a share of oil authority for regions.
The Constitution itself calls for modern oil legislation that could help clarify the lines of authority. Iraq's Cabinet passed a draft law in 2007, but it stalled in Parliament largely because the different camps have fundamentally different ideas about the nature of Iraqi federalism.
Kurdish leaders have worried that too much power concentrated in Baghdad will lead to another dictatorship. They recall the days of Saddam Hussein, when the regime neglected economic development in the north and used its power to pursue genocidal campaigns against the minority Kurds.
"We believe that the evil of centralized system of government that inevitably leads to dictatorship and tyranny has been proven a total, utter failure in Iraq," KRG Prime Minister Barham Salih said in his keynote address to investors at the CWC Kurdistan Oil and Gas Conference in Erbil last month. "We believe that federalism is not only good for Kurdistan, but it is a safety net, an insurance policy, for a united Iraq."
In Shahristani's view, however, a safe and prosperous Iraq depends on central control of the oil sector.
"For me, the unity of the country – the peaceful coexistence of its ethnic and religious and sectarian factions – is extremely important," Shahristani said. "And unless oil is managed centrally and revenues are distributed equally to all Iraqis, oil can be very dangerous, can lead to civil war among the different factions."
==============
FEATURE-Iraq oil security tested as U.S. forces withdraw
16 Dec 2011 12:38
Source: Reuters // Reuters
* Oil security key for OPEC member Iraq
* Three bombs hit southern oil hub Basra
* Militants expected to step up attacks
By Rania El Gamal
BAGHDAD, Dec 16 (Reuters) - A bombing of southern Iraqi crude pipelines despite a nationwide alert against a possible surge in insurgent attacks has heightened fears for the future security of Iraq's vital oil sector as American troops withdraw.
The oil hub city of Basra, which handles the bulk of the OPEC member's oil exports, has generally seen fewer attacks this year than other cities in the country.
But militants have stepped up assaults over the past months and bombed oil installations despite tight security, testing the ability of Iraqi security forces to halt attacks nearly nine years after the U.S. invasion that toppled Saddam Hussein.
On Tuesday, three bombs hit a pipeline network that transports crude from Iraq's southern oilfields to storage tanks around Basra, igniting a fire and disrupting output at the Rumaila field, the workhorse of Iraq's oil industry.
"Increased violence directly or indirectly affecting the oil industry is the main risk and unknown in all assumptions, as the impact on projects from a strong deterioration naturally could be massive," said Samuel Ciszuk, a consultant at KBC.
Protecting Iraqi oil reserves, the world's fourth largest, is crucial to Baghdad's plans to rebuild a shattered economy after years of war and economic sanctions, and its desire to become a top producer once again to rival Saudi Arabia.
Oil firms are awarding tenders for work in their fields to reach the production targets they have set after signing a dozen deals in Iraq that could quadruple output capacity to Saudi levels of 12 million barrels per day.
As Washington prepares to end its military presence by Dec. 31, Iraqi officials say the American pullout will not affect oil security because U.S. troops have not been involved in protecting oilfields since 2005.
But Tuesday's attack occurred despite an increase in oil police patrols to protect installations against a possible surge in al Qaeda violence before the U.S. withdrawal.
"There is direct targeting of the oil sector ... By the start of the withdrawal there will be attacks not just on oil, but they (insurgents) will try to unsettle the situation in the country," Major General Hamid Ibrahim, head of Iraq's energy protection told Reuters.
VIOLENCE EASES BUT OIL SITES STILL TARGETED
Overall violence in Iraq has dropped since the peak of sectarian killings in 2006-07, and the Shi'ite Muslim south, where most oil output occurs, is relatively calm. But attacks remain common and militants still target oil infrastructure.
The Iraq-Turkey pipeline in the north, which carries around a quarter of Iraq's oil exports, is regularly hit by sabotage, usually blamed on al Qaeda and former members of Saddam Hussein's banned Baath party.
In early June, bombs were planted atop four crude depots of the Zubair 1 storage facility in Basra, setting ablaze one tank.
Zubair is surrounded by tight security and visitors pass three checkpoints to reach the site. Yet the bombers managed to plant four bombs without being seen by guards.
Tuesday's attack on the oil pipelines was in the same area of Zubair, according to security officials in Basra who said the bombers could have been had inside help.
Diplomatic sources said they believed disputes between the oil workers union and the state-run South Oil Co were behind June's attack, but did not dispel fears insurgents could turn their sights on foreign oil firms after the U.S. withdrawal.
Iraqi officials, however, say there have been no indications that oil firms could come into the crosshairs of insurgents.
"Foreign companies were and are still working in Iraq... There have been some incidents in Basra but they did not target the oil companies specifically," the deputy prime minister for energy affairs, Hussain al-Shahristani, told Reuters.
But Shahristani said Iraq still needed the Americans' help to protect its offshore oil platforms and export pipelines.
The Iraqi navy took over responsibility this year for guarding Iraq's 35 square-nautical-mile-slice of the Gulf and offshore oil export terminals -- the nation's economic lifeline.
More than once this past summer, neighbouring Iran sent a fast boat into Iraqi Gulf waters, testing its defences. Iraqi forces chased the intruders away without escalating tensions.
Competitive oil development in Iraq, however, could increase friction with Iran, OPEC's No. 2 producer, and lure potential foreign investment away from Iraq's neighbours.
The Iraqis can get by for basic security with the training and equipment they have now, said a U.S. military official involved in trained the Iraqi navy since 2004.
"They can do the basics with what they have," the official said. "But if the Iranians came with their ships and missiles, they can't match up."
JITTERS
Foreign investors who ventured into the country's promising energy sector were already on edge before the latest attacks.
On Nov. 24, three bombs tore through a busy market in Basra, a day before a major energy conference, killing 19 people.
After the bombing, local officials said they believed the attack had targeted the country's oil sector ahead of the U.S. withdrawal to undermine Iraq's potential economic power.
Oil majors ExxonMobil, Royal Dutch Shell and ENI, who already work in Iraq, steered clear, leaving their booths empty during the three-day conference.
A day later, a bomb threat at the conference sent foreign executives fleeing. A suspected bomb was found in a car parked outside the venue and police said it was a false alarm.
But an Iraqi security source said an alert had been sent by Iraqi intelligence and security services to security contractors to get executives out of the meeting as it might get targeted.
Local Iraqi officials blamed the incident on neighbouring countries with a competitive interest in limiting Iraq's oil growth. Basra, Iraq's major port, sits near Iran, Saudi Arabia, and Kuwait - all major oil exporters.
"Every time Basra moves a step ahead they want to push it back a mile," a senior Basra police officer said.
"This oil and gas conference was like a sword on the Gulf's neck, because major companies are coming here to invest instead of going to their countries." (Additional reporting by Aref Mohammed; Edited by Patrick Markey and Mark Heinrich)
=========================
Barzani statements on Exxon Mobil oil criticized - Movement
12/2/2011 8:27 PM
NINEWA / Aswat al-Iraq: The statements of Kurdish President Masoud Barzani on oil contracts was criticized by the Chairman of Justice and Reform Movement.
Barzani stated that the Kurdish region will continue dealing with Exxon Mobil to drill oil in Kurdistan.
Sheikh Abdullah al-Yawar called Ninewa parliament members to move to protect the wealth of the Iraqi people.
Ninewa local officials said that the Kurdish region gave Exxon Mobil the right to investigate in territories that belong to Ninewa province, in a reference to the disputed areas between Baghdad and Arbil.
Al-Yawar, in a statement, received by Aswat al-Iraq, added that Barzanis's declarations "ignored all popular and political calls to reject such move, which surpassed the legal and constitutional limits".
He added that the current move is "stealing and occupation to continue the previous one following 2003 events".
Justice and Reform Movement expressed rejection of the contract with the US Exxon Mobil in Ninewa territories till Article 140 of the constitution is implemented.
=================
Subject Discussion
Wed 18:11
Re: JG Interview
GKP.L
76
Is this the first mention of 3D at Ber Bahr. I don't see it in any presentations.
"Money will also be spent on drilling a second well at the Sheikh Adi Block and to acquire 3D seismic at Ber Bahr."
The 3D will be around $25MM. Sounds like John is hinting that BB has come good!
I expect TK/JG to continue to keep us up to date with BB-1 if Genel is tardy. They did the same at Bijeel-1 pointing out its significance re the regional aquifer.
GLA
Gramacho
=================
14:35
Buy Take the emotion out of it!
LESTER THE INVESTOR
6
Guys and gals
The reason the bb is becoming like a play ground is because of emotion.
So many investors in the this stock are emotionally charged - dreaming of the day when they can sell at £50/share, tell the boss to f-off, buy a sports car, give to charity. It's ridiculous. I think there are a number of inexperienced investors in this stock who probably don't hold anything else and a mate has to them to buy some tickets that will make them rich beyond their dreams.
The above is a generalisation and not aimed at everyone.
However, because of the above, people are so easy to manipulate by rampers and derampers as they prey on your emotions (greed and fear). That's why we have so many silly rumours and discussions here.
I have some of the aforementioned dreams (it's human nature), but when my mind starts to get carried away (usually as I try to get to sleep) I force myself to consider the fundamentals. At the moment, and IMO, we are massively underpriced, so any negative news would need to be significant for me to sell.
The fundamentals simply are:
- Billions of barrels of oil (in massive demand)
- Well financed (we're going nowhere!)
-A large amount of further upside (from text results and drilling)
Everything else is background noise.
One day IMO, the stars will align and we will be rewarded as oil is NEEDED.
However, until we get the RNS, try to ignore the b0llocks and not influence your investment decisions too much.
Emotion contributes to any volatility, so best sticking to fundamentals if you are able and take this board, tweets etc with a pinch of salt.
All IMO.
Regards
==============
13:56
Re: tweeting
Hub
13
reading the BB this morning sickens me to be honest. Subtle deramps and discussion on RKH falls is not going to work i'm afraid boys and girls.
It's really poor and those involved in the thread should be ashamed.
One thing that cannot be denied is that the tweets and mis-information certainly seems to have been ramped up to the extreme over the last few weeks.
This is just some of the expected news that is possible in December...
1. Bek-1 results we have been told is coming in december
2. SH-4 results are underway and we are told the well looks the best so far on Shaikan
3. BB-1 possible RNS from Genel as well is heading towards TD
4. Oil&Gas law draft coming 'possibly'.
5. Production kicking off again
6. Possible big NED announcement (save the best to last?)
7. Spud news on SH-6
8. Exxon continued silence defying baghdad says a thousand words
9. More contracts to be announced by KRG or possible BIR's revealed.
I could go on and on.
The above is the reason why the derampers and 'players' are upping their activity. They want your shares on the cheap and who wouldn't?
They are not your friend and you'll find most are traders. They simply want to make money and they make the most when they can get a 'herd reaction'.
Sad but true.
The RKH thread is utter tosh - it has absolutely nothing to do with GKP and could happen to any stock. It's more likely to happen to RKH again imho but for some reason their doesn't appear to be the same level of interest on that stock by the derampers and tweeters.
My view would be to read the BB's with a large dose of salt. Understand why some posters post what they do. And why some posters reply. Often they are in cahoots.
Victor - sorry to say it, but every cat and dog knew what happened on RKH and considering you were actively posting on PCI at the time - you would have known full well.
Was it really necessarily to relive the occasion?
This board is becoming nothing short of pathetic.
HUB
=================
12:58
The Stop Loss
MikeyAdmin
6
There are two types.
One that the PI uses through a normal Broker, which are executed on a
"Best Endevours Basis"
If you have one set with Aim's Shares, you need to seriously consider whether on not to use one.
If a raid was instigated on GKP, it would be done via AT trades, which control the spread and the SP.
Again, if one was instigated, it is possible your Best Endevours Stop Loss would not execute at the set price, but possibly lower, because of a queuing system that operates.
This is because, that during rapid fluxuations in any Share Price, the Market Makers are flooded with Orders, so trades go the "negotiated trades only".
The same goes for anyone wanting to buy during a rapid fluxuations in any Share Price, as trades will go to "negotiated only", meaning a telephone call. Then the chance is lost.
Even my TDW Trading Platform goes to negotiated trades sometimes.
The other type that use the Stop Loss, are the CFD users.
They have a Margin to protect, so
some use a tight trailing Stop Loss moving up with the price, if they have bought recently, or have a Stop Loss much lower if they bought far earlier.
There are some on here that can confirm, that they lost their shares and a big junk of their Margin earlier this year, during the Shahristani rebuke of Malaki, and possibly in the much slower Lybian retrace.
That is why CFD usage has advantages and disadvantages, so can sometimes be dangerous.
During a rapid retrace, it is those tight Stop Losses that get hit first, and possibly the some set through normal Broker Accounts.
If the result produces a waterfall effect, it can take out lower Stop Losses, like with RKH.
The mid day Auction of 5 mins during rapid rises or falls is a protection method, during which the 5 mins can be used for holders to take a time out and consider options, plus for the market to catch up with unexecuted orders, both O and AT.
I do not expect one to happen with GKP, as so far the recent retraces have appeared to have more to do with closing of Shorts resulting in the SOL's falling.
So I repeat an earlier post, IMVHO.
Many folks work during the day, and cannot keep an eye on what is happening.
So those folks using CFD's to gain leverage and hold more shares, shore up your Margin, and lower your Stop Loss to where you feel safer.
If you trade through a normal Broker, remove your Stop Loss and trust in the Fundamentals.
Mikey
PS. Personally, as I trust the GKP Fundamentals, and I watch my stocks all day, I do not use any Stop Loss, but each to their own.
