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By John Lee.

Under the patronage of Oil Minister Hayyan Abdul Ghani, Basra Oil Company (BOC) organized a ceremony for the handover of the main operator role for the West Qurna 1 oilfield.

The event, attended by the Ministry's Deputy for Extraction Affairs Basim Mohammed Khudair, marked the transfer of management responsibilities to China's PetroChina, replacing ExxonMobil as part of an agreement settling ExxonMobil's stake in the field.

Basra Oil Company has become a major partner in managing the field, holding a 22.7-percent stake, alongside PetroChina, Pertamina from Indonesia, Itochu from Japan, and the government partner, the Oil Exploration Company.

The subsequent holding in the field are: PetroChina 32.7%; Basra Oil Company (BOC) 22.7%; Itochu 19.6%; Pertamina 20%; and Oil Exploration Company 5%.

The current production capacity of the field exceeds 500,000 barrels per day. Both the South Gas Company (SGC) and Basra Gas Company (BGC) are involved in utilizing the associated gas from the field.

(Source: Ministry of Oil)

By John Lee.

Pertamina, the Indonesian state-owned energy company, will reportedly buy an additional 10 percent stake in the West Qurna 1 oilfield from ExxonMobil.

The Deputy Director-General of the Basra Oil Company (BOC), Hassan Muhammad Hassan, told the official Iraqi News Agency (INA) that the agrreement, "is subject to the signing of the settlement agreement with the Basra Oil Company."

Pertamina previously had a 10 percent holding.

The Iraqi cabinet had previously agreed to allow BOC to take over ExxonMobil's holding in the field, at a price of "up to $350 million."

(Source: INA)

By John Lee.

The China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC) are reportedly considering acquiring Exxon Mobil's remaining stake in Iraq's West Qurna 1 oilfield.

According to sources cited by Bloomberg, the stake could fetch more than $500 million.

ExxonMobil originally had a 60% stake in the field, but sold 25% to PetroChina and 10% to Pertamina in November 2013. (Shell originally had a 15% stake, but sold it to CIECO West Qurna Limited, a subsidiary of Japan's Itochu Corporation, in 2018 for $406 million.)

Itochu's website lists the current interests as: ExxonMobil (US (Lead Contractor), 32.7%; Petrochina (China) 32.7%; Itochu (Japan) 19.6%; Pertamina (Indonesia) 10.0%; Oil Exploration Company (Iraqi state-owned company) 5.0%.

More here.

(Source: Bloomberg)

By John Lee.

Oil production is to increase at the West Qurna 1 oilfield, according to Reuters.

The news agency quoted Basra Oil Company (BOC) chief Ihsan Abdul Jabbar as saying on Wednesday that output will rise from 440,000 barrels of crude oil per day (bpd) to 490,000 bpd in the “next few days”.

The field is being developed by ExxonMobil (25%), PetroChina (25%), Itochu (15%), Pertamina (10%), Iraq's state-owned Oil Exploration Company (25%)

(Source: Reuters)

By John Lee.

Iraq's Petroleum Contracts and Licensing Directorate (PCLD) has announced the five additional companies have been approved to bid for Iraq's "borderline onshore & offshore exploration blocks & fields."

The companies are listed as:

• Dana Gas (UAE)
• Dragon Oil (UAE)
• Geo-Jade Petroleum (China)
• Schlumberger (USA)
• Zarubezhneft (Russia)

Eight companies had applied for approval.

The five successful companies will be eligible to compete along with the following companies which are qualified from previous licensing rounds:

• BP (United Kingdom)
• China Zhenhua Oil Company (China)
• China National Offshore Oil Corporation (CNOOC) (China)
• China National Petroleum Corporation (CNPC) (China)
• Crescent Petroleum (UAE)
• Daqing (China)
• Eni (Italy)
• ExxonMobil (US)
• Gazprom (Russia)
• Itochu (Japan)
• JSOC Bashneft (Russia)
• Kogas (Korea Gas Corporation) (South Korea)
• Lukoil (Russia)
• ONGC Videsh (India)
• Pakistan Petroleum (Pakistan)
• Pertamina (Indonesia)
• Petronas (Malaysia)
• Shell (Netherlands/UK)
• Sinopec (China)
• United Energy Group (UEG) (China)
• Total (France)

The areas to be offered include the onshore exploration blocks of Khudher Al-Mai, Jebel Sanam (Jabal Sanam) and Umm-Qasr on the Kuwaiti border; the Sindbad, Huwaiza, Shihabi, Zurbatia and Naft Khana blocks on the Iranian border; and the offshore exploration blocks in the Iraqi regional waters of the Arab gulf.

