SOMO, Maysan Oil Company deny the evacuation of foreign oil company employees

Kerry urges Kurds to save Iraq from collapse Tue, Jun 24 12:21 PM EDT image 1 of 3 By Lesley Wroughton ARBIL Iraq (Reuters) - U.S. Secretary of State John Kerry held crisis talks with leaders of Iraq's autonomous Kurdish region on Tuesday urging them to stand with Baghdad in the face of a Sunni insurgent onslaught that threatens to dismember the country. Security forces fought Sunni armed factions for control of the country's biggest oil refinery on Tuesday and militants launched an attack on one of its largest air bases less than 100 km from the capital. More than 1,000 people, mainly civilians, have been killed in less than three weeks, the United Nations said on Tuesday, calling the figure "very much a minimum". The figure includes unarmed government troops machinegunned in mass graves by insurgents, as well as several reported incidents of prisoners killed in their cells by retreating government forces. Kerry flew to the Kurdish region after a day in Baghdad on an emergency trip through the Middle East to rescue Iraq after a lightning advance by Sunni fighters led by an al Qaeda offshoot, the Islamic State in Iraq and the Levant. U.S. officials believe that persuading the Kurds to stick with the political process in Baghdad is vital to keep Iraq from splitting apart. "If they decide to withdraw from the Baghdad political process it will accelerate a lot of the negative trends," said a senior State Department official who briefed reporters on condition of anonymity. Kurdish leaders have made clear that the settlement keeping Iraq together as a state is now in jeopardy. "We are facing a new reality and a new Iraq," Kurdish President Massoud Barzani said at the start of his meeting with Kerry. Earlier, he blamed Prime Minister Nuri al-Maliki's "wrong policies" for the violence and called for him to quit, saying it was "very difficult" to imagine Iraq staying together. The 5 million Kurds, who have ruled themselves within Iraq in relative peace since the U.S. invasion that toppled Saddam Hussein in 2003, have seized on this month's chaos to expand their own territory, taking control of rich oil deposits. Two days after the Sunni fighters launched their uprising by seizing the north's biggest city Mosul, Kurdish troops took full control of Kirkuk, a city they consider their historic capital and which was abandoned by the fleeing Iraqi army. The Kurds' capture of Kirkuk, just outside the boundary of their autonomous zone, eliminates their main incentive to remain part of Iraq: its oil deposits could generate more revenue than the Kurds now receive from Baghdad as part of the settlement that has kept them from declaring independence. Some senior Kurdish officials suggest in private they are no longer committed to Iraq and are biding their time for an opportunity to seek independence. In an interview with CNN, Barzani repeated a threat to hold a referendum on independence, saying it was time for Kurds to decide their own fate. NEW GOVERNMENT Washington has placed its hopes in forming a new, more inclusive government in Baghdad that would undermine the insurgency. Kerry aims to convince Kurdish leaders to join it. In Baghdad on Monday Kerry said Maliki assured him the new parliament, elected two months ago, would sit by a July 1 deadline to start forming a new government. Maliki is fighting to stay in power, under criticism for the ISIL-led advance. Baghdad is racing against time as the insurgents consolidate their grip on Sunni provinces. The Baiji refinery, a strategic industrial complex 200 km (120 miles) north of Baghdad, remained a frontline early on Tuesday. Militants said late on Monday they had seized it, but two government officials said troop reinforcements had been flown into the compound and fended off the assault. Local tribal leaders said they were negotiating with both the government and Sunni fighters to allow the tribes to run the plant if Iraqi forces withdraw. One of the government officials said Baghdad wanted the tribes to break with ISIL and other Sunni armed factions, and help defend the compound. The plant has been fought over since last Wednesday, with sudden reversals for both sides and no clear winner so far. In the town of Yathrib, 90 km north of Baghdad, tribes aided by ISIL fighters attacked the huge al Bakr air base, known under U.S. occupation as "Camp Anaconda", with mortars, according to a security source and the deputy head of the municipality. Police and army forces also clashed with ISIL militants just north of the town of Udhaim in nearby Diyala province, after being driven out of the town into several villages around the Himreen mountains, a militant hideout, security sources said. In recent days, Baghdad's grip on the Western frontier with Syria and Jordan has been challenged. One post on the Syrian border has fallen to Sunni militants and another has been taken over by the Kurds. A third crossing with Syria and the only crossing with Jordan are contested, with anti-government fighters and Baghdad both claiming control. For ISIL, capturing the frontier is a dramatic step toward the goal of erasing the modern border altogether and building a caliphate across swathes of Iraq and Syria. POLITICAL FOUNDATION Kerry thanked the Kurds for their "security cooperation" in recent days, and said their forces were "really critical in helping to draw a line with respect to ISIL." Kurdistan now shares a border more than 1,000 km long with territory held by insurgents. Militants have skirmished with Kurdish peshmerga forces, but both sides have sought to avoid an all-out confrontation for now. U.S. President Barack Obama has offered up to 300 American advisers to Iraq but held off granting a request by Maliki's Shi'ite Muslim-led government for air strikes. The insurgency has been fueled by a sense of persecution among many of Iraq's Sunnis, including armed tribes who once fought al Qaeda but are now battling alongside the ISIL-led revolt against Maliki's Shi'ite-led government. Maliki's State of Law coalition won the most seats in the election in April but still needs support from rival Shi'ite factions as well as Kurds and Sunnis to keep him in power. Some State of Law figures have suggested they could replace Maliki to build a government around a less polarizing figure, although Maliki's allies say he has no plan to step aside. His main foreign sponsors, Washington and Tehran, have both called for a swift agreement on an inclusive government, suggesting they may be ready to abandon the combative 64-year-old Shi'ite Islamist after eight years in power. Maliki has put himself at odds with