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Reuters reports that the China National Petroleum Corp (CNPC), the first foreign oil company to sign an oil service contract in Iraq after former president Saddam Hussein was toppled, said on Monday said that it completed construction of the first phase of the Al-Ahdab oilfield.

The parent of PetroChina Co Ltd said it started work on the Al-Ahdab oilfield in March 2009 after successfully renegotiating an old development deal, and hoped to pump 110,000-130,000 barrels per day (bpd) from the field, which had estimated reserves of 1 billion barrels.

Completion of the first phase, with a capacity of 60,000 bpd, was ahead of schedule, marking major progress in building Middle East oil and gas projects, reported the China Petroleum Daily, CNPC's in-house newspaper.

The field was the first new oil capacity building project in 20 years in Iraq, the report said.

(Source: Reuters)

As Iraq reports the results of its recent gas auctions, the western province of Anbar is demanding more control over its potentially huge energy reserves, including the vast desert province’s Akkas reservoir.

According to Reuters, Anbar’s government last week rejected Baghdad’s plan for the auction due to the possibility that surplus gas will be exported.

Anbar’s opposition reflects deep discontent in Iraq’s Sunni heartland about the Shiite-led central government.

“We are against the approach of the central government and we will be against any contract between the central government and any company in the world,” Anbar Governor Qasim Abid said.

“We have our own vision of how to develop this [field].”

Mainly Sunni Anbar Province, controlled by Al-Qaeda in the years following the US-led ouster of Saddam Hussein, has been relatively quiet since tribal sheikhs joined forces with US troops to drive out Sunni Islamist militants in 2006 and 2007.

“We demand the Oil Ministry start exploration in Anbar because it’s unfair to develop and start production from oilfields in some provinces and ignore the billions of barrels of crude we have,” Anbar provincial council leader Jassim Mohammad said.

Anbar authorities warned they would refuse to provide security to foreign firms working in Akkas and would use all means, including “civil revolt,” if Baghdad ignores their demands.

Further to our report yesterday on the police raid on CNPC's al-ahdab oilfield, Iraq's Oil Ministry said on Tuesday that security forces had violated the law, and expressed concern for the affect it could have on foreign investment in the oil sector.

"Oil sites and facilities are under the control of the Central Government and the interference of any body or the provincial councils is a violation of the law," the state-run daily al-Sabah quoted the ministry as saying.

Emergency forces in the eastern province of Wasit raided the facilities on Monday on the orders of some members of the provincial council. The council members claimed there was 'manipulation in the documents' of the al-Ahdab oil field and demanded to 'review the conduct of business and production process'.

Two years ago, the Chinese National Petroleum Company (CNPC) and its Chinese partner, Zhenhua Oil, signed a 23-year service agreement to work in the al-Ahdab oil field, which has estimated reserves of 1 billion barrels.

CNPC contracts in Iraq have been in existence since the Saddam Hussein era, but the agreement to work in al-Ahdab was renewed after the US-led invasion of 2003.

(Source: Deutsche Presse Agentur)

A media department official in Wassit Council said on Sunday that they had expelled executives from the Al-Ahdab oil field accusing them of embezzling public funds.

Taha Hassan Abdul told AKnews that the decision came after a delegation from Wasit council including its deputy chairman visited the field, 30 km west of Kut, with a group of journalists in a bid to shed light on the oil field’s financial administration.

Hassan told reporters from AKnews that the al-Adhab oil field security force attempted to forceably prevent the delegation from entering the site.

“Verbal altercations occurred between the two sides before the administration agreed to receive the delegation, which included seven members of the Council who wanted to shed some light on allegations of the field’s management wasting public funds.”

Without giving precise details of the allegations, Hassan said that the council members demanded access to administrative documents concerning tenders, field projects, the site’s payroll and “some other issues” in which the delegation were looking for evidence of corruption.

The Chinese National Petroleum Company (CNPC) took on a 20 year service contract to develop the field in 2008, the first company to enter the Iraqi oil sector since the 2003 US-led war.

(Source: AKnews)

Iraq expects to increase daily crude production by about 13 percent next year, an Oil Ministry official said.

“We expect an increase of about 300,000 barrels per day,” Abdul Mahdy al-Ameedi, deputy director general at Iraq’s Petroleum Contracts and Licensing Directorate (PCLD), said in a telephone interview with Bloomberg. “This includes about 60,000 barrels per day from the al-Ahdab field”, he said.

