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The latest Oil & Gas industry news from Iraq – security updates, oil industry events and more – brought to you by Iraq Business News

Marathon Expects Kurdish Oil Production by 2015


On Thursday, Marathon Oil Corp. said it expects to start producing oil from its operations in the Kurdish region of Iraq within the next two years. The company posted an 8.4 percent increase in net income for the second quarter of 2013, according to its quarterly report.

According to UPI, the company said it is planning further development of the Atrush reserve area in the Kurdish region of Iraq, and that it notified the Kurdish government in May the prospect had commercial potential.

“The development plan is currently under review with final approval expected in the third quarter of 2013,” the report stated. “We anticipate first production in 2015.”

Marathon holds a 15 percent stake in the Atrush area, and is working on testing programs at other assets in the Kurdish region. Marathon started exploratory drilling campaigns in a well in the region in March.

The semi-autonomous Kurdish north has been shielded from much of the violence plaguing Iraq, but its government is at odds with the national government over who controls the country’s oil sector.

(Source: UPI)

 

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Iraq Now 2nd Biggest OPEC Oil Producer, Bigger Budget In 2013


Iraq continues to grow its oil production at a good pace. Having recently breached the three million barrels of oil in a day mark, it is now averaging over a month 2.6m b/d, the most in three decades, according to Falah Alamri, the head of the State Oil Marketing Organisation.

With Iran’s oil production having stalled recently, potentially due to oil sanctions or lack of investment, Iraq has now overtaken it to become the second-largest oil exporter in the Organization of the Petroleum Exporting Countries, making $8bn per month in revenue from oil exports on an average price this year of more than $100 per barrel.

Iraq still has a long way to go to catch up with Saudi Arabia, which, as the OPEC country with the highest production, produces around 10m b/d. Saudi Arabia claims to have one fifth of the world’s oil reserves.

Hadi Abbas, secretary for the Parliamentary Finance Committee, said that they are expecting that higher oil revenues will lead to the Iraqi government approving a bigger budget for next year.

 

 

Sources: Reuters; Euphrates

 

Reuters

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Dunia Weekly Iraq Market Tracker


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Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

DNO, ExxonMobil, Shell

Action Calls:

  • Moves afoot as Maliki pushes back on rivals: Maliki shows once again why he maintains his position on top of Iraqi politics.
  • Shell negotiates cut to Majnoon output target: As we expected, Exxon is not the only one to benefit from their Kurdish PSC move.
  • DNO lifts reserve estimates: DNO’s adjustment – opportunity to revisit our Kurdish oil thesis.

Headlines:

  • Move towards police supremacy continuing: One small potential step towards normalization of Iraq.
  • Sadrist PDB asserting self in Basra: Potentially an indicator of SoL-Sadrist relations.

Calendar Events Discussed:

  • May 23 – P5+1 Nuclear Talks in Baghdad
  • May 30-31 – 4th Round Oil and Gas Auction
  • June 15 – Parliament returns from 6 week break

Click here to access the report, or to add your email address to Dunia’s mailing list to receive the Iraq Market Tracker via email.

 

Posted in Banking & Finance, DFC Market Tracker, Oil & Gas, Politics, SecurityComments (0)

Dunia Weekly Iraq Market Tracker


Advertising Feature

Iraq Business News is delighted to bring you the latest Iraq Market Tracker report from Dunia Frontier Consultants. The market tracker highlights the activities and market performance of a basket of publicly traded firms who derive a significant percentage of their revenues from operations in Iraq, but are traded on foreign exchanges: a proxy Iraq play as much as practicable. It also identifies and analyzes the primary political and security events that occur in country that have market-moving implications.

Click here to access the report.

Companies Mentioned:

ExxonMobil, Gulf Keystone, Halliburton

Action Calls:

  • Gulf Keystone shares hit as Exxon fear overcomes greed: Watch increasing noise out of Baghdad to signal crisis and closure.
  • New Kurd rules tie oil equipment imports to PSCs: Signals that Kurds continue to pursue their own path.
  • Iraq starts oil exports from SPM: Status quo continues – Iraq infrastructure progress in fits and starts.

