Preparations are being made for a fourth auction of oil and natural gas exploration zones. This will be in line with the country’s aim to rival Saudi Arabia as one of the world’s leading oil producers.

Iraq’s official statistics reveal that oil reserves are pegged at 143.1 billion barrels, the fourth largest in the world.  However the former oil minister who is now deputy prime minister Hussain al-Shahristani says the country has potential reserves of over 214 billion barrels.

Iraq’s Oil Ministry revealed that 12 new exploration zones will be auctioned off on Wednesday May 30^{th –} Thursday 31^st May 2012. All of the exploration zones are in remote areas which in turn makes them vulnerable to insurgent attacks.

The zones are mainly situated in Western and Central Iraq and companies who win the licenses will have to be able to commit to spending $90 million – 200 million.

Analysts state that Shahristani (Pictured) initially aimed to boost production to 10 million – 12 million bpd by 2017, this will not occur due to the underdeveloped infrastructure, the boost in production has been pushed back to 2020. “While the government’s most ambitious targets suggest 12 million – 13 million bpd by 2020 is theoretically possible, an output plateau of around 6 million – 7 million appears more likely” according to Oxford Analytica. Even this would earn the Iraqi Government $1 billion per day to fund on-going national reconstruction.

(Source: UPI)

Halliburton has won a $95 million contract from Russian state oil producer Gazprom Neft to test and complete 11 wells at its Badra oil field in eastern Iraq, according to the Wall Street Journal.

Gazprom said testing of the first well is scheduled to start in the third quarter of this year. “Production will commence once the final field development plan is completed in 2013,” the Russian firm said.

The field, which has estimated reserves of 100 million barrels of oil, is being developed by Gazprom (30%), Korea’s KOGAS (22.5%), Malaysia’s Petronas (15%), Turkey’s TPAO (7.5%), and Iraq (25%).

(Source: Wall Street Journal)

The Chinese firm Zhenhua has decided not to partner with Pakistan Petroleum Limited (PPL) in a bid for an exploration block in Iraq due to security issues, the Express Tribune reports.

“The News”, however, reports that Zhenhua walked out on the deal because a re-drawing of the boundary of the Bloc-9 meant “the opportunity became sub-economical for Zhenhua”.

Despite the development, Pakistan’s Economic Coordination Committee (ECC) has approved PPL’s plan to proceed with the project.

The company’s had been expected to make an investment of $200 million if their bid would have been accepted. PPL would have had 49% stake and Zhenhua 51% share, with the right to increase its share up to 70%.

“PPL is still in favour of investing in Iraq despite its partner walking away,” officials said.

(Source: Express Tribune, The News)

Russia’s Gazprom Neft is expecting to start exporting from its East Badrah oil field in Wasit [Wassit] province early next year, according to AKnews.

Alexander V Kolomatsky, Project director for the Middle East at Gazprom, said the company had initially planned to reach the 15,000 bpd level by the last quarter of 2013 because the oil field, which is near Iraq’s border with Iran, had to be first cleared of landmines.

But progress in the de-mining work however has led to this figure being pulled forward to early 2013, with 60,000 bpd expected by mid year, and 120,000 bpd by the beginning of 2014.

The field, which has estimated reserves of 100 million barrels of oil, is being developed by Gazprom (30%), Korea’s KOGAS (22.5%), Malaysia’s Petronas (15%), Turkey’s TPAO (7.5%), and Iraq (25%).

(Source: AKnews. Iraq Energy)

Iran and Iraq will start new round of talks in Tehran on 26th May on issues such as developing the Sohrab joint oilfield and establishing a joint oil company, Iran’s Mehr News Agency reports.

The managing director of the National Iranian Central Oilfields Company, Mehdi Fakour, said that eight drilling rigs are currently in operation in oilfields that are shared with Iraq, and that the output is “satisfactory”.

Iran reportedly produces 68,000 barrels per day of crude oil from four oilfields associated with Iraq: Naftshahr, Paydar Gharb, Dehloran and Aban.

Oil Minister Rostam Qasemi said in August 2011 that the Iranian government should consider plans for the development of joint oilfields in the border areas with Iraq.

By the end of the fifth development plan (2015), the country’s oil production must increase to 5.2 million barrels per day (bpd) and this should happen from the country’s joint fields,” the ISNA News Agency quoted Qasemi as saying.

In January, Iran and Iraq announced that the two countries have reached an agreement to develop joint oil fields in border areas to increase their crude output.

(Source: Tehran Times)

In preparation for the World Energy Outlook (WEO) 2012 special report on the Iraq energy outlook, the International Energy Agency (IEA) held an informal one-day workshop in Istanbul, Turkey on 4 May 2012.

The workshop was chaired by Dr. Fatih Birol, IEA Chief Economist, and had some 85 attendees, including His Excellency Thamir Ghadhban, Chairman of the Prime Minister’s Advisory Commission in Iraq, who welcomed the WEO study.

There was strong participation from Iraqi government representatives (at both federal and regional level), as well as representatives from other governments, high-level international experts, oil and gas companies, utilities and international organisations, which served as a reflection of the importance of this work.