Definition of 'Contract For Differences - CFD'
An arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities.
Investopedia explains 'Contract For Differences - CFD'
This is generally an easier method of settlement because losses and gains are paid in cash. CFDs provide investors with the all the benefits and risks of owning a security without actually owning it.
Do you use CFD's or buy actual shares.
If actual shares, the "Best Endevours" still applies, so there is no guarantee that your orders would be filled.
If you use CFD's and have the use of DMA, then yes, your order would be executed.
Best Endevours.
Limit Orders. All limit orders will be dealt with on a reasonable endeavours basis
All normal Stock brokers will have something similar,.
http://www.tddirectinvesting.co.uk/using-your-account/order-types/
First and foremost, the MM's that deal on the Book of GKP cannot see anyones Stop Loss.
A Stop Loss is held by ones Broker or CFD provider until it is to activate if required, so cannot be "seen" by any Market Partisipant or GKP MM.
Every Market Partisipant that trades on the Order Book are their own Market Makers, so consist of many various organisations.
Thankfully the 12 GKP Market Makers that are displayed on the Book for GKP, have to operate under set Rules for Aims Stock, taking Profit from the Spread.
They are there to provide Liquidity, at times if needed, and can move the Market according to the set Rules, which is not much.
They also execute large Buy or Sell Orders over the Normal Market Share (NMS), that we see from time to time, displaying them when filled, not when ordered.
On the otherhand, LOL, every "outside Market Partisipant" work under much more relaxed Rules, and it is they who influence the direction of any SETs traded stock like GKP.
They can guess where folks have their Stop Loss set, so whoever can influence any stock is both powerful and influencial money wise, and Professional.
Such Pro's work for the big Banks, Funds, Institutions, Hedge Funds and the like, so not the average Joe Blogs using CFD with Direct Martket Access.
IMVHO, for some reason unknown, someone is controlling the Share price of GKP, keeping it in a low band when require, or allowing normal Market Forces to prevail otherwise.
Why, I have no idea, but the how is more clear.
Forbidding Weight and Depths on the Ask, high Shares on Loan, selling into every rise dictating where it will stop according to what Charters expect.
For further info about how the Market Makers and Market Partispants work, please do further research.
Look under London in the following Link.
http://en.wikipedia.org/wiki/Market_maker
Mike
===============
http://www.independent.co.uk/news/business/news/exxon-woos-gkp-to-gain-kurdish-base-6278531.html
US oil supermajor Exxon Mobil is understood to have sounded out London-listed Gulf Keystone Petroleum (GKP) over a possible deal that could value the Kurdistan-focused group at around £7bn.
GKP has a market capitalisation of around £1.5bn and is listed on the junior Aim market, but its chief executive, Todd Kozel, believes the group could eventually go for double-figure billions. GKP is sitting on what is considered to be one of the world's great recent oil finds –
Shaikan, about 50 miles north-west of Kurdistan's capital, Erbil – but the regional government is known to want a supermajor on board to properly fund and develop the field.
It is thought that the board would not accept the estimated £8-a-share that Exxon is considering and that a number of other companies, perhaps including China's Sinopec and Californian giant Chevron, are monitoring the situation. There is even some speculation that an informal four-way auction for GKP might be under way, while it is also believed that the company has spoken to at least two smaller businesses about potentially developing its assets in a joint venture.
Kozel's $100m divorce settlement will unfreeze his GKP stock
MARK LEFTLY SUNDAY 11 DECEMBER 2011
The $100m divorce case of Todd Kozel, one of the City's most colourful oil entrepreneurs, is close to settling in a move that would unfreeze around 10 per cent of his company's stock.
In a hearing in Florida last week, Mr Kozel's legal team approached his wife Ashley's lawyers about ending the divorce battle. Mrs Kozel's lawyers had alleged her husband had squirrelled away his assets in investment vehicles that hold stock in Gulf Keystone Petroleum (GKP) in an act of "divorce planning". The case has revealed much of the share structure of GKP, an AIM-listed firm that is sitting on a potentially great recent oil find, in Kurdistan.
Earlier this year, Mrs Kozel obtained an order from the Sarasota courts which froze that stock, stopping Mr Kozel and those vehicles from trading those shares. Around 11.6m shares in one vehicle, Gulf Keystone Petroleum LLC, will be transferred to a safety deposit box in Sarasota to ensure Florida maintains legal jurisdiction over aspects of the case relating to the company.
If the legal teams agree a divorce settlement, GKP will be left with one other case: US-based Excalibur Ventures says it is owed 30 per cent of GKP for introducing the firm to opportunities in Kurdistan, an allegation that Mr Kozel's company fiercely denies.
============================
Neither last Sunday’s story, not today’s is sourced but it does rather look as if Leftly has a channel of communication with TK’s legal team. If so, we have to take this seriously.
We should discount the ‘no comment’ from GKP. It just might be TK trying to trigger an auction, which is understandable if he has other plans separate from GKP, as Leftly suggests.
I wouldn’t get too excited yet – we can leave that to the MMs on Monday - but this story will be picked up by the newswires later today and other papers will be digging. It will all over the City very soon.
I don't think a RNS on Monday will be especially helpful or indeed necessary - unless the press are all over it by then. If so, the BoD might have to come clean and admit that there have been preliminary talks. Even that would be enough to get the ball rolling. I really do not believe someone like Leftly would be fantasising.
Re: EXXON- £8 BID: Leftly's Record
Fruit n Veg
7
The story implies that there has been no bid, referring only to the “…£8-a-share that Exxon is considering…”
Now since Exxon is hermetically tight-lipped and also that Leftly is much more likely to have a source related to GKP rather than to Exxon, I don’t expect he has ever spoken to Exxon. If he had any credibility with Exxon, no doubt they would have returned his calls on this occasion, which he says they have not. The only informed source, if any, therefore, must be GKP-related.
When these unsourced stories are run, the clue to their credibility is in the level of detail given. The paragraph of most interest in this respect is the one below:
“It is thought that the board would not accept the estimated £8-a-share that Exxon is considering and that a number of other companies, perhaps including CHINA'S SINOPEC and Californian giant CHEVRON, are monitoring the situation. There is even some speculation that an informal FOUR-WAY AUCTION for GKP might be under way, while it is also believed that the company has spoken to at least TWO SMALLER BUSINESSES about potentially developing its assets in a joint venture.” (My caps)
and further down:
“There are suggestions that Exxon's interest in GKP was discussed at a board meeting 10 days ago...”
There are two possibilities. Either Leftly has been on something (and I would like some of it) or he has been thoroughly briefed. I will go for the latter.
Various posters have recently derided the idea of a £8 offer for the some or all of our assets. The irony is that some on here tonight are talking in the past tense about the trials and tribulations we have all endured.
I think that suggests that they think it is all over and they will bite Exxon’s (or whoever’s) hand off for £8.
Talk in an information vacuum is cheap, but when an offer comes, greed and human nature take over. I personally hope £8 will be a base figure only for one asset only. It is, perhaps, where TK wishes to kick off the bidding (for Shaikan only???) – his reserve price, if you will.
Moreover, I cannot think that the savvy Exxon will overbid for anything in this almost unprecedentedly depressed market. They have the KRG’s ear for a start and I am sure they are an officially favoured bidder in any forthcoming auction. There is also no denying that the KRG owes Exxon an enormous debt of gratitude for the political bombshell which it has put under the ‘bureaucrats in Baghdad’.
If the KRG wants a partner with political as well as financial clout, then Exxon must be a walkover in the battle for GKP, whatever the price. I do realise that we have discussed the legal aspects of this topic at great length….!
========================
After much Bulletin Board spectulation, the Indepentent article also spectulates "Exxon Mobil is understood" "It is thought that the board would not accept the estimated £8-a share" "There is even some speculation that an informal four-way 4 way auction for GKP".
£8 per share may also be spectulation on the writers behalf, but the anti has ratcteted up from Bulletin board spectulation to International Newspaper speculation level.
US is leaving Iraq on the 31st.
The KRG has been pushing for the Oil Law by the end of the year, and no wonder.
It is now easy to see why.
The Contract for Largest new Oil Field found in the World for the last 20 years, was changed on the 1st August 2010, with the BIR's to be sorted by the 1st Jan 2012, by which time everyone thought an Oil Law would be in place.
Time has ticked by since August 2010, until typically the last minute, and still no Oil Law, so what better than going to News of International Importance.
1) The KRG give matters a push and annouce the Exxon has entered Kurdistan.
2) Malaki called to Washington, where no doubt he was told that the KRG had a deadline of the 1st January before they HAVE to ANNOUCE to the WORLD, the BIRS for Shaikan, so another push.
3) Malaki back from the US calls all parties together for a meeting.
4) Another push rightly or wrongly may well be the leak of a Bid for GKP.
No doubt other News sources will pick the Independent Article, though it remain speculation for now, but another push.
It is certainly getting interesting.
2 inches of snow need shifting, so its outside for me.
Mikey.
======================
MERGERS NEWS
UPDATE 1-Exxon mulls 7 bln stg approach for Gulf Keystone-paper
Sun, Dec 18 11:05 AM EST
LONDON, Dec 18 (Reuters) - U.S. oil major Exxon Mobil Corp is mulling a 7 billion pound ($10.9 billion) takeover of Kurdistan-focused explorer Gulf Keystone Petroleum , the Independent on Sunday reported.
The newspaper said that Exxon is considering making an estimated 800 pence per share bid for Britain's Gulf Keystone, which has made huge oil finds in the semi-autonomous Kurdistan region of Iraq.
"It's not our practice to comment on media reports, rumours or speculation," an Exxon spokesman told Reuters in an emailed statement.
Gulf Keystone also declined to comment.
Exxon has "sounded out" Gulf Keystone about the possible deal, said the report without citing its sources, adding that it is thought that the company would not accept an offer at the 800 pence per share level.
Shares in Gulf Keystone closed at 165.5 pence on Friday, valuing the firm at 1.4 billion pounds.
Exxon became the first major to move into the northern Kurdish region in mid-October when it signed with the Kurdistan Regional Government (KRG) for six exploration blocks, a move which has angered the Baghdad government.
Baghdad has said any oil deals signed with the KRG are illegal.
============
UPDATE 3-Gulf Keystone not talking to Exxon on $11 bln sale
Mon, 19th Dec 2011 17:09
By Tom Bergin
LONDON, Dec 19 (Reuters) - Explorer Gulf Keystone Petroleum said it was no
t in talks with U.S. oil major Exxon Mobil Corp about a 7 billion pounds ($11 billion) sale, scotching a newspaper report that sent the Kurdistan-focused group's shares 24 percent higher.
The Independent on Sunday newspaper reported Exxon was considering making an estimated 800 pence per share bid -- five times Gulf Keystone's closing share price on Friday.
But Gulf Keystone said in a statement on Monday it was 'not in discussions with regard to a sale of the company'.
Exxon declined to comment.
The Kurdistan Regional Government (KRG) said last month Exxon had signed contracts for six exploration blocks, the latest in a list of ever-larger corporations investing in the area.
The increased investment reflects signs the semi-autonomous Kurdish region of northern Iraq may be about to agree a deal with Baghdad on oil revenue sharing and licensing.
Gulf Keystone, which says it has found billions of barrels of oil at its Shaikan discovery, has frequently been the subject of takeover rumours and said in September it was seeking a buyer for its 20 percent interest in the Akri-Bijeel block to help finance ongoing development of other assets.
Industry sources said the company has mulled(To go over extensively in the mind; ponder.
) a possible sale of other parts, or all, of its interests in Kurdistan.
On Monday the company acknowledged the 'increasing interest' in the region but said it was committed to continuing its exploration and appraisal of its assets itself.
Dealers and analysts had earlier dismissed the prospect of an usually high bid from the notoriously financially disciplined Texas-based oil giant.
'We fear an element of yuletide wishful thinking may also be playing a part,' said Richard Savage, oil analyst at brokerage Mirabaud.
Acquirers rarely make offers at more than a 50 percent premium to a target's pre-bid share price.
Gulf Keystone shares opened 24 percent higher before falling back to close up 7.7 percent at 178.25 pence following the company's denial of talks.
One dealer said he was especially surprised by the report's claim that Gulf Keystone's board would not accept the estimated 800 pence per share bid and that chief executive Todd Kozel wanted a price tag over 10 billion pounds in total.
'I bet the shareholders would jump for anything over 250 pence a share,' the dealer said.
Exxon's Kurdistan deal prompted criticism from the Baghdad government, which has challenged the regional government's right to issue licences.
The deal would make Exxon the first company in the top tier of the industry to move into the Kurdish region, but Exxon has not confirmed it and declines all comment on the matter.
Industry sources said that many big western oil companies have been mulling an entry into Kurdistan, by either buying existing players in the region, many of whom are small independents, or by buying new licensing blocks.
(Additional reporting by Sarah Young; Editing by Jon Loades-Carter, Mike Nesbit and Mark Potter) Keywords: GULFKEYSTONE/EXXON
(tom.bergin@thomsonreuters.com)( +44 207 542 1029 Reuters Messaging: tom.bergin.thomsonreuters.com@reuters.net)
============
Gulf Keystone shares hit new highs on bid speculation
8:38 am by Jamie Ashcroft
Gulf Keystone Petroleum (LON:GKP) shares were trading at new highs this morning on speculation that US giant Exxon Mobil is lining up a bid.
A weekend report claimed the American oil firm had sounded out GKP over a £7 billion takeover, which would price the AIM-quoted stock at 800p a share.
It went on to say that GKP’s board would not accept such a deal and a number of other companies were monitoring the situation. The other potential suitors named by the Sunday Independent were Sinopec and Chevron.
