Tag Archive | "West Qurna"

The latest West Qurna Oilfield News – Baker Hughes, contract, Shell, Lukoil, Russia, new oil wells and more – brought to you by Iraq Business News

Lukoil to Invest $30bn at West Qurna-2

By John Lee.

Ravil Maganov (pictured), who oversees Lukoil‘s exploration and production, has said total investment in the West Qurna-2 field was expected to exceed $30 billion.

At its peak in 2019, he said he expects oil production at the field to hit 1.25 million bpd.

The world’s second-largest undeveloped field, with recoverable oil reserves of around 14 billion barrels, started production in March.

(Source: Reuters)

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LUKOIL Qualifies for Iraq Payment

LUKOIL Overseas (the Operator of LUKOIL’s overseas upstream projects) has informed Iraq’s Ministry of Oil that it has fulfilled its contractual obligations for first commercial production at West Qurna-2.

LUKOIL, the Operator of the West Qurna-2 project, successfully maintained an average daily production of at least 120 thousand barrels for 90 days, entitling it to begin recovering costs and receive remuneration.

Daily oil production at West Qurna-2 is currently above 200 thousand barrels.

Andrey Kuzyaev (pictured), Vice President of LUKOIL and President of LUKOIL Overseas, said:

“The West-Qurna-2 project is developing at a fast pace, and production is going up. As of today, the project has reached another milestone by paving the way for LUKOIL to receive contractual remunerations.

“Timely cost recovery for the Early Oil phase will enable the Operator to proceed to active implementation of the subsequent phases of the field development.

(Source: LUKOIL)

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West Qurna-2 hits 200,000 bpd

By John Lee.

Lukoil boss Vagit Alekperov (pictured) has told journalists that production at the West Qurna-2 oilfield has reached 200,000 bpd, from a starting volume of 120,000 bpd two months ago.

He added:

By the end of the year according to obligations 400,000 will be reached. Today there is no doubt that 400,000 will be reached by December.

(Source: Reuters)

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Southern Oil Exports “on Track for Record”

By John Lee.

According to shipping data tracked by Reuters, oil exports from Iraq’s southern terminals are heading for a record high in April.

An average of 2.55 million barrels per day were shipped in the first 23 days of April, which if sustained would top February’s 2.50 million bpd, the highest since 1979.

Southern exports are being boosted by the start of production at Lukoil‘s West Qurna 2 oilfield (pictured).

In the north of the country, however, shipments of Kirkuk crude are reported to be still stalled due to a bomb blast on 2nd March, and traders are not expecting flow to resume for some weeks yet.

Without exports from the Kirkuk fields via pipeline to Turkey, overall shipments are set to be below February’s rate of 2.8 million bpd, which Deputy Prime Minister for Energy Hussain al-Shahristani described as a record.

(Source: Reuters)

(West Qurna-2 picture by Essam al-Sudani)

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West Qurna 2 Begins Production

By John Lee.

Iraq’s giant oil field West Qurna 2, with a minimum 14 billion barrels of recoverable reserves, began production on Saturday as Lukoil opened spigots to put 140,000 barrels a day onto the market.

By the end of the year the field is set to produce 400,000 bpd, putting Iraq on track for its production target for this year of 4 million bpd.

If fully developed, West Qurna 2 could produce 1.2 million bpd for 20 years and the start of production at the field was described as “strategically important” by Lukoil chief executive Vagit Alekperov (pictured.)

Lukoil have a 75% stake in the operation with the remainder owned by Iraq’s South Oil Company.

Some analysts have noted how Iraq’s rising production could spark tensions with OPEC, as the country is now already moving outside of OPEC production quotas, set to keep prices stable.

(Source: Al Arabiya)




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Thales to Provide Security System at West Qurna

Thales has been awarded a contract to provide an Integrated Security System (ISS) for the West Qurna-2 oil field development located 65 km northwest of Basra in Southern Iraq.

This contract has been signed with LUKOIL Mid-East Ltd, a subsidiary of the Russian oil company LUKOIL.

