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By John Lee.

Iraq's Ministry of Oil celebrated the groundbreaking of the West Qurna 1 Field Operations Center (Phase 1) and inaugurated several service projects in Al-Sadiq District, Basra Province.

The initiatives were carried out by the Basra Oil Company (BOC) in collaboration with PetroChina, the operator of the West Qurna 1 field.

The new center will play a pivotal role in managing water injection, oil production, and gas processing operations. Once operational, it is expected to enhance efficiency and oversight of production activities across the field.

Oil Minister Abdul Ghani emphasized the strategic importance of the West Qurna 1 oil field, which boasts reserves exceeding 22 billion barrels. The field currently produces 550,000 barrels per day (bpd), with ongoing efforts to sustain and boost output.

Key Developments:

1. Infrastructure Improvements in Al-Sadiq District
   • Road Rehabilitation: Resurfacing and paving of key roads, including "Alam Street" (8.6 km) and "Antar Street" (5.5 km).
   • Electricity Projects: Commissioning of a new 33/11 kV substation in Al-Housh area to enhance local power supply.
2. Educational Support
   • Provision of supplies to 7 schools and the Institute of Fine Arts in Al-Sadiq and Al-Madina districts, including classroom furniture, office equipment, and IT tools.
3. Job Creation
   • Increased employment opportunities for local residents.
4. Gas Utilization Initiative
   • The minister directed PetroChina to prioritize capturing and utilizing associated gas for power generation, reducing flaring and contributing to the national grid.

West Qurna 1 was awarded to ExxonMobil during Iraq's first licensing round in 2010. However, ExxonMobil requested to transfer its stake to PetroChina, a process completed after negotiations and approval in 2023.

(Source: Ministry of Oil)

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.

The Iraqi Ministry of Oil has received approval from the Ministerial Energy Council (Recommendation 23067/T) for a final settlement with ExxonMobil.

This settlement, known as the "Settlement Agreement," resolves longstanding disputes arising from the service contract for the West Qurna oilfield project between Basra Oil Company (BOC) and US-based oil giant.

The agreement excludes tax disputes mentioned in paragraphs 1-14 of the settlement.

(Source: Media Office of the Prime Minister)

By Ahmed Mousa Jiyad.

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

The Dedication, Preface, and Introduction of IPSC Project' New Book

Ahmed Mousa Jiyad

Norway

My newest book in the Iraq Petroleum Sector Chronicle Project- IPSCP has been released this month; it is volume 4, has a sub-title, Contracts Amendments in the Making and covers the development in 2013 with comparative linkage to previous years.

This contribution comprises to whom the book was dedicated, the "Preface" jointly written by two prominent patriotic and progressive Iraqis and the "Introduction", which it provides an executive summary of the book.

The recent book is dedicated to all my colleagues with whom I worked, at different capacities, between 1975 and July 1988, on many issues, projects, and missions (inside and outside the country) related to the petroleum sector and the Iraqi economy, particularly at: The Council of Ministers, Ministry of Oil' headquarter, INOC and SCOP.

*****

PREFACE

A Guiding Light-tower in the Solitary of a Deserted Path

By

Fuad Al-Amir and Majid Allawi

 We did not have the opportunity to know closely our dear colleague Ahmed Mousa Jiyad until a group comprising many good patriotic oil experts and professionals stood fast confronting the attempt to promulgate a disastrous oil law in 2007, and we have not been able to meet until now. However, a bond of mutual respect, understanding and continuous contact and communication developed between us while we three follow-up and engage in the national discourse on variety of economic and oil issues.

The most intensive contact and important cooperation between us occurred when Iraq National Oil Company-INOC Law "smuggled" in the last days of the parliament's term on March 14, 2018, and the dubious approval of the President of the Republic was granted after only eleven days on March 25, 2018.

Two days after that approval, dear brother Ahmed Mousa Jiyad, wrote and circulate a "direct appeal against the Iraqi National Oil Company Law" to the Federal High Court, on March 27. He provided detailed analysis showing where INOC Law violates the Constitution and shows that the President's endorsement of it is a violation of his basic duty, according to Article 67, to protect and ensure compliance with the Constitution.

Ahmed' initiative was a source of motivation, mobilization, and awareness on how the seriousness of the negative consequences that law could have on the existence of Iraq; as an entity and a state and could transform all oil-producing and non-oil-producing provinces into mini-states, resembling KR' "mini-state," fighting over resources, provincial borders, transit rights and fees, and even over water. Under a state that would be governed by a company, which owns all Iraq's hydrocarbon, and its resources are managed by an appointed, unelected administration.