At the time of writing, neither Gulf Keystone nor Exxon had commented.
In early trading, GKP shares gained as much as 53.5p, or 32 per cent, and were changing hands at 220p.
Last month it was reported that Exxon had signed contracts with the Kurdistan Regional Government for six blocks within the semi-autonomous region of Iraq.
While it was seen as a massive vote of confidence in the area, it was also seen as a potentially incendiary move which may provoke a political backlash from the Iraqi authorities in the south.
It comes at a delicate time as Baghdad and the KRG attempt to pass legislation that would support the award of these potentially lucrative oil and gas contracts in Kurdistan.
Of late, the region has become a magnet for mid-tier players such as Marathon, Hess (NYSE:HES) and Repsol (MCE:REP).
GKP was, however, one of the early entrants. Its exploration success in the past three years, principally the massive Shaikan oil discovery, has seen the firm grow into one of AIM’s largest companies.
Indeed, the firm’s corporate transformation is reflected by its plan, announced in September, to step up to London’s main market in the coming months.
=======================
Mon 13:59
It is like a bad game of Cluedo!
GKP.L
93
This whole episode has clearly become nonsensical!
• Mark Leftly claims his sources are “bang on” and credible, but obviously CANNOT NAME THEM. The SP rises 35% from 166p to around 225p.
• DJ Newswires then claims that “A GKP Executive” (whatever that is supposed to mean!) who declines to be NAMED, says the Rumour is “baseless”, and the SP then falls back about 20% to 180p... before stabilising at currently around 195p.
So, someone is LYING!
1. Is it Mark Leftly who is the Deputy Business Editor of a trusted British National Newspaper?
2. Is it DJ Newswires who are making up an unidentifiable source?
3. Is it the Un-named GKP Executive who speaks only to DJ Newswires under condition of anonymity?
4. ... Or did Professor Plum do it in the Study armed with a very long piece of Rope?
Whoever is responsible for this confusion is certainly causing havoc with some people’s FINANCIAL decision-making, and potentially profiting from their actions. It is therefore both UNETHICAL and ILLEGAL.... ..which is precisely why GKP SHOULD have issued an RNS to either CONFIRM or DENY the Rumour, at the first moment it was clear that the Rumour was attracting worldwide attention!
It is simply NOT ACCEPTABLE to use the old adage that it is 'not company policy to respond to press speculation', as a quick look through GKP’s history of RNS’s shows that they have responded no less than FOUR TIMES in the past, sometimes to much less specific rumours than that described by Mark Leftly.
This particular rumour has created huge volatility
and a 55% swing in the SP already today!
Furthermore, how can some supposedly trustworthy source make dishonest statements with apparent impunity? Where is the Regulator in all of this?
As shareholders, we surely have the right to a CLEAR and UNAMBIGUOUS statement by RNS from the Company.... NOW!
GLA, scaramouche
==================================
This is like that RKH moment
livic1971
I am watching the SP collpase, except its upside down.
Do not get tricked out just above 203p, they are short about 15 million shares last time I looked and they sold a lot just before to try and keep it under 200p and lost. There is very little on the sell side of the order book and it looks like it could collapse.
==============
Sell side running out of stock
Cash rich asset poor
2
I've waited a couple of years for this day and as we shoot up to 215p and we have 2.5 million on the bid vs 500k on the sell side and I have to step on a plane......
To make it worst its Easyjet - what do you expect all my money is in GKP!
=============
Due to Media reports over the weekend and, now, the market action or reaction, I believe that RNS is in its way to confirm talks but no offer yet
================
http://www.iii.co.uk/sites/all/themes/iii2010/iiicentre/discussions/emoticons/money.gif
3rd short running @ 219p
The Basher
I am now starting to worry about you 3D....
Unfortunately the City doesn't have safeguards to stop people ruining their lives....
This looks like a normal little breather in what will be a meteoric rise.
Take the loss and go away for a few days to rethink your strategy - you are going to wreck more than your Xmas if you go on like this....
08:40
SP rise announcement
Sh0rtie
What % rise in SP is required to trigger an RNS? Even if they ignore speculation and rumour they can't ignore a 30% rise with big volume can they?
Saudi's Prince Alwaleed buys stake in Twitter
Mon, Dec 19 02:07 AM EST
* Saudi billionaire Prince Alwaleed owns stakes in Citi, News Corp
* Twitter buy latest media venture
=========
reiterate suka47
TRINDERM
3
in a while the sp will drop to a lower level form now, the panic will be set in, the L2 shows a need for stock, the rise hasn't forced a sell, so a drop will force a sell, and you lose your tickets............. something like that.
if you held at lower levels i am sure you will manage to hold now
==============
08:42
Buy on rumour sell on news
BBanker
I am surprised that these shares have not moved higher but it has been a chance to increase my holding!! Any hint that the rumour is true will I believe put a minimum value on GKP of £8 and I would expect the share value to rise to around £5 if not more. At last there is some recognition of the true value of the oil in place and yet we are still not fully aware of the true extent of the amount in the ground. The company does not have to say anything today but it is my belief that an RNS will be issued either later today or at 7am tomorrow. NKeep the faith!
===============
08:50
Re: What could happen tomorrow
alan G4
4
Looks like i was right with my comments last night,
lots of shorts closed and many of those
that made losses on shorts now going long to re-coup,they will need to raise this far higher
to keep a market today as genuine sellers are few and far between.
-----------------------
After todays news regarding Exxon and the likely offer at many multiples of current SP
here is my take on how tomorrow and the week ahead could pan out ( and this is from
21 years of trading experience ) .
Firstly and most significantly very early on tomorrow there will be a number of "SHORT
POSITIONS CLOSED" as anyone who has a significant short position in GKP is very
likely to incurr life changing losses if they keep it open for much longer. This means
there will be several brokers tomorrow morning handling an influx of "short shares"
and from experience the major brokers and mm,s work together to keep at least a
level starting position from which to make the forward market...they can do this by
reducing the market size of shares available on the open market whilst keeping
the spread tight and level to absorb these shares "in the background" to then sell
on at a far higher price when the mm,s let the price go....or they could let the price
go early and then conduct what appears like a treeshake to let their broker chums
get a piece of the action and use the "delayed publication" trick to feed these shares
back in whilst the market is in frenzy and no one notices or cares.
There is no doubt going to be heavy demand tomorrow for these shares and i would
expect many investors will be laying limit orders ready for market open at far higher
than fridays closing price to ensure they can get at least some stock before it motors
ahead too far. What will compound a dramatic increase in shareprice will be the fact
that existing holders will be gleefully hanging on to stock they already hold and adding
to the dilemma for the mm,s of not having enough free float entering the market ( hence
my previous statement of how important any "short shares" are that brokers take ).
We are going to see impressive sustained gains here for sure !
Funny old game this ,and there was i expecting a very ordinary xmas where instead it
will be one of the most exciting ones with my early held 8300 gkp shares bought at
an average of 31.6p about to multiply way beyond my expectations...and my other little
gem and mini gkp Silvermere energy ( SLME ) about to start producing in gulf of mexico
with only 20M shares in issue !
Im sure there will be many happy returns for GKP holders this Xmas....cheers to everyone!
===============
HOLD, HOLD, HOLD or buy more.
suka47
I ask the unexperienced investor again to HOLD. I have been investing for over 40 yrs and have been in this situation many times before. The sp will almost certainly drop, your shares are wanted. After the drop the sp will probably rise, not just this afternoon but also over the next few days. Just be patient and reap the rewards.
This could be similar to when RKH struck oil, over several days the sp surged to even greater highs, then did a sizeable retrace. I know some investors that lost their nerve and took profi. They then saw the price continue to fly ahead, and they couldn't get back in. I'm not selling anything, this has much more legs yet.
===================
09:02
LAST CHANCE
alltold9
1
At the current level, the lemmings will sell into the hands of the mm's only to dee a massive rise in the next hour. Watch and see.
==============
I dont see why the MM's would help shorters close out positions, MM's are in it for the money and they dont help longs, so why help out shorters ? Is this another urban myth to join the MM codes on the order book
=================
09:45
Buy Re: GKP Silence
prostand
16
...suggest to me that something's definitely brewing re a bid, and that despite the usual MM shenanigans with the SP, the Indy's report contained more than a grain of truth.
=============================================
I am confident there are discussions going on, if there wern't then a denial RNS would have been issued immediately this morning.
The fact there is no RNS yet means there are discussions that are ongoing and they can't announce anything until the preliminary discussions are over and they agree on what to announce.
Secondly EXON will need to be very careful WHAT they announce due to the political situation with the Iraq central government.
Its all looking VERY HEALTHY IMO and even if it doesn't happen this side of xmas it ahows what WILL happen when it is announced and I'm happy to hold and add more and hopefully get a price well in excess of £8
Anything under £2 is a giveaway and it is NOT a time to trade and short GKP
GLA
================
Morning M, another Q please. I had a limit order set to sell a portion of my GKP. Totally forgot I had this done this tbh, but there we are. Had it set to £2.20 to sell a small number (protect profits n all), but it never got triggered. I trade with Sharecentre (mostly). I believe the SP reached £2.25 high?, so called SC only to be told that yes it did reach that price, but only in Auction. And that price is only available to MM's.
Is that right? bah humbug!!!!!!!!! very helpful. At least I know a bit about not being able to sell within an Auction time period
Its all at best endevours by your broker in a queue system.
No guarantee
O trades can be executed during an Auction
Automatic trades cannot be.
You set your Limit sell too high, and your broker executes on a 1st come 1st served basis at best endevours.
I have an account with the SC and I must say that I find them generally very good but a few times I have had a sp reach my sell limit out of auction but only for a few seconds or so and it hasn't been triggered. such is life!
202.25 resistance breached
stopthismadness
31
Normally, it is best to wait for the close before declaring if a resistance is breached.
However, if you consider the amount of volume traded above and below it today it is conclusive that enough volume has been traded above the resistance to provide consolidation which indicates that 202 has been broken
Even if it doesn't close above 202.25, the massive volume traded above it means that the risk vs reward would be massively in favour of upside at a ratio of 1 to 5 making downside of 173 and upside of 294
The downside risk is just a gap play
===================
I am a holder since Exxon (unofficially) entered Kurdistan. There seems to be some big expectations re the T/O price. I havent seen any takeover where the price has been anything over a 100% increase on the pre-takeover SP. How then are we going to reach the 4-5 bagger plus of todays SP. I just dont get it.....I don't believe the same rules apply to exploration companies as a whole, and this one particularly, because of the massive finds.
------------------------------------------------------------------
But how is that not factored into the SP already (apart from the obvious political games over O+GL and Baghdad)?
The question you should be asking is why have we remained so undervalued and suppressed for so long?LARGEST ON-SHORE oil fiields in the last 30years spring to mind...Because the market has overplayed political risk and underplayed the resources.
The market gets it WRONG and they have on this occasion...
================
I think this rumour has been released/started to counter the expected uncertainty of the USA withdrawal of all troops at the weekend. As GKP and all the other oil companies are now at the mercy of the Iraqui govt and the KRG ( to a lesser extent ). The strategy seems to have worked!
===================
10:28
If you were a Super Major CEO
livic1971
29
The majors have merged so much these days that they are all several hundred billion $s each in market cap. Most of them have profits of around $50 billion per year.
Its got to the point where they can't eat each other as the competition authorities will come down on them. They need to buy large amounts of reserves just to stand still and big fields are harder to find these days. Shaikan is fairly unique in that its huge and its not owned by an existing major oil company. If you are the CEO do you want to micromanage 100s of small oil fields, many of which might now be deep offshore to maintain your reserves with significant extraction costs and risk. Everyone saw what happened to Tony Hayward when Deepwater Horizon blew up, he had barely heard of it yet it still cost him his job.
If you are a major you can buy ~10% of your reserves on land with very low extraction costs that will last 20 years just by buying GKP and it might only cost you 2 months of profit.
What would you do?
The market has focused far too much on whether GKP can develop this, the odds of GKP having to are exceedingly low.
==================
What we are seeing at the moment is the mm,s BALANCING before the real
breakout,just had a look over at data explorers and noticed as i predicted the "short money"
has fallen off a cliff and dried up.Those nursing big "short losses" will now be piling in and
taking "long positions" to recoup losses.This is only going one way and i think the BoD will
milk this situation to its maximum.
==============
Dow Jones article.
Hi,
I say I stand by the story and my sources are rock solid.
Kind regards,
Mark
Mark Leftly
Deputy business editor
The Independent on Sunday
Company appears unwilling to respond to The Independent piece.
Crucially, they are not denying it.
Why not?
If it was untrue, there would be NOTHING and NOBODY to prevent them denying it.
But because there is truth in the story, there is very definitely something that might prevent them commenting on it:
KRG
Exxon
US State Dept
A gagging order is in place, IMHO.
=====================
Psyclops
Discretion is the better part of valour...
If there is in fact truth to the article published yesterday then any response GKP provide would require them to also announce that they are in offer discussions which would make them subject to the Takeover and Mergers Panel which most companies don't want to get involved with until much later in the process as it is expensive and onerous to maintain.
If they are in preliminary talks then the easiest course is to neither confirm nor deny until such a point as is mutually beneficial to both.
============
GKP/EXXON!
OLADAPO OGUN
4
Anyone following the GKP story in full should be able to understand why exxon can't really comment, the simple answer is that they do not want to annoy the ICG further, they definitely somehow contacted gkp, with a t/o offer which probably was slated to be made public after the o&g law is passed, but alas like everything going on in kstan just like exxy's entry into k/stan, someone leaked hence this PR fiasco!
