A security source in Basra Province revealed on Wednesday that Iran is preparing to drill an oil well 600 meters from the border of Iraq’s Basra province, and stressed that relevant government authorities were informed of this activity, according to Alsumarianews.

The source told the agency that border forces detected the installation of an Iranian drilling tower close to the Iraqi border.

The source who spoke under condition of anonymity said that “Iraqi forces noticed the presence of caravans and working machines and civilian cars in the project location”, pointing out that they reported what they saw to the relevant Iraqi authorities.

Iraq has 24 joint oil wells with Iran, Kuwait and Syria including 15 used wells while the others are not exploited. The most important of these fields are Safwan, Al Rumaila, and Al Zabir with Kuwait, and Majnoon, Abou Gharb, Bazerkan, Al Feka and Naft Al Khana with Iran.

Oil experts say that the majority of the area of these fields is situated in Iraq, but Iraq has not been as strong as its neighbours in technology and financial backing, and until now didn’t sign agreements with Iran and Kuwait about the exploitation of these wells because of problems in defining the borders.

In December 18, 2009 an Iranian force annexed the Al Fekka oil field east of Al Amara town, 305 km south of Baghdad and did not pull out till the end of January. The Algeria agreement signed in 1975 between deputy President at that time Saddam Hussein and Iran Shah Mohammed Reza Bahlawi, stipulates that Iraq and Iran shall demarcate their borders. In fact, the eastern half of Shat Al Arab was given to Iran in exchange for halting the Iranian support for Kurdish parties. However, in September 17, 1980 Saddam Hussein canceled the agreement and the two countries entered in a war that lasted until 1988.

(Source: Al Sumaria TV)

Iraq’s insurgents are targeting the country’s oil industry, according to a report by Joel Wing for AKnews. In June there were five attacks on oil-related infrastructure and personnel:

• June 5: Zubair oil field in Basra was attacked. Reports differ as to whether it was hit by bombs or rockets, but its oil storage facility was hit, setting its petroleum reserves on fire. The day before, Deputy Premier Hussein Shahristani who is in charge of the country’s energy policy had visited Zubair.
• June 15: Four bombs were found at the Daura [Duora, Dora] refinery in Baghdad. Officials said that it was an inside job, and several guards were arrested.
• June 22: A convoy carrying a delegation from the Iranian Oil Ministry through eastern Baghdad was shot at and two guards were wounded. The cars belonged to the Oil Ministry, and it was unclear whether the assault was aimed at the Iranians or the government vehicles.
• June 24: Baiji [Bayji, Beiji] refinery (pictured) in Salahaddin was bombed. First reports simply said an explosion occurred at the facility, which caused a fire that took four hours to put out. It was then revealed that the cause was a bomb that went off near a gas pipeline around 2:30 am, but which did not cause any major damage.
• June 27: a rocket was fired at the Shuaiba oil refinery in Basra, and the police found two other rockets before they went off.

These were the first attacks on Iraq’s petroleum sector since March, which points to a new campaign to undermine the nation’s most important resource.

The last time oil facilities were targeted was in March, when the northern Kirkuk-Ceyhan pipeline was bombed, closing it for five days for repairs. The fact that the Zubair field was hit and the Shuaiba refinery was targeted was also something new, as the southern fields, which hold the vast majority of Iraq’s reserves, have not been threatened for years.

(Source: AKnews)

Cyprus Airways has added two new Middle Eastern destinations to its schedule, with flights to Erbil in Northern Iraq starting on 4th July, and flights to the Iranian capital Tehran starting on 7th July.

At Erbil the first four flights will be chartered and will operate with a frequency of one per week, but the expectation is to increase this frequency.

The opening of this new service is the result of cooperation between Cyprus Airways with the tourist agency MERJAN, which is among the largest in Northern Iraq.

Both destinations are completely new to the Cypriot market, which should have a positive impact on tourism.

(Source: Cyprus Airways)

TNT Mateen Express Iraq, the global business to business express delivery company, can now delivery parcels inside the International Zone, formerly known as the Green Zone. Located in Baghdad city, the International Zone embraces major multinational companies and is also known as the diplomatic and government district.

TNT Mateen Express can now deliver and pick up consignments from the International Zone during working hours which will certainly assist the company expanding its presence in the Iraqi market.

Following a thorough selection process, TNT Express has recently signed a partnership with Mateen Express as its exclusive associate in Iraq.

Wasfi Barzanji, CEO of TNT Mateen Express, commented: “Accessing the International Zone is one step forward towards our expansion plan in the local market. Our association with TNT Express enabled us to increase our daily flights to six flights per week for Export and 14 cargo flights to different Airports in Iraq.”

Mateen Express has a proven experience as one of the leading domestic express operators in Iraq. It also has an extensive presence in the United Arab Emirates and China, as well as considerable expansion plans for Germany, Turkey and Malaysia beside a strong channel of agents in more than 70 countries.

“We are the only Express operators offering such frequency, this has strengthen our position in the local market and allowed us to respond more efficiently to meet our customers’ demands, “added Barzanji.

