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Record Oil Production set to Increase

By John Lee.

Iraq produced a record of around 4 million barrels per day (bpd) of crude oil in December, Oil Minister Adel Abdel Mehdi (pictured) told a press conference on Sunday.

This beat the previous record for Iraqi production of 3.56 million bpd in 1979, according to an official from the State Oil Marketing Organization (SOMO).

The Minister went on to reveal plans to export 375,000 bpd for the first three months of 2015 from Kirkuk and the Kurdistan region, increasing to 600,000 bpd from April.

(Source: Reuters)

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Iraq Plans Record Oil Exports

By John Lee.

Reuters reports that the State Oil Marketing Organization (SOMO) is planning to export 3.3 million bpd of Basra crude from its southern ports in February.

December’s total figure hit 2.94 million bpd, the highest since 1980, of which a record 2.76 million bpd of oil was exported from the country’s southern terminals.

(Source: Reuters)

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Iraq Reviews Oil Prices

By John Lee.

Iraq’s State Oil Marketing Organisation (SOMO) has adjusted its official selling prices for its Basra Light and Kirkuk crude grades for February.

In common with some other countries, Iraq’s oil is priced relative to regional benchmark prices:

  • For shipments to US, contracts are priced are relative to the Argus Sour Crude Index (ASCI);
  • Shipments to Europe are priced relative to the North Sea Spot BFOE (Brent benchmark); and
  • Asian shipmentas are priced relative to the Dubai-Oman crude benchmark, published by Platts, the energy-information division of McGraw-Hill.

The new prices to Europe are as follows:

  • Basra Light to Europe will sell at a discount of $5.95 a barrel to Dated Brent, compared to a discount of $4.35 previously.
  • Kirkuk Crude to Europe will sell at a discount of $4.80 a barrel to Dated Brent, compared to a discount of $2.90 previously.

And to the US:

  • Basrah Light will sell at a discount of $1.05 to the U.S. benchmark, down 40 cents the previous month.
  • Kirkuk will sell at a premium of $1.75, unchanged from last month.

To Asia:

  • Basrah Light to Asia will sell at a discount of $3.70 to the benchmark, up from a discount of $4.00 last month.

(Source: Bloomberg)

(Oil image via Shutterstock)

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Dragon Oil Make Second Basra Discovery

By John Lee.

Dublin registered Dragon Oil have announced a second oil discovery at the Block 9 exploration well, ‘Faihaa-1′.

This is good news for the consortium who have a 30% stake in the well along with the operator, Kuwait Energy who have a 70% stake in the block, located in the northern part of Basra province, southern Iraq.

The firm’s first discovery at Block 9 occurred in September last year, 2700 metres into the Mishrif formation. The second target was the Yamama formation, at 4000 metres. Dragon Oil signed their oil services contract for the site in January 2013.

(Source: Dragonoil.com)

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Hawrami Calls for Private Oil Exports

By Padraig O’Hannelly.

Dr Ashti Hawrami (pictured), the KRG’s Minister for Natural Resources, has clarified the two stage process involved in the recent agreement between Erbil and Baghdad regarding oil exports.

Speaking at CWC’s Kurdistan-Iraq Oil & Gas Conference recently in London, Dr Hawrami said that the first stage of the resolution covers the issues recently agreed, including the 2015 budget, the export of 250,000 bpd from KRG-controlled oilfields, and the facilitation of 300,000 bpd exports from the Kirkuk fields.

Still to be agreed as part of a second stage of negotiations over the next six months are issues including the KRG’s right to export oil independently, and to receive payments directly.

But he added that following the KRG’s recent experience with regard to the receipt of payments from Baghdad, which he described as “a wake-up call“, there will be no flexibility in the KRG’s position on these two points.

Dr Hawrami went on to express his confidence that a resolution will be found, and said that his preferred option would be for the oil companies to market their own oil, north and south, independently of either the KRG or the State Oil Marketing Organization (SOMO):

“The oil companies can do a better job in exploration, in production, and in marketing, and in everything else, so it is not our policy to [replicate the work of] SOMO.”

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December Crude Exports may Hit Record

By John Lee.

Reuters reports that Iraq’s oil exports may hit a record high in December.

Shipping data for the first 23 days of December suggest that exports from Iraq’s southern terminals have averaged at least 2.6 million barrels per day.

Additionally, the State Oil Marketing Organization (SOMO) has been exporting about 180,000 bpd of Kirkuk crude through the Turkish port of Ceyhan, following the deal reached between Baghdad and Erbil.

Taken together, this comes close to the 2.8 million bpd record high posted in February.

(Source: Reuters)

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Basra joins Revenue Sharing Talks

By John Lee. 

According to a 2009 revision of Iraq’s Provincial Powers Act (also known as Law 21) the province of Basra is supposed to be receiving an extra $5 dollars of oil revenue per barrel produced in the province.

If this was the case, the province could be receiving an income equivalent to that of some small countries.

To date however, this has not been the case for both political and economic reasons and currently the province receives much less than its entitlement. This is of critical importance, because the province produces most of Iraq’s oil.

This situation might be about to change. The current governor, Majid al-Nasrawi, had his position strongly contested by former PM Maliki, who opposed decentralising power from Baghdad.

Now Maliki is on the sidelines and the Ministry of Oil is headed by the Islamic Supreme Council of Iraq member Abdel Adel Mehdi, of the same party of the Basra governor. Given that Maliki is now longer in the seat of power, we might expect more power to be devolved to provinces like Basra.

Abdel Mehdi hinted a new arrangement could be on the horizon, noting recently that the government were looking for “fairer ways to share revenue with the provinces” to include Basra and not just the Kurdish provinces.

Certainly, the political alignment of Basra and the Oil Ministry through ISCI, a party which pursued a strong federalist agenda in the 2009 election could see some interesting developments. If the current Baghdad-Arbil deal holds, we might expect a new deal for the southern provinces.

In the long term, such federalised arrangements could lead to greater security in Iraq as a whole, since the war torn provinces of Anbar and Ninewa also have oil and gas reserves, although not on the scale of the KRI and the south.

(Source: Various publications)




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BP Plans to Double Rumaila Production

By John Lee.

The coming year will see BP expand drilling work and upgrades to equipment at the vast Rumaila oil field in southern Iraq, of which the company have a 50% stake.

BP operate the field with PetroChina, Iraq’s South Oil Company and SOMO.

This work is carried out under the umbrella of the Rumaila Operating Organization, which oversees activity at a field which is thought to have some 20 billion barrels available for extraction. Some observers have noted that BP have played a “long game” in Iraq and that their patience with contractual difficulties and initial security concerns is paying off.

The aim of the new plan is to increase production at the field to 2.1 million BPD by 2020, double the current production. This has surprised some observers who are unfamiliar with Iraq’s geography and do not realise that the ISIL terror group are operating hundreds of kilometres to the north.

The 25 year contract at the Rumaila field is expected to generate $1 trillion for the Iraqi economy.

(Source: Various publications)


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