The bidding process should commence in May, according to the following schedule:

(Source: Oil Ministry)

By John Lee.

Iraq's Ministry of Oil has requested proposals from international oil companies interestsed in developing a number of small- and medium-sized oil fields.

The fields concerned are:

• Sindebad (Basra governorate);
• Umm Qasr [Um Qaser] (Basra governorate);
• Rachi (Basra governorate);
• Abu Khema (Basra governorate);
• Kumait (Missan governorate);
• Noor (Missan governorate);
• Umara (Missan governorate);
• Dema (Missan governorate);
• Dujaila (Missan governorate);
• Mid-Euphrates fields (Mergan, Kifl, West Kifl).

The companies already qualified to bid are:

• China Zhenhua Oil Company (China)
• Dragon Oil (UAE)
• Edison (Italy)
• Glencore Exploration (Switzerland)
• Gulfsands Petroleum (UK)
• Inpex (Japan)
• Itochu (Japan)
• Japex (Japan)
• JOGMEC (Japan)
• JX Nippon (Japan)
• Kuwait Energy (Kuwait)
• Mitsui Oil Exploration (MOECO) (Japan)
• Mubadala Oil (UAE)
• OSJC Rosneft (Russia)
• Pertamina (Indonesia)
• PetroVietnam (Vietnam)
• PTTEP (Thailand)
• SNGN Romgaz (Romania)
• Crescent Petroleum (UAE)

Tenders from non-qualified companies will also be considered.

More information here, here and here.

(Source: Ministry of Oil)

By John Lee.

According to a report from Reuters, Indonesia's state-owned energy company Pertamina hopes to seal a deal this year with an un-named Indian refiner to process around 1 million barrels of Iraqi crude oil each month.

Chief Executive Dwi Soetjipto (pictured) told reporters:

"It is better if we purchase the crude and then utilize a refinery overseas ...

"Why India? Because its geographic location is good."

Any crude shipments from Iraq would pass several Indian oil ports on the way to Indonesia.

Pertamina's monthly Iraqi oil shipments would consist of 290,000 barrels from a stake in the West Qurna block and another 700,000 barrels it would purchase from other Iraqi oilfields, he said.

The company has about 1 million barrels per day of domestic refining capacity, which meets only about two-thirds of Indonesia's daily oil consumption.

(Source: Reuters)

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. 

By John Lee.

ExxonMobil signed agreements on Thursday with PetroChina for a 25 percent participating interest in the West Qurna I project in Iraq, and with Indonesia's Pertamina for a 10 percent participating interest in West Qurna I.

ExxonMobil retains 25 percent interest and remains lead contractor.

The transfer has been approved by the South Oil Company, Oil Exploration Company of the Iraqi Ministry of Oil and Shell West Qurna B.V., as members of the West Qurna I contractor consortium.

China is already the top foreign player in Iraq's oilfields.

(Source: ExxonMobil)

(Picture: Rex Tillerson, chairman, president, and CEO of Exxon )

Reuters reports that Exxon Mobil is selling part of its stake in the West Qurna-1 oilfield to PetroChina and Indonesia's Pertamina.

Oil Ministers Abdul Kareem Luaibi [Elaibi] told the news agency that 25 percent will go to PetroChina and 10 percent to Pertamina.

He added that the deal would be done "maybe after two to three weeks".

Exxon Mobil currently has a 60 percent stake in the giant oilfield and is the operator.

(Source: Reuters)

(Picture: Rex Tillerson, Chairman and CEO of ExxonMobil)