Halliburton (NYSE:HAL) has been awarded a contract by Eni to provide a range of integrated energy services for the redevelopment of the Zubair field in southern Iraq.

Work for the multi-million dollar contract is underway. Halliburton will perform services such as wire-line logging, perforating, acidizing and well testing on 20 wells.

“We are committed to providing Eni the critical services required to deliver on its goal of expanding production over the next several years,” said Dave Lesar, Halliburton’s Chairman, President and CEO.

“Halliburton has made a strategic investment in our Iraqi infrastructure and the award of this contract, coupled with the recent letter of intent awarded by Shell and its partners, demonstrates that we have the technology and people in place to deliver in Iraq.“

ShaMaran Petroleum, the Canadian oil and gas company, has announced that it has entered into an agreement with Aspect Energy International to acquire a one third stake in General Exploration Partners, a wholly owned subsidiary of Aspect.

The Kurdistan Regional Government of Iraq (“KRG”) and GEP are parties to a Production Sharing Contract dated November 10, 2007 (the “PSC”) in respect of the Atrush Block Oil and Gas Exploration Area located in the Kurdistan Region of Iraq (the “Atrush Block”). GEP currently owns 80% of the rights and obligations of the Contractor in the PSC and the Contract Area and the KRG owns the remaining 20%.

The Atrush Block is located immediately north and adjacent to the major new Shaikan discovery announced by Gulf Keystone Petroleum Ltd. in January 2010. The 2D seismic data over the Atrush Block indicates that the Atrush structure is similar to the Shaikan structure. The Shaikan discovery was announced as multiple stacked oil reservoirs in the Cretaceous, Jurassic and Triassic sections, with reported estimated potential resources between 1.9 billion barrels (P90) and 7.4 billion barrels (P10), with a mean of 4.2 billion barrels of oil (see Gulf Keystone website (www.gulfkeystone.com) – press release dated 14th January 2010.) The Atrush Block is also adjacent to and on trend with the recent Bijeel oil discovery to the east, operated by Kalegran Limited (MOL).

The Atrush 1 exploration well location has been approved and the well is expected to spud in September 2010. The well (planned depth of 3100 meters) is prognosed to encounter the same reservoir sections as Shaikan and will also test the structural extension of the Shaikan discovery into the Atrush block as indicated from the 2D seismic data. Of the ten expected target reservoirs in Atrush 1, nine were confirmed to be oil-bearing in Shaikan, while the Lower Kurra Chine encountered high pressure gas. There is also additional upside potential in the shallower Cretaceous Qamchuga formation, and the deeper Permian section (not reached in Shaikan), which is also indicated by seismic data to have closure in Atrush.

Under the terms of the agreement, ShaMaran BV has acquired 33.5% of the fully-diluted share capital of GEP in exchange for initial cash payments totaling $24.1 million, 12.5 million shares of ShaMaran, and a future obligation to contribute the next $15.9 million in cash which will be required to fund GEP’s operations (the Company has over USD $50 million in cash as of date to fund these commitments). Thereafter, each of the shareholders of GEP will fund operations pro-rata according to their participating interest (including its share of the KRG carried interest). All of the above mentioned payments, with the exception of the share consideration, will be added to a designated cost pool within GEP, to be repaid to ShaMaran BV out of future oil production which is attributable to petroleum cost recovery under the terms of the PSC.

Pradeep Kabra, President and CEO of ShaMaran, commented, “We are very excited about our partnership with Aspect and the opportunity to participate in one of the most exciting exploration blocks in the Kurdistan Region of Iraq.”

About ShaMaran

ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration vehicle. Its initial three projects in the region are the Pulkhana development/appraisal block and the Arbat and K42 exploration blocks. These projects are nearby and on trend with existing fields and recent discoveries.

Kurdistan lies within the northern extension of the Zagros Folded Belt. The area is highly underexplored and is currently undergoing a significant exploration and development campaign by over 30 mid to large size international oil companies.

ShaMaran Petroleum is a Canadian oil and gas company listed on the TSX Venture under the symbol “SNM”.