Tim Frank, General Manager of TNT Express, Middle East and Sub Continent Associates said:”I am very pleased with this achievement. TNT Express has always aimed to be the fastest and most reliable on-demand express delivery company and Mateen Express has proven our vision in exceeding our customers’ expectations.”

Levels of violence rose again in Iraq last week, as part of what appears to be a gradual trend which has evolved over the past six months. Last week saw attacks concentrated around Baghdad, Mosul and Kirkuk, with several more incidents in Anbar, Diyala and Salah ad-Din provinces. The southern provinces have also seen a slight rise in militant activity of late. As well as the police, Iraqi army and government, the US military and other foreign interests have also been singled out in a number of recent attacks. It appears that June has been the deadliest month for US troops in a long time. The past fortnight has also seen a number of attacks against what should be well defended compounds. Organisations are therefore advised to review the security measures at their accommodation and place of work. For further details please email akebaghdad@akegroup.com.

Weekly Attacks in Iraq - conditions have gradually worsened over the last 6 months

North

Kurdistan remains quiet with no incidents reported last week. However, conditions worsened in the neighbouring provinces of Ninawa and Ta’mim. There were four reported kidnaps in Kirkuk, targeting professionals or their family members, with the responsible criminals likely hoping to secure a ransom for the victims’ release. Kidnap for ransom remains an ongoing concern in Iraq, and the country remains one of AKE’s top 10 world kidnap hotspots. If you would like to receive our upcoming quarterly kidnap report please email intel@akegroup.com for details.

Central

There was a rise in terrorist activity in the central provinces last week, with several attacks, predominantly in the districts surrounding Baghdad and in towns along Highway One as it passes through Salah ad-Din province. In the capital a series of bombs in a market area in Shurtah ar-Rabi’ah district left 25 people dead and 35 injured, while several more attacks (including some involving the use of sticky bombs) took place in districts which are normally well patrolled by the security forces, such as Jadriyah and Karradah. Militants appear to have become more emboldened in the city and organisations are advised to review their security measures as a result.

South

The southern provinces are still more quiet than some of the central and northern provinces but incidents have been occurring more frequently over recent weeks, with a rise in the number of indirect fire attacks (rockets and mortars) and roadside bombings, particularly targeting US military bases, secure compounds and airports. While the majority of attacks are being conducted by anti-foreign Shi’ah militia groups recent suicide attacks against a police compound in Basrah and a provincial government facility in Diwaniyah demonstrate that radical Sunni groups are also attempting to conduct attacks in the area. Organisations are advised to review the security measures at their accommodation and place of work while transport arrangements should also be re-examined amid the risk of roadside attacks, most of which are targeting high profile convoys and military patrols. For further information and advice please contact akebaghdad@akegroup.com

John Drake is a senior risk consultant with AKE, a British private security firm working in Iraq from before 2003. Further details on the company can be found here while AKE’s intelligence and political risk website Global IntAKE can be accessed here.

You can obtain a free trial of AKE’s intelligence reports here.
You can also follow John Drake on twitter here.

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There was more sabre rattling on the Iraqi political scene this week, as the Speaker of parliament, Osama al-Nujaifi, hinted at the possibility of a break-away Sunni state.

His statements follow indications, finally, from Prime Minister Nouri al-Maliki to the effect that ministerial heads may metaphorically roll as a result of their poor performance.

These stories, against a background of increasing violence, have perhaps distracted attention from the fact that the Development Fund for Iraq (DFI), which was set up after the 2003 war to handle oil and other revenues, reverts to Iraqi control from tomorrow, 30th June.

The sums involved are immense, and it is essential that they are handled professionally. We can expect some clarification from the International Advisory and Monitoring Board (IAMB) on Thursday regarding the future management of the fund.

Update, RBC Capital Markets opinion: albeit the size of the contract is not material compared to Petrofac’s backlog, we believe that any positive developments from Iraq should be seen as a positive step for Petrofac. This region becomes increasingly strategic, especially for the newly created Integrated Energy Services (IES). This contract award follows the EPC for the early production facility of the Shell-operated Majnoon field ($240m in March) demonstrating PFC’s ability to build a presence in the country.

Petrofac, the international oil & gas facilities service provider, announces that BP Iraq NV (BP) has awarded Petrofac and its joint venture partner, China Petroleum Engineering & Construction Corporation (CPECC), an inspection, maintenance and repair contract worth US$90 million for the Rumaila oil field in Southern Iraq.

Petrofac’s Offshore Engineering & Operations (OE&O) business will lead the one-year contract, which is effective from 28 June 2011, and is worth US$63 million to the group. Work will commence following a short transition and the scope of the contract covers rotating machinery, degassing stations and cluster stations. The project is being undertaken in partnership with CPECC, a company which has well established operations and infrastructure in Iraq. As part of the agreement Petrofac’s staff will be based at CPECC’s accommodation facilities in Rumaila.

