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The latest oil and gas news from Iraq – refineries, production and more – brought to you by Iraq Business News

Petrofac Results and Operational Update

By John Lee.

In its final results announcement this morning, Petrofac gave the following update on its operations in Iraq:

Maintenance services, Iraq

In August 2013, we were awarded a second contract by Gazprom Neft Badra B.V. (Gazprom) on the Badra oil field, situated 160 kilometres southeast of Baghdad. Worth US$95 million over three years, we will provide maintenance engineering, maintenance execution and support services.

The award builds on a previous contract to carry out the EPC work on the first phase of the field’s processing facilities. Iraq is an important geography for us, and this award reflects our ability to provide quality maintenance and engineering services on technically and logistically challenging projects in the region.

Operations and maintenance services, Iraq

In October 2013, we announced a contract extension with SOC for its Iraq Crude Oil Expansion Project. The 12-month extension, worth around US$100 million, includes additional scope for operations and maintenance services.

The extension follows the original award made in 2012, which covered operations and maintenance services on offshore facilities, including: an offshore platform, metering station, two single point moorings, subsea pipelines and tanker operations, all based 60 kilometres offshore the Al Fao Peninsula in Southern Iraq.

The extension covers two additional single point moorings and a central metering and maintenance platform. During the first year of the contract, we achieved some significant milestones on behalf of our customer SOC, including the export of 240 million barrels of oil and one million man-hours worked without a lost time incident.

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Iraqi Oil Exports To Triple: Smit Lamnalco Secures Major O&M Contract

Smit Lamnalco has secured the turnkey contract to support Single Point Mooring operations for The Iraq Crude Oil Export Expansion Project (ICOEEP). The scheme, 20 km off the Al Fao Peninsula, looks to triple oil exports from Iraq.

The SPM contract covers operations and maintenance of four SPM systems and runs for up to three years, a term that would generate over US$200 million for Smit Lamnalco. The agreement involves the full scope of maritime support services for the export facilities. It follows hard on the heels of an over-arching support and maintenance agreement reached between Iraq’s South Oil Company and oil and gas service provider Petrofac in August. Smit Lamnalco will be responsible for the majority of the work scope and will purchase seven new vessels to support the contract.

“This is one of the largest ever SPM operations and maintenance contracts in annualised terms,” said Daan Koornneef, Smit Lamnalco Chief Executive. “It is also one of our most complex SPM projects to date due to its short start-up phase, regional logistics and the operational complexity involved in delivering the full package of integrated maritime services.

“The scale of the contract bears testament to customer confidence in our enhanced capabilities following the merger of Smit’s terminal handling activities with Lamnalco in July 2011. It is a major step towards our goal of becoming the leading supplier of cost effective marine support services in the world.”

Smit Lamnalco owns, operates and crews one of the most modern marine and offshore support fleets in the industry. To meet the ICOEEP requirements, the company will mobilise up to 14 vessels ranging from high powered berthing tugs, maintenance vessels and mooring boats, to an accommodation barge and a patrol vessel. As part of its commitment, Smit Lamnalco has contracted two newbuild tugs from Damen, with delivery due one apiece in October and November 2012.

“We provide expertise which is local and regional, and combine that with strict adherence to international standards and Smit Lamnalco’s global reach,” said Vivek Seth, Smit Lamnalco Managing Director, Middle East and Indian subcontinent. “Asset deployment will be backed up by extensive Masters, Officers and crew training in operational procedures and safe vessel loading. We will provide diving capabilities as part of the package to support the uninterrupted loading of tankers. Furthermore, a dedicated team of onshore management will oversee supporting logistics arrangements.”

In total, close to 200 Smit Lamnalco employees will be deployed to service the ICOEEP.


Sources: Smit Lamnalco; SeaNews Turkey

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Kurdistan Takes Next Step Towards Oil Agreement With The Central Government

A new age is dawning over oil in Iraq, as this week sees several important steps made towards agreement between two powerful political centers.

Kurdistan, the semi-autonomous territory in Iraq,  has agreed to keep exports steady at 140,000bpd and then raise them to 200,000bpd by the end of the year, according to Reuters.

We wrote this week that Baghdad took the first step in settling the ongoing dispute over oil and oil payments with its northern region by agreeing to pay oil companies operating there. In return, we learn today, Kurdistan has made these promises on oil exports.

Kurdistan halted shipments of oil earlier this year in a sign of protest, because the central goverment refused to honor the region’s contracts with oil companies, branding them illegal. Baghdad has also threatened to reduce Kurdistan’s share of the budget by billions of dollars.

The revenue from the restarted exports will quickly amount to billions of dollars. The central government currently needs to pay less than $1bn to the oil companies.