Make no mistake, leftly is not publishing fallacies, he is reporting according to him on solid facts! Exxon, once the o&g is passed would reveal its true colours and somehow I get the feeling that its not only GKP+THEIR 6 blocks that they are interested in, it most likely is more than that, vast, shamarran and the others are bound to face similar scenarios for their blocks!
Folks, this is real, wake up! Our usually bold BOD can't even come out with a straight forward denial RNS they are denying via an anonymous source on DJ, something is happening here and the main issue here is Exxon not wanting to further infuriate the icg!
===========
DECEMBER 19, 2011, 9:05 AM ET
Analysts Weigh Exxon’s Rumored Kurdistan Oil Play
By Alexis Flynn
Getty Images
A bid by ExxonMobil for Kurdistan-focused explorer Gulf Keystone “wouldn’t be out of kilter(( kil·ter (kĭl'tər)
n.
Good condition; proper form: "policy 'adjustments' designed to bring the . . . country's economy back into kilter with the Western economic system" (Edward Zuckerman).
)) at all,” says VSA Capital analyst Malcolm Graham-Wood, who points out the 800 pence a share offer price first referenced in an Independent on Sunday story would be at the top end of most valuations.
A GKP executive on Monday said reports of the Exxon bid approach are unfounded. Exxon declined to comment.
GKP’s biggest treasure is a significant oil discovery in the Shaikan oil field. Exxon last month signed an exploration deal with the Kurdistan Regional Government, in the semi-autonomous region in the north of Iraq. Exxon was the first of the major energy companies to reach such a deal.
Graham-Wood says if Exxon is moving on GKP, it could be a tactic to execute a deal quickly: “When you fire the starting pistol, there will be competition. Go high early and you lock the opposition out early too.” VSA Capital rates Gulf Keystone at buy with a 500p target. In London, Gulf Keystone shares are up 20% at 198p. Shares of Exxon are a touch higher in pre-market trading in the U.S.
–Hassan Hafidh contributed to this post.
=========================
Re: Independent iraq in turmoil
investor48
10
Hi All,
Not seen this Chronic guy for ages!!!Iraq in turmoil,serves Maliki right as the Sunnis realised that the Shias are control freaks as well!!
Now given all these challenges in Iraq proper,if i am the CEO of ExxonMobil,or Total,Kurdistan is the place i want to be!
Patience and be steadfast.Watch the volumes,a few new substantial shareholder may well emerge through a few nominees or below 3percent!!Anything is possible with GKP,it is certainly not short of admirers!
Best wishes to all
======================
Tue 00:00
Buy Re: Looking in the wrong place
Ray Zondetra
23
I rarely post on the GKP BB, but as a board director of a leading London PR agency (and owning a decent stake in GKP), this story is just so easy to read:
1. This story came from GKP IMO. Look at the detail in the story and examine the recent significant behavioural change including rushing out an RNS on a drill where they are not even the operator.
2. Classic end of story line in the Indie on Sunday - GKP "declined to comment". How many times have I needed to get a story out but insisted on this end line! Usually a condition of any leak!
3. Look at the GKP statement as stated by Hub. Having written numerous holding statements in my time for various clients for national newspapers, it's all about the EXACT wording. Ignore the eegits who claim this is a comprehensive denial, they're talking total rubbish. They have left so many options open of what could be happening you could drive a horse and cart through. When you issue a denial statement you always need to leave a way out if needed... staying two steps ahead.
4. The "baseless" claim given to the Dow news wire is a classic back covering exercise from an unnamed source at GKP. Always good to to demonstrate to your partners that you're working with them and not solely for your own interests. No wonder they remained nameless...
5. I am not surprised the RNS arrived late in the day. With clearance and approval time, including commentary from a potential army of lawyers and PR's in both Iraq and the US. The benefit of the RNS arriving late suited GKP, as newswires across the world, including - crucially - the US picked up the story BEFORE the late RNS. A 7am RNS would have prevented global pick up of the story.
6. Mark Leftly - used to cover the media patch on the IoS. Not had many dealings with him but he is well respected in the industry and a good journo.
Far more confident after today's fun and games!
GLA
===================
Mon 23:33
TL1
ro499
If you are long term in xel and rkh and only fleetingly know of gkp then why the hell are you here and have been here all day spouting your self righteous shi.te like some uber investor? the people invested in this stock have their OWN reasons for being here and many have invested countless hours in researching and living with the ups and downs that comes with such a politically charged, manipulated and valuable asset. They have every reason to talk, argue and dissect every little element that is gkp should they wish to or feel the need to. I don't see how you get off popping up here other than to stroke your ego or just have the chance to take a pop at some people that may have had a tough day. Is it because we aren't all in love with xel and rkh, or perhaps wish to stick with gkp before making a move to other prospects!? Seriously mate you need to look at your posts and honestly ask yourself why you are doing it...and don't tell me it is because you care! I never used to throw people in the ignore bin, but over the last few weeks I really understand it's value.
=====================
NOTE the RNS
MikeyAdmin
5
Shaikan-6, the last appraisal well to be drilled as part of the Shaikan appraisal programme, will target prospective intervals in the Jurassic and Triassic
Shaikan-6 will be followed by the Shaikan-7 exploration well in 2012, which will target potential untapped resources in the lower Triassic and the Permian, the Company's deepest undrilled horizon to date
SH-6 is an Appraisal Well, and SH-7 is an Exploration Well, with Casing designed and Rig to Explore the Lower Triassic and Permian
Possibly we may get a more powerful Rig and or Mud Pumps, with the power enabling a Drill into the Lower Triassic and beyond.
==============
imitch,
how is supply short when 48m shares were traded yesterday and already 4.5m today?
someone is selling - that is a fact as we don't have that kind of volume normally.
Looks like a pump and dump for an institution offload.....so the supply is currently there, no problem.
HWD
================
OPEC Agrees to Higher Oil Target to Accommodate Libya, Iraq
20-12-2011 08:27
OPEC decided to increase its production ceiling to 30 million barrels a day, the first change in three years, moving the group’s target nearer to current output as it grapples with rising exports from post-war Libya.
The new quota is for all members of the Organization of Petroleum Exporting Countries, including Iraq and Libya, and compares with actual November production from those 12 nations of 30.37 million barrels a day, according to OPEC estimates. The target will be reviewed at its next meeting on June 14 and replaces a previous target for 11 OPEC nations, excluding Iraq, of 24.845 million.
OPEC is raising its quota to more closely match current production while at the same time gauging the possibility of a slowing global economy and rising Libyan supply. Its last meeting in June broke up without consensus when six members including Iran and Venezuela opposed a formal push to pump more oil. Saudi Arabia and other Gulf nations went ahead anyway and increased supply to make up for halted Libyan exports.
==================
12:26
Takeover Candidate at 4x price
bonobo77
http://www.gurufocus.com/news/156217/are-you-interested-in-a-takeover-candidate-that-might-get-bought-at-4x-the-current-share-price
Are You Interested In A Takeover Candidate That Might Get Bought At 4x The Current Share Price?
Dec. 19, 2011
'In this case a buyout from a major seems like an obvious result, and the Exxon story likely has some substance.
The Shaikan field is a mega discovery, which is rare in the world of oil exploration today. Especially rare are discoveries that are on land (not in the arctic, not in the deepwater) and thus have low production costs.
Discovery costs are $0.25 per barrel. Lifting costs are $3 per barrel. Do you think Exxon could pay $10 per barrel and still make some money with global oil prices over $100 per barrel?'
====================
06-08-11
The BIG BANG theory
GKP.L
65
All...
there have been many posts of late re BoD silence...
is it good/is it bad etc?
FWIW...I have spent many hours putting myself in Todd's shoes...as it were
and trying to fathom the deals that he and advisors will currently be structuring...
or may have structured
Now you are not going to like this...and I apologise...
because I am going to say that,although I am pretty sure that I have worked it out...
and I would love to tell you my thoughts...
these BBs are being inevitably read by highly 'interested' parties
and for me to spill the beans re likely dealplay
will surely take advantage AWAY from GKP and hand it to the other parties involved...
IE to do so will cost me (and others here) money...so not a great idea, you would agree
However...if my theories had led me to the view that TK et al would sell out for the sort of figures talked about on the BBs...I would have merely maintained my holding here...
to the contrary...the holdings have further increased of late
Some BB posters have suggested that a lowball bid of £x will be ACCEPTED by them
IMO...this is nonsense...
it might be ACCETABLE to them
but they will never get a chance to accept such bid...
as the BoD will simply not put it to the shareholders...
and ...were a potential acquiror ...or acquirors...to go 'hostile'
( which I consider most unlikely)
they would be faced with both GKP's advisors seeking alternative bids ...
IE running a several month value maximisation programme...
and ALSO the KRG ...
as it is, in part, in the gift of the KRG as to WHO is to acquire GKP or any part thereof
I can tell you that my theory involves GKP being far ahead in the sales process..
and VERY far ahead of much of the BB chat
the theory also involves GKP greatly expanding its operatorship...
the KRG being enormously keen to see production climb
oh...and some people were commenting re the wording of most recent RNS....re 'not production yet'...and taking those words as negative
IMO nothing can be further from the truth...
one needs to read a sample PSC to see why that is so
Sorry to be a bit obtuse...
but there are a couple of people on here (with whom I am in touch privately) who share my views ...
Regards
GRH1+
================
Vallares’ Kurdish Excursion « Back
Matt Aktins, January 2012
When Tony Hayward, former chief executive of BP, exited the company under a toxic cloud in October 2010, his career seemed in tatters, tainted by the disaster in the Gulf of Mexico. But, just a year after his exit,
Hayward has returned to the oil game along with financier Nat Rothschild and other partners, via their Vallares investment vehicle. In merging with Turkish-owned Genel Enerji, Vallares has picked up a successful exploration and production operation focused on Kurdistan, Iraq’s semi-autonomous northern province. However, investors are questioning the venture’s new partners and the sensitive political situation of the target region. Could Mr Hayward’s ambitions see him burned once again?
The deal
Established in June 2011, the Vallares investment vehicle sought funds of £1bn, with the intent of purchasing oil resources in an unspecified emerging market. Through the venture, Mr Rothschild aimed to equal the success of his Vallar vehicle, which had purchased Indonesian coal assets for £707m.
When Vallares floated, it exceeded expectations, attracting £1.35bn. Roughly half of its investors came from the UK, and the other half from the US. According to Mr Rothschild, US investors were extremely enthusiastic, despite the bad press Mr Hayward attracted in 2010.
In September, Vallares announced it had merged with Genel through an all-share reverse-takeover in which Vallares acquired 100 percent of the company,
issuing $2.1bn worth of shares at £10 per share. The deal gave Vallares and Genel’s current owners an equal stake in the combined business. The deal saw Mr Hayward return to CEO status, taking the helm at the new company, with Rodney Chases – an ex-BP man, and once Mr Hayward’s deputy CEO – as chairman. As a listed cash shell, Vallares’ purchase brought the Turkish company onto the London Stock Exchange (LSE) as Genel Energy plc. However, on its debut, shares slumped by 8.3 percent – the result of concerns surrounding the deal.
On the surface, the deal seemed bullet-proof. Kurdistan is one of the last frontiers in oil drilling, and US Geological Survey estimates suggest the
presence of 40 billion barrels of oil and 60 trillion cubic feet of gas. “The Kurdistan region of Iraq is undoubtedly one of the last great oil and gas frontiers,” Mr Hayward told a press conference. “Arguably, it is the last big onshore ‘easy’ oil province available for exploration by private companies anywhere in the world.”
Understandably, after a decade of conflict, Iraq does not have the best reputation for security, but Kurdistan is felt to be one of the calmer regions of the country, and the Kurdistan Regional Government (KRG) has worked hard to attract business and promote oil development.
Vallares picked up Genel for a relatively modest price. The company is currently producing about 40,000 barrels of oil a day in Kurdistan.
Its exploration portfolio comprises interests in six licences and runs from Peshkabir in the north of the region to Chia Surkh in the extreme south. Its biggest producing asset is the Taq Taq oil field. “I believe Vallares is acquiring access to a world-class resource at a competitive entry cost at a time when Iraq’s politics are becoming more stable,” said Mr Hayward. “The prospects for the Kurdistan Region of Iraq and its oil sector have never been brighter.” Mr Hayward’s optimism is not shared by all, however.
Controversy
Anxiety over corporate governance at the target company, and questions surrounding the conduct of its executives, are among the factors which threaten to outweigh the benefits of the deal that Mr Hayward has fiercely fought to highlight.
The storm has centred around two prominent characters at the centre of the deal.
The Cukurova group, one of Turkey’s largest conglomerates, and the previous owner of Genel, is chaired by businessman Mehmet Emin Karamehmet, who has nominated his daughter as non-executive director of the new company. Mr Karamehmet, however, is currently appealing against an 11-year prison term, much to the consternation of Vallares’ investors.
Mr Karamehmet received the sentence in 2010 over the misuse of loans when he owned Pamukbank, before it was nationalised in 2002. Though the ruling was overturned in June 2011, a retrial has been ordered by the court’s general council and Mr Karamehmet is barred from travelling. If the prosecution is successful, he faces up to 12 years in prison. The court case is not the only black cloud over his name.
Mr Karamehmet was forced to step down as chairman of Turkcell amid last year’s legal proceedings, and is currently embroiled in legal struggles with his former partners in the company. He was also accused in US diplomatic cables appearing on Wikileaks of issuing death threats to a former business partner.
In addition to the doubts surrounding Mr Karamehmet, the Genel deal has been criticised for providing the company’s owners with a fast track route onto the LSE. Genel has tried once before to list,
though the plan was scuppered when a number of company executives were fined by the Financial Services Authority (FSA) for insider trading.
