Russia and Iraqi Oil

Tags: Russian-Iraqi relations, Commentary, Business, Russia, World, oil extraction Pershkina Anastasiya Jan 19, 2012 20:57 Moscow Time Photo: RIA Novosti Five Russian companies will fight for Iraq oil tender. The auction will take place in April this year. Among the candidates are Russia’s state oil company Rosneft and the Bashneft Company, for which the geological survey in Iraq may become its first project abroad. Iraq has been holding auctions for its deposits since 2009. However, it is for the first time that it has decided to offer foreign companies a tender for geological survey, not for oil extraction. On the one hand, this could reduce interest in the auction, and on the other, we know that up to 15 per cent of the world reserves of oil are concentrated in Iraq. This fact dispels all doubts, which all those who are involved in the oil extraction business may have. Russia has never had any doubt, though, an analyst with the Moscow-based “Investcafe” agency, Vitaly Mikhalchuk, says. "Specialists from the former Soviet Union worked in Iraq earlier, and today Russia continues oil extraction in Iraq, taking into consideration the following: first, all these are promising deposits and second, Russian companies have sufficient experience of working in Iraq. For example, the LUKOIL Company is developing the West Qurna -2 oilfield in Iraq and the Russian gas giant Gazprom is developing Iraq’s Badra oil deposit." The Iraqi authorities’ interest in developing cooperation with the Russian companies can be explained not only by economic but also by political factors. The USA and Britain would like to get involved in the development of Iraq’s resources too. However, Iraq’s relations with these two countries are tense. That is why there’s reason to believe that Iraq will prefer to work with Russian companies, which is expected to be mutually advantageous cooperation, the President of the Union of the Oil and Gas Industrialists Gennady Shmal says. "The cost of oil extraction in Iraq is much lower than in Russia. Besides, the logistics sector in Iraq causes no pain at all. Europe, Japan, China, and many other countries buy Iraq’s oil with pleasure. Therefore, the companies working in Iraq show high economic indices, which means that such cooperation is beneficial for them." Both the development and the geological survey of deposits abroad mean consortium working with other companies. Powerful tandems can emerge in the course of such work. As an example, we can mention here the cooperation between Russia’s state oil company “Rosneft” and the American Exxon Mobil Corporation. These two are developing the Black Sea Shelf, sharing the existing risks. The Exxon Mobil Corporation undertakes the greater part of spending for geological survey, and its Russian partner gets involved at the stage of development. For a joint participation in the tender “Bashneft” has chosen the Vietnamese company PetroVietnam. It is a very interesting partner, continues Gennady Shmal: "Any alliance is of great help in using the experience which the two sides have acquired. For example, the Vietnamese company, PetroVietnam” is developing the White Tiger deposit in the southern part of the country. This deposit is considered to be a very difficult one – that is why cooperation would be only welcome there." The main problem in Iraq is the fact that its infrastructure was practically ruined during the war. Besides, the debates about the oil-and-gas law were again delayed in early January. The Kurdistan Regional Government and the federal government of Iraq have been debating about the control of the oil and gas deposits in the country for nearly 2 years now. The interest of the parties concerned is quite understandable but foreign companies whose rights are defended by no law at all may suffer as a result. =========== Statoil to Sell Stake in West Qurna-2? Posted on 15 January 2012. Tags: Statoil, West Qurna The Middle East Economic Survey (MEES) reports that Norwegian producer Statoil ASA is trying to sell its stake in the West Qurna-2 oilfield. According to the report, the company may use the negotiations to improve the terms of the West Qurna-2 contract and decide against pulling out. If a sale happened, it would be the first re- sale of energy assets awarded to international companies during Iraq’s 2009 auction round. ================ Global oil and gas M&A faces tough 2012 Thu, Jan 19 13:53 PM EST * Funding difficulties could limit deals in 2012 * Global oil, gas M&A hit $317 billion last year * Shale-related transactions tipped for