Thales will design and deploy the Integrated Security System over the security perimeter surrounding the West Qurna-2 area, protecting LUKOIL Mid-East personnel and assets, including well pads, central processing facilities, gas treatment facilities, produced water treatment, all related offsites and utilities, storage tanks and living camps.

Thales´s Integrated Security System will include a number of innovative technical solutions as well as a command & control centre to assure supervision and control of day-to-day security operations and comprehensive protection from operational incidents and threats.

Thales is also part of the international consortium that was awarded another contract by LUKOIL Mid-East Ltd at the end of 2013 for spare parts supply and maintenance assistance at the existing and future security installations of LUKOIL´s West Qurna-2 oil field development.

Dominique Gaiardo, Vice President Protection Systems, commented:

These two contracts are important milestones because they are Thales’s first deals with LUKOIL, Russia’s largest privately owned oil business group and a major international, vertically integrated oil & gas company.

“In addition, these awards continue to confirm that Iraq is an important geographical market for Thales.

(Source: Thales)

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Capital Gain Tax on IOCs in Iraq

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Many countries impose capital gain tax on individuals, companies and corporations when a profit realized from the sale of assets. National and state legislation often has a large array of fiscal obligations and regulations regarding capital gains, however, these fiscal obligations may vary from jurisdiction to jurisdiction.

In other words capital gain tax is a normal component of taxation systems on both national and international levels, and thus has a significant contribution to the state revenues and fiscal policies. Iraq is no different and should consider doing the same.

In Iraq the signed service contracts provide the IOCs with a possibility to assign (sell) wholly or partly their participating interests as specified by a common clause in the signed contract, “any Company shall have the right to assign any of its Participating Interest, shares, rights, privileges, duties or obligations under this Contract to an Affiliate.” Such right for assignment is subject to and governed by a set of provisions outlined in the signed contract.

Due to the long duration of the contracts (the Term) that extend beyond 20 years, and due to the usual practice of Merger and Acquisition (M&A) in the international petroleum business it is highly probable that IOCs might “farm in” and “farm out” by acquiring, selling or exchange participation interests in the related petroleum field.

The transfer of participation interests between IOCs involves financial transactions or transfer of “asset” ownership between the concerned parties: the buyer and the seller.  This assignment deal may (though highly likely) results in significant realized gain (profit) for the selling party compared to the actual cost (investment) it made as a consequence to its participation in the related upstream petroleum development project.

 This realized gain is known to be “capital gain” and in most countries it is taxable. The “Capital Gain Tax” is imposed on individuals, companies and corporations and in many countries it is imposed in addition to other direct taxes such as “Property/Wealth Tax” and “Income Tax” among others. The percentage of Capital Gain Tax differs according to the taxation systems and fiscal policies across the world. 

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Weir Wins $98m Contract with Lukoil

The Weir Group has announced it has signed a contract with LUKOIL to provide general maintenance services for the West Qurna-2 oilfield in Southern Iraq.

The agreement, which is for two years and is estimated to be worth a total ofUS$98m (£59m), will see Weir engineers deliver mechanical, electrical, maintenance and pipeline services for the related production facilities, including the Mishrif Central Processing Plant.

Weir has invested over US$8m in establishing its service centre in Basra, Iraq and it is the first in-country location to offer fully comprehensive maintenance services for all kinds of rotating equipment, valves and wellheads. The facility is also the first in Iraq to obtain API and ISO licences.

West Qurna-2 is one of the largest undeveloped oilfields in the world. Mishrif will initially produce 150,000 barrels of oil per day (bod), increasing to 400,000 bod by the end of 2014. The processing facility is expected to be operational in the first half of 2014, at which time Weir will commence work under the terms of the contract. Weir will recognise input on a monthly basis over the course of the contract in accordance with the agreed work plan.

Weir Chief Executive, Keith Cochrane (pictured) said:

This substantial contract demonstrates the importance of Weir’s long experience of working in Iraq and our reputation for delivering high quality engineering services in support of the country’s developing oilfield infrastructure. It also reflects our global capability, a key strength of our Group which allows us to capture opportunities in high growth markets and be a partner of choice to our worldwide customers.

(Source: Weir Group)

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