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Weatherford International has won a deal to build early production facilities at Iraq's untapped Garraf oil field in southern Iraq, a former Iraqi oil ministry official said Wednesday, according to a report from Dow Jones.

Adnan Galay, who retired as chairman of the field's joint management committee a few weeks ago, declined to give the value of the deal. However, contracting sources attending an Iraqi energy meeting in Istanbul said the contract is worth about $200 million.

Galay said that Lakeshore TolTest Corp will be a subcontractor to the project.

Weatherford was awarded the contract by the Malaysian company Petronas (45% stake) and its partners, Japan Petroleum Exploration (Japex) (30% stake), and Iraq's state South Oil Company (25% stake).

Petronas, which has been considering bid proposals since the late summer of 2010, chose Weatherford over three rival bidders--Petrofac with JGC, and Saipem with Punj Lloyd.

The giant oil services company earlier this year won a deal worth $52 million to drill 11 new wells in Garraf, located halfway between the southern cities of Karbala and Nasiriya in Thi Qar [Dhi Qar] governorate. The field was discovered in the 1980s by the then Iraqi oil ministry, and has oil reserves of 1 billion barrels.

Output from the field is expected to hit 50,000 barrels a day next year, 60,000 barrels a day in 2013 and 100,000 barrels a day in 2014, Galay said.

Garraf has an eventual output target of 230,000 barrels a day, although the Petronas-Japex partnership may increase production beyond that level, officials said.

"Three wells have been drilled to date, and testing oil proves that gravity ranges from 24 to 36 degrees API in the two reservoirs of the field," Galay said.

The Garraf early production work involves construction of a degasing facility with two trains of 50,000 barrels a day each, as well as storage tanks and infrastructure.

Weatherford earlier carried out the front-end engineering and design study at Garraf.

(Source: Dow Jones)

WesternZagros Resources has announced encouraging results from a recently-completed study of the drill cuttings from its Kurdamir-1 well (pictured) utilizing advanced technology.

The study, by Weatherford Laboratories in Houston, confirmed the potential of a gross oil and gas interval over 1,900 metres thick in the Kurdamir-1 well. These results significantly increase the Company's confidence of encountering oil in the Eocene and Cretaceous reservoirs in the upcoming Kurdamir-2 well, which would add to the oil already encountered in the Oligocene reservoir.

WesternZagros expects Kurdamir-2 to be spudded in the fourth quarter of 2011 on the Company's Kurdamir Block which is operated by Talisman. Kurdamir-2 is located approximately two kilometres away from Kurdamir-1 and will target the Oligocene, Eocene and Cretaceous reservoirs on the flank of the structure where the combined potential oil interval is likely at maximum thickness. The combined audited mean estimate for all three reservoirs is 585 million barrels of prospective oil resources as at January 14, 2011.

The advanced geochemical study was comprised of both Total Scanning Fluorescence (TSF) and Thermal Extraction Gas Chromatography (TEGC) analyses of approximately 100 drill cutting samples and six oil and condensate samples from the Kurdamir-1 well. TSF is a technique applied to organic solvents from drill cuttings by exciting a sample using UV light and measuring its fluorescence intensity. TEGC provides a rapid automated determination of hydrocarbon compounds. In combination, these techniques can differentiate between oil and gas in potential reservoirs.

"This is a further positive step in our evaluation of the potentially large oil intervals of the Kurdamir discovery," said Simon Hatfield, WesternZagros's Chief Executive Officer. "We are excited by the upcoming opportunity for the Kurdamir-2 well to test the potential for over 580 million barrels of recoverable oil in the Oligocene, Eocene and Cretaceous reservoirs."

(Source: WesternZagros)

Hermes Datacommunications Middle East, a key specialist providing Wide Area Network communications to the upstream oil and gas industry has won a contract to continue providing VSAT communications to support BP’s operations in Iraq. Hermes will continue supporting degassing stations, rigs and static life support camps.

Included in this contract renewal is additional bandwidth to the South and North Rumaila sites to offer load sharing, whilst also providing full redundancy across the BP Iraq network. Hermes will be using a separate satellite provider, Yamal 200 to ensure complete independence from their existing link.

Kevin Thorley, CEO, Middle East says:

“We are delighted by the BP contract win. We believe this renewal demonstrates not only our ability to more than satisfy our customers’ needs but also highlights our strengths as a key player in Iraq, as well as the rest of the Middle East markets. We look forward to continuing a strong and fruitful relationship with BP.”

To facilitate this win, Hermes has further increased the Middle East team to include a dedicated Account Manager and technical team. This expansion includes the move of one of Hermes’ top Engineers from their Head office in the UK, Vincent Davies.