the Kurds, who accuse him of reneging on promises made in exchange for their backing to stay in power after the last election in 2010. Relations are now characterized by deep mistrust, but the State Department official said Washington hopes the Kurds can be wooed back. "If we are to have a chance ... to use this process of forming a new government to reset the political foundation here, the Kurds have to be a critical part of that process, and we think they will be," the senior State Department official said. The Kurds have signed oil deals on their own terms with Turkey and late last year completed an independent export pipeline, despite opposition from both Baghdad and Washington. A tanker delivered a cargo of oil from the new pipeline for the first time on Friday, to Israel. (Writing by Isabel Coles; Editing by Peter Graff) ================== Baghdad (IraqiNews.com) SOMO denied the withdrawal of employees of foreign oil companies operating in the southern oil fields because of the situation taking place in Iraq, while confirming its agreement with the local government in the provinces of Basra and Maysan to hire local labor. On Friday the general manager of the Maysan Oil Company in southern Iraq, Ali al-Bahadli said in a statement that the news reported by some media on the withdrawal of foreign personnel from the fields of the province is completely untrue, affirming that the cadres of foreign oil companies were operating normally and did not get any withdrawal. Bahadli considered this news as part of psychological warfare used by armed elements, warning some satellite channels of “spreading false news aimed at disturbing public opinion and harming the morale of Iraqis who are fighting a holy war against terrorism”. He vowed to “prosecute the channels that support terrorism,” according to the source. In the same vein, the Southern Oil Company announced its agreement with the local government in Basra on the employment of local labor from areas along the oil fields exclusively, denying that it had stopped production at the Zubair oil field. The Iraqi government says that about 100,000 policeman are standing on high alert and well armed to protect oil installations. The oil companies do not run the risk when it comes to the employees of foreign experts, who have become the prime target of armed groups such as ISIL and organized criminals who have taken control over a number of oil-rich cities. On Wednesday June 18, IraqiNews.com had reported on the evacuation of ExxonMobil and BP staff. ======================= Baghdad (IraqiNews.com) MP Suzan al-Saad, a member of the Parliamentary Oil and Energy Committee called to address the employment discrimination between the foreign employee and the Iraqi one in Maysan Oil Fields. Saad stated “During our visit to Maysan Oil Company on last Sunday, we observed several complaints among the workers there over the discrimination between the Iraqi employees and the foreign ones in terms of salaries and the services provided to them in spite of their parallelism in certificates and experience.” She stressed “We demand the Ministry of Oil to consider this issue to settle this problem.” “We also detected complaints concerning the ministerial contracts for those who work according to daily wages in the company,” she added, noting that “MoO did not fulfill its commitments in appointing the contracting employees on the permanent staff, therefore we demand to appoint them like their counterparts in other governmental institutions.” It is worth to be mentioned that the Iraqi Parliament has announced appointing the contracting employees on the permanent staff as well as accounting years of their service since 2003. = Apr 20, 2013 Maysan (IraqiNews.com) A Chinese company in Maysan province refused to allowed its Iraqi staff that are about 13 thousand employees to participate in the Provincial Councils elections.”The reporter of Iraqi News (IraqiNews.com) “A Chinese company in Maysan province refused to grant its employees a temporary vocation to participate in the elections,” noting that “The employees are about 13 thousands.” ======================================= The continued violence in Iraq looks like a harbinger of a sharp cutback from the world’s seventh-largest oil producer. But the bulk of Iraq’s production is still secure. Even though the Middle East has clearly become less stable, it will still take a cascade of problems to create a big oil price shock. The oilfields which account for around 90 percent of Iraq’s production are in the still peaceful south of the country, far from the conflict zones. Oilfield security is tight and has recently been increased. The evacuation of non-essential staff by BP and other foreign operators is not an immediate threat to output, since these large fields are predominantly staffed by locals. Oil exports were near record rates in June, according to industry sources cited by Reuters. Of course, the oil price would spike if every drop of Iraqi exports disappeared altogether. An Iraqi conflict that extended into the southern Shi’ite strongholds would be likely to spark trouble in other producers in the region. Current Iraqi production is 3.4 million barrels of oil a day, of which 2.7 million are exported. There is unlikely to be enough spare capacity elsewhere to compensate comfortably if supply suddenly dropped. The International Energy Agency is probably optimistic in its estimate that OPEC has 3.3 million daily barrels of effective spare capacity, four-fifths of which is in the hands of Saudi Arabia. The International Energy Agency is probably optimistic in its estimate that OPEC has 3.3 million daily barrels of effective spare capacity, four-fifths of which is in the hands of Saudi Arabia.Even if the Saudi capacity is not tested, the advance of Islamic State in Iraq and the Levant (ISIL) militants has made the whole Middle East look less safe for investment, with Iraq at the top of the worry list for foreign companies. That might discourage oil companies. The IEA’s forecast that Iraq will supply 60 percent of the growth in OPEC output for the rest of the decade was made in less volatile times.For now, though, it looks like the market’s assessment of the situation is about right. The price of a barrel of Brent has retreated from its nine-month high of $115. On Tuesday morning, it was trading around $114 a barrel, only 4 percent above the pre-insurgency level. Iraqi violence does not yet threaten the stability of the global oil market. Brent crude held near $114 a barrel on June 24 as data tracked by Reuters showed oil exports from Iraq’s southern terminals are near record highs in June. ========================

