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ACWA Power, a Saudi-based developer, owner, and operator of power generation and water desalination plants, has signed a Memorandum of Understanding (MoU) with Iraq Energy Institute (IEI), an independent non-profit policy institute, to collaborate on research development projects and enhance capacity building programs that will contribute to the optimum development of Iraq’s energy sector.

The MoU communicates the commitment of ACWA Power and IEI to partake in both parties’ events, workshops and activities and exchange expertise from consultants and senior management at organised events and forums.

The partnership will initiate professional dialogues and knowledge sharing that will bring about solutions which target challenges facing the region and elevate the private-public investor community in Iraq.

Demonstrating its role in nurturing young talent, ACWA Power will also take a leading role in IEI’s future scholarship programmes that will grant Iraqi students the chance to progress and excel in the energy and water fields in cooperation with other governmental and non-governmental partners.

The MoU was signed by Mr. Yesar al-Maleki, Managing Director of IEI, and Mohamed Fata Nahhas Business Development Manager at ACWA Power in the presence of Mohammad Abunayyan, Chairman of ACWA Power and Mr. Adnan Al Janabi, Vice Chairman of IEI.

ACWA Power Chairman, Mohammad Abunayyan said:

"We are pleased to commence collaboration with Iraq Energy Institute and bring our expertise to the Iraqi market.

"The signing of the MoU will certainly bridge to further alliances between ACWA Power and Iraqi energy players and is a robust start of a mutually beneficial relationship built on knowledge and exchange of energy proficiency between the Kingdom of Saudi Arabia and Iraq – which we are proud to lead and are keen to further progress."

(Source: ACWA Power)

By Ahmed Mousa Jiyad.

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

Monetization Strategies for Joint Development of Border Fields in MENA Region

Many hydrocarbons fields and exploration blocks, with billons barrels of petroleum, straddle sovereign borders (both onshore and offshore) in the Middle East and North Africa- MENA region, present significant development opportunities as well as potentially risk and source of conflict.

So far, they have been mostly source of conflicts, contentious and acrimonious relationship; it’s about time to pursue the other mutually beneficial approach whenever possible and feasible.

The number, prospects and potential of border fields in MENA Region indicate to billions barrels of oil equivalent -BOEs of proven hydrocarbon (oil, gas and condensates) reserves, with more to add through further exploration and technological advancement, generating  billions of cash flows with attractive returns on investment.

Brief examples and as of today’s data and information are the following:

• Iraq has (24) border oilfields with Iran, Kuwait and Syria;
• Iran has (23) border fields/blocks with Iraq, Saudi Arabia, Kuwait, Qatar, UAE, Oman and Turkmenistan;
• Arabian Gulf Region is crowded with too many structures, including Saudi Arabia-Kuwait Neutral Zone (Al-Khafji & Al-Wafra);
• The Mediterranean: Lebanon vs. Occupied Palestine (Israel); Cyprus vs. Turkey; Egypt vs.....!!
• Red Sea: Egypt vs, Sudan (Halayib and Shalateen)
• Other MENA countries…….

Empirical evidence and analytical premises suggest that sovereign border hydrocarbons fields or exploration blocks could be developed either through “competitive” or “collaborative” strategies; the first follows “rule of capture” or “use it before losing it”, while the second adopts “feasibility & optimization”;  the first is harmful to the field, its structure and reservoir(s) while the second adheres to efficiency considerations, prudent natural resource management and international best practices; the first is premised on “sovereign exclusivity” while the second is formulated on “Bi/trilateral inclusivity”; the first is “conflict-prone”  while the second serves “mutuality of interests”; the first is “short-term focused” while the second has “phasic orientation” and finally, from investment vs. net revenue perspectives, the first is “own-risk” while the second is “burden and benefit-sharing”.

What should be highlighted is that collaborative development of a border field could be done through two broad (comprising various versions) distinct modalities with different investment, revenue structures and legal modalities: unitization (mostly trilaterally structured) or joint venture (mostly bilaterally structured).

For this purpose the presentation proposes TELG Approach for monetizing these resources, which basically integrates four fundamental broad spheres of professional knowledge-base and analysis and the needed institutional, managerial and governance setups applicable to the collaborative mode of border fields development in both modalities- unitization and joint venture.

TELG Approach is helpful for unitization requirements of both onshore and offshore across-sovereign borders as well as across contracted areas within each country.

After discussing the essence of cross-border fields exploitation as “Hotelling game”, basic contesting strategies, phases of unitization agreements and elaborate on TELG approach and its requirements, the presentations provides examples on the “ambiguity” of legal provisions on unitization in the Iraqi service contracts, the July 2019 Iraq-Kuwait contract with ERCE and a list of modalities governing UK-Norway unitization of fields.

The presentation ends with call upon Arab related entities such as OAPEC, ESCWA and the Economic and Social Council of the Arab League among others to take necessary and serious measures to address unitization, and request Arab petroleum professionals to produce international best-practice guide and formulate basic model for unitization agreement in efforts to help in efficient exploitation of such natural resources in a prudent and effective way and finally provide Illustrative Hypothetical Case for Unitization Negotiation Game.

This presentation was delivered before the 12^th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration at Imperial College, London, UK. 19 September 2019; I am very grateful to Target Exploration for sponsoring my participation.