Iraq, reliant on oil for most of its income, is seeking foreign investors in all parts of its economy after years of conflict and sanctions. It currently produces about 2.4 million barrels of oil a day.

Al Ahdab in the eastern Wasit province was the first oilfield development to be awarded by the Iraqi government after the U.S.-led invasion that ousted the regime of Saddam Hussein in 2003. China National Petroleum Corp. won the $3.5 billion agreement to develop Al Ahdab in November 2008. Since then, Iraq has awarded 11 other contracts to international major oil companies and has announced a third round of bidding this year to develop the country’s natural-gas reserves.

(Source: Bloomberg)

Iraq expects the CNPC-operated al-Ahdab oilfield to have an initial production rate of 60,000 barrels per day from July 2011, Deputy Oil Minister Abdul Kareem Luaibi said on Sunday.

Al-Ahdab was the first major oilfield development contract awarded by the Iraqi government after the 2003 US-led invasion when it agreed to revive a Saddam Hussein-era deal with the Chinese oil company.

In June 1997, Al-waha Petroleum Co., Ltd, a joint venture of CNPC and China North Industries Corporation, signed an agreement with Iraq's Saddam Hussein government to develop the al-Ahdab oil field, which was postponed by the UN sanctions on Iraq and the subsequent U.S.-led invasion to the oil-rich state.

In November 2008, CNPC signed a Development Service Contract of Al-Ahdab Oilfield with Iraq's Ministry of Oil.

Located 180 kilometers southeast to Iraq's capital city of Bagdad, Al-Ahdab Oilfield has a structural area of about 200 square kilometers.

It has since struck 11 other deals with global oil majors to help it quadruple its output capacity to Saudi levels of 12 million bpd within seven years.

(Sources: CNPC, Reuters)

Related articles:

• Oil Pipelines Extended to Nassiriya
• China Races to Secure Middle East Oil Deals
• CNOOC Seals Deal on Iraq Oil Field

(Source: Aswat Al Iraq)

Al-Ahdab Oil Company started on Tuesday extending pipelines toward al-Nassiriya and al-Zabiediya plant in north of Kut, a media official said.

“The company started on Tuesday (June 22) extending pipelines toward the pumping plant in Nassiriya and the power production plant in al-Zabiediya in north of Kut,” Majed al-Attabi told Aswat al-Iraq news agency.

“Wassit received last week a part of al-Ahdab oilfield’s revenues, which reached $212,000 through producing and marketing oil and gas in January and February 2010,” he explained.

In June 2010 Iraq Oil Report had two stories about locals in southern Iraq who opposed the government’s new oil deals. In Dhi Qar, tribal leaders stopped an oil exploration company from doing their work, and threatened them with violence if they didn’t give them money for using their land. Sheikhs also asked Malaysia’s Petronas, which won an auction for the Gharraf field in Dhi Qar in December 2009, to pay them as well.

In southern Iraq, marsh Arabs claimed that oil companies were encroaching on their property and forcing them out. The Arab Marshes Revival Committee also said that their territory was being polluted by petroleum projects. As development steps up on Iraq are other oil fields, more Iraqis may begin protesting.

The first demonstrations actually began last year in Wasit province. There the China National Petroleum Corporation (CNPC) won the first post-Saddam oil contract for the Ahdab field. Shortly after the foreign company began work, farmers started destroying equipment and demanding compensation for damages to their land.

One news story said that the locals caused up to $1 million in damages. They also complained that the company had not hired any locals for jobs as they had hoped. As a result, CNPC actually shut down operations for a month until the government deployed more security for them.

Iraqi’s Oil Ministry has signed twelve oil deals in the last two years. It’s hoping that they will dramatically boost exports, which account for 90% of the government’s revenue, and provide jobs and development as well. The 2010 budget will also pay provinces that produce oil $1 per barrel.

Some Iraqis are not satisfied with these promises, and are taking matters into their own hands by protesting against encroachments upon their property, and threatening international oil companies unless they are paid directly.

This could cause problems for the Oil Ministry’s plans, and may ironically lead the government to crackdown on its own people to develop the country’s greatest resource. This is an issue that needs close attention as the work on the petroleum fields unfolds.

27 May 2010 - Newsweek

China is racing to secure Middle East oil deals, putting it on a possible collision course with U.S. interests in the world's most volatile region. China is now the biggest importer of Saudi oil, the second-biggest of Iranian oil, and the largest player in the Iraqi oil game. China is "being very aggressive," says Jon Alterman, director of the Middle East program at the Center for Strategic and International Studies. "They're putting a lot of money on the bet that having ownership of oil fields is a better guarantee of supply than buying oil on the open market."