Davies says, “I am thrilled to join the emerging Middle East team and to contribute towards the continuing success of the BP account”.

Davies brings with him a wealth of international experience including three and a half years as Project Engineer, Algeria. He has worked on some very significant client accounts including Petrofac, KBR, BP and Weatherford.

American oil-services company Weatherford International announced on Monday that it has completed the drilling of 20 oil wells in southern Iraq, at oilfields including Rumaila and Bazergan.

Work is continuing at another 70 wells.

The company's Director, Ramzi al-Harithy, told Aswat al-Iraq news agency during the recent Oil & Gas Exhibition in Basra that his company has no connections with the U.S. company Halliburton in developing eastern Iraq’s Majnoon oilfield.

Bazergan oil field, 24 km to the east of Amara city, is expected to reach full capacity at 2,000-3,000 barrels per day. Drilling on the oil field began on 10th September this year.

(Source: Aswat al-Iraq)

Reuters, citing "industry sources familiar with the matter", reports that U.S. oil major ExxonMobil and its partners have awarded a contract to oil services firm Schlumberger to drill 10 wells in Iraq's West Qurna 1 oilfield.

The contract award was finalised a few days ago but a final contract is yet to be signed by Schlumberger, the sources told Reuters.

The new wells are part of the Exxon-led consortium's plan to rehabilitate West Qurna, for which it signed a 20-year development contract with Iraq earlier this year.

Leading service companies including Weatherford International, Halliburton, and Schlumberger were also said to have been invited to bid for another tender to drill 15 new wells, which could be awarded by early next year.

The state-owned Iraq Drilling Company was also invited to bid. Exxon and Shell were awarded the deal to develop the 8.7-billion-barrel West Qurna 1 oilfield last year.

Exxon and its partners raised their production plateau target for West Qurna 1 to 2.825 million barrels per day after adding new reserves to the area.

In March, Schlumberger was awarded a contract to drill new wells at BP's Rumaila oilfield.

(Source: Reuters)

The Trade Bank of Iraq plans to expand abroad and almost double of the number of its branches in Iraq next year to benefit from an anticipated oil boom, the bank's chairman, Hussein al-Uzri, told Reuters.

The state-run bank is also eyeing financing deals in the energy sector as OPEC member Iraq moves ahead with plans to boost oil production through a series of deals with oil majors and rebuilds its battered economy, he said.

"Business is picking up," he said in an interview on the sidelines of the oil and gas conference in the southern oil hub of Basra.

"We expect that by end of next year we should cover all of Iraq plus we will have three branches outside of Iraq," he said.

The bank, which has 15 branches in Iraq now, plans to open another eight or nine branches next year and to have a foothold in Beirut, London and Istanbul to feed the appetite of investors eyeing Iraq.

The Trade Bank of Iraq will help the government in financing some of its oil and power infrastructure projects, Uzri said.

"As we see in Basra, security didn't stop (investors) from coming here," he said at the bank's booth, surrounded by other exhibitors including companies such as Weatherford, Schlumberger, Turkey's TPAO and Malaysia's Petronas, all of which have won deals in Iraq's oil sector.

"The drive was initiated by the oil companies. Now we see service companies are also coming, and this will attract hotels, restaurants, housing and office complexes. It's already started."

The bank sees net profit increasing by about 25 percent in 2010, driven mainly by corporate and private banking, Uzri said.

It made $305 million in net profit last year.

"In 2010, we were targeting a 20 percent increase (in net profit), I would imagine it would be more, about 25 percent, which is good," he said.

"We started this year the investment banking, the corporate banking. We expect revenues to expand," he said.

It also plans to boost its capital from $427 million to $1 billion, he said.

(Sources: Forex Pros, Reuters)

Bijeel-1 Discovery Well Update

Gulf Keystone notes the announcement made today by MOL Hungarian Oil & Gas Plc regarding the successful end of testing of the Bijeel-1 discovery well, in which Gulf Keystone holds a 20% Working Interest.