The steps taken this week bring the two sides closer to being able to agree a legal framework for future oil deals and oil revenues.

Oil companies operating in the region, such as Gulf Keystone saw their share prices rise on the news.


Sources: Reuters; Kurdistan Alliance.

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Baghdad and Erbil Reach Agreement On Oil

The central government of Iraq has agreed to pay the oil companies operating in Kurdistan, the northern, semi-autonomous region of Iraq, and to raise oil production to 200,000 barrels per day.

The official Iraqiya TV station announced on Thursday that “A meeting was held between the two Governments to settle the pending issues between both sides where the meeting reached an agreement to pay the dues of the oil companies working at the Kurdistan Region and to continue exporting the oil and increase its production of oil up to 200,000 barrel per day.”

But a spokesperson for Iraqi Prime Minister Nouri al-Maliki said a few weeks ago that the Kurdistan Regional Government could have up to $3bn deducted from its near $11bn budget as a punishment for signing “illegal” energy deals with oil companies.

The central and regional government have been unable to agree a common oil and gas law since one was first presented in 2007.





Sources: AIN; reuters

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Siemens Wins $129m Contract To Supply Gas Turbines And Generators

Siemens will supply Khormala gas turbine power plant in northern Iraq with four SGT5-2000E gas turbines and four SGen5-100A generators along with the associated auxiliary and ancillary systems. The customer is the KAR Construction and Engineering Company Ltd., which is erecting the Khormala plant for the independent power producer KAR Group headquartered in the city of Erbil. Commissioning is scheduled for 2013. The order value for Siemens is worth more than USD129m.

The four-unit Khormala gas turbine power plant is located 25 kilometers south of Erbil, the region’s capital, which falls under the administrative authority of the Kurdistan Regional Government (KRG). With an installed electrical generating capacity of 640 megawatts (MW), this is the first major power plant project for the KAR Group, who will also operate the facility. Plant output is enough to meet roughly one quarter of the region’s power demand, delivering electricity to over four million people.

Siemens Energy Sector is the world’s leading supplier of a complete spectrum of products, services and solutions for power generation in thermal power plants and using renewables, power transmission in grids and for the extraction, processing and transport of oil and gas.

Earlier this year, Dietmar Siersdorfer, Siemens Energy CEO, Middle East, said:

Iraq is facing acute and critical challenges in providing reliable power to all the country’s residents and Siemens is fully committed to assisting the Ministry of Electricity in meeting those challenges.

We have a long history in Iraq and the wider Middle East, and understand that this is an issue of utmost importance to the Ministry and the people of Iraq. With our complete portfolio of proven products and service solutions, we are well-positioned to address this issue.




Sources: Siemens

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ShaMaran Announces Atrush-2 Well Tests Over 42,200bpd

ShaMaran Petroleum Corp has announced results of the Atrush-2 appraisal well (AT-2) drilled 3.1 kilometres to the east and downdip of the Atrush-1 discovery well in the Kurdistan Region of Iraq.

The AT-2 well was spudded on 23rd May 2012 and successfully reached the planned total depth of 1750 meters in 49 days. The well was drilled on time and 30% under budget. The Jurassic Barsarin-Sargelu-Alan-Mus (BSAM) reservoir Oil Down To was found 97 metres deeper than that encountered in AT-1. Reservoir intervals within the Jurassic Adaiyah and the upper part of the Butmah formation were also found to be oil-bearing.

Separate cased hole drill stem tests were conducted over three of the formations in the BSAM reservoir. Rates totaling 42,212 barrels of oil per day (bpd) were achieved (approximately 27 degree API). The test rates were limited by surface testing equipment. None of the tests had measurable amounts of formation water.

Separate tests were also conducted in the Butmah (open hole) and Adaiyah (cased hole) formations. The highly fractured upper part of the Butmah flowed up to a maximum of 1,450 barrels of fluid per day under nitrogen lift and towards the end of the test was producing 100% 9 degree API oil. A reservoir zone within the Adaiyah anhydrite flowed up to 650bpd of 11 degree API of dry oil. In accordance with the requirement of the Production Sharing Contract, GEP has presented a notice of Discovery to the Ministry of Natural Resources of Kurdistan for the Adaiyah & Butmah.

Meanwhile in the eastern part of the Atrush block, the second phase of the 3D seismic acquisition was completed in August 2012, providing GEP with 3D coverage of the entire Block. Tendering is underway for the lease of an Extended Well Test Facility (EWTF) with an award expected shortly. Plans are for a re-completed AT-1 to be connected to the EWTF with first oil in early 2013.

