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Following Total's statement on Friday that it was considering possible investments in Iraqi Kurdistan, Deputy Prime Minister for Energy Hussain al-Shahristani warned the French major on Sunday that it would bear the "full consequences" if it did.

"The position of the Iraqi government will be the same as with the other oil companies, that no company has a right to sign a contract without the approval of the central government of Iraq," Shahristani told Reuters.

"Any such contract has no standing with the Iraqi government, and the companies have no right to work on the Iraqi territories and they bear the full consequences.

Total Chief executive, Christophe de Margerie, said on Friday that “[Iraqi Kurdistan] is a place where there are important oil and gas reserves and contracts are better [than in Southern Iraq] ... The reward for investment  [in Southern Iraq] doesn’t appear for the moment to be enough.”

ExxonMobil has reportedly been excluded from the fourth energy round because of its deals in Kurdistan.

Total has s smaller presence than Exxon in southern Iraq, but is in negotiations to develop gas projects in Missan [Maysan] province. It has a minority share in the Halfaya oilfield.

"If they don't find it attractive enough, they are most welcome to withdraw from it," Shahristanti responded when asked about Margerie's comments.

(Sources: Reuters, Bloomberg, AKnews)

Iraq has postponed its next energy licensing round by more than a month to May 30, a senior government official has said.

Speaking to Reuters on January 31, Abdul Mahdy al-Ameedi, the Oil Ministry’s Director-General, said the decision to move the date back had been made to allow potential bidders more time to study the contracts following a number of alterations by the department.

“We have made major changes and amendments on the initial contract that concern the economic and contractual terms, and the result was a new model contract,” he said.

“The changes and amendments on the exploration contract were mainly touching the pricing formula and profits of the companies, and how to determine their shares in the contract.”

The two-day round had been scheduled for April 11.

This was the second postponement, with the original auction date delayed last month after a number of requests from international oil companies (IOCs).

“The [existing] technical service contracts are very tight, [as] the Iraqis managed to squeeze companies quite heavily on the terms,” Sam Ciszuk, an analyst with KBC Energy Economics, told The National.

“IOCs were still moving forward with this because of potential future opportunities. Now it seems like those opportunities look fairly unattractive and the Iraqis have seen that they need to do something about that.”

More than 40 operators have qualified to take part in the round, which is expected to add 29 trillion cubic feet (812 bcm) of gas and 10 billion barrels of oil to Iraq’s reserves once exploration work begins.

These include major names such as BP, Shell, ExxonMobil, Lukoil, Total, China National Petroleum Corp (CNPC), Eni, Occidental Petroleum and Chevron.

In total, 12 exploration blocks are being made available, ranging in size from 5,500 to 9,000 square kilometres.

According to the ministry, seven of these are believed to contain natural gas, and five are thought to contain crude oil.

The blocks are located in the provinces of Basra, Najaf, Babil, Muthanna, Diwaniyah and Dhi Qar, south of Baghdad, Nineveh and Diyala to the north and Anbar to the west.

(Source: NewsBase)

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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:

BP, Exxon Mobil, Lukoil, Shell, Statoil, Total

Action Calls:

• Iraqiya ends parliamentary boycott, discusses ending cabinet boycott: Iraqiya fading as Iraq moves towards semi-stable majority government.
• Statoil to sell WQ-2 stake to partner Lukoil: Confirming Statoil's exit in south, perhaps freeing it to look north?
• Iraq again delays 4th bid round auction: Bigger news is Exxon's re-entry onto list of bidders.

Headlines:

• Maliki advisor: oil law pushed to late 2012: Not necessarily surprising, but underlines that Kurds are building facts on ground, rather than relying on promises in Baghdad.
• Turkish official cancels Baghdad anti-terror trip: Minor indicator of larger trend - Erbil-Ankara entente at expense of Baghdad.

Calendar:

• This month - Iraqiya ends cabinet boycott
• Next month - National Reconciliation Conference?

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.

There has been a welcome outbreak of pragmatism in Iraq in recent days.

While the fact that ExxonMobil will apparently be allowed to take part in the auction for the fourth round oil licences was not entirely unexpected, some will see it as a climb down on the part of Baghdad.

Others, such as Hess Corp, which was barred in September as a result of its contracts in Iraqi Kurdistan, will be left in little doubt that some oil companies are more equal than others.

On the party-political front, the return of Iraqiyya deputies to the parliament after several weeks of boycott has generally been seen as a positive, especially with budgets to be finalised.

But this should not lead to any complacency, as tensions between the factions still remain high.

What this all means for the long-awaited hydrocarbon law remains to be seen.

Iraq’s legislation doesn’t prevent oil companies from signing deals with the central government in Baghdad and with the KRG, as ExxonMobil has done, said Adnan al-Janabi, chairman of Iraq’s Oil and Energy Committee.

Speaking on the sidelines of an oil conference in London, he added, "there are no blacklists in parliament".

“With or without the [new hydrocarbon] law, I don’t think there is anything to constrain any company from operating anywhere in Iraq ... I don’t see any legality in announcing anyone as being blacklisted.”