Highlights:

• The cased hole test, performed at a depth of 3,804 - 3,967 meters in the Jurassic formations, produced 2,700 barrels per day (bbl/d) of 12-13 °API oil through a 40/64 inch choke.
• Previously, the Bijeel-1 well produced 3,200 bbl/d of 18 °API oil and 933,000 standard cubic feet per day (scf/d) of gas, (150 barrels of oil equivalent per day (boe/d)), through a 48/64 inch choke from 3,646 - 3,831 meters in the Jurassic formations.
• A joint cased hole test was also performed for the above two intervals (3,729 - 3,967 meters) with a result of 3,743 bbl/d of 13° API oil and 618,826 scf/d (99 boe/d) gas through a 48/64 inch choke.
• Following the successful result, Kalegran Ltd, MOL's fully owned subsidiary, has notified the Ministry of Natural Resources of the Kurdistan Regional Government of Iraq confirming the presumed existence of the discovery.
• The planning of the formation's appraisal programme is now underway.
• The results support Gulf keystone's belief that the Bijeel-1 well is the possible southern flank of the potentially significant Bekhme structure.
• Ongoing exploration of the Akri-Bijeel block, including the Bekhme structure, will continue in due course.
• The Weatherford 842 drilling rig will now be released to the Shaikan-2 location and begin drilling the first deep appraisal well on the Shaikan structure.

Click here to see details of the MOL announcement.

Commenting on today's announcements, John Gerstenlauer, Chief Operating Officer said:

"Today's announcement by MOL brings the testing of the Bijeel-1 well to a successful conclusion and highlights the clear potential of the Akri Bijeel block, in which Gulf Keystone holds a 20% stake.  In addition to this further positive exploration development, we are pleased that the Weatherford 842 drilling rig will now be able to be moved to the nearby Shaikan-2 location, as part of the ongoing Shaikan appraisal programme."

MEED reports that prospects look good for the only oil services companies eligible to bid for work on Iraq’s oil fields.

At the Adipec oil and gas conference, which took place between 1-4 November in Abu Dhabi, the stands belonging to the ‘big four’ US oilfield services companies -- Schlumberger, Baker Hughes, Halliburton and Weatherford -- were busy as people queued up meet their senior decision-makers.

Prospects are definitely looking up for the big four at the moment and the reason, according to MEED, is Iraq. They, together with local Oil Serv, are the only oil field services companies being allowed to bid for work on the country's existing oil fields.

After spending so much money during the licensing rounds, the international oil companies need to ramp up production on the Iraq fields and the quickest way to do it is to give the work to the services companies on a turnkey basis. By taking on such a risky venture, these five companies are hoping that it positions them correctly for when the market opens up fully.

Working in Iraq is risky in many ways, but developing these oil fields is about as close as you can get to a sure thing in the country. The industry knows that developing Iraq’s hydrocarbon reserves is real and it is happening. That’s why the big four’s stands were so popular at Adipec.

With Abu Dhabi and Saudi Arabia becoming quieter as they reach their production targets, the whole of the upstream oil and gas industry is relying on Iraq to drive regional revenues for the next 10 to 20 years.

That is where the big four are going and the rest are queuing up to follow.

(Source: MEED)

Shares in Gulf Keystone Petroleum (LSE: GKP) jumped 6.5% on Monday morning following an update on theie current exploration and testing activities in the Kurdistan region of Iraq:

Shaikan-3

The well is currently in the Cretaceous Garagu Formation at 1,229 metres, measured depth.  Oil shows have been observed both while drilling and also in a core.  The wellbore is being conditioned prior to logging the well.  Subsequently, the well will be drilled to TD and a 7-inch casing string will be run, finally, the pay interval will be tested.

Extended Well Test Facilities at Shaikan-1

A total of 10 truck loads of crude from the Shaikan-1 discovery well have now been sent to different refineries and oil processing plants in Kurdistan.  The results of refined product yields from these product test runs continue to be analysed, after which a domestic price will be set for the Shaikan, Sargelu crude oil.

Sheikh Adi-1

The well is currently drilling in the Cretaceous at 899 metres, measured depth.  Oil shows have been encountered in a core taken in the top Cretaceous.  In addition, oil shows have been seen in the surface returns whenever there have been full or even partial returns.  Log evaluation also indicates high hydrocarbon saturations over a minimum gross interval of 50 metres in the first Cretaceous zone encountered.  However, hole stability issues (swelling, unstable shales) preclude the possibility of a production test at this time, doing so would involve running an unplanned casing string thus jeopardising our ability to reach the primary Jurassic and Triassic targets.  Plans are to drill ahead to the primary targets and leave the Cretaceous intervals for later testing. Read more ...

Reuters reports that the Chief Executive of Weathford International, one of the largest suppliers of goods and services to oil companies, said the oil services industry needed more consolidation.

Weatherford is currently operating in Iraq's al-Bazerkan oilfield in Amara.

"We need to get larger," said Bernard Duroc-Danner, citing the fact that oil services companies face large challenges in Iraq and in shale gas, which will require larger players.

While the industry had seen a number of deals in recent years, he added: "There's more to come".

(Source: Reuters)