His memorandum galvanised efforts and assembled much wider support, was the basis for subsequent moves to crystallize and formalise our position and course of action, immediately after INOC Law was published on the Official Gazette, Al-Waqaai Al-Iraqiya.

Our communication continuous after the law was published, and in light of consultations with him, we decided to file an appeal case before the Federal High Court, challenging the premises of law; because the "public" appeal that Ahmed had previously submitted and circulated widely did not meet the legal procedural requirements for filing a case in terms of powers of attorney, legal representation, and other formalities, which may require many months of direct presence and attendance. His residency, work and commitments outside Iraq prevented him from be in Baghdad for the required period.

However, the most important role in that lawsuit was what Ahmed had played in the accurate formulation of all the articles of the lawsuit list, and the statement on the constitutional articles that were violated by the articles of the National Oil Company Law, in an in-depth legal formulation. The lawsuit statement was completely drafted by him, with the exception of the introductions and formalities necessary to be followed and adhered to in such lawsuit regulations. And he continued to follow up on every session during the course of the lawsuit, which was resulted in a decision by the Federal High Court accepting appeals almost all main articles that were appealed against; certainly, the thorough and well-articulated views on the constitutional and legal appeals that he formulated had the decisive role in accepting those appeals and "demolishing" the miserable INOC Law.

What should be highlighted is the depth, objectivity and diversity of his studies and interventions: he addressed and condemned the positions of successive, collusive governments regarding KRG'   unconstitutional control of oil operations in Iraqi Kurdistan region. Also, his analysis of the State annual budgets, as he wrote on 2019 budget, condemn the "Policy of extortion and negativity of acquiescence", and asserting any payment from the federal government to KRG not only violates state budget law, but also indicates government failure in protecting the national interests. He addressed and uncovered corruption and irregularities in the work of Ministry of Electricity and how the Minister contract with "himself". He conducted and published serious, in-depth and valuable series of economic studies regarding many projects and suggested agreements such as Basra-Aqaba Pipeline, Agreement with TotalEnergies, the SIIP with ExxonMobil, ..., and many more studies and positions on different issues of petroleum policy, contracts, refineries, development of border joint-oilfields among other topics.

Ustath [Professor] Ahmed Mousa Jiyad is an extension and outcome of a generation of patriotic and progressive experts who carried the concerns of Iraq and its oil issues on their shoulders after the fall of the glorious July 1958 Revolution, after it dared to launch the battle for the  liberation of the national oil wealth by enacting Law No. 80 of 1961; the hostile forces mobilized all evil efforts to bring it down.

Great symbols prominent Iraqi experts and intellectuals have taken up the leadership of the oil battle, led by the deceased of Iraq, the great stature Dr. Mohammad Salman Hassan with his lecture that he delivered at the Economists Association and issued a pamphlet entitled "Towards the Nationalization of Iraqi Oil", in which he presented the idea of the gradual nationalization of Iraqi oil. There is another pioneering work presented by Dr. Ibrahim Allawi in his book "Iraqi Oil and National Liberation" in 1967, which has become a reference for every follower of oil issues.

Dear brother Ahmed lived through that generation after his graduation in 1967, and he was among the elite of the progressive youth who gathered around Dr. Mohammad Salman Hassan and coordinate their movements and intellectual activity under that glorious banner.

Now, Ahmed, with exceptional qualities, represents and resembles an extension of all those who preceded him. He has enriched his first academic specialization as a graduate of the Faculty of Economics and Political Science with several specialized academic studies in the most prestigious international, UK and US, universities with a diploma in planning, a master's in development and a master's in law and diplomacy.

Moreover, he enriched the oil library with a series of volumes/books entitled Iraq Petroleum Sector Chronicle-IPSC Project, this fourth volume covers the year 2013. Ahmed' research and publications, particularly IPSC Project, provide the most important documentary reference for Iraqi oil issues.

All that, in addition to his long experience as an employee, chief expert, and negotiator at the Ministry of Oil, INOC, Council of Ministers and Ministry of Trade, explain the depth and width of his analytical approach. Therefore, his treatment of all raised oil issues was distinguished by methodology, professionalism, objectivity, and accurate scientific approach; a spirit of the researcher and analyst of technical, legal and financial factors, economic feasibility, and possible alternatives to the subject he deals with, away from convulsions or constructive and polemical phrases or tendencies.

We mention this to testify how exceptional this unique talent is. And in the highly complex and volatile global conditions in the oil industries and policies, the failure of the competent state agencies, starting with the prime minister, not to benefit from his experiences and consultations is a grave loss and national negligence for which an apology is not sufficient.