The FSA fined chief executive Mehmet Sepil £967,005 for dealing in the shares of UK listed Heritage Oil Plc on the basis of inside information. At the time it was the largest fine issued by the FSA against an individual for market abuse. Genel’s chief commercial officer Murat Ozgul and its exploration manager Levent Akca were also fined £105,240 and £94,062 respectively. The fines included the disgorgement(=To surrender (stolen goods or money, for example) unwillingly.
) of the £267,000 made by Mr Sepil in the transaction, and the £10,062 made by Mr Ozgul and Mr Akca.
In its investigation, the FSA recognised that the executives did not set out to commit market abuse, and all three cooperated with the agency and settled at an early stage. As a result, they received a 30 percent discount on their fines. This has not allayed investor concern however, and the affair still weighs heavily on the minds of Vallares’ investors.
-
Mr Hayward, then, had some ground to smooth over. “If you refer to the FSA’s description of what occurred, it was a genuine mistake,” he told the news agency Reuters, in defence of his company’s president.
“He didn’t recognise he was infringing the rules. We have done extensive due diligence and we are very satisfied this is a fit and proper company.” It is unfortunate that the deal came at a time when the FTSE Group announced it is to consider tightening entry requirements for the UK.
=====================
Author GRH1 View Profile Add to favourites Ignore
Date posted today 15:28
Subject was 'unmeasure-able' an understatement?
Votes for this Posting Voted 156 times.
Message
All
Longer term holders may recall a fairly impromptu ...but very senior level ...ceremony at the SH1 well site...
it was upon the first discovery of oil
and it has been all but lost in the sea of noise that sometimes dominates this board
That is a pity...
as, at that ceremony... it was suggested that the oil was 'unmeasure-able'...
perhaps some newer holders might even be unaware of that statement
I hope to show you WHAT 'unmeasurable' actually looks like
--------------------------------------------------------------------------------
My apologies for the slightly lengthy post...
especially as I said that I would post no more ...on Wifely orders pre Christmas
But...I have permission for JUST this final one ...
For those who are not interested in the 'PRE-AMBLE'...
and who could blame you?
may I suggest that you skip straight to the 'MEAT' section
I have thought long and hard about putting a pre-amble in here at all...
but... were I to merely put out the second part of this post,
there would be more questions than there might be with this longer version...
The following represents my personal opinion only...
so here goes
PRE -AMBLE
In all of the post below, I bow to the MUCH greater knowledge of several posters here...
some of whom have held very senior and successful positions within the oil industry...
I recognise that,as a non scientist and as a mere businessman and investor,
what I know about this industry can be written on the head of a pin or two
but I speak as I find etc....
As some here will know, I have been investing in oil shares since very late in 2008...
and in volume since 2009...
and, like many here, I have had my winners and a few losers...
I hold GKP...
somewhat later in this post you are going to see WHY
Now....leaving aside GKP as a rather special case ...
I regard the E&P sector per se as a very tough place for investors to make real money...
(yes, of course GKP is tough also...but for rather different reasons)
and IMO that is greatly due to the 'success' rates on drilling wildcats on seismic alone...
My research indicates that about 1 in 12 wildcats become commercial successes...
some people like to quote 1 in 5 or so...
but I do not believe that to be correct
as it appears to reflect the re-categorisation of poor drilling results
This poor rate of success leads DIRECTLY to many companies in this sector issuing a seemingly endless number of new shares...
thus diluting the existing equity holders....often at lower and lower prices...
we have all seen many instances of that effect...
to my simple mind...dilution appears as a drug within this sector
a couple of years ago, I coined the phrase....'issuing shares like confetti'((Small pieces or streamers of colored paper that are scattered around during the course of festive occasions))
the phenomenon was more recently described to me by a very senior Nomad... as the 'waterfall' effect
When I came into this sector, I did much research...
and soon developed a view that there must be better ways of finding hydrocarbons...than seismic ALONE
Please understand that I am not knocking seismic...I am a great fan of it...but used for the correct purpose
I postulated a theory to another poster that the US had probably developed ...or at least used...
oil mapping from aircraft...
Through countless meetings and contacts, I eventually met with long term and very senior oil exploration people
(one such was a GM in BP's International & Frontiers E&P Division and country Vice Pesident Exploration of various BP operations)
who had,many years before, developed ...jointly with a group of Russian scientists ...just the technology I was postulating...
albeit utilising satellite rather than aircraft-gathered images
(vast numbers of such images need to be interrogated for the all important evidence of live hydrocarbons to emerge...
such evaluation is a truly mammoth task)
The technology works by examining physical changes at surface level...
changes in the manner in which vegetation performs when subjected to the constant barrage of chemical 'soup' emanating from the upward migration of hydrocarbons
(MICRO seepage...NOT please to be confused with seeps that are visible to the naked eye)...
and the effects upon the cementation of rocks where no such vegetation exists
(I am told by a senior geologist that such phenomenon is well recognised within the minerals mining sector)
They had achieved startling techical success
and, whilst they had achieved wealth for themselves...
that degree of wealth IMO did not correctly reflect the sheer immensity of what they have
I put that down to two main factors...
Resistance from the extant E&P community ...the closed shop approach...
ie resistance to change,bearing in mind that seismic was around at the time when many senior oil executives were learning their trade...
(imagine the initial conversation were seimic to be invented today...'shall we bang the ground and see what we can infer')
and a business model that revolved around a pure 'service ' approach
So...a colleague and I ...he is well known over at the other place....
having considered MANY business models,entered into an International alliance with them...
whereby we would change the business approach...and the nature and scale of the revenue stream
For almost a year (it is not a fast process for reasons I have partly outlined above)
we have been signing up E&P companies to our model...(I dislike the term ' E&P' as, surely, what is of great interest to investors is 'D' for Discovery)
which essentially reduces the up-front costs for the client companies and we believe greatly improves their chances of drilling success...
whilst enabling us to enjoy financial success ...via participatory rights...in various exploration activities
As far as I am concerned, it represents the creation of a 'virtual' oil company
We never ...or at least very rarely... suggest that drilling take place without relevant seismic...
but the key word is 'relevant'
ie it is surely sensible to throw better quality seismic...over much reduced areas of GREAT interest...
rather that using it as a primary oil finding technique
Of course...many here know that seismic cannot positively identify the PRESENCE of hydrocarbons....per se...
but rather the types and forms of the sub surface structures that MIGHT contain hydrocarbons
I consider that such point goes to the heart of the CoS issue
The satellite-enabled technology I describe provides a totally DIRECT indication of hydrocarbons...
thus very different to traditional techniques
The marketing has taken much time...and continues...
and it is early days and these drills also take time...
not least of which is time expended in the licencing arrangements...
but we are hoping to see some 'live firing' drilling in 2012 on several locations...
'live firing' meaning that... in the success case... we make money out of each such success via the business model (not as investors)
It has been entirely up to the client or partner companies to decide if they wish to actually go public
with the fact that they have signed satellite contracts...
and my view overall is that they might be advised to keep quiet about it for OBVIOUS commercial reasons...
one Company though has made such information public...
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Obviously ...in addition to our BUSINESS activities as noted above
we have also been using such technology to better inform our own INVESTMENT decisions
yes...HOW I wish that I had met these guys back in 2008
and I have personally witnessed quite startling successes...
to the extent that,whilst the Company and its scientists will claim a somewhat lower CoS ...
I can tell you that , in respect of the most recent 25 predictions/analyses, over 85% have been correct
it has been a good run
Of course,,,we have audit trails of things such as
telling quoted companies in advance that their drill would be a duster
(among others...a high profile drill in Kurdistan ignored our data...hugely to the cost of the shareholders in that company)...
and analysing an un-related duster that cost me (it was before I met the satellite guys!) a large amount of money
as recently as the Mayfair Hotel presentation by GKP I showed a satellite oil map of Shaikan to a person from GKP..
and I told him that, in our opinion, SH4 would be EXTREMELY good...
he emailed me some while later ...AFTER the first RNS about the preliminary results from that drill....
to ask me HOW I had been so confident as to give him an ADVANCE prediction re SH4 that was SO accurate....
--------------------------------------------------------------------------------
MEAT
OK...so what...you ask?
Well, we have persuaded the scientists to allow us to post in public...for the first time...
satellite OIL images of Shaikan and part of Ber Bahr....
I am also posting a purely topographical MAP of three of the blocks...
obtained from a space shuttle programme
but with the block boundaries super-imposed for your ease of reference
Please understand that the OIL images are NOT in any way to be compared with the interpretation maps you see in various presentations...
IE they are not the product of a chap with a pencil or two
but massively important 'live' images...
There need to be a few conditions please ...but only a few...
As to Ber Bahr... it will be 'only' the south eastern block on the BB licenced acreage...showing the drill location for BB1
in the view of the scientists,that BB drill appears to be located sub optimally
(it is not dissimilar perhaps in relative placement to SH1 really within the Shaikan structure ...and look what happened there)
BUT...the scientists told me that they feel that BB1 should contain oil reservoirs...
although the technology cannot predict porosity/permeability depths of the accumulations...
and frankly ...if BB1 comes good ...
then one needs to look carefully at the rest of that southern structural map to see the upside there ...
it appears QUITE GOOD
and that EXCLUDES all the rest of the BB acreage and structures...
please bear in mind that for obvious reasons of commerciality,
I AM ONLY POSTING VERY LOW GRADE/SMALL SCALE/HIGH LEVEL IMAGES...
as the very detailed stuff still has great commercial value to me and my colleagues
but I can tell you that black is thought to be 'good'...
and we do see rather a lot of deep black here
I must also say that I am not able to answer questions ...
partly as I simply do not have time to engage in MUCH debate...
and partly for reasons of commercial sensitivity...I hope that you will understand
It is possible that my colleague in this venture will be prepared to talk with people...within commercial confines/on a limited basis...
probably over at the other place
However...I do very much hope that some here might appreciate the images..
and the work that has gone into them...it has been considerable
I am 'full' on GKP stock...
now you know why...
and, hence, I now have no issue with letting others here...who might be interested...
see ...at least low resolution versions of... what sits on my office wall...
I post these without charge...
in the hope that they might help put some of the thousands of excellent posts into a clear visual context...
AND/OR OF COURSE WITHOUT WARRANTY, IMPLIED OR OTHERWISE ...
in choosing to view such images, you automatically accept such conditions...
if you are not prepared to accept such conditions ...please do NOT view the images
How much oil do we own?
of course, I do not KNOW the answer
but I can tell you that the GKP images that I possess are, in their scale AND intensity,
quite unlike others I have relating to several other oilfields of other companies
So...let's just say that, purely personally, I regard BBBS's numbers as being rather conservative...
sorry BBBS...I hope you don't mind
Here are the images
Ber Bahr...
http://db.tt/nrmRjZ5D
GKP ...three blocks
http://db.tt/eWQgeDlQ
Shaikan Image...
http://db.tt/HCjVh1c2
PLEASE do your own research , use your own judgement
and ignore as much 'noise' as possible...
Good luck as ever to all holders
I really am now signing off for Christmas
Regards
GRH1
================
Tue 23:57
A little more tinder for the fire....
Cash rich asset poor
19
From a decent poster on ADVFN. Note point 2 and its something I have observed over the last week on L2 and I'm sure Mikey and co will endorse. Nothing concrete but then everything at the moment is based on conjecture, but once you reach a certain level you tend to hit critical mass and that suggests something is afoot.
zooshare - 20 Dec'11 - 23:41 - 141734 of 141737
I doubt very much that the sp action today can be attributed wholly to the space images. They may have excited PIs who visit these boards, but the actions can also be related to:
1. a follow on from yesterday's re to smoke without fire and increasing belief that this story is NOT baseless
2. was informed by a colleague on the trading floor in the city that the MMs operated today in much reduced and noticeable "hand off approach", ie they have not pinned down or intervened too much. perhaps this is a signal that the story is credible and sp should move on
3. shorts also believe now in the story and have started covering
whatever, may it continue...gla
========================
Gang, suspected with recent oil pipes explosions in Basra, detained
12/24/2011 10:59 AM
BASRA / Aswat al-Iraq: Iraq's Southern Oil Company's police in Basra city, has arrested 6 members of a gang, suspected with having been behind
explosions that blew off oil pipes south of the city over the past few weeks, its Police Director told a news conference on Friday.
"We have arrested a 6-member gang in Raha area, 10 km to the south of Safwan township in Basra Province, suspected with having been behind
the explosions that took place in Basra's oil pipelines three times over the past 3 months, including one about 2 weeks ago,: Mousa Abdul-Samad
said.
He added that the suspected men had an artillery mortar, middle-size rifles, light weapons, explosive charges, hand-grenades, rockets and other
weapons and ammunition in their possession during their arrest.
The Police officer said that the detention of the said men took place after a broad inspection campaign in agricultural fields in Burjisiya area, 40
km to the west of Basra and southern Rumeila, over the past 14 days, adding that "the weaponry that was found with the suspects could have
been used in the said explosions."
===================
http://cdn.theguardian.tv/brightcove/2011/12/15/111215IraqNew-4x3.mp4
Series: British PathéPrevious | Next | Index
The oilfields of Basra - British Pathé videoBritish Pathé archive footage shows downtown Basra and the surrounding oilfields from 1952. A British-Iraqi delegation comes to inspect the fields and open the Basra Petroleum Company's newly constructed oil pipelines. Officials then attend a celebratory lunch and footage on the modern drilling process is captured. Officials then attend a celebratory lunch
http://gu.com/p/345y6
Aborted attempt to blow up an oil pipeline in central Basra
Author: MB Editor: CC Wednesday, 21 k 1 2011 09:09 GMT
A pipeline in Basra
Alsumaria News / Basra
BASRA / Aswat al-Iraq: Basra police commander disclosed that a bomb implanted beneath an oipipeline was foiled, and 16 persons were arrested, including one charged with terrorism.