Kuwait-based Eastern National Oilfield Services (ENOS), a subsidiary of Kuwaiti Safat Energy Holding (KUW: SENERGY), has won a $7 million (8.2 billion Iraqi dinars) contract to provide oil well testing and digging services for an unnamed company in Iraq, according to a report from ADP News.

Safat Energy reportedly released the information in a statement to the Kuwait Stock Exchange (KSE) last week. The contract is valid for a period of two years, with a renewal option.

Safat Energy, formerly Hasibat Holding, is engaged in investment activities in the oil and gas sector. It holds controlling interest in several oilfield service companies. Through its subsidiaries, Safat Energy offers wire-line and production logging, drilling, perforating, well testing and stimulation, cementing, engineering design and consulting, facility construction and maintenance and other oilfield services. The company has operations in Kuwait, Iraq, Bahrain, Libya, the United Arab Emirates, China, Pakistan and Egypt.

(Source: ADP News)

Business Monitor International (BMI) has published a new report on business in Iraq.

Summary:

The oil sector contracts signed between Iraq and international energy companies in 2009 reflect the first stirrings of what the oil and gas industry hopes will be the reestablishment of a strong working relationship. Following years of underinvestment as a result of the economic sanctions imposed on Iraq following the 1991 Gulf War, Iraq is hoping to tap the expertise and capital of international oil companies (IOCs), their state-run national oil company (NOC) competitors and service companies in order to boost the technical capabilities of its infrastructure as well as the production and export capacities of the country’s crude oil, natural gas and refined products.

Owing to the 1991 Gulf War and subsequent UN sanctions Iraqi production suffered during the 1990s. The country was granted an exemption from OPEC production quotas while it operated under the auspices of the UN Oil-for-Food program, which allowed Iraq to export limited amounts of crude oil in exchange for the purchase of food and essential medical supplies.

Although the Oil-for-Food program was disbanded after 2003, Iraq still benefits from the OPEC quota exemption. BMI forecasts Iraq’s 2010 production at 2.47mn b/d, of which 1.62mn b/d will be exported, and the government plans to boost production to 12mn b/d by 2020-a production increase of 485% over the 10-year period. BMI sees this target as ambitious, forecasting 2020 output of 4.5mn b/d, but our projections still see 82% growth over the period.

While our outlook is sanguine, there are manifold risks to investment in the Iraqi oil and gas industry. In the long term, crude production growth will mean that Iraq will come under increasing pressure to rejoin the OPEC quota regime, presenting a potential cap on further output gains. In the short and medium term, Iraq’s large investment needs, political instability and security risks will all contribute negatively to the country’s energy sector aims. Furthermore, the role of ‘resource nationalism,’ particularly in a country with an insecure polity wary of foreign intervention, cannot be discounted in the upstream segment.

This can be discerned from the development contracts signed between Iraq and the various international companies jostling for position in the country’s energy investment plans. The final awardees originate from a broad spectrum of European and Asian countries, and only two US companies-ExxonMobil and Occidental Petroleum-were awarded contracts. Furthermore, the Iraqi government was keen to be seen as negotiating hard to obtain the best possible terms for the state, and the government has shown no hesitation in changing deal terms for its financial benefit. Earlier changes to contractual structures included a 5% decline rate provision for output above the applicable production targets, as well as changes in ownership structures to the benefit of the IOCs. Nonetheless, BMI believes that Iraq’s ambitious plans for its oil and gas sector present significant investment opportunities for foreign companies. Specifically, we have identified the country’s oil services sector, refining segment and natural gas industry as particularly attractive opportunities. We have highlighted below not only the nature of these opportunities, but the three most important risks that foreign investors will face in the Iraqi energy sector in the coming years.

The full report runs to 43pages, and is available at a price of £525 directly from Business Monitor International.

Iraq’s core inflation continued to slow in July, dropping to an annual rate of 1.7 percent from 2.7 percent in June, a central bank official said on Monday, according to a report from Reuters.

The bank gave no immediate explanation for the fall in core inflation, which excludes expenditures on fuel.