He is the sparkling continuity of all generations of Iraqi experts and intellectuals who left and are leaving their marks and giving to their country and to future generations and he becomes a guiding beacon in the solitary of a deserted path.

Baghdad

March 2023

INTRODUCTION

Iraq Petroleum Sector Chronicle Project, Progressing

This fourth book/volume is, mainly, about the development in Iraqi petroleum sector during 2013, but also, it provides the needed continuity by covering the development in previous years that were addressed in the first three volumes in this series of books on Iraq Petroleum Sector Chronicle-IPSC Project.

There is a separate note in this volume outlining IPSC Project, which is one fruition of many decades of constant meticulous research, consultation, documentation, follow up and direct involvement efforts, and of more than six decades since my formal association and engagement with the Ministry of Oil.

The first three volumes/books were published by Lambert Academic Publishing-LAP, this fourth volume is too.

All books have the same main title, Iraq Petroleum Sector Chronicle but with different subtitles, reflecting the major themes that dominate the debate in that particular year/period covered by the related volume.

The first IPSC book has a subtitle, "Grand Opening for Big Push Strategy" and covers the development in the upstream petroleum in Iraq prior to 2011. The subtitle reflects the mood, sentiments, actions, and views that prevailed then both inside and outside the country, expecting Iraq to be a game changer in the international petroleum scene. That was premised on the concluded service contracts pursuant to the bid rounds, particularly the first and the second. The book/volume was published in October 2021 and my dear colleague Tariq Shafiq wrote the Preface.

Signs of powerful restraints and constraints began to emerge and thoughts for revisions were contemplated during 2011. Hence, the subtitle for the second volume reflects that dramatic shift from high expectations originally formulated after concluding the above-mentioned contracts; it was, "A Game Changer, No More". The volume was published in May 2022 and its Preface was written by my dear colleague Dr. Walid Khadduri.

The third book covers 2012, with subtitle "Reality Seldom Coincides with Expectations"; it is in fact a logical continuation or extrapolation of the subtitle for the previous volume. The third book contains many new additions and improvements, especially regarding data and statistics covered in part four. My colleague and twice Minister of Oil, Thamir Al-Ghadhban enriched volume three of the book by writing its Preface.

The current volume comprises the usual four parts, in addition to Preface, Introduction, a brief note on IPSC Project, Table of contents and Abbreviations.

Following the established structure of the previous volumes, Part One contains a selection of my own essays and research work published in 2013. Each of my "Essays..." has its own methodology, structure, assumptions, analysis, discussion and consulted references; information on each essay was provide, when and where it was published and the web-link to access it, if that is permissible by the related websites. This part contains 11 essays.

Part Two of the book comprises views of and positions taken by some selected well-known Iraqi oil professionals, senior government officials and others aiming at presenting a balance of wide spectrum of different, and sometimes opposing, views positions and affiliations; these are presented in a form of own articles, interviews, keynote statements or any other form.

The selected items reflect the richness and diversity of opinion that shaped the discourse among Iraqis at that time and, consequently, enriched the value of this book. Official views, expressed, through detailed interviews and statements, by senior government officials and decision makers reflect the political vision and economic aspiration of the dominant political parties, groups, religious/ politicized individuals and different associations and gatherings of professionals, notably oil experts and professionals inside and outside the country.

This part includes also other articles written or interviews given by non-Iraqi oil professionals, articles, abstracts and extracts from reports, studies and books written or done by international entities, consulting/legal firms, and authors, among others; they were included due to their relevance to Iraq upstream petroleum. There are 22 items in this part two.

Part three, provides much wider global views on the development of the Iraqi petroleum sector, comprises outside foreign and international standpoints and contributions to the debate about Iraq's petroleum and its prospect; a large number of items compiled from many and different external sources includes reports, studies, articles, and media reporting among others, most if not all, were written by non-Iraqis.

This part adds the third perspective of the book; how the outside world looked to Iraqi petroleum matters, what was their preoccupation, how did they understand or fail to understand, analyse, debate the issues, and foresee the implications. Some items provide data and information that are not made available by Iraqi entities through formal channels and thus becomes important source for such information. In total, this part comprises 59 items.

In this volume, Part Four exhibits noticeable addition and improvements, with production of many charts, tables, and introduction of trendlines and regression equations. Data and statistics are vital material evidence and essential for understanding and assessing progress or otherwise in different aspects in petroleum sector.

The part has eight main sections with many sub-sections, 47 tables and 27 charts.

This part provides rather detailed data and analysis not only for 2013 but also covers previous years whenever possible and data are available. A brief review of quantitative and statistical indicators regarding the eight topics are provided hereunder.