He said he expected a first reading of the law in Iraq’s parliament next month.

As recently as September Baghdad reportedly excluded Hess Corp from participation in the fourth energy licensing round because of its contracts with the KRG.

(Sources: Bloomberg, Reuters)

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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:

ExxonMobil, Lukoil, Statoil, Total, Samsung

Action Calls:

• National Reconciliation Conference looks dead, Sadrists ask their price: Nothing likely to come of it, unless it is to be used to announce developments elsewhere.
• Exxon moving into KRG: Exxon has their contractual commitments, so expect this to continue.
• Total close to securing Kurdistan oil rights: Just as we predicted, another major moving towards Kurdistan.

Headlines:

• Increasing attacks along the trigger line: Triggered by increasing political uncertainty, something to watch.
• Samsung wins $1 billion WQ-2 contract: Shows that life goes on in southern Iraq.

Calendar:

• 31 Jan - Parliament to reconvene
• This week - Exxon reports, Basra single point mooring set enter service
• Next month - National Reconciliation Conference

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.

The Sunday Times, citing unidentified industry sources, reports that French oil and gas producer Total is close to securing exploration rights over several exploration blocks in Iraqi Kurdistan.

A deal could be announced within weeks, according to the newspaper.

Chevron and ConocoPhillips are also believed to be competing for rights in the semi-autonomous region, following the announcement last year that ExxonMobil had acquired six exploration blocks in defiance of central government in Baghdad.

(Source: Bloomberg)

Despite objections from Baghdad, ExxonMobil already has personnel on the ground in Iraqi Kurdistan, according to Reuters.

Whiel the company has kept silent on its exploration agreement with the Kurdistan Regional Government (KRG), one central government regards as illegal, one Western industry source in Erbil told the news agency:

"They [Exxon] are definitely here and they are definitely assessing living and working accommodation ... There are around 10 individuals here at any one time looking at what it takes to fully mobilise here - office space, housing space, these types of things. No oil company comes in in a day."

Executives from Exxon reportedly met Ashti Hawrami, the region's Natural Resources Minister, last week, and are preparing to issue a tender for seismic work for at least some of the six exploration blocks acquired in October.

Exxon has been summoned to the oil ministry in Baghdad for final talks, but it is unclear whether the discussions would take place before the company's fourth quarter results on 31st January, when it is expected to publicly announce its Kurdistan investment.

In the meantime, however, it is business as usual at Exxon's West Qurna-1 field in the south of the country, where output has risen to about 390,000 barrels per day, and where Exxon continues to lead a multi-billion dollar water injection project that is crucial to boosting output in the area.

The KRG is in talks with other oil majors and further agreements are expected in the coming months. Sources say France's Total, which has a minority stake in the Halfaya oil field in southern Iraq, is keen to move into the north, possibly linking up with Anglo-French explorer Perenco in the Sindi-Amedi block along the Turkish border.

A Lukoil spokesman, on the other hand, dismissed the possibility of the Russian company heading north.

(Source: Reuters)

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, ExxonMobil, Genel, Gulf Keystone, Marathon, Oil Search, ShaMaran, WesternZagros

Action Calls:

• Allawi defiant, Kurdish silence is deafening: Allawi boycott helped scuttle parliamentary quorum, but again, Iraqiya is weak; watch the Kurds.
• Hayward, Vallares founders stand to pocket $247 million in Genel shares: Indicator of short-term and long-term plays on Kurdish oil shares.
• ShaMaran relinquishes Pulkhana, Arbat: ShaMaran focuses its exploration efforts, hopes to become acquisition target.

Headlines:

• IRGC statement angers Sadrists: Confirms that Iran will have influence in Iraq, but that Iraq's Shiites are not puppets.
• Hashemi bodyguards tortured: Reminder of just how powerful Maliki's intimidation campaign is.

Calendar:

• 28 Jan - Parliament to reconvene (second try)
• Next month - Reconciliation meeting

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.

By Gavin Jones, Director of Iraq Business News, and Partner at consultancy firm Upper Quartile. This article was originally published on the Emerging Economics blog. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

It is very difficult with a market like Iraq to separate current issues, past progress and likely consequences. Since mid-2009 there has been significant achievement and progress, a sustained period of calm which now, sadly, is turning into what will probably be a very violent period as the actions and indecisions running up to the last election start to be resolved.

Let us take a quick look back at what has been achieved by the Iraqi Government:

• Two licence rounds that were very much more transparent than most in Western countries;
• Production has increased from about 2 million barrels of oil a day in 2009 to about 3 million today and is increasing rapidly;
• 14 IOC’s (International Oil Companies) and hundreds of service companies operating in Iraq;
• $43 billion in foreign investment during 2010 with numbers showing about twice that expected in 2011.
• The Central Bank of Iraq has a surplus of $50 billion

The contracts being awarded are massive, but it is not clear to me that many companies are making much in the way of profits in the country because the operating costs are so high. If companies cannot generate earnings commensurate with the risk, they will leave – especially with the price of oil rising quickly.