Click here to download the PowerPoint slides presented at the conference.

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 Ali Mamouri for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraq works to distance itself from US-Iran tension after Saudi Aramco attack

Attacks that occurred Sept. 14 against Aramco oil processing facilities in Saudi Arabia, resulting in huge fires and halting near half of the supply from the largest oil exporter in the world, could have a major effect on Iraq.

Soon after the attacks, Yemen’s Houthi rebels took responsibility, saying they used 10 drones in the strikes.

However, Middle East Eye quoted an unnamed Iraqi intelligence official as saying the strikes were launched by Iranian drones using Iraqi territory.

Middle East Eye added that the attack was in revenge, occurring out of the belief that Riyadh funded Israeli drone attacks that have taken place in recent months on Iraqi Popular Mobilization Units.

Click here to read the full story.

(Picture credit: Tasnim, under Creative Commons licence)

Iraq has signed a landmark deal with the Gulf Cooperation Council (GCC) for a power line to import 500 megawatts of electricity by 2020, local reports said on Sunday.

According to the Iraqi Electricity Ministry, the 300-kilometre line will run from Kuwait to Iraq’s southern port of Faw and be financed by the GCC.

Electricity Minister Lo’ai [Luay] Al-Khatteeb (pictured) signed the agreement with the head of the GCC Interconnection Authority, Ahmad Ibrahim, on the sidelines of an energy conference held in Baghdad.

“This is the first deal of its kind with the GCC,” explained Al-Khatteeb. Iraq is also in separate talks with neighbours Saudi Arabia, Jordan and Turkey to import electricity.

“This first step will pave the way to discuss further and higher capacity projects,” the minister added, “not only to supply Baghdad and northern Iraq but also as a pathway to other countries.”

(Source: Middle East Monitor)

By John Lee.

Commercial operations at the new Saudi-Iraq Arar Crossing will begin on a trial basis on 15th October.

Saudi Arabia's Ambassador to Iraq, Abdul Aziz Al-Shammari, and Iraqi Ambassador to Riyadh, Qahtan Al-Janabi, made the announcement during a visit to the crossing point.

The Saudi town of Arar is 70 kilometers from the Iraqi border.

(Sources: Xinhua, Arab News)

By John Lee.

Petrofac has said that a fall in first-half order intake was partly due to an investigation into the oilfield services company’s dealings in Saudi Arabia and Iraq.

In its results for the six months ended 30th June 2019, Petrofac's Group Chief Executive Ayman Asfari commented:

"Petrofac has delivered good results that reflect solid operational performance across the business.

"New order intake year to date has been impacted by recent challenges in Saudi Arabia and Iraq. 

"Looking forward, the Group has a busy tendering pipeline with around US$13 billion of bid opportunities due for award in the second half of the year."

It added that "no charges have been brought against Petrofac, or any officers or current employees."

Earlier this year, David Lufkin, previously Global Head of Sales for Petrofac International Limited, pleaded guilty to eleven counts of bribery.

(Source: Petrofac)

By John Lee.

The Arar border crossing between Saudi Arabia and Iraq will reportedly officially reopen in October.

It was closed in 1990 following Iraq’s invasion of Kuwait.

According to Gulf News, some pilgrims are currently being allowed to pass through the crossing to participate in next month’s Haj.

(Source: Gulf News)

By Padraig O'Hannelly.

A senior oil executive has predicted that Iraq could surpass Saudi Arabia as an oil producer.

Addressing delegates at CWC's Iraq Petroleum conference in London, Majid Jafar (pictured), CEO of Sharjah-based Crescent Petroleum, said:

"Iraq is hugely underexplored. We at Crescent know of 300 structures just in the Western Desert that have yet to be drilled, so I for one believe that Iraq has a lot of potential, and I wouldn't be surprised if it becomes the largest producer in OPEC during my career."

Crescent Petroleum has an interest in the Khor Mor field in the Kurdistan Region of Iraq, and has signed initial contracts to develop the oil fields of Gilabat-Qumar (in Diyala), Khashim Ahmer-Injana (in Diyala), and Khudher Al-Mai [Khider al-Mai] (in Basra and Muthana).

By Padraig O'Hannelly.

Following the increase in tensions in the Gulf region in recent weeks, two British diplomats have expressed the view that Iraq could have a positive role to play.

Addressing delegates at CWC's Iraq Petroleum conference in London, the British Ambassador to Iraq, Jonathan Wilks CMG, said:

"Iraq is strong enough now to keep itself out of whatever may develop between the US and Iran, as long as it asserts its sovereignty and independence with all countries, not just with Iran and the US, but with all countries east and west. It is powerful enough to do this now ... [and] must be taken seriously as an economic power.

"Iraq is back as a reasonable, constructive and credible player in world affairs."

Later at the same gathering, Sir William Patey KCMG (pictured on left), a former UK Ambassador to both Iraq and Saudi Arabia, said:

"Iraq is in a unique position, in that it has equity in ensuring that there isn't a war ... and I think a confident new Iraq could play a role.

"It has better relations with Saudi Arabia, it has good relations with Iran, it has a close relationship with the United States, and it has a lot at stake. So I actually think in terms of reducing the tensions, I think there is potential for Iraq, and I think  the current leadership of Iraq has the [right] vision and outlook."