Commenting on the award, Petrofac’s group chief operating officer, Maroun Semaan, said: “We continue to be focused on our ongoing activities in Iraq and this most recent contract win demonstrates our strategic intent to grow the breadth and depth of our service delivery within the country. It also provides an excellent opportunity for us to establish closer relations with the BP Iraq team and to continue to develop our own in-country knowledge and presence.”

Bill Dunnett, managing director, Petrofac OE&O added:

“We’re delighted to be able to continue to support our existing customer, BP, in its onshore operations and to build on our relationship which started in the UK North Sea and developed more recently when we took over the operatorship of the Sajaa asset in Sharjah earlier this year. This contract will be run from our operating centre in Sharjah and we hope it will further establish our capability both in the country and the region to maximise any future opportunities.“

The Rumaila oil field, discovered by BP in 1953, is located in Southern Iraq, 32km from the country’s border with Kuwait.

WesternZagros Resources has announced its results for the period ended March 31, 2011, key highlights, and activities to date.

On May 31, 2011, WesternZagros made an oil discovery in the Jeribe Formation at the Sarqala-1 exploration well. The Company tested the well at rates up to 9,444 barrels per day of 40 degree API oil. This rate was reached after flowing and stabilizing the well at progressively bigger choke sizes until reaching the limits of the surface equipment. The final rate was achieved on a 52/64 inch choke with a wellhead pressure of 2,475 psi. No water was produced during this initial testing program. No stimulation was applied to the well but there remains the potential to do so at a later date. Efforts will now be directed toward evaluating and sourcing surface equipment and trucking facilities by the end of 2011 to start producing and selling oil during an extended well testing program.

Subsequent to March 31, 2011, the Company concluded negotiations with the Ministry of Natural Resources of the Kurdistan Regional Government of Iraq (“KRG”) and Talisman (Block K44) B.V. (“Talisman”) to amend the Production Sharing Contract (“the “Original PSC”) that governs the Company’s exploration activities in the Kalar-Bawanoor Block in Kurdistan. Once approved, the amendments will divide the contract area of the Original PSC into two contract areas, each under a separate PSC. The northern contract area (comprising some 340 square kilometres) will remain under an amended version of the Original PSC (the “Kurdamir PSC”) and will be called the Kurdamir Block. The southern contract area (comprising some 1,780 square kilometres) will be governed under a new Garmian PSC and will be known as the Garmian Block. The Company is awaiting formal approval of both the Kurdamir and Garmian PSC’s from the Oil and Gas Council of the KRG and execution of the PSC’s by the KRG. The PSC’s will extend the time available to complete the remaining first exploration sub-period work obligations to drill Mil Qasim-1 by December 31, 2011, and will add an additional well commitment to drill Kurdamir-2 by June 30, 2012. WesternZagros’ 40 percent ownership and other economic terms will remain unchanged in both the Kurdamir PSC and the Garmian PSC.

Commenting on the first quarter results and subsequent events, WesternZagros Chief Executive Officer Simon Hatfield said:

“We are pleased with the negotiated amendments to the Original PSC to enable us to focus our efforts on our drilling operations over the next year. The Company is looking forward with great anticipation to evaluating the full potential of the Sarqala-1 oil discovery through an extended well testing program. We’re proceeding with our target of discovering over one billion barrels of oil equivalent through drilling the next two wells at Mil Qasim-1 and Kurdamir-2.“

Summary of Exploration Activities Completed and Exploration Opportunities Being Pursued

About Kurdamir

- WesternZagros began drilling the Kurdamir-1 well in May 2009, and announced a large Oligocene gas and condensate discovery in November 2009. The well reached a total depth of 4,077 metres in January 2010. Testing performed in December 2010 confirmed an oil column in the Oligocene reservoir at Kurdamir-1 beneath the gas cap. Technical analysis of the oil shows encountered in the well to date support oil potential in the Oligocene, Eocene and Cretaceous formations. Under the Kurdamir PSC, the Kurdamir-2 well will be required to be drilled by June 30, 2012 and it is expected to commence drilling in the fourth quarter of 2011.

About Sarqala

- WesternZagros began drilling the Sarqala-1 well in May 2008 and suspended the well in early 2009. In March 2011, the Company re-entered the well and drilled a 100 metre sidetrack through the Jeribe Formation. The Company confirmed an oil discovery in the Jeribe Formation after flowing light, 40 degree API oil. Currently the Company is evaluating and preparing for an extended well test at Sarqala-1 by the end of 2011 including sourcing the required surface and trucking facilities to start producing and selling oil.

About Mil Qasim

- Mil Qasim is a structure, the crest of which lies approximately three kilometres from the Sarqala-1 well. Target reservoirs are Upper Fars sandstones, which are anticipated to be oil bearing. The Mil Qasim-1 well must be drilled by December 31, 2011 and it is expected to commence drilling in July 2011.

About Qulijan and Baran

- Qulijan and Baran are attractive prospects located close to the Kurdamir-1 discovery well. Both Qulijan and Baran are anticline structures with upside potential related to the fault that separates them from Kurdamir in the Oligocene, Eocene and Cretaceous Formations.

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