Iraq approves oil exploration deal with Kuwait Energy

Iraq approves oil exploration deal with Kuwait Energy Wed, Jan 09 10:05 AM EST By Ahmed Rasheed BAGHDAD, Jan 9 (Reuters) - Iraq has approved an oil exploration deal with a Kuwait Energy-led group, a senior oil official said on Wednesday, to take the place of Turkey's state-owned TPAO, which the cabinet decided to expel. Facing souring diplomatic ties with Turkey, Iraq asked Kuwait Energy last year to acquire TPAO's shares in exploration block 9. At the time, the Kuwaiti company held a 30 percent stake. "Kuwait Energy has acquired the stake of the Turkish company TPAO, and now it's holding 70 percent of the contract, and Dragon Oil PLC will hold 30 percent," Abdul-Mahdy al-Ameedi, director of the ministry's contracts directorate, said in an interview. Iraq's oil ministry plans to sign the final deal on Jan. 27, Ameedi said. Baghdad has been angered by Ankara's moves to forge closer ties with the Kurdistan Regional Government in northern Iraq, which is in a dispute with the federal government over oil and land rights. Turkey and Iraq have also accused each other of inciting sectarian tensions and have summoned each others' ambassadors in tit-for-tat manoeuvres. The contract provides the consortium rights to explore and develop oil block 9, which is located in Iraq's southern Basra province. OPEC member Iraq is expected to be the world's biggest source of new oil supplies over the next few years. It plans to open up more rounds for oil and gas blocks for auction. A handful of international companies won bids last May at Iraq's fourth energy auction, which had a poor showing because of tough contract terms drawn up by Baghdad. Iraq has offered foreign companies less attractive service agreements, in which they receive a fee rather than the Kurdistan's production-sharing deals, which allow them to profit jointly from the output. ========================= UPDATE 1-Iraq says has right to sue over unsanctioned oil exports Share this Email Print Related NewsIraq says reserves right to sue over oil exports 5:22am EST UPDATE 2-Defiant Kurds to truck more crude to Turkey-Genel Wed, Jan 9 2013 Iraqi Sunnis, Kurds boycott cabinet to back protests Tue, Jan 8 2013 UPDATE 2-Iraqi Kurdistan starts independent crude oil exports Tue, Jan 8 2013 UPDATE 4-Rosneft leads Russian oil output to new high Wed, Jan 2 2013Analysis & OpinionConcerns about current account deficit Islamists push own agenda in Iraq’s Sunni protests against Shi’ite power Related TopicsStocks » Markets » Energy » Industrials » Thu Jan 10, 2013 7:03am EST BAGHDAD Jan 10 (Reuters) - Iraq has the right to take legal action against oil companies exporting crude without dealing with the central government, including confiscating cargoes and suing sellers, buyers and transporters, the state-run SOMO oil company said on Thursday. A SOMO statement made no reference to any company, but it was released after Genel Energy said Iraq's autonomous Kurdistan region had given permission for the company to deliver some crude directly by truck to Turkey. Baghdad says only the central government has authority to export crude and sign oil deals. But Kurdistan says the constitution allows it to agree to contracts. It has signed with oil majors such as Exxon Mobil, angering Iraq officials who deem the Kurdish agreements unconstitutional. "The Iraqi Ministry of Oil and SOMO, shall reserve the right to take all legal actions against any company or entity that deal with bodies other than SOMO in addition to the confiscation of cargoes smuggled across borders as well as suing sellers, purchasers and transporters," it said. Crude reserves are at the heart of a wider dispute over territory, oilfields and political autonomy between Baghdad and the Kurdistan enclave in the country's north, where ethnic Kurds run their own regional government. Genel Energy said on Wednesday trucked exports from the Anglo-Turkish company's Taq Taq oilfield in Kurdistan could reach 20,000 barrels per day in a few weeks after starting with relatively small amounts. The move to truck oil directly to Turkey came after Kurdistan exports were halted through the Baghdad-controlled Iraq-Turkey pipeline because of a dispute over central government payments to oil companies working in Kurdistan. Baghdad has made one payment to companies, but Iraqi officials said last month they would not pay oil firms a second portion because Kurdistan had failed to reach agreed production under a deal made in September. The Kurdistan Regional Government is now negotiating for a pipeline to connect Kurdistan oilfields directly with Turkey, which would be a major step for the autonomous region to break its reliance on Baghdad's pipeline for export of its crude. =============