This fourth book covers the development of the sector during 2013. It has the subtitle, Contracts Amendments in the Making; the most impacting action and financially rewarding to IOCs.

Click here to download the full analysis in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

By Ahmed Mousa Jiyad.

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

Ending ExxonMobil Presence in WQ1 Oilfield

Legal-Contractual Discussion with Economic-Financial Analysis

Information indicates that the Iraqi Ministry of Oil (MoO) proposed to acquire (buy) ExxonMobil's participation interest (PI) in the West Qurna 1 (WQ1) oilfield for $300 million, and that the final decision depends on the formation and approval of the new government.

The proposal revives the divergent positions that prevailed within MoO when discussing a similar situation in 2018 relating to the same oilfield.

Click here to download the full report in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq's Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

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)

Writing in Oil Price, Simon Watkins that the recent approval of the Iraqi National Oil Company (INOC)'s acquisition of ExxonMobil's 32.7 percent stake in the West Qurna 1 oil field is likely to leave China delighted, the U.S. irritated, and Iraq's oil industry still unable to achieve any of its key oil output goals.

Click here to read the full article.

By John Lee.

The Iraqi cabinet has agreed to allow the Basra Oil Company (BOC) to take over ExxonMobil's holding in the West Qurna 1 oilfield, at a price of up to $350 million.

Addressing media after Wednesday's cabinet meeting, Minister of Communications Arkan Al-Shaibani (pictured) said the cabinet also allocated an initial payment of $250 million "according to the acquisition amount to cover the Basra Oil Company's share in the work program and the budget for the year 2022 according to new developments provided that ExxonMobil relinquishes its litigation against the Basra Oil Company at the International Court of Arbitration."

Note that other media list the acquiring entity as the Iraqi National Oil Company (INOC).

(Sources: Govt of Iraq, Reuters, S&P Global Platts)

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today announced that the Kurdistan Regional Government has approved the Company's acquisition of ExxonMobil's remaining 32 percent interest in the Baeshiqa license, doubling DNO's stake.

In parallel, commerciality has been declared on the license with plans submitted for fast-track development including early production from previously drilled but suspended wells.

DNO has already demonstrated proof of concept of producing these wells through temporary test facilities, having trucked some 15,000 barrels of 40 degree API and 22 degree API oil for export in 2019 and 2020 from the Baeshiqa-2 and Zartik-1 discovery wells.

Following the transaction, the joint venture comprises DNO as operator with a 64 percent (80 percent paying) interest, the Turkish Energy Company (TEC) with a 16 percent (20 percent paying) interest and the Kurdistan Regional Government with a 20 percent carried interest.

Bijan Mossavar-Rahmani, DNO's Executive Chairman, said:

"This acquisition and plans for fast-track development underscore our belief in the potential of the Baeshiqa license and more broadly our long-term commitment to Kurdistan.

"Once we get the green light from the authorities to proceed, first production will be a matter of months rather than years."

DNO's 3,204 meters discovery well, Baeshiqa-2, tested hydrocarbons to surface from multiple stacked Jurassic and Triassic zones. Two zones flowed naturally at rates averaging over 3,000 barrels of oil per day (bopd) of light gravity oil each and another averaged over 1,000 bopd also of light gravity oil. DNO drilled Zartik-1, the second discovery well, 16 kilometers to the southeast of Baeshiqa-2, to a depth of 3,021 meters. This well tested hydrocarbons to surface from several Jurassic zones, with one zone flowing naturally at rates averaging 2,000 bopd of medium gravity oil.

DNO acquired its first 32 percent interest and assumed operatorship of the Baeshiqa license from ExxonMobil in 2018. As consideration for both acquisitions DNO has covered ExxonMobil's share of exploration costs since January 2019 and the seller will receive payment of USD 15 million.

In addition to the 327-square kilometer Baeshiqa license, DNO operates the Tawke license containing the Tawke and Peshkabir fields in Kurdistan. Combined production from these fields averaged 110,300 bopd in the second quarter of 2021.

(Source: DNO)

By John Lee.

According to a report from Reuters, the Iraqi Prime Minister Mustafa al-Kadhimi has told the press in Washington DC that he wants another American company to replace ExxonMobil when it exits the West Qurna 1 oilfield.

Meanwhile, S&P Global Platts reports that Exxon filed an arbitration case against the state-owned Basra Oil Company (BOC) related to its stalled attempt to sell its stake in the field.

More here and here.

Read also: The Demise of ExxonMobil in the Iraqi Petroleum Sector 

(Sources: Reuters, S&P Global Platts)