Headlines:

  • Iraqiya indicates positive steps in Hashemi talks with Maliki: Maliki probably pursuing holding pattern until after Arab League summit.
  • KRG says negotiating Peshmerga deployment in Diyala : Could be very positive move, if it indeed has Baghdad’s support.
  • Al-Qaeda attack in Anbar: AQI attacks likely to continue in run-up to Arab League summit.

Calendar Events Discussed:

  • 29 March – Arab League summit
  • April – National Reconciliation Conference

Click here to access the report, or to add your email address to Dunia’s mailing list to receive the Iraq Market Tracker via email.

 

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Al-Ahdab Oilfield Three-Years Ahead Of Schedule


Capacity at Al-Ahdab oilfield reached 120,000 bpd on Friday, three years ahead of schedule, according to Reuters.

The one-billion barrel field in Wassit Province, central Iraq, is being developed by Chinese firm CNPC. The firm started production at 60,000 bpd in summer, six months ahead of schedule and it has doubled it far faster than expected.

CNPC is the first foreign oil company to sign an oil service contract in the post-Saddam era. It renegotiated an old development deal for Al-Ahdab back in March 2009. It collected its first payment this week for work on the field: 650,000 barrels of crude oil.

Output for the field is intended mostly for export, but it will also fuel local power stations to ease fuel shortages.

 

(Sources: Reuters; AFP)

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Iraq Could Slash Deficit Next Year


The high price of oil could prove the latest projection of a USD14.5bn budget deficit in 2012 as being too pessimistic.

The Cabinet approved a $100bn budget for 2012 in the first week of December, although it is still waiting for Parliament to give its approval. The budget is based on oil at an average $85 dollars per barrel. With around 95% of Iraqi government revenue coming from oil, the price of a barrel is the most important factor to forecast.

At the end of 2010 the government had forecast a budget surplus for 2012, but in its latest budget it has instead committed to greater expenditure to speed up infrastructure investment and growth. Iraq’s budget has risen by around $30bn since 2010, leading to a forecast of a $14.5bn deficit in 2012.

With oil now at $100/barrel or more, it is possible that the government will cut into this deficit in 2012 if prices remain higher for most of the coming year. In the past two years, Cabinet and Parliament have based their budgets on conservative oil price estimates. If these latest projections also turn out to be conservative enough, the projected deficit could come down significantly.

The second tricky number to project is the number of barrels of oil the country will produce. The final numbers are not in, but it looks like the government was pretty close to its target of 2.2m/bpd target in 2011.  The 2012 budget is projecting an average 2.65m barrels per day.

Posted in Investment, Oil & Gas, PoliticsComments (0)

Weekly Security Update for 21st December 2011


Levels of violence fell in Iraq over the past week, with attacks concentrated in Mosul, Baghdad and Kirkuk. There was a scattering of incidents throughout the central provinces and a notable bombing attack on oil and gas infrastructure in Basrah province. Bomb attacks left at least 15 people dead and 77 injured, a decline from the previous week, while a consistent number of small arms attacks left 15 people dead and seven injured. There were no suicide attacks recorded over the course of the week, and the country should now be considered statistically overdue.

Politicking
The political situation appears to have deteriorated considerably over recent days. There are growing concerns that the arrest warrant for vice prime minister Tariq al-Hashimi will bring Iraq’s political communities to the brink of confrontation. Whether or not there is truth in the allegations made against al-Hashimi, the ongoing pursuit of alleged Ba’athists and suspected terrorists from the Sunni community in the central provinces will increase suspicions amongst the public that a witch hunt is underway. This is hardly a situation conducive towards reconciliation, development and advancement in the post-US era of the country and does not bode well for stability and security in 2012.

