Tag Archive | "Turkish Petroleum"

Turkey Joins Exxon in Kurdistan Oil Deal


By John Lee.

Turkish prime minister has said that state-owned Turkiye Petrolleri AO (TPAO) is has reached an agreement with the Kurdistan Regional Government (KRG) and ExxonMobil to carry out oil exploration in northern Iraq.

Tayyip Erdoğan (pictured) told reporters:

Countries from various parts of the world are taking steps to explore and produce oil in different parts of Iraq, and then deliver it to world oil markets.

“There’s nothing more normal, more natural than Turkey, which provides all kinds of support and aid to its next-door neighbor, to take a step that is based on mutual benefit.

An Ankara-based source told Hurriyet Daily News that TPAO will take equity stakes in a partnership with Exxon and KRG, and would become part of the production-sharing agreement.

Prime Minister Tayyip Erdoğan said that details would be clearer after his visit to the US – he is due to meet U.S. President Barack Obama on Thursday.

(Sources: Hurriyet Daily News, Reuters, Dow Jones)

Posted in Oil & GasComments (1)

KBR Awarded FEED, QCSS Contracts at Mansuriya


By John Lee.

KBR has announced that it has been awarded the Mansuriya Full Field Development contract to perform front end engineering and design (FEED) studies and Quality Control Support Services (QCSS) for the Turkish Petroleum Overseas Company (TPOC), a wholly owned subsidiary of Turkish Petroleum Corporation (TPAO), in Diyala Province.

The Mansuriya project is expected to help alleviate current problems with intermittent electricity experienced in Iraq by supplying fuel to power stations and feedstock for industrial plants.

KBR will perform FEED studies and QCSS during the EPC phase for the field’s production and export systems, which systems extend from immediately downstream of the well up to and including the road-loading gantries at the liquefied petroleum gas storage and loading facility and sulphur bagging and storage.

The FEED study and QCSS are designed to help TPOC start the first gas production in mid-2015 and help raise the Mansuriya field raw gas production to receive a plateau level of approximately 320 MMscf/d net dry gas by mid-2017, which is expected to be maintained for an estimated period of 13 years.

Services for the project will be based out of KBR’s offices in London and Jakarta. KBR’s Baghdad office will play a role in supporting local employee content for the project. The project is expected to be completed in 2017.

Khaled Abu-Nasrah (pictured), President, Middle East Region, commented:

The Mansuriya project builds upon KBR’s long-standing commitment to serve Iraq and further solidifies our position as a premier contractor in the Middle East

“KBR brings the experience and expertise of working in logistically challenging areas like Diyala, so we are able to successfully navigate issues to help TPOC meet its first gas date. I am confident that KBR’s successful execution of this project will position us for additional services in Iraq and throughout the region.

Mansuriya participating interests are: TPAO (operator –37.5%), Oil Exploration Company (25%), Kuwait Energy (22.5%) and Korea Gas Corporation (15%).

(Source: KBR)

Posted in Construction & Engineering, Oil & GasComments (0)

Dragon Oil Updates on Block 9


By John Lee.

In its interim results for the period ended 30th June 2012, Dragon Oil today issued the following update on its business in Iraq:

A consortium of companies, comprising Dragon Oil (30%), the Turkish Petroleum Corporation (TPAO) (30%) and Kuwait Energy (40% and operator), has been awarded an exploration, development and production service contract for Block 9 in Iraq’s fourth bidding round.

On 16 July 2012, the Iraqi Ministry of Oil and the consortium initialled the contract for this block. This is the first step in a formal process before the signing of the final contract, which is anticipated later this year.

The consortium’s bid for Block 9 was awarded on the basis of a remuneration fee of US$6.24 per barrel of oil equivalent. If Block 9 is found to be commercial during the five-year exploration period, the consortium may make an application to the Iraqi Government to develop the block over a 20-year development period.

Block 9 is located in the Basra province. The block spans over 900 km². The work commitment on the block within the initial five-year exploration period will include de-mining of the area in the first instance, followed by seismic acquisition and interpretation.

Based on this seismic analysis, a location for an exploration well will be selected and drilling performed. The capital expenditure will be incurred in proportion to each partner’s share in the consortium and given the exploration nature of the block the cash outflow is not expected to be significant.