The Atrush Block is operated by the joint-venture company General Exploration Partners Inc. (GEP) which holds an 80% working interest in the Block. Aspect Holdings, LLC through its Aspect Energy International LLC subsidiary has a 66.5% interest and ShaMaran Petroleum Corp. through its wholly owned subsidiary, ShaMaran Ventures BV, holds a 33.5% interest in GEP. Marathon Oil KDV B.V., a wholly owned subsidiary of Marathon Oil Corporation (NYSE: MRO), holds a 20 percent interest in the block.

Pradeep Kabra, President and CEO of ShaMaran (pictured), commented: “The results from the Atrush 2 well demonstrated the excellent production capability of the BSAM reservoir and the discovery of additional resource potential of the Butmah and Adaiyah. We commend the operator GEP on the outstanding job done by them during the drilling and testing of the well and look forward to continuing our work with the Kurdistan Regional Government to appraise and develop this world class discovery.”

ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration vehicle. ShaMaran Petroleum is a Canadian oil and gas company listed on the TSX Venture Exchange under the symbol SNM as well as NASDAQ OMX First North under the symbol SNM.

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Gulf Keystone Half-Year Report To June 2012

Gulf Keystone, an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq, today announces its results for the six months ended 30 June 2012.


Operational – to 30 June 2012 and post period end

Shaikan (75% working interest; Operator) [Shaikan-2 is pictured.]

· 83% increase in gross oil-in-place numbers (PMean) for the Shaikan discovery with a new range of 12.4 billion (P90) to 15.0 billion (P10) barrels, with a mean value of 13.7 billion barrels, following independent evaluation by Dynamic Global Advisors (“DGA”) in July 2012
· Completion of the agreed five-well appraisal programme of the Shaikan field with the drilling of the Shaikan -4, -5 and -6 appraisal wells and testing of Shaikan -4 and -6
· Submission of the Declaration of Commercial Discovery for the Shaikan field with effect from
1 August 2012
· Spudding of Shaikan-8, the first post-appraisal well
· Ongoing work on the Shaikan Field Development Plan to be submitted within 180 days following the Declaration of Commercial Discovery
· Construction of two new early production facilities (PF -1 and -2, formerly known as EWT -1 and -2) is nearing completion, with the first unit due to become operational in January 2013 and the second by the end of the first quarter 2013
· Following completion of the preliminary design work, awaiting confirmation of the final route of the Shaikan export pipeline

Sheikh Adi (80% working interest; Operator)

· Sheikh Adi-2, the second exploration well on the block, spudded in May 2012 and has been drilled to a measured depth of 2,754 metres, with a plan to conduct a well testing programme across 7 target zones

Akri-Bijeel (20% working interest)

· Based on the Bekhme-1 exploration well’s log data, DGA calculated a range of 2.5 billion (P90) to 5.4 billion (P10) barrels of gross oil-in-place resources for the Aqra/Bekhme anticline
· Bijell-3 well, spudded in January 2012 to appraise the Bijell discovery of 2.4 billion (P50) barrels of gross oil-in-place, as calculated by the operator of the block. The well is currently drilling at a measured depth of 4,974 metres and, given good preliminary results of the logs and cores, will be followed by a well testing programme
· An early production facility for the Bijell discovery is being constructed to be installed by the end of 2012
· Bakrman-1 exploration well spudded in May 2012 and is currently approaching the planned 7 inch casing point at 3,637 metres and, given good preliminary results of the logs and cores, will be followed by a well testing programme
· Gulak-1 exploration well spudded in July 2012 and is currently drilling in the upper Jurassic below a measured depth of 1,600 metres

Ber Bahr (40% working interest)

· Ber Bahr-1, the first exploration well on the block, was drilled to a total depth (“TD”) of 3,930 metres and encountered a 300 metres oil column in the Jurassic. The well has been temporarily suspended while a work over rig is moved to the location to conduct a further well test with results expected in the fourth quarter 2012

Financial – as at 30 June 2012

· Loss after tax: $31.4 million (1H11: $10.3 million)
· Loss per share: 3.68 cents (1H11: 1.37 cents)
· Cash, cash equivalents and liquid investments of $136.9 million as at 30 June 2012 (30 June 2011: $137.6 million; 31 December 2011: $237.6 million)

Corporate development

· The Nominations Committee of the Board was formed in February 2012 (Lord Guthrie, Chairman) and the Remuneration and Appointments Committee was renamed the Remuneration Committee (Mehdi Varzi, Chairman)
· Lord Truscott retired by rotation from his position as the Company’s Non-Executive Director
· Mr Adnan Samarrai retired from his position as the Company’s Country Manager moving to a senior position within the Ministry of Natural Resources of the Kurdistan Region of Iraq. Mr Umur Eminkahyagil, previously Development and Production Manager, has been appointed the Company’s Country Manager in the Kurdistan Region of Iraq