Faisal al-Ibadi told Aswat al-Iraq that the pipeline belongs to south refineries of Al-Muftiyah, mid of Basra city.
Announced the leadership of the police forces in Basra, Wednesday, thwarted attempt to blow up the tube carrier of petroleum products downtown improvised explosive device.
The commander of police forces in the province Faysal Al-Kazem Abadi, in an interview for "Alsumaria News", "detachments of police foiled an attempt to blow up the tube carrier of petroleum products in the Republic near the city center of Basra, after a booby trapped by unidentified explosive device," noting that "The process is based on accurate intelligence."
He Abadi, that "police forces carried out a search in anticipation of the presence of more explosives down the pipe," adding that "orders were issued to tighten security measures near the site."
The exposed package pipeline tanker of crude oil extends from station Al-Zubair (1) to the station Zubair (2) within the South Rumaila, one of the largest oil fields in the country, on 14 December 2011, to an act of sabotage carried out in three explosive devices resulting in exploding in quick succession for of fire continued for hours, causing a decline in the production field for three days.
The package itself was, on 11 October 2011, to the near simultaneous blasts caused a fire and a large amount of leakage of crude oil, in addition to the suspension of production in the field for an emergency landing for two days.
The province of Basra, about 590 km south of Baghdad, witnessing since mid-2008 a remarkable stable security, but they are located from time to time violent attacks against civilians, while stressing the security forces face significant challenges, including repeated attempts to target oil installations.
================
10:32
GKP - Sinopec via Repsol or Exxon
buster21
GKP Takeover
Sinopec via Repsol or Exxon are the obvious front runners.
If this was a condition or interest free Auction I would put money on Sinopec.
Chevron and CNOOC are outsiders.
However I think BP may be the dark horses.
I just hope Genel are not involved anywhere.
GLA,
Buster
-------------------------------------------------------------------------------------------------------------------
Looks like Sinopec is looking for a new supply.
BEIJING, Dec 19 (Reuters) - China's top refiner Sinopec Corp will in January buy less than half the crude it typically imports from Iran, trade sources said on Monday, as the two haggle over terms against a backdrop of rising international pressure on Tehran.
Iran's largest crude buyer has cut its January purchases by about 285,000 barrels per day (bpd), sources said. That is over half of the close to 550,000 bpd that China has been buying on annual contract this year.
GLA,
Buster
-------------------------------------------------------------------------------------------------------------------------
29 July
Spanish oil and gas group Repsol (REP.MC) said on Friday it has signed agreements with the Government of the Kurdistan region of Iraq for the exploration of two blocks in the Kurdistan region. (Reuters).
18 December
China’s Sinopec is eyeing a €2.7bn stake in Spain’s Repsol. (FT)
If this isn't laying the groundwork for a major Kurdistan run and possibly a GKP shot I don't know what is.
GLA,
Buster
=================
Baker Hughes secured a contract worth up to US$ 640 million to drill 60 wells at Iraq's southern Zubair oil field
It has been reported that U.S. oil-services company Baker Hughes Inc. (BHI) has secured a contract worth up to $640 million to drill 60 wells at Iraq's southern Zubair oil field.
=======================
Exclusive: Hayward Eyes New Iraq Deal
Share
Comments (5)
Mark Kleinman
December 20, 2011 8:50 PM
Recommend post (12)
The oil and gas company headed by Tony Hayward, the former BP chief executive, is in detailed talks about a deal that would expand its presence in Iraq's vast energy industry, I have learned.
Genel Energy is close to sealing an agreement to acquire an additional 40 per cent stake in a major oil-field controlled by Longford Energy, a Canada-listed independent exploration and production company. A deal, which is likely to cost Genel tens of millions of pounds, could be announced before Christmas, I'm told.
Longford's principal asset is the Chia Surkh block in the Kurdistan region of Iraq, which has some of the world's largest untapped oil reserves. Genel already owns 20 per cent of the field, and the new transaction will hand it control of the asset.
The acquisition would be the second since Hayward listed Vallares, a cash shell, on the London Stock Exchange, earlier this year. In September, Genel was reversed into Vallares in a deal worth about $2bn, since when Hayward has promised to identify further takeover opportunities, both in Kurdistan and elsewhere.
Genel declined to comment this evening.
================
Author SpikeyDT View Profile Add to favourites Ignore
Date posted today 12:23
Subject Q&A: Hussain al-Shahristani
Votes for this Posting Voted 2 times.
Message
Q&A: Hussain al-Shahristani
http://bit.ly/sAEj3F
Iraqi Deputy Prime Minister for Energy Affairs Hussain al-Shahristani in his office in Baghdad. (BEN VAN HEUVELEN/Iraq Oil Report)
By BEN VAN HEUVELEN of Iraq Oil Report
Published December 22, 2011
BAGHDAD - Since Hussain al-Shahristani became Oil Minister in 2006, he has primed Iraq for the biggest oil boom in world history, despite political infighting and a still-problematic security environment.
Dozens of the world's largest oil firms have won tough deals to develop oil and gas fields. On paper, at least, those contracts would make Iraq the world's largest-ever oil producer in only seven years.
Forty-six companies have qualified to participate in an upcoming bidding round for 12 exploration blocks.
One of those companies, ExxonMobil, signed six contracts with the semi-autonomous northern Iraqi Kurdistan Region on Oct. 18, posing the biggest challenge yet to the policies of Shahristani and Prime Minister Nouri al-Maliki, who have sought to keep oil sector authority in Baghdad.
In an interview with Iraq Oil Report's Ben Van Heuvelen, Shahristani explained his reasons for central control over an oil sector, what Exxon must do to keep square with Baghdad, and what IOCs want changed in the fourth bidding round contract model.
Ben Van Heuvelen: I'd like to start by asking you about the fourth bid round. You have received a lot of credit for the success of the first three contract licensing round. What lessons should Iraq take from that success, and how are you applying those lessons to the fourth bidding round?
Hussain al-Shahristani: We are very pleased with the results of the bid rounds we have already had, and the work on the ground is progressing well. The fact that the largest IOCs are working on developing these fields and increasing Iraq's production capacity is very encouraging. We are also very satisfied with the fees that are being paid to these companies, based on the service contracts that have been signed.
We hope to receive similar participation in the coming bidding round. Of course this is going to be different because the first three bid rounds were for discovered fields and the companies knew exactly what there is in the fields, while the fourth bid round is about exploration blocks.
Although we all understand that the potential of discovery is very high in these blocks, still it has to be discovered, and the nature of the contract will have to take into account not only the risk associated with these fields but also the development plan that would follow.
That's why the bid round was delayed a couple of months: to carefully prepare the model contract to take all of these factors into account. So far the indications are that a great many number of companies are interested in for these blocks.
BVH: How would you characterize the companies' initial reaction to the data packages and the model contract? Have they suggested changes? Are they enthusiastic?
HS: The data packages – there hasn't been much comment because there isn't much data in there, because these are exploration blocks.
But the model contracts, they have had a lot of, ah, suggestions for changes, and particularly in case large quantities of oil are discovered along with the gas – because these blocks were selected for their gas potential, but there is always a possibility of finding significant amounts of oil. And some of the blocks are perhaps are very likely that some oil will be discovered there.
Iraq is not ready at this stage to develop further capacity for oil production, because we believe with 12 million barrels per day signed contracts already, we have to wait and see how the world oil demand is going to develop, taking into account the economic crisis in the Euro zone and elsewhere, and how this is going to affect their economic growth, which will obviously have significant effect on the oil demand.
So there are a number of general factors beyond our control in the world economy, and we have to take some time to see how the demand is going to grow and how much room there is for increasing Iraqi oil production.
So, no decision will be taken to add any additional capacity to oil production.
However, the story of the gas is different. Iraq needs more gas for its large-scale power generation plans. Also there is a great demand for Iraqi gas from all of our neighbors, except Iran. Beyond our neighborhood, also - Europe has signed a memorandum of cooperation with us where they have very clearly indicated an interest to get some of Iraqi dry gas. All the countries around us, including Turkey, they are looking to get some Iraqi gas.
So, Iraq will develop its gas potential, and that's why these blocks have been chosen in the fourth bid round.
But yet the model contract has to take into account what to do with the oil once it's discovered. That's why it has been a bit different from the previous bid round, a little more complicated, and the companies had more comments on it.
BVH: Has Iraq determined what the policy will be about potential oil discoveries?
HS: Yes,
in the model contract we have to deal with that. The current line of thinking is to have some waiting period before that oil discovery is developed.
BVH: Speaking of the fourth bidding round, will ExxonMobil be allowed to participate?
HS: I cannot answer that question at this stage, because
Iraq has not taken its decision vis-à-vis ExxonMobil because of the contract that was signed without the approval of the central government. Once that decision is taken, of course it will be implemented, in all other areas of bilateral obligations.
BVH: So is this an all-or-nothing proposition?
If something is worked out with Exxon, then the fourth bid round is ok, West Qurna 1 is ok, the water pipeline is ok? And if not, then none of those things can continue?
HS: No decision has been taken yet. All of these options are under consideration.
Iraq's position has been made very clear to ExxonMobil. Before they signed the contract (with the Kurdistan region), and after they signed the contract, they received a letter form the prime minister and from the minister of oil telling them that signing contracts without the approval of the federal government is a breach of their contract for West Qurna Phase 1. And that remains to be the position.
ExxonMobil has been asked to reconsider its situation. And we have not heard from them what they plan to do yet, before we make our final decision.
BVH: I hear that Prime Minister Maliki met with Exxon CEO Rex Tillerson in Washington, DC -- and that Exxon promised to reconsider the KRG contract. Do you have any details about this?
HS: I have no details. The PM has met with ExxonMobil and he has promised to reconsider their contracts in the KRG, but I haven't heard from the prime minister directly what was the commitment made by Tillerson to him.
BVH: You seem to think it's very important for the oil sector in Iraq to be centralized. Why?
HS: Yes, absolutely.
Oil can be used to unify Iraq and build a prosperous, progressive country where people can live in peace, with a share of the oil wealth. And there is plenty of it to satisfy all of the Iraqi people and beyond Iraq.
Or it can be a tool for the disintegration for the country, civil war, among different regions, different governorates, and even different tribes.
So, for me, the unity of the country, the peaceful coexistence of its ethnic and religious and sectarian factions, is extremely important. And unless oil is managed centrally and revenues are distributed equally to all Iraqis, oil can be very dangerous, to be used in the civil war among the different factions.
BVH: Are you concerned that a decentralized policy - for example if the KRG were given contracting authority - might set a precedent for other oil producing regions?
HS: Well,
it's not whether it's a fear or not: we are hearing from all of the oil-producing areas, particularly from Basra, where 70 percent of Iraqi oil is being produced, as if the KRG is permitted to manage its own oil. "We will not allow anybody else to manage our own oil, and we know what to do with our oil" -- and that attitude prevails throughout the region.
For one thing, the biggest loser will be the KRG, because they are already taking 17 percent of the oil (revenues) from the south. And if the south wants to behave the same way as the KRG are behaving, the first victims will be the KRG with their 17 percent.
That's why we feel, in order to avoid any such friction between all the parts of the country, it's important to manage it centrally.
And of course this is not to say that we don't need to coordinate, consult with the regions, with the oil-producing governorates. In fact, there is a constitutional clause that requires such consultation and coordination. But the management of the sector needs to be central.
BVH: It seems the vehicle to define this architecture of authority is federal oil legislation. What is the next step for the oil law? It seems unlikely that Oil Minister Luaibi and KRG Minister of Natural Resources Dr. Ashti Hawrami will meet by the end of the year. So what is the next step?
HS: Well,
even if Mr. Luaibi and Mr. Ashti meet before the end of the year and agreed on some kind of a draft, that has to be presented to the Council of Ministers, to accept an alternative draft to the draft that they already voted on a few months ago, and sent to the Parliament.
And as far as the government, the Council of Ministers is concerned, that's the only draft that is on the table for discussion.
Of course, the Parliament can amend it. But it cannot produce another law. The draft laws have to come from the government, to the Parliament for discussion. And then acceptance or rejection of legislation.
The government, when the last draft was presented to it, which was an amendment of the 2007 draft, made by the Ministry of Oil, presented to the Energy Committee, was approved unanimously by the Energy Committee, sent to the Parliament, it was approved almost unanimously there with two ministers not voting for it - and that's the only draft on the table there, in the Parliament.
There are attempts to produce other drafts, or to go back to the 2007 draft, and there has been talk about this. But as far as I can see, I don't believe that the Council of Ministers will change this draft, and it is really in the court of the Parliament to decide either to legislate the last draft that was sent to them by the government, or to amend it if there is an agreement there.
Otherwise it will be just waiting, as was the case for the last draft that was sent in 2007.
BVH: We heard from Barham Salih that when he came down to Baghdad in late October to meet with Prime Minister Maliki they agreed to go back to the 2007 draft and work off of that. Is this not true? Is this deal now off? Or has the arrangement been changed?
HS:
I have heard different versions of that story. I have heard what Mr. Barham Salih said, and I have heard what other participants in that meeting have said. And it's not – I mean, the two stories are not identical.