The Withdrawal
AKE issued a risk advisory for Iraq following the withdrawal of US forces which concluded on 17 December. US counter-insurgency operations will no longer take place on the ground while training of the Iraqi security forces has also been significantly scaled back. The country now faces a security gap, which various threat groups, both domestic and external may attempt to capitalise on. Violence may therefore rise over the course of 2012, not least as the political environment appears to growing more competitive and confrontational.

Medical Concerns
From a practical perspective foreign personnel will no longer be able to rely on advanced medical treatment in the event of illness or injury in the country. Organisations should therefore aim to be as medically self-sufficient as possible and ensure that employees have sufficient evacuation, repatriation and insurance cover in advance of travel. Organisations should also strongly consider taking medically trained personnel with them on deployments. For further information on security and medical support in the country please email operations@akegroup.com.

Abductions
Three people were kidnapped in separate incidents in the central provinces last week, including a mayor in Babil province who was later found shot dead. Three ministry employees abducted last week were also found shot dead in Salah ad-Din province. AKE will be producing its quarterly update on worldwide kidnap trends in the new year. If you would like to be added to the mailing list please complete your details here.

Basrah Bombings
Up to three improvised explosive devices targeted oil pipelines servicing southern oilfields last week. There were no casualties but open sources indicate that the pipes were damaged and local output was reduced by half for at least a day. While an investigation is ongoing, there is widespread speculation over the threat group behind the incident. With the perpetrators potentially either from local communities along the length of the pipeline, or amongst energy workers themselves, the importance of due diligence, employee consultation and community engagement has once again been highlighted. It is not economically feasible to station guards along the entire length of pipeline infrastructure, but engaging with local communities and staying in close communication with employees will work well towards mitigating the risk of further violence. Needless to say, close relations with local communities will also work towards empowering the Iraqi public and illustrating that the energy sector is there for the good of the country, and not to steal a sovereign resource.

John Drake is a senior risk consultant with AKE, a British private security firm working in Iraq since 2003. You can access AKE’s intelligence website Global Intake here, and you can obtain a free trial of AKE’s Iraq intelligence reports here.


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Deterioration Ahead of the Pullout


Many are concerned that conditions could worsen in Iraq once the US military has withdrawn its forces from the country. Troops are required to leave by the end of the year and the pullout is already well underway. Hundreds of transport vehicles are currently snaking their way south towards the Kuwaiti border. Most of the troops are likely to have left the country by Christmas. Concerns are not being eased by a recent bomb in the International/Green Zone and a rise in violence over the course of November.

At least 200 people were killed and over 560 injured in violent incidents over the course of the month. Of the dozens of recorded attacks over a third targeted civilians. However, it was the security forces who bore the brunt of the violence. Over half of all the attacks targeted either the Iraqi police or military.

Government employees, particularly those working in ministries in the capital, were the next most commonly targeted group. After that the Sahwah organisation suffered the next greatest number of targeted shootings and bombings in the central provinces. The US military suffered a handful of attacks, but they will now go into decline as the force crosses the border into Kuwait.

Militant Targeting in November

Commercial interests remain at risk of attack in Iraq but they remain targeted only infrequently. The oil and gas sector was not targeted at all over the course of the month, although a bombing in Basrah the day before a notable oil and gas conference served as a sharp reminder of the security issues facing private businesses. Two recent attacks on North Oil Company employees in Kirkuk also illustrate that the hydrocarbon sector is far from immune.

The economic potential in Iraq is significant so would-be investors should not be put off by ongoing violence. The operating environment simply requires a different approach from a health and safety perspective. The industry-wide principles of preparation, training, protection, intelligence and insurance are as applicable in Iraq as in other industry hotspots such as Algeria, Angola and Nigeria. Risk-aware companies which prepare themselves appropriately for investing securely in the country will likely find themselves far ahead of their competitors.

John Drake is a senior risk consultant with AKE, a British private security firm working in Iraq since 2003. You can access AKE’s intelligence website Global Intake here, and you can obtain a free trial of AKE’s Iraq intelligence reports here.



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