Tag Archive | "State Oil Marketing Organization"

BP, CNPC Increase Stakes in Rumaila

By John Lee.

Reuters reports that a revised contract signed last week by BP and China’s CNPC for the Rumaila oilfield has raised both companies’ stakes in the project.

Thamer Ghadhban (pictured), energy adviser to former Prime Minister Nuri al-Maliki, told the news agency that BP’s share has been increased from 38 percent to 47.6 percent, and CNPC’s from 37 percent to 46.4 percent.

The stake owned by Iraq’s State Oil Marketing Organization (SOMO) was cut from 25 percent to 6 percent.

It was reported earlier this week that output targets for the supergiant field had been reduced, and the contract period extended.

(Source: Reuters)

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Gazprom Starts Oil Deliveries from Badra

By John Lee.

Russia’s Gazprom Neft, the operator of the Badra oil field (pictured) in Iraq, has announced that first oil from the field is now being delivered to Iraq’s main pipeline system for transfer to the export terminal in Basra, on the Persian Gulf.

Current deliveries from Badra to the pipeline stand at over 15,000 barrels of oil per day and this level should be maintained until the end of 2014.

According to the service contract with the Government of Iraq, the consortium of investor companies will begin receiving a share of the oil produced at the field after a period of 90 days following launch of commercial supply.

All of the oil produced in southern Iraq, including at Badra, is Basrah Light oil. The Iraqi State Oil Marketing Organization (SOMO) is responsible for oil sales and each quarter will be delivering a share of oil to the investor companies to reimburse their initial project costs.

Once these project costs have been covered, the investor companies will receive remuneration in kind for ongoing development at the rate of $5.5 of oil per barrel produced. Each investor company will be selling their share of oil independently.

First oil from the Badra field was produced in December 2013. Final commissioning at the field and testing of production and transportation infrastructure began in May 2014. Two wells are currently in production at the field and a further three wells are being drilled under a contract with the Chinese company ZPEC. According to the service contract production at the field will achieve 170,000 barrels of oil per day.

Alexander Dyukov, Chairman of the Management Board of Gazprom Neft, said:

Over the period of just a few years, a consortium of companies led by Gazprom Neft has fully prepared Badra, one of the most complex geological field structures in Iraq, for full-scale commercial development.

“This is the first major international project in upstream the company has implemented from scratch. The unique experience gained during this project will contribute to our development of future projects both in Russia and internationally“.

The field is being developed by Gazprom as lead partner (30% stake), along with Korea’s KOGAS (22.5%), Malaysia’s Petronas (15%), Turkey’s TPAO (7.5%), and Iraq (25%).

(Sources: Gazprom Neft, KOGAS)

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Erbil and Baghdad: One Step Forward?

By John Lee.

Just as some observers were saying the dispute looked intractable, Deputy Prime Minister for Energy Hussein al-Shahristani has announced a potentially big breakthrough in the ongoing saga of deal and no deal between Baghdad and the Kurdish Regional Government over oil exports to Turkey and oil revenues.

Reuters has reported that after intensive negotiations which have seen Kurdish oil exports stuck at the Turkish port of Ceyhan, the KRG has agreed to export through SOMO, the State Oil Marketing Organisation.

If such a deal survives where previous agreements have stumbled, this leaves an ongoing dispute about the 17% of oil revenue the KRG is supposed to receive from Baghdad, which the KRG complains is frequently reduced. Since January, Baghdad has been withholding salaries of civil servants in the KRG and threatening to sue Turkey.

Shahristani has hailed the deal with SOMO as a positive step forward, and salaries for KRG civil servants will supposedly be paid for the month of January. Shahristani has said February’s payments will go through when the SOMO deal comes into effect.

(Source: Reuters)


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Southern Oil Exports Rise

Oil exports from southern Iraq increased by almost 300,000 bpd in the first two weeks of this year, compared to the December average, according to a report from Reuters.