growth By Oleg Vukmanovic LONDON, Jan 19 (Reuters) - Oil and gas company mergers and acquisitions rose in number but fell in total value in 2011 due to a decline in transactions topping $1 billon, according to an analysis of activity by global law firm Ernst & Young . Funding difficulties and euro zone debt fears could keep a leash on deal-making in 2012, particularly in the economically sensitive parts of the downstream sector, the firm warned. Companies struck 1,322 deals worth $317 billion, compared with $341 billion recorded in 2010 due to a decline in mega-deals from 76 to 71. The number of deals rose by more than 5 percent. North America continued to fuel activity with 562 deals in the upstream sector, but Europe and ex-Soviet states saw the strongest growth, the report said. "The oil and gas market has proved that it can adapt to higher levels of uncertainty and keep transacting. The key questions now are how it will cope with the combination of commodity price volatility and structural contraction in global debt capacity," Andy Brogan of Ernst & Young's transaction advisory services said. Shale-related transactions are tipped to see growth as China moves to develop its unconventional resource base, the biggest in the world with 19 percent of global reserves. About $66 billion was spent on shale transactions. Activity in the downstream sector declined modestly during 2011, but overall values were comparable with 2010 levels. "Downstream activity will continue but may be more concentrated in storage and midstream rather than refining." Brogan said. In oilfield services, high capitalization rates and opportunism meant an increase in deal activity that is set to continue in 2012, "underpinned by those seeking new geographies, new customers and new technologies", the firm said. ===================== Iraq, Lukoil Award $998M West Qurna Deal to Samsung THURSDAY, 26 JANUARY 2012 07:39 RIGZONE.COM Basra. Iraq and Russia's OAO Lukoil Holding have awarded a $998 million deal to south Korea's Samsung Group to develop the supergiant West Qurna phase 2 oil field, the Iraqi government said in a statement Wednesday. Government spokesman Ali al-Dabbagh said Samsung would build a central processing facility for oil production in the field. "Work in the processing facility is expected to finish in 31 months from the start of the work," Dabbagh said following a weekly cabinet meeting. Lukoil and Norway's Statoil ASA were awarded a 20-year service contract for West Qurna Phase 2 in Iraq's second licensing round held in December 2009. The companies promised to get the southern field pumping at a rate of 1.8 million barrels a day for payment of $1.15 a barrel with first oil planned for early 2013. =============== Bulgartransgaz Reports 1/3 Drop in Russian Gas Supplies Energy | February 3, 2012, Friday| 295 views According to Bulgartransgaz CEO Kiril Temelkov, Russia has slashed gas deliveries to Bulgaria, Greece, Turkey and Macedonia by 1/3. Photo by actualno.com Russian gas supplies to Bulgaria, Greece, Turkey and Macedonia have been reduced by 1/3, according to Kiril Temelkov, CEO of Bulgaria's state-owned gas transmission operator Bulgartransgaz. "At present, gas supplies for Bulgaria, as well as volumes of gas exported for Greece, Turkey and Macedonia, have been slashed by over 30%," Temelkov said in an interview on Friday. Bulgartransgaz' CEO explained that Bulgaria was using its own reserves to make up for the gas supply restriction amid the severe winter weather. On Thursday, Dimitar Gogov, CEO of state-owned gas supplier Bulgargaz, told Capital Daily that natural gas consumption in Bulgaria had gone up by 10-15% over the cold spell of the last days. He told journalists that increased demand was being met by tapping reserves from the Chiren gas depot and from local gas production, which he said was quite scant. Gogov added that the consumers had been advised to stick to the contracted volumes of natural gas. Gogov further explained that, although the Chiren gas depot contained reserves for 90 days, only limited quantities of gas could be taken out of it on a daily basis, and the volumes would not suffice to meet soaring consumption. Earlier on Friday, EU observer noted that impact of the sharp drop in Russian gas supplies had spread to a total of nine countries, including Italy, Austria, Slovakia, Poland, the Czech Republic, Bulgaria, Greece, Hungary and Romania. Gas supply restrictions first hit Italy on Tuesday. Tags: Bulgartransgaz, Kiril Temelkov, Dimitar Gogov, Bulgargaz, natural gas, Russian gas, Chiren =================