To spur investment and economic growth outside of the oil sector, which accounts for 95% of government revenues, the central bank has relaxed monetary policy and tried to encourage banks to lend.

As we reported last week, the central bank last week said that from Sept 1 it will cut commercial banks’ reserve requirements to 15 percent from 20 percent. In April it cut its key interest rate by 100 basis points to 6 percent due to subdued inflation.

Meanwhile, an Iraqi economist says the country’s inflation rate might “continue to grow” as the government has set a program of granting loans to citizens, especially public servants, until 2015.

Speaking to AKnews, Amer Hamad Jaberi said the government does not have a mechanism to control inflation.

“The instability in oil prices is also a significant problem which causes inflation rate in Iraq to increase,” said Jaberi.

He criticized the Iraqi government for relying heavily on oil revenues and overlooking other major areas like industry and agriculture.

(Sources: Reuters, AKnews)

AFP reports that 90 percent of the $1.9m batch of US-purchased computers destined for schoolchildren but allegedly sold off on the cheap have been recovered.

As we reported on Saturday, an unnamed senior official at Umm Qasr port had reportedly misappropriated the gift and auctioned the computers for just $45,700.

But customs chief Nofal Salim denied the claim, saying the sale was in accordance with a legal disposal procedure for all goods not claimed by the addressee 90 days after their arrival in Iraq.

“On May 19 we received a list from the port of Umm Qasr of containers arriving more than 90 days earlier and which had not been claimed,” Salim said.

“No container belonging to the American military appeared on the list.

“However, there were two belonging to a company named Global, although there was no indication that they were destined for the education authorities in Babil province.”

Global did not submit a claim for the containers until August 22, six months after their arrival, Salim said.

“The customs service in the south cancelled the sale and has recovered more than 90 percent of the cargo, which will be sent to the Umm Qasr port where the company can get them back.”

But in a statement received on Saturday the US military disputed Salim’s version of events.

“The disposition of the shipment was unknown until early April when the two containers, containing the computers, were identified through shipping documents,” a spokesman from the US army’s southern division told AFP.

“Once identified, US forces began coordinating transportation for the containers and computers from the port to Babil province.

“During this process the containers were declared abandoned by custom officials and subsequently put up for and sold at auction.”

The US army commander in southern Iraq, Major General Vincent Brooks, called on Friday for “an immediate investigation into the actions of the Umm Qasr official.”

Umm Qasr is a large port, and corruption issues led the British military to dismiss many officials there when they administered the facility following the 2003 US-led invasion that toppled Saddam Hussein.

(Source: AFP)

Iraq’s North Oil Company has drilled 31 new wells in latest bid to boost output from the aging Kirkuk’s oil fields, according to a report from Azzaman.

Oil first was pumped from Kirkuk more than seven decades ago.

Kirkuk’s fields, once believed to be one of the world’s largest, have seen their output fall to less than half a million barrels a day from nearly 2 million barrels in the past.

“We have completed the drilling of 13 wells out of 25 the company wants to drill this year,” the company’s director Kadhem Hussein said.

Currently Kirkuk fields produce a little more than 300,000 barrels a day. Output was estimated at nearly 1 million barrels before the 2003-U.S. invasion of Iraq.

The company is drilling new wells in various fields. This year’s plan calls for the drilling of 15 new wells in Aujail, six in Bas Hassan, two in Jumboor and two in Khabbaz.

The company has nine drilling towers with the capacity to drill wells to a depth of about 5,000 meters.

(Source: Azzaman)

The flow of crude oil from northern Iraq’s Kirkuk oilfields has again been interrupted, according to a report from Dow Jones.

Shipping agents report a technical fault since Sunday on the Turkish part of the Kirkuk-Ceyhan pipeline.

This is the third time the flow has been suspended this month, sometimes due to technical faults and other times blamed on sabotage. A week ago, a leak at a section of the pipeline near the Iraqi city of Mosul suspended the flow for five days.

Reuters-Balkans reports that the problem is electrical, and says that five tankers are waiting to load at Ceyhan.

(Sources: Dow Jones, Reuters-Balkans)