Exports averaged 2.35 million bpd in the first 15 days of January, up from 2.08 million bpd in December.

Although this is seen as a sign that Iraq is delivering on its plan to increase supply significantly, Iraq is still catching up with loading delays caused partly by bad weather.

The State Oil Marketing Organization (SOMO) has cut crude allocations to some customers for February.

Work is said to be finished at the new terminals, and they should be capable of handling exports of more than 2.5 million bpd.

From the north, Iraq also exports about 300,000 bpd from its Kirkuk fields to the port of Ceyhan in Turkey.

(Source: Reuters)

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KRG Confirms Oil Export through Ceyhan

The KRG Ministry of Natural Resources (MNR) gives public notice of the commencement of the sale of its first shipment of crude oil exported via Kurdistan Region’s new pipeline through Turkey to the Port of Ceyhan (pictured).

MNR anticipates the sale of the first parcel of two million barrels of exported crude oil to occur at the end of January 2014. Thereafter, monthly parcels will increase to 4 million barrels by the end of February and 6 million by the end of March, then steadily stepping up to 10-12 million barrels for the month of December 2014.

At the beginning of this month, some initial quantities of crude oil produced from the Tawke field began flowing through Kurdistan’s new pipeline system to the Turkish port of Ceyhan, and crude oil from Taq-Taq and other producing fields will soon be added to the export system, resulting in a blended medium crude oil quality of 30 to 32 Degrees API.

Prospective buyers can lift the crude oil shipments in the port of Ceyhan under similar arrangements as those used for SOMO (the State Oil Marketing Organisation) for oil export from Kirkuk.

Details of each parcel will be published by MNR in due course. All tenders will be competitive and based on international pricing. In order to ensure full transparency of the sales and contracting process, independent observers will be invited to each tender, together with representatives of the oil companies that have produced the exported oil.

MNR also invites representatives of SOMO to join the process as observers.

At this stage, MNR is inviting reputable and financially capable companies to register with MNR their interest in participating in the January tender or any of the future tenders.

All applicants should in the first instance write to the Ministry of Natural Resources with information about their company profile, track record and financial status via email KOMO@mnr.krg.org.

All submissions should be addressed to:

KOMO – Kurdistan Oil Marketing Organization,

Ministry of Natural Resources,

Council of Ministers, Kurdistan Regional Government,

Erbil, Kurdistan Region, Iraq

(Source: KRG)

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Oil Output Up in February

By John Lee.

Platts reports that Iraqi oil production rose slightly in February to 2.963 million barrels per day (bpd), up by 43,000 bpd over January.

Figures from the State Oil Marketing Organization (SOMO) show that Iraq exported 2.536 million bpd last month, 177,000 bpd above January’s tally of 2.359 million bpd, and only 78,000 bpd below the September-November average of 2.614 million bpd, when it registered the highest export rates since 1990.

But oil production increases have lost momentum in recent months, partly due to infrastructure constraints in the south. Total oil production in February is still 272,000 bpd lower than the post-1990 record of 3.235 million bpd achieved only five months ago.

Production in the South rose by 45,000 bpd in February (month-on-month) to 2.281 million bpd, while production from the northern fields fell by 2,000 bpd in February to 682,000 bpd.

There was no contribution from the Kurdistan Regional Government, which suspended oil exports in mid-December as a result of the continuing row with Baghdad over oil payments. The Kurdish province had supplied 152,000 bpd in November, the highest volumes exported from the province through the federal pipeline to date.

Internal supply rates to local refineries and power stations in February totaled 598,000 bpd, compared with 675,000 bpd in January with the 77,000 bpd decline in domestic supply helping to boost export rates.

(Source: Platts)

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Is Sima a Front for Trafigura in Iraq?

By John Lee.

Four industry sources have told Reuters that Swiss oil trader Trafigura is still indirectly supplying gasoline to Iraq through another firm, despite being banned from participating in tenders for 2013 after buying oil from Iraqi Kurdistan.

