Tag Archive | "West Qurna"

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Exxon in Talks Govt on Oil Payments

By John Lee.

The Iraqi government has reportedly requested talks with Exxon Mobil to restructure oil agreements to help Iraq meet its near-term cash requirements.

CEO Rex Tillerson (pictured) is quoted by Reuters as saying that “by and large we are current in our payments,” adding that any change would have to be beneficial to Exxon.

Exxon is the lead contractor on the West Qurna I oilfield development.

(Source: Reuters)

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West Qurna Adds $1.25bn to Lukoil Earnings

By John Lee.

Lukoil‘s West Qurna-2 project in Iraq has added $1.25 billion to the company’s earnings in the third quarter.

In a statement to the markets the company said:

The Group launched the “Mishrif Early Oil” stage on the West Qurna-2 field and reached the planned production of 120 thousand barrels per day in March 2014.

“According to the service agreement, costs are compensated after this level of production is achieved and maintained during any 90 days within a 120-day period. In June 2014, we met this term. Therefore, in the nine months of 2014, the Group accrued revenue from the West Qurna-2 project in total amount of $2,629 million, consisting of cost recovery of $2,589 million and remuneration fee of $40 million.

“In the third quarter of 2014, this revenue amounted to $1,450 million, of which $1,426 million represented cost compensation and $24 million – remuneration fee. This revenue was classified as crude oil sales revenue in the nine months of 2014. Initially, in the second quarter of 2014, this revenue was classified as other sales.

“In order to conform with the current period’s presentation, amounts for the second quarter of 2014 have been reclassified. Attributable amount of 3,902 thousand tonnes of crude oil, or 26,761 thousand barrels, was included in Group’s crude oil production for the nine months of 2014 (2,121 thousand tonnes, or 14,543 thousand barrels, in the third quarter of 2014), that represented approximately 58% of total production from the field (53% in the third quarter).

“Positive impact of cost compensation on Group’s EBITDA for the third quarter and the nine months of 2014 amounted to $1,247 million and $2,264 million, respectively.

“The project’s target production level is 1.2 million barrels per day and the total term of the contract is 25 years.

“The Group is exposed to political, economic and legal risks due to its operations in Iraq. Management monitors the risks associated with the projects in Iraq and believes that there is no adverse effect on the Group’s financial condition that can be reasonably estimated at present.”

(Source: Lukoil)

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West Qurna-2 Drives Growth at Lukoil

In the first 3 quarters of 2014, the production of marketable hydrocarbons at LUKOIL Overseas (the operator of LUKOIL’s international upstream projects) reached 70 million barrels of oil equivalent – a 44 percent year-on-year increase and a new record for LUKOIL’s upstream operations abroad. Oil production more than doubled to reach over 6.5 million tons in January-September 2014.

The launch of the West Qurna-2 field in Iraq this March was largely responsible for the record production increase. The field was producing 325 thousand barrels per day on average at the end of September and cumulative production exceeded 46 million barrels of oil (LUKOIL’s share was 26.7 million barrels).

The project is on the upswing: the initial field development phase – Mishrif Early Oil – will bring the production level to 400 thousand barrels per day. Moreover, the final investment decision has been made on the next phase – Mishrif full field development – which aims to bring the production level to 550 thousand barrels daily. The return of investments is going ahead as planned: as part of the cost recovery, four tankers were shipped in August and September 2014 with over 6 million barrels of oil.

(Source: Lukoil)

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IOCs seek Independent Water Facilities

By John Lee.

International oil companies (IOCs) in southern Iraq are seeking to push ahead with their own water injection facilities to meet production targets, according to a report from Platts.

Malaysia’s Petronas, operator of the Gharraf [Garraf] oil field, is the latest to ask the Ministry of Oil for permission to build a standalone facility, as the new multi-billion dollar Common Seawater Supply Facility (CSSF) project remains stuck in the conceptual design phase.

The $5 billion first phase of the CSSF, which will provide 4 million bpd of treated water for the management of reservoir pressure, is not expected before the end of 2018 at the earliest, assuming the two contracts for design work are signed immediately.

Platts reports that project management consultants CH2M Hill had been hoping to award the front-end engineering and design (FEED) in the second quarter of 2013 and start the project in the third quarter of 2017, but the company is still waiting for details from the oil ministry, and its subsidiaries South Oil Company (SOC) and State Company for Oil Projects (SCOP), specifying the amounts of water required for each field and the time schedules.

This has been held up by delays to final agreements with the oil companies on their revised plateau targets. For the largest fields — West Qurna-1 and Rumaila — new deals were only reached in September, while negotiations are still going on with Shell for the Majnoon oil field.

Complicating matters further is the fact that only two firms are in the running for each of the main FEED contracts — the US’ Parsons for the water treatment plant and Austria’s ILF Consulting Engineers for the pipeline contract.

The total cost of the various water schemes is put at more than $10 billion (12 trillion Iraqi dinars).

(Source: Platts)

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Lukoil to Increase Output at West Qurna-2

By Patrick M Schmidt.

The Dubai-based division of the Russian oil company, Lukoil announced revise production figures for the West Qurna-2 fields.

The company began production in March 2014 with an output of approximately 120,000 barrels of oil per day. Current production levels are now at 300,000 barrels of oil per day.

It is expected output will reach 400,000 barrels of oil per day by next year.

West Qurna-2 has an estimated 13 billion barrels of oil in reserve and is located approximately forty miles from the city of Basra.

(Source: Gulf News)

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Iraq Approves $278m Halliburton Deal

By John Lee.

The Iraqi cabinet has approved a drilling deal with Halliburton value at $278.5 million (324 billion Iraqi dinars).

Reuters reports that under the 30-month contract, Halliburton will drill 30 oil wells in the 8.7-billion-barrel West Qurna-I field, operated by U.S. major ExxonMobil.

Production at the field is currently running at around 360,000 bpd due to problems with low levels of water injection.

(Source: Reuters)

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Lukoil discusses Investment in Iraq

By John Lee.

Lukoil President Vagit Alekperov has said that his company has invested $6 billion dollars so far on operations in Iraq.

At a meeting with Iraqi Oil Minister Adel Abdul-Mahdi [Adil Abd al-Mahdi] in Baghdad, Alekperov said:

“Lukoil is now working on geological exploration projects with other foreign companies in the 10th exploratory area … I believe the appropriate circumstances were made for investing in Iraq that guarantees the rights of the investors.”

First oil was produced from Lukoil’s West Qurna in March. The company, Russia’s largest private oil company, signed a contract revision in June to build two 75-mile pipelines and associated infrastructure.

(Sources: UPI, Ministry of Oil)

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LUKOIL Recovering Costs From West Qurna-2

The Sea Triumph, an oil carrier chartered by LITASCO (LUKOIL‘s international marketing and trading arm) has departed the port of Basra in Southern Iraq with the first batch of oil as part of the recovery of LUKOIL’s costs from the West Qurna-2 project.

The shipment volume amounts to 1 million barrels of oil. The vessel is headed for the port of Augusta, Sicily. After being unloaded, the oil will be transported to LUKOIL’s ISAB refinery in Priolo for processing.

Production at the West Qurna-2 field currently exceeds 280 thousand barrels per day. The project’s development is on schedule with LUKOIL successfully fulfilling all of its contractual obligations.

(Source: LUKOIL)

(Picture credit: Essam al-Sudani, www.essampxiraq.com)

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