· Complete and submit the Shaikan Field Development Plan by the end of January 2013, select development concept, and move to the large-scale staged development in 2013 with the goal of achieving 150,000 bopd by 2015 and full plateau production thereafter
· Commission the two Shaikan early production facilities to increase production to 30,000 – 40,000 bopd by mid-2013
· Confirm the final route and make a decision on the construction of an export pipeline to connect Shaikan’s increasing production to international markets
· Explore undrilled horizons in the Shaikan block, with the Shaikan-7 well targeting the deeper Triassic and the Permian
· Continue aggressive exploration and appraisal of the Akri-Bijeel, Sheikh Adi and Ber Bahr blocks to prove up resource base
· Evaluate the ongoing process of the sale of the Company’s 20% interest in the Akri-Bijeel block, taking into consideration forthcoming results of the three wells currently being drilled and planned early production from the Bijell discovery
· Successfully remove the uncertainty caused by the claims asserted by Excalibur
· Move from AIM to the premium segment of the Official List of the London Stock Exchange as part of establishing the Company as one of the major independent exploration and production players listed on the London Stock Exchange

Todd F Kozel, Executive Chairman and CEO of Gulf Keystone, commented:

“As an independent explorer and operator in the Kurdistan Region of Iraq, we are proud of our outstanding operating record to date with 15 wells drilled or currently being drilled across the four blocks and ambitious targets consistently being met. Since mid-July, we have announced another major upgrade of Shaikan’s gross oil-in-place volumes following independent evaluation, completed a very successful appraisal programme of this world-class discovery and declared the field commercial. Gulf Keystone is now in transition from the exploration and appraisal phase to the large-scale staged development and production of the Shaikan field, which will be both challenging and exciting”.

Following the release of Gulf Keystone’s results for the six months ended 30 June 2012, the management will be hosting a meeting with equity analysts. For details contact Pelham Bell Pottinger.

Copies of the presentation will be available on the Company’s website at www.gulfkeystone.com from 10.00 a.m. (UK time).


Gulf Keystone Petroleum:
+44 (0) 20 7514 1400
Todd Kozel, Executive Chairman and
Chief Executive Officer

Ewen Ainsworth, Finance Director

Strand Hanson Limited

+44 (0) 20 7409 3494
Simon Raggett / Rory Murphy / James Harris

Mirabaud Securities LLP

+44 (0) 20 7878 3362
Peter Krens

Pelham Bell Pottinger

+44 (0) 20 7861 3232
Mark Antelme / Henry Lerwill

or visit: www.gulfkeystone.com

John Gerstenlauer, the Company’s Chief Operating Officer, who has 33 years of relevant experience within the sector and meets the criteria of a qualified person under the AIM note for mining, oil and gas companies, has reviewed and approved the technical information contained in this announcement. Mr. Gerstenlauer is a member of the Society of Petroleum Engineers.

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Afren Begins Drilling Simrit-3 Well

Afren, one of the 250 biggest companies listed on the London Stock Exchange, in conjunction with operator Hunt Oil, has commenced exploration drilling at the East Simrit prospect located on the Ain Sifni PSC in the Kurdistan region of Iraq.

The Simrit-3 well is located approximately 10 km east of the successful Simrit-2 discovery well, and is exploring the eastern extent of the large scale Simrit anticline.

The Simrit anticline is a large scale east to west trending structure located on the northern part of the Ain Sifni production sharing contract (PSC). The partners recently completed drilling of the Simrit-2 exploration well, the purpose of which was to test the western extent of the structure.

The well was ultimately drilled to a total measured depth of 3,800 metres and encountered 460 metres of net oil pay throughout Cretaceous, Jurassic and Triassic age reservoirs. No oil water contact has been established in the target reservoirs.

Following the conclusion of drilling operations in June 2012, a comprehensive well test programme commenced and is ongoing. The partners intend to undertake up to 12 separate drill stem tests (DSTs) in total, and announced in July 2012 that the first batch of three DSTs in the Triassic age Kurra Chine formation had yielded an aggregate flow rate of 13,584 bpd of 39° API gravity oil.

The Simrit-3 exploration well is seeking to demonstrate the presence of oil within the same Cretaceous, Jurassic and Triassic reservoir intervals at the eastern extent of the Simrit anticline.

Afren has a 20pc interest in the Ain Sifni PSC and is partnered by Hunt Oil Middle East (60pc and operator) and the Kurdistan Regional Government (20pc).

Osman Shahenshah, Chief Executive of Afren, commented: “The drilling and test results recorded to date have already confirmed Ain Sifni in the Kurdistan region of Iraq to be a world-class asset. The Simrit-3 exploration well, which is part of ongoing evaluation of the block’s transformational potential, will test the areal extent of the existing discovery.”

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