(Source: Dragon Oil)

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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:

DNO, Dragon Oil, Genel, Kuwait Energy, Inpex, Lukoil, Pakistan Petroleum, Shell, Turkish Petroleum, WesternZagros

Action Calls:

  • 4th Round Auction fails to impress: Will failure lead to convergence or divergence between Kurdish and central government approaches to oil and gas?
  • WesternZagros mulling London listing: Critical mass of Kurdish plays may be emerging in London.

Headlines:

  • Sadr invites Maliki to Najaf, only to be rejected: No-confidence rhetoric takes on fevered pitch.
  • Barzani: Peshmerga to be unified by end of the year: Long time coming, but timely now, given debate with Baghdad.
  • Turkish consulate protesters dissipate: Potential indicator of Baghdad’s, and possibly Erbil’s, relations with Ankara.

Calendar Events Discussed:

  • 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, Industry & Trade, Investment, Oil & Gas, PoliticsComments (0)

Did Big Oil Win the War in Iraq?


12 April 2010 - AlertNet

Posted on November 14, 2009

Last week, ExxonMobil became the first U.S. oil company in 35 years to sign an oil-production contract with the government of Iraq.

Do these contracts represent a “victory” for Big Oil in Iraq? Yes, but not one as big as the companies had hoped for (at least, not yet).

Before the United States and Britain invaded Iraq in March 2003, their oil companies were shut out of oil-production contracts being negotiated by the government of Saddam Hussein. Today, more than six years of war later, Saddam is gone, and the U.S. and British oil companies are not only in on the oil contracts, they have managed to sweeten the terms.

However, organized resistance by Iraqis and people around the world has thus far succeeded in denying Big Oil its Big Prize: passage of the Iraq Oil Law, alternatively called Iraq Hydrocarbons Law, which would grant far greater control over Iraqi oil to foreign companies on terms much less favorable to Iraq than the current contracts provide.

If the negotiations proceed on their current path, foreign companies will produce the vast majority of Iraq’s oil. How much control they will exert, and who will reap the greatest benefits (and endure the steepest costs) is yet to be determined.

Before the Invasion

In January 2000, 10 days into President George W. Bush’s first term, representatives of the largest oil and energy companies joined the new administration to form the Cheney Energy Task Force. As part of its deliberations, the task force reviewed a series of lists titled “Foreign Suitors for Iraqi Oilfield Contracts” naming more than 60 companies from some 30 countries with contracts in various stages of negotiation.

None of contracts were with American nor major British companies, and none could take effect while the U.N. Security Council sanctions against Iraq remained in place. Three countries held the largest contracts: China, Russia and France — all members of the Security Council and all in a position to advocate for the end of sanctions.

Were Saddam to remain in power and the sanctions to be removed, these contracts would take effect, and the U.S. and its closest ally would be shut out of Iraq’s great oil bonanza.

After the Invasion

The invasion of Iraq dealt handily with the problem of U.S. and British exclusion. ExxonMobil, Chevron, BP, ConocoPhillips and other major oil companies met with the Iraqi government on countless occasions, and the Iraqis tried to make deals.

But the oil companies, backed aggressively by the Bush administration, steadfastly insisted that contracts would only be signed after the Iraq Oil Law was passed. They nearly prevailed on several occasions, but organized resistance in and outside of Iraq has continually stymied the law’s passage.

Several forces have conspired to bring the oil companies to the negotiating table today.

Most recently and significantly, Iraq’s Parliament has refused to even consider the law until after the January 2010 elections. It is quite likely that a new government hostile to the interests of foreign (particularly U.S. and British) oil companies could come to power in those elections, making passage of the law much less likely. The deals being offered today would be the best the companies would be likely to get.

President Barack Obama and his administration have been vocal and active proponents of the law’s passage. However, this administration’s allegiance to the oil industry is not as steadfast as that of its predecessor.

The Obama administration’s push for passage of the law comes at the same time that it pursues withdrawal of all but a residual U.S. troop presence. It is hard to underestimate the added negotiating weight brought by 150,000 members of the U.S. (and until very recently British) military. Bush announced his most public declaration for passage of the Iraq Oil Law at the same time that he announced the surge of an additional 20,000 U.S. troops into Iraq. The pending loss of its most potent negotiating stick has clearly made the oil companies’ more willing to deal.

Secretary of State Hillary Rodham Clinton may have best put forward the administration’s position at the U.S.-Iraq Business and Investment Conference on Oct. 20, explaining: “A comprehensive hydrocarbon law is vital for regulating the [Iraq] oil sector. Parliament has delayed this vote until after January, but steps can be taken in the interim; for example, by holding transparent, credible auctions on oil and gas fields as we are seeing …”

In other words, ‘we know you want the law, but Parliament isn’t biting, and we’re not keeping 150,000 U.S. soldiers in Iraq indefinitely for you to get it. So, sign the d*** contracts.’