Beijing is betting big in Iraq, which many Western companies are avoiding. In November, the Chinese National Petroleum Co. (CNPC) won a large stake in a $15billion deal to develop the Rumaila oil field in southern Iraq, thought to be the second largest in the world. That followed a $3billion deal to develop the Ahdab oil field in 2008. And two other Chinese firms just closed a deal on a large oil field in eastern Iraq. Chinese companies have also shown much greater willingness to take on risk by placing their own nationals in war zones: CNPC has an office in Baghdad partly led by Chinese nationals.

China is also ramping up its ties to Iran as many Western firms pull out. Last summer, China signed $8billion in oil and gas deals with Tehran. It's also increased sales of gasoline to Iran, which has a lot of oil but few working refineries or stable gas suppliers. In fact, China is now Iran's biggest economic partner, with more than $21 billion in annual trade.

China is moving to protect its new oil ties in the Middle East, presenting a challenge to the West. China is reluctant to follow the U.S. line on Iran sanctions because of its oil interests. The two Chinese warships that docked in Abu Dhabi in March also sent a blunt message: China is willing to back up its interests with firepower. For their part, U.S. officials have tried to reassure Beijing that it can meet growing energy needs without dealing with Tehran and have pressured Saudi Arabia to give China oil guarantees to wean it off Iranian oil. Still, there will likely be plenty of other disagreements ahead as China increases its Middle East footprint. "Bilateral quarrels and clashes are unavoidable," Sun Bigan, China's former Middle East envoy, wrote in an essay in a Chinese academic journal last fall. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

CNOOC and Turkish Petroleum Corp. have signed a 20-year contract to develop the Missan oil-field in southern Iraq

By Chen Zhu

CNOOC Ltd., the Hong Kong-listed unit of China National Offshore Oil Corp. has partnered with the state-run Turkish Petroleum Corp. (TPAO) to win a contract with Iraq to develop the lucrative Missan oil-field in southern Iraq, marking CNOOC's first upstream access to Iraqi oil following its two major rivals, CNPC and Sinopec.

According to CNOOC, the 20-year contract includes an increase of Missan's production capacity to 450,000 barrels per day from the current 100,000 barrels a day within six years. CNOOC has agreed to price every additional barrel of oil produced after capacity rises by 10 percent at US$ 2.30.

CNOOC will be the operator and hold 63.75 percent of the interest. TPAO will have 11.25 percent interest while an Iraqi drilling company will hold the remaining 25 percent.

Located 350 kilometers southeast from Baghdad, the Missan oil-field complex includes Fakka oil field, Buzurgan oil field and Abu Ghirab oil field. The estimated reserve of the complex is 2.5 billion barrels.

The deal is still pending Iraqi government approval.

CNOOC started bidding for the Missan contract in June last year, partnering with Sinochem International Corp. The two companies proposed to increase production to 450,000 barrels a day and charge US$ 21.40 per barrel, exceeding the Iraqi government's US$ 2.30 proposal.

Last summer, the two sides held rounds of negotiations and the companies concluded to sell on the proposed price. However, Sinochem International later decided to withdraw from the deal without explanation. An industry analyst close to the company speculated that Sinochem was concerned with numerous risks associated with the deal.

Last week, Abdul Mahdy al-Ameedi, head of the Iraqi Oil Ministry's Petroleum Contracts and Licensing Directorate, announced that TPAO had joined the consortium with CNOOC.

The other two major Chinese oil companies, CNPC and Sinopec, have also gained a foothold in the Iraqi oil industry. In November 2008, CNPC and China North Industries Corp. set up a joint venture and signed a 20-year development contract for Al-Ahdab Oilfield.

In June 2009, CNPC and BP jointly won the bid for a 20-year a technical service contract of Rumaila oil field. The companies plan to see a rise in Rumaila's oil production to 2.8 million barrels per day from 1.1 million, charging US$ 2.00 per barrel.

In late 2009, CNPC setup a consortium with Total and Malaysia's Petronas to develop Halfava oil field by charging US$ 1.40 per barrel.

Sinopec made its expansion in Iraq in August 2009, through the US$ 7.24 billion purchase of the Swedish oil firm Addax, which has operations in Iraq.

( Caixin Online )