But regardless, even if there was such an agreement, we have in Iraq a state of law - I am not talking about the political group - but we are in a state of laws and the decisions have to be made by the Council of Ministers. And the only decision that was made by the Council of Ministers was the draft that was presented a few months ago.
BVH:
How do Exxon's deals with the KRG affect oil law negotiations? Some people have said that this drives a wedge between Baghdad and Erbil. Others have said that it gives urgency to a process and can in fact serve to bring the two sides together. What do you think?
I think both are partially correct. This draws attention to the importance of having new legislation that clarifies all of the procedures and the authorities. But as it stands now, it has definitely created more problems for both the central government and the KRG.
And a lot of Iraqis think that ExxonMobil has played on very dangerous grounds and has created problems unnecessarily for itself and for Iraq.
BVH: I saw an interview with Prime Minister Maliki recently in which
he seemed to be envisioning a process by which you could somehow re-route the Exxon-KRG contracts through the Oil Ministry. I wonder if you have any insight into how this might work.
HS: This hasn't been discussed. Those contracts have not even been presented to the Ministry of Oil, so the Ministry of Oil has not studied them; they have no views on that.
But as I explained earlier, the sure stand of the central government is that anything that is not approved by the Council of Ministers has no legal value in Iraq. And the companies are strongly advised to refrain from working on Iraqi territory without the permission of the Iraqi government. This has consistently been the position of the authorities of the central government.
We have to combine all of these statements, and if you read that statement in the light of what the prime minister said yesterday that his understanding – and that's what he told ExxonMobil, and apparently there has been some positive response from ExxonMobil – that they have to reconsider the contracts with the KRG, as they will never be accepted the way they have been done.
BVH: Can you envision a process where a new contract for these same blocks that Exxon has already signed would run through the Ministry of Oil?
HS:
There are a number of options we can consider with ExxonMobil. They have been told that they are welcome to come and discuss it with the Minister of Oil. But first and foremost, they have to acknowledge the authority of the federal government, and to accept the fact that their contracts are not valid without the approval of the central government.
Otherwise, what's the point of coming to talk with the central government, if they consider the (KRG) contracts to be valid?
BVH: To clarify, did the Government of Iraq at any point send a signal to anyone at ExxonMobil that there was a chance these deals would be accepted?
HS:
Nobody in the central government from the minister of oil to the deputy prime minister for energy to the prime minister himself or the council of ministers, ever have given any such indication or signal.
BVH: Some of these blocks are in disputed territories.
Obviously this is potentially problematic for a number of reasons. Do you have any idea, first of all, why they assigned these blocks to Exxon? Who wanted to do this?
HS: It's not my style to comment on people's intentions – and the conspiracies, and so on. That's just not my style.
BVH: What is the impact of these contracts on the territorial disputes?
HS:
I can talk about the facts of this.
The representatives of the governorate council of Ninewa have come to me a couple of days ago and they have told us that they will never accept any foreign company working in their governorate without explicit approval of the central government. And, as these contracts have been signed, two of them within Ninewa province, they want the support of the Iraqi government stop the foreign company from trespassing the boundaries of the governorate.
There is a very strong rejection by the governorate of Ninewa about these contracts. And the same is true in Kirkuk.
BVH: Do you think the presence of Exxon in these blocks makes it more difficult to resolve the issue of disputed territories?
HS: Of course.
BVH: Why?
HS: Because these are disputed territories: Iraqis have been discussing it – it's one of the most difficult unresolved issues in Iraq. And when an oil company comes and puts its nose into such delicate internal affairs, it reminds people of the role of the oil companies in the '50s and '60s in the region, and I don't think that will serve at all to change the image of ExxonMobil, in particular, in the region.
BVH: Do you think this is dangerous for ExxonMobil in terms of security?
HS: Definitely. If they start any activities in that area, I don't think the people of the Ninewa governorate will allow them to do so.
BVH: Do you think it makes things difficult or dangerous for them in the south as well?
HS: If the Iraqi people – and, you know, there are very strong sentiments among Iraqis – if they feel that ExxonMobil is party to the disintegration of the country, or undermining the authority of the Iraqi government, I wouldn't be surprised. I've not heard anything specifically. But I wouldn't be surprised if there would be strong reaction from the population. Not only in the south – everywhere.
BVH: Have there been discussions between the Baghdad government and Erbil since the signing?
HS: The last discussion was what you just referred to, when Barham Salih was there in Baghdad. And since them, I am not aware of any further discussions.
BVH: In terms of US-Iraq relations moving forward, has the US been supportive of your efforts to have this contract reconsidered?
HS: Well,
what I would say at this stage – this contract that was signed by ExxonMobil will not undermine Iraq-US relationship. Both countries have taken a very clear position that such contracts will have to be done with the approval of the central government, and we don't expect anything more than that from the US government. They have given the right advice to the companies.
Iraq and the US have signed a cooperation agreement, and we look forward to their involvement of US companies in the reconstruction programs in Iraq and in many other areas. And I don't think the relations between the two countries will be affected by what Iraq decides vis-à-vis ExxonMobil – whether to allow it to remain in Iraq, or not to allow it to do so.
I'd like to ask one more question, to circle back to an earlier topic: you mentioned that Iraq's production is looking very strong. Not needing more oil production, will you make any revision to the production plateau targets for the first and second bid round fields?
We are studying very carefully the oil markets and the expected demands, and we are also studying our own investment – the scale of our investment, and whether it would be more prudent to stretch it a bit longer. All of these are very careful considerations, and Iraq will make its decision, it will announce it, and the first companies to be informed will be the companies that have contracted with us.
The final decision will not detrimentally affect the contracts that have been signed or put any financial burdens on these contracts.
=========================
1. FTSE250 entry cited for H12012 (most likely march 5th/6th)
A buyer would want to avoid the hassle of the new FTSE250 takeover regulations although GKP being bermuda based may still circumnavigate the heavy stuff.
=============
13-12-11
Ho Ho Ho
RKH.L
136
Ok chaps this is relatively brief but mostly because it can be summarised as simply superb.
Sealion is now massive a full 14km long. That field will produce in excess of 750m bbls. The CPR won't show that it'll be 550-600 as a guess. Fields always get bigger after the second appraisal well.
Add to this we now have additional fields Casper will be sizable. Probably one of the biggest discoveries in Uk waters in years (yet it's a bonus!). Beverly will do nicely and will have oil. And we have Casper south....
The permeabilities have shocked me and I'm not prone to shock. A full darcy average and five darcies max. Wow. In a clastic environment there will be very few reservoirs in the world that beat that. (the flow rate you could get out of that for condensate would be exceptional. I'd expect 15,000 bbl/d vertical well with assistance). 5 darcy rock, really, something else.
Sooo is it commercial. Yes. End of that discussion.
After costs and the current tax rate someone will produce circa $35b profit from sealion for an investment of about 10% of that.
At 267p RKH is vulnerable to a hostile takeover at £5. Although I suspect that at that net present value there would be a bidding war.
The data room is open and the latest data will be in the model with in a week. I know what some poor hairy geologist will be doing over Christmas, analysing that. If I were a mid size independent that would have my undivided.
As desire own a chunk of sealion to control the field both need to be bought out. DES look extremely cheap right now.
So the CPR due end Q1 (why you only have to add one well if youve been doing it properly). I think the CPR is irrelevant. Rkh either farms in or gets bought out I don't see another option. I don't think big oil will let this go to the banks. Any decent sized oil company won't look at the CPR. They'll do there own study before committing billions. This will be done before march.
Timing wise for an "event". Nothing is likely to happen before Christmas and there for new year. But immediately after that the gloves are off. That said
if I where the business development officer for a sizeable oiler I'd buy up to the disclosable limit as a marker you wouldn't lose money on it. 267p is a joke. This should double that before we get into anything else.
So sealion is in the bag and nothing will change that. We should now be in the fun bit...
Merry Christmas
OB
===========
Exxon Spars With Iraq Over Lack of Payment
Atef Hassan/Reuters
A worker at West Qurna 1 oil field in southern Iraq. Exxon Mobil wants $50 million for work to improve the oil field, which will help Iraq get on its feet financially.
By ANDREW E. KRAMER and JULIA WERDIGIER
Published: December 22, 2011
RECOMMEND
TWITTER
LINKEDIN
SIGN IN TO E-MAIL
PRINT
SINGLE PAGE
REPRINTS
SHARE
The turmoil in Iraq after the United States troop withdrawal is extending to its vital petroleum industry.
A blog about energy and the environment.
Go to Blog »
Add to Portfolio
Exxon Mobil Corporation
Go to your Portfolio »
The American oil giant Exxon Mobil and its partners are embroiled in a $50 million payment dispute with the Iraqi government over an oil field in southeastern Iraq that the companies are upgrading and modernizing. The Shiite-led government of Prime Minister Nuri Kamal al-Maliki is also unhappy with Exxon over a separate development deal the company has struck with the leaders of the semiautonomous Kurdistan region in northern Iraq.
The Iraqi government’s failure to pay Exxon, the only American oil company operating in southern Iraq, for nearly two years of work underscores the perils for Western companies seeking to do business there. The government has not explained why it has withheld the payments.
Any perception that the Iraqi government will not honor its oil contracts could also send ripples beyond Iraq to international markets worried about disruptions in petroleum supplies. Iraq is expected to ramp up oil production faster than any other country in the next 25 years, with a capacity of five million barrels of oil a day by 2035, more than traditional leaders like Saudi Arabia, according to the International Energy Agency.
“The international oil companies are putting in the capital and expertise,” Alex Munton, a Middle East analyst for Wood Mackenzie, a research and consulting firm based in Edinburgh, said. “They need to recover their costs and get a profit margin on top. For it to work, they have to be paid what they are due.
“It would certainly serve Iraq’s interests well to have that contract working smoothly,” he added.
Exxon’s 2009 deal with the Iraqi government to improve production in the West Qurna 1 field was never expected to be lucrative under the best of circumstances. The government had agreed to pay Exxon and its partners $1.90 for each additional barrel of oil they pumped after refurbishing the already producing field. The fees would barely be enough to cover the companies’ costs. Other deals between Iraq and foreign oil companies had similar terms.
International oil contracts are more typically structured to compensate companies with a percentage from sales or a share of production that takes into account the fluctuating price of oil, so that they can be more profitable for the companies when prices rise.
Western oil companies, shut out of Iraq’s oil fields for decades under the government of Saddam Hussein, were willing to do the low-profit, technical service deals to get a foot in the door with the new government that was put in place after the American-led invasion in 2003. Only a few dozen of Iraq’s 80 or so discovered fields are in production, and the government has suggested that it would give more lucrative agreements later to companies that helped the country early on.
For most of the nearly nine-year war, American government advisers aided Iraqi ministries in negotiating and fulfilling contracts. That tapered off as Iraq assumed more sovereignty. President Obama, in a meeting this month with Mr. Maliki in Washington, said Iraq was now a country “sovereign, self-reliant and democratic.”
Exxon and its minority partners in the project — which include the Anglo-Dutch oil giant Shell — increased output in the West Qurna field by more than 10 percent by last March. That was the trigger point for the Iraqi government to begin paying the companies for their work.
But the payments have not been made, according to Hans Nijkamp, Shell’s country manager for Iraq.
“There are a lot of admin-type issues that we’re working through with the government,” Mr. Nijkamp said in an interview.
He said Shell did not believe the delays were deliberate and that the issues would eventually be resolved.
An Exxon Mobil spokesman declined to comment, saying the company has a policy of not discussing commercial matters.
=
The Iraqi government awarded 11 oil and natural gas contracts for fields at auctions beginning in 2008. Two other consortiums that won deals and have since raised output by more than 10 percent — those led by BP of Britain and Eni of Italy — have been compensated.
A blog about energy and the environment.
Go to Blog »
Add to Portfolio
Exxon Mobil Corporation
Go to your Portfolio »
BP said that, together with partners, it has been paid in kind in oil. Eni is also taking crude as payment.
Western oil service companies, including the American giants Halliburton and Baker Hughes, have also made substantial profits working in Iraqi oil fields.
Mr. Nijkamp said that Shell was working to smooth over the flaws in its Iraqi technical service contracts before another field it was developing, Majnoon, entered commercial production by the end of next year.
“We’re working with South Oil Company and the Oil Ministry to get the invoicing process up to scratch until then,” he said.
Faisal Abdullah, a spokesman for Iraq’s deputy prime minister in charge of energy, Hussain al-Shahristani, confirmed in an interview in Baghdad in November that the government owed a payment to the Exxon-led consortium, but he did not characterize it as late.
“Exxon has increased output and a small amount of money has not been paid,” Mr. Abdullah said. He said the government had not paid Exxon about $50 million, a figure that roughly conforms with estimates by Western oil analysts.
Mr. Abdullah described the delay in paying America’s largest oil company as bureaucratic and unrelated to the dispute over exploration contracts in Kurdistan that Exxon signed in November.
However, that deal has caused great consternation. The central government considers deals in Kurdistan illegal. Without an oil law to split petroleum wealth, these agreements are worsening an already poisonous ethnic divide between Kurds and Arabs, officials in Baghdad say.
Mr. Abdullah said that Exxon executives had expressed concerns to officials in Baghdad about the profitability of the West Qurna 1 contract before striking the deal in Kurdistan, suggesting that the Texas-based company was dissatisfied with the deal.
“They said ‘We are not getting enough profit from West Qurna 1,’ ” Mr. Abdullah said. “But that is not true. It is a very big field.”
Iraqi officials say they cautioned Exxon not to sign the deal in Kurdistan, even as they were apparently withholding payment for the work in the south.
Ali al-Fayadh, the deputy chairman of the oil committee in the Iraqi Parliament, said in an interview in his Baghdad office that the government was considering banning Exxon from working in southern Iraq because the company had signed the deal in Kurdistan.