In 2012, the IEA will be conducting a comprehensive analytical study of the energy outlook for Iraq as part of its annual flagship publication, the World Energy Outlook. The study will be released as a special report on 9 October 2012 and is being conducted with the support and close cooperation of the Government of Iraq.

The aim of the workshop, organised by the IEA with the support of the Turkish Ministry of Energy and Natural Resources, was to seek insights and information from high-level experts in industry, policymaking and other relevant stakeholders in various parts of the world to exchange views on Iraqi energy perspectives. The results of the meeting will help to shape the key findings and messages of this year’s World Energy Outlook.

(Source: International Energy Agency)

In its Interim Management Statement this morning, oil explorer Afren gave the following update on its operations in Iraqi Kurdistan:

Barda Rash

Having received all necessary approvals of the Field Development Plan (FDP) for Barda Rash during November 2011, the Company has commenced the development programme that will initially target approximately 500 million barrels of light recoverable oil out of the independently assessed 1.43 billion barrels total recoverable volume.

Phase I development work is focused on the existing BR-1, BR-2 and BR-3 wells that have been drilled at the field to date. The three wells will be sequentially re-entered, worked over, tested, completed and bought onstream. The wells will be tied back to a modular Early Production Facility that is being installed at the central BR-1 well location. Assembly of the Romfor 23 rig has been completed at the BR-1 well location, and final preparations are being made to re-enter the well.

The Company is on track to commence production at Barda Rash by August, and expects all three wells to be onstream and producing at a rate of between 10,000 bopd to 15,000 bopd by year end. Acquisition of a comprehensive block wide 3D seismic survey has also commenced and is progressing well. The objective of the survey is to provide additional data that will assist in future development planning and well placement combined with enhancement of the Company’s understanding of fracture zone distribution.

Post completion of this initial phase, the Company will commence the drilling and completion of multiple new development wells with the intention of increasing production to a planned trucking capacity of 35,000 bopd and ultimately to a targeted 125,000 bopd by 2017. Following this, the Company will focus on the development and production of the heavier oil resources, which will offer further large scale production growth.

In a step that further builds its resource base in the Kurdistan Region of Iraq, Genel Energy  announced on Monday that it is to acquire a 23 per cent stake in the Bina Bawi exploration licence. The Bina Bawi licence lies alongside the producing Taq Taq oilfield where current potential output is some 80,000 barrels a day and is projected to rise to some 200,000 barrels a day.

Bina Bawi licence covers an area of 246 square kilometres to the east of Erbil. Genel said two of the three wells drilled on the block to date had encountered significant hydrocarbons.

The acquisition will be made through the purchase for $175 million of all of the share capital of A&T Petroleum Company Ltd, current holders of the stake. A&T is wholly owned by Petoil Petroleum and Petroleum Products International Exploration and Production Inc. The deal will be financed from Genel’s existing cash resources.

Genel CEO Tony Hayward said:

“What we are acquiring is very high-quality acreage in an area immediately adjacent to Taq Taq, one of our major established fields which we plan in due course to link by a pipe line to the region’s main export pipeline from Kirkuk to Ceyhan.

“The transaction fits neatly with our strategy of building our Kurdistan resource base through the steady, considered addition of promising acreage.“

Genel said the first well drilled on the block in 2007 on a large surface anticline Bina Bawi-1, had encountered significant shows of 35-degree API oil while drilling through the Cretaceous zone and tested 6 million standard cubic feet of gas a day in the Triassic zone.

The third well, Bina Bawi-3, completed recently by block operator OMV on the same structure, had encountered a gross hydrocarbon column of more than 800 metres in the Jurassic zone. Two Jurassic reservoir intervals tested separately had achieved an aggregate flow rate of more than 4,000 barrels a day of light, 44 to 47-degree API oil.

Genel said a further gross hydrocarbon column, estimated at over 1,000 metres, in the Triassic zone of Bina Bawi-3, remained untested but had confirmed the gas find made in the first well in 2007.

The overall results of Bina Bawi-3 continue to be reviewed, including the evaluation of deeper potential targets in the Triassic reservoirs. Further exploration/appraisal drilling is planned for this year and next, along with an early production test that should start up in early 2013.

“Our estimate is that the Bina Bawi discovery has contingent resources of some 500 million to 1 billion barrels of oil and oil equivalent, with some additional prospective upside,” Hayward said.

On completion of the purchase, which is subject to various consents, approvals and assurances, including from the Kurdistan Regional Government (KRG), Genel Energy will hold a 23 per cent interest in the Bina Bawi production sharing contract, OMV a 36 per cent operated interest and Prime Natural Resources a 21 per cent interest. The KRG will retain a 20 per cent working interest which is carried by the contractors on a pro rata basis.

“Genel Energy is already the biggest oil producer in the region and has one of the strongest reserves base” Hayward said. “This deal enhances that position and confirms our continuing confidence in the immense potential of the Kurdistan Region and our determination to play a leading role in its ongoing development.“