Iraq seeks to market more of its oil in Asia: SOMO

Baghdad (Platts)--16May2011/715 am EDT/1115 GMT

Iraq is looking to market more oil in the Asian market in response to strong demand growth in that region, the head of the State Oil Marketing Organization SOMO said Monday.

"In 2006, exports to eastern markets were between 25% and 28% [of total exports]... but now they are more than 60%," SOMO director general Falah al-Amri said at the Iraqi Extractive Industries Transparency Initiative conference.

Iraqi oil exports have been creeping up in recent months because of rising production, mainly from southern oil fields where foreign oil companies are operating under 20-year service contracts.

Iraq exported 2.141 million b/d of crude oil in April, slightly below the 2.2 million b/d exported in February, the first time that exports had topped 2 million b/d since early 2010, as new barrels came online from southern fields, mainly Rumaila, Zubair and West Qurna 1.

Iraq signed a dozen contracts with foreign oil companies after two bidding rounds to develop oil fields that will account for the majority of Iraq's planned production capacity increase to over 13 million b/d by 2017 from 2.7 million b/d currently.

"We have achieved an increase so far of 200-300,000 b/d from the bid rounds," Amri said.

On SOMO's marketing strategy, Amri said Iraq favored 1-2 year crude oil sales contracts "to stabilize oil marketing" rather than the six-month to one-year contracts sought by customers.

"We aim to export as much as we can at the highest price we can," Amri said.

Ali Nazar, who is in charge of SOMO's US marketing arm, said that Iraq was trying to attract new international companies that have large refineries, which he said were currently relying on Saudi Arabia and Kuwaiti supplies "because the are more stable" than Iraq.

"We are trying to expand Iraqi oil to more international markets... to rely more on important companies such as ExxonMobil, Shell and BP," because they operate in the upstream, midstream and downstream, Nazar said.

Iraq has based its 2011 budget on oil exports of 2.2 million b/d, including 100,000 b/d from the Kurdish provinces.

Nazar's presentation showed a breakdown of expected exports by SOMO in 2011 to its main export markets, with Asian sales again accounting for the highest volume and sales to the US edging up slightly.

Iraq expects to export an estimated 2.672 million b/d in 2011, with 1.463 million b/d going to the Asian market, 633,000 b/d to the US and 576,000 b/d to Europe. The higher export figure is contingent on completion later this year of the first phase of Iraq's export capacity expansion project from southern terminals.

The 2011 projected export figures compare with an average 2.235 million b/d exported in 2010, of which 1.113 million b/d went to the Asian market, 605,000 b/d to the US and 517,000 b/d to Europe.

In the second half of 2009, Iraqi oil exports averaged 2.1 million b/d -- 797,600 b/d to Asia, 683,000 b/d to the US and 633,000 b/d to Europe.

Nazar said that US sales accounted for 24% of exports in 2010, dismissing accusations that Washington had benefited from its 2003 invasion of Iraq by getting preferential oil deals. He noted that in 2004 the US accounted for over 50% of total Iraqi oil exports.

"The layman in the street says most of the oil goes to America," said Amri. "But we are not selling to countries, but to companies, based on the market."

--Ben Lando, newsdesk@platts.com

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