A decision has not yet been made, Mr. Fayadh said. The government could prohibit Exxon from participating in future auctions or end its contract for West Qurna 1, he said.
If that happened, it would mean the only major American oil company operating in Iraq would be expelled on the heels of the United States military’s departure.
Oil companies are expected to invest $150 billion in Iraq in the next decade. The payment delay to the Exxon coalition highlights the quandary they face.
Though eager to gain access to reserves estimated at 115 billion barrels, the fourth-largest in the world, companies are initially required to invest large sums with only tiny early returns and major risks.
Insurgents have not generally targeted their bombs at international oil companies, which are ensconced in well-guarded compounds. But the companies are worried that schisms within the fracturing government would cause the administration of contracts to grind to a halt, delaying payments and regulatory decisions.
1 2 NEXT PAGE »
Omar al-Jawoshy contributed reporting.
A version of this article appeared in print on December 23, 2011, on page B1 of the New York edition with the headline: Exxon Spars With Iraq Over Lack Of Payment.
===============
Analysis: What was Exxon thinking?
Hussain al-Shahristani (right), then oil minister and now the deputy prime minister for energy, sits with ExxonMobil executives at the signing ceremony for the West Qurna 1 project. (STAFF/Iraq Oil Report)
By BEN VAN HEUVELEN of Iraq Oil Report
Published December 5, 2011
ExxonMobil's controversial signing of six exploration blocks with Iraq's semi-autonomous Kurdistan region has jolted the country's oil sector out of its uneasy status quo.
In political arenas where Bush administration benchmarks and the massive U.S. Embassy failed to force headway, another American icon – the world's most profitable company – has caused Iraqi decision makers to start confronting fundamental questions about the shape of not only the oil sector but also the state.
Exxon has crossed the bright red line in Iraqi politics that defines the conflict between Baghdad and the Kurdistan Regional Government (KRG): the question of centralized versus federalized power. Never before has a company started working with the Oil Ministry and then defied its blacklist policy against signing oil deals with Kurdistan.
Exxon's move has forced a referendum on the architect of the blacklist policy, Deputy Prime Minister for Energy Hussain al-Shahristani. As oil minister from 2006 to 2010, Shahristani not only established himself as the leading hard-liner against the KRG's contracts, but he also set the framework for the development in Basra that has enticed and frustrated Exxon and other international oil companies (IOCs).
Exxon's actions constitute a direct challenge to both sets of policies.
It has plenty to lose: development of the 8.7 billion barrel West Qurna 1 field; a lead role in another multi-billion dollar project, in partnership with other majors, building a water injection pipeline; and the prospects of 12 exploration blocks on offer in an auction next year.
A company with a reputation for caution and discipline would not have taken this step rashly, without weighing the risks both above and below the ground.
The company's strategists evidently looked at a variety of factors – including the limited upside of the West Qurna 1 project and the scant promise of lucrative deals in the future – and concluded they were willing to forsake the south. Baghdad's terms simply weren't good enough.
Moreover, Exxon's decision to sign with the Kurds represents a bet that Baghdad lacks the clout to contain the Kurdish oil sector. From the company's point of view, Shahristani's hard-line position cannot hold.
Behind closed doors, that theory is being tested right now. The Iraqi government – namely, Prime Minister Nouri al-Maliki – has to decide whether to back up Shahristani's threats to cancel Exxon's West Qurna 1 contract and risk short-term setbacks to southern oil production, or whether to compromise centralist principles and keep the world's largest oil major in the fold.
The dilemma is closely linked to the larger debate over federalism. Maliki's administration has advocated for a strong central government which includes setting oil policy; leaders in the Kurdistan region, which has enjoyed significant autonomy for 20 years, equate central power with Saddam Hussein-style tyranny.
Exxon's move represents an enormous bet on Erbil's position. If federalism prevails, then not only will the company have the prime position in Kurdistan, but the framework of decentralization would undercut Shahristani and potentially leave Exxon with a friendlier cast of decision-makers in Baghdad and Basra.
Shahristani will not go gently, though. In the immediate aftermath of the KRG signing, he issued statements saying that Exxon's move was a violation of Iraqi law and a breach of its West Qurna 1 contract, laying the groundwork for expelling the wayward major. Maliki appeared to back his deputy, saying through a spokesman that he endorsed Shahristani's position; and Exxon has now been disqualified from the fourth licensing round, which is set for March 7-8, 2012..
But since then, Baghdad has softened its tone a bit. Oil Minister Abdul Karim Luaibi – who reports to Shahristani, but ultimately answers to Maliki – said the ministry had sent Exxon four letters demanding an explanation and was still evaluating its options.
"We haven't negotiated with Exxon," Luaibi said on Nov. 27. "As of now, we have only sent them letters, and we are awaiting a reply."
Indeed, the ministry is still negotiating with an Exxon-led consortium for a water pipeline project necessary for boosting long-term production at several Basra fields.
A tale of two oil sectors
Since the fall of Saddam, Iraq has developed two separate oil sectors.
The central government in Baghdad has struck 14 oil and gas deals, which together aim to boost production from 2.9 million barrels per day (bpd) currently to 13.5 million bpd within seven years. The KRG has signed production sharing contracts with 43 companies.
The Oil Ministry has claimed sole authority to sign deals and calls the Kurdish contracts illegal. The KRG's Ministry of Natural Resources has justified its powers through a regional hydrocarbons law, which draws authority from constitutional provisions guaranteeing regions a share of control over oil development.
The Constitution doesn't provide a definitive answer, though, since it contains vague wording that was designed to win broad appeal. Instead, it calls for passage of an oil law, which holds the promise of reconciling both governments under a single national framework.
Draft oil legislation has been in limbo since it was first debated in 2007. As the two sides have signed contracts, the stakes of the dispute have only risen, and it has been unclear what kind of political breakthrough could possibly end the legislative deadlock.
Until recently, Baghdad had the upper hand. It commanded loyalty from the world's largest oil companies largely because it controls the world's third-largest conventional oil reserves – about TK billion barrels to the KRG's TK. Shahristani has effectively forced companies to choose between the two: under a blacklist policy, any company that signed with the Kurds has been banned from oil contracts with Baghdad.
Moreover, Shahristani has been able to squeeze Kurdistan's export capacity. Baghdad controls the pipelines and the State Oil Marketing Organization (SOMO), so the flow of crude and cash associated with exports runs mainly through the central government. The only other way for the companies signed with the KRG to make their profit has been to sell on the local market – a limited capacity that garners an estimated $60 per barrel.
The apparent goal has been to establish the Oil Ministry as the sole broker for any deal with long-term prospects. As a result, contracts with Kurdistan have been tainted by the twin uncertainties of future access to markets and legal viability.
On the other side, KRG Minister of Natural Resources Ashti Hawrami has attracted companies with production sharing contracts (PSCs) that offer equity oil and higher returns than Baghdad's technical service contracts (TSCs). The attractive terms have offset the political risk: at first the wildcatters came, like Genel Energy, DNO and Gulf Keystone, and then the mid-majors, like Marathon and Hess.
The American government in Baghdad and Washington has lightly condemned any deal between foreign oil companies and the KRG. In public and to any oil company seeking their advice, U.S. officials warned of the risks of signing legally questionable contracts without comprehensive new oil legislation; they also advised that every new deal drove another wedge between the centrist Arab-led government in Baghdad and the strongly federalist Kurds.
True to Shahristani's threat, the Oil Ministry disqualified the first 42 companies that signed with the KRG from Baghdad's contract licensing rounds. But few of those companies would have been able to compete for the ministry's big deals, which require billions of dollars in capital outlays.
Now comes Exxon, the first Baghdad-signed major to call the Oil Ministry's bluff – a particularly significant move because of the company's reputation for playing the long game.
The West Qurna boondoggle
Exxon's restlessness probably began with its TSC for West Qurna 1. The contract guarantees cost recovery, but requires the company to ramp up production rapidly in order to generate attractive returns.
Like other majors, Exxon was presumably willing to strike less-than-ideal terms in order to get its foot in the door of the world's last great oil play. West Qurna 1 was the company's first move into Iraq, but hardly the definitive one.
As operators in Basra have begun work over the past two years, they have encountered a host of problems.
Iraq's stunted logistical capacity has held up the transportation of vital equipment and the processing of visas for key employees. Oil Ministry rules have hampered subcontracting. And contract provisions have mandated that operators use a high percentage of Iraqi workers, despite a shortage of local laborers able to perform to international standards.
The factors on the ground are slowing progress, while the financial terms of the contract reward quick boosts in production. The realities of working in Basra have brought out the worst in the TSCs.
In the medium term, the picture has also been uncertain.
The production leaps that would make West Qurna 1 really profitable are not possible without injecting large volumes of water to boost reservoir pressure. Plans call for a pipeline to bring seawater up to a few Basra fields from the Arabian Gulf, but that project has also hit delays.
Exxon and other majors expected the ministry to take care of this project. The ministry, on the other hand, has maintained that the companies must share responsibility, though the costs are ultimately recoverable. As a result of the impasse, a project that was supposed to begin last TK has only just been awarded – at an additional, unforeseen expense to the companies.
Even if production gets on track, Exxon also faces a ministry reluctant to pay.
Because the TSCs guarantee cost recovery, they provide little incentive for companies to keep their expenses down. Aware of this shortcoming, the ministry has reportedly challenged company expenses aggressively and held up some payments.
On paper, West Qurna 1 looks like an enormous jewel in Exxon's crown, a super-giant field with light, sweet oil and low extraction costs. But the company's real test of a project's worth – as Exxon executives constantly tell Wall Street analysts – is return on capital employed.
By this measure, West Qurna has started looking less and less like a winner, and given Baghdad's four-letter reaction, the company's role there looks increasingly uncertain.
The fourth bid round vs. Kurdish PSCs
All of these problems could be chalked up to the growing pains of a budding industry whose leaders are inclined to err against conceding too much to foreign companies. Indeed, Shahristani has won respect in many quarters for his tough negotiating posture.
But he might have overreached.
Companies have been willing to endure delays in Basra partly because they look forward to a brighter future. In particular, they have eagerly anticipated the fourth bidding round.
After three contract auctions for already-discovered oil and gas fields, the ministry announced a bidding round for exploration blocks – originally scheduled for November, then rescheduled to January, and now moved again to March. Because exploration involves more risk, such contracts typically yield more upside.
The fourth bid round model contract, however, has generally left IOCs disappointed, though terms are not set and the finalized version will incorporate IOC recommendations. Under draft terms, a company that makes an oil discovery can be forced to wait as long as seven years to develop a field; moreover, ministry officials indicated that companies might not be able to book reserves.
From Exxon's point of view, this might have been the last straw. Doing business with Baghdad already involved logistical problems, shrinking returns, and uncertainty around payments – and now there wasn't even the promise that better deals were on the horizon.
Kurdistan, on the other hand, has been booming.
Over the summer, as Baghdad was announcing its fourth bid round terms, the early entrants into Iraqi Kurdistan – led by Norway's DNO and Turkey's Genel Energy – were combining for 181,000 bpd in exports, a short-lived peak. Former BP chief Tony Hayward was moving in with $2 billion in venture capital to acquire Genel; Gulf Keystone was making discoveries at its Shaikan field that might potentially support 40,000 bpd of production by the end of 2012.
Kurdish oil was also flowing to market. Under a tenuous political agreement struck in January between Maliki and KRG Prime Minister Barham Salih, KRG officials say they will end the year averaging more than 100,000 bpd exports per day and estimate 175,000 bpd next year, with half of the proceeds from those sales going back to the KRG to pay contractors for costs.
The problems are hardly resolved – Baghdad has stopped short of recognizing the legality of Erbil's contracts or paying the contractors' profits. But the uncertainty that haunted KRG oil deals has seemed to be lifting, and the unassigned blocks have been dwindling.
Shifting leverage
On Nov. 15, days after the Oct. 18 Exxon-KRG contracts came to light, the Cabinet approved the long-delayed gas joint venture company deal with Royal Dutch Shell.
Shell had been dipping its toe into Kurdistan as well, but pulled out at the last minute. The final approval of the $17 billion gas deal was a reassuring signal to other Basra-operating IOCs that Baghdad could be business-friendly – though too late for Exxon.
As Baghdad-KRG tensions eased, Shahristani had lost much of his leverage over Exxon. With only a disappointing fourth bid round on the horizon, the blacklist threat was now less of a risk.
Any attempt to boot Exxon from West Qurna 1, a project less attractive financially now than when it was first signed, would be an enormous challenge. The case would likely land in a court of arbitration – an arena where Exxon has confidently bared its litigious teeth against other governments.
The greatest risk, from Exxon's perspective, must have involved the consequences of souring relations with Baghdad. Exxon's move had the potential to break the fragile cooperation that has allowed Kurdish exports to re-start and moved policymakers back to the oil law negotiating table.
It's not clear if KRG officials received assurances from Maliki that their détente could survive the Exxon signing, or if Exxon got Maliki's quiet blessing. Exxon might have simply judged that Maliki depends on the Kurds for political survival, and – if forced to choose – the prime minister would distance himself from his energy deputy.
Whatever the case, Exxon felt sufficiently insulated – with some justification. The U.S. oil major has become so enmeshed with Iraq that the government cannot punish Exxon without harming itself: kicking them out of Basra could set back production, and punishing them for their Kurdistan deals would sour any attempts to pass long-overdue oil legislation.
In Iraq, on the eve of the U.S. withdrawal, Exxon is too big to fail
========================
No comments:
Post a Comment