And finally, under immense pressure, the Iraqi Oil Ministry also has steadily been sweetening the deals.

The New Oil Contracts

The Iraq Oil Ministry began a bidding round in June for eight currently producing oil fields, which are among the largest in the world. Only one consortium — BP and the Chinese National Petroleum Corp. — agreed to the terms. The rest of the companies balked, saying the terms just simply were not generous enough. The terms have since been sweetened (and applied retroactively to BP and CNPC’s deal), and the companies are now jumping on board.

Because the U.S. and British companies have, to a large degree, squeezed into pre-existing negotiations, some strange bedfellows have emerged to sign these new contracts, and more odd pairings are expected soon.

  • BP and CNPC finalized the first new oil contract issued by Baghdad for the largest oil field in the country, the 17 billion barrel Rumaila field.
  • ExxonMobil, with junior partner Royal Dutch Shell, won a bidding war against Russia’s Lukoil and junior partner ConocoPhillips for the 8.7 billion barrel West Qurna Phase 1 project.
  • Italy’s Eni SpA, with California’s Occidental Petroleum and the Korea Gas Corp., was awarded Iraq’s Zubair oil field with estimated reserves of 4.4 billion barrels.
  • Japan’s Nippon Corp., leading a consortium of Japanese companies including Inpex Corp. and JGC Corp., is at an advanced stage in talks to win the Nassiriyah oil field.
  • Shell, with partners CNPC and the Turkish Petroleum Corp., is also in discussions for the giant Kirkuk oil field, although negotiations have been delayed until after Iraq’s January elections.

The Terms

These contracts are complex and unique, representing a hybrid of existing models. They are not the best that the oil companies hoped for, which would have been production sharing agreements (PSAs). Nor are they the worst the companies might have feared; Iraq is not maintaining its nationalized system, closed to foreign oil company production participation (U.S. and other foreign oil companies sell Iraqi oil now and have done so for decades).

They are also not technical service contracts (TSCs), although this is what the Iraqi Oil Ministry has named them (likely in an attempt to thwart opposition to the contracts for offering too much to foreign oil companies). Greg Muttitt, an Iraq oil expert with Platform, told me, “TSCs generally last just a few years, they’re generally for a specific job (e.g. installing pumps) rather than managing a field, and they go to service companies like Baker Hughes and Halliburton.”

On the positive side for the companies, where the development production contracts (DPC) that Iraq was signing prior to the 2003 invasion offered 12-year contracts, today’s run for 20 to 25 years. And while as recently as a year ago the Iraqis offered the foreign companies a 50 percent ownership stake, today’s contracts offer them a 75 percent stake (25 percent for the Iraqi government).

On the other hand, where the PSAs sought under the Iraq Oil Law would give the companies an equity stake and the ability to book the oil in the fields as their own, these contracts provide reimbursement fees for capital and operational expenses and a fixed fee per barrel of oil produced and deny the companies the ability to book reserves.

It remains unclear whether the foreign companies or the Iraqi government ultimately has production decision-making authority. And some of the benefits included in the contracts would be annulled if the Iraq Oil Law were passed, including requirements to hire and train Iraqi workers and the transfer of needed technology.

Finally, the Iraqis apparently sweetened the deals further in the last few weeks by reducing the amount the foreign companies pay in taxes and allowing them to use private security forces to protect their facilities.

The Next Bidding Round

On Dec. 11 and 12, the second, much larger, bidding round will be launched in Baghdad. Forty-four international companies have been prequalified to bid on run for 11 groups of oil and gas fields in already producing and undiscovered fields. Negotiations will include the super giant Majnoon field, which Chevron and France’s Total have teamed up to bid for.

The contracts for these fields are expected to mirror those described above, but no “model contract” has been made publicly available.

Sunlight

The Iraq Oil Law has remained an elusive goal of the world’s most powerful industry and governments because a massive organized global resistance movement has been shining a bright spotlight on its content, its backers, and on the consequences of its passage.

We must continue to shine this spotlight on the new contract negotiations to help ensure that 1) the military occupation of Iraq will be able to conclude, and 2) that the Iraqis are not freed from a foreign military occupation only to be brought under foreign economic control.

Posted in Oil & GasComments (0)


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