Baghdad’s State Oil Marketing Organization (SOMO) finalised a deal in November to buy 1.56 million tonnes of gasoline from a pool of suppliers that excluded Trafigura. The contract was awarded to Vitol, Glencore, BP and Sima, an Iranian-Azeri company registered in Fujairah with an address in Dubai.

But while Trafigura’s name may not be on the suppliers list, traders say the firm is behind the gasoline supplies of Sima. They say a number of vessels delivering gasoline to Iraq’s southern Khor al Zubair terminal for Sima loaded their cargoes from Trafigura’s storage tanks at Jebel Ali in the United Arab Emirates.

It’s a well-known secret that Trafigura back Sima’s deliveries to SOMO,” said a gasoline trader. “Hardly a secret really.

In 2012 Trafigura delivered as much as 60,000 tonnes a month, worth more than $65 million at current prices.

(Source: Reuters)

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Iraq Addresses Crude Oil Price/Quality Concerns

By John Lee.

Reuters reports that Iraq has sweetened the terms for oil contract buyers and is becoming more competitive on pricing.

Oil Minister Abdul Kareem Luaibi [Elaibi], who met customers in Vienna last month on the sidelines of the OPEC meeting, told the news agency:

We were keen that I personally meet all the companies that buy Iraqi crude oil and hear their complaints directly from them … After considering these problems in detail, we decided to improve the contractual terms and conditions as well as enhance the competitiveness of Iraq’s crude oil.

Buyers had expressed concerns over the higher prices and the variable quality of Iraqi oil.

Customers said one change the Iraqis have offered to make is to demurrage – money to be paid in the event of a cargo loading outside the agreed period – which buyers said was costing them a fortune.

“They heard loud and clear that the demurrage payment, or lack thereof and huge delays to what was agreed, was affecting business,” said a source at one company which buys Iraqi crude.

The customer, though, was “not overwhelmed” by the offer and a second buyer, involved in an oilfield project in southern Iraq, plans to visit Baghdad to follow up with the Iraqi State Oil Marketing Organization (SOMO).

“So far, the changes are really not significant for us,” said the second buyer. “We’re still in discussions.”

But Iraq also has another problem with the variable quality of the Basra Light and Kirkuk crude streams, due to the erratic flow of Kurdistan oil into the Kirkuk stream and the start-up of new fields in the south.

Changes in the crude’s sulphur content and API gravity – a measure of its weight – affect its value and can cause processing problems for refineries configured for a certain gravity and sulphur level.

Iraq has managed to stablize the API of Basra Light at around 30 degrees, an Iraqi official said. A regular buyer of the grade confirmed the change.

Keeping the quality of Kirkuk stable will be more of a challenge after the Kurdistan Regional Government (KRG) halted shipments through the Baghdad-controlled Iraq-Turkey pipeline in December, due to the long-running feud over contracts and payments.

Luaibi told Reuters a subsea pipeline in the Gulf would be opened soon which would allow two offshore Single Point Moorings (SPMs) to load simultaneously, boosting capacity in the south to above 2.6 million bpd from about 2.3 million bpd now.

Iraq is also addressing concerns about high official selling prices for its Basra Light and Kirkuk crude oils, buyers say.

Despite the increasing supply, Basra Light has been more expensive for Asian buyers than a rival crude from Saudi Arabia, Arab Medium.

For February 2013, however, Iraq chose to raise its Basra Light price to Asia by 5 cents a barrel, while Saudi Arabia increased the prices of its Arab Light, Medium and Heavy crude to customers in the East by 15-30 cents.

“Most importantly, they recently have become more competitive with their prices compared to the usual following of the Saudi formulae,” said a long-time buyer of Iraqi oil.

A second customer felt the Iraqis could do more. “A little bit but not enough. They need to get more realistic,” the buyer said.

(Source: Reuters)

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