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DNO ASA, the Norwegian oil and gas operator, today announced issuance of a notice of discovery to the Kurdistan Regional Government of Iraq on the Baeshiqa-2 exploration well, in accordance with the requirements of the Production Sharing Contract, after flowing hydrocarbons to surface from the upper part of Triassic Kurra Chine B reservoir.

Following acid stimulation, the zone flowed variable rates of light oil and sour gas. Further testing of this and other Jurassic and Triassic zones is ongoing and will determine the next steps towards appraisal and assessment of commerciality.

The Baeshiqa-2 well was spud in February 2019 and drilled to a total depth of 3,204 meters (2,549 meters TVDSS).

DNO acquired a 32 percent interest and operatorship of the Baeshiqa license in 2017. Partners include ExxonMobil with 32 percent, Turkish Energy Company (TEC) with 16 percent and the Kurdistan Regional Government (KRG) with 20 percent.

(Source: DNO)

Iraq’s Rehabilitation Continues: Find out More at Basra Megaprojects Conference

The summer months have seen Iraq continue with its quota-busting production run. According to figures from S&P Global Platts, the country added another 10,000 barrels per day in July, taking output to 4.78 million bpd, leaving it 270,000 bpd over its OPEC compliance target, due to higher crude exports from its southern terminals. Once again, it seems, Iraq is a force to be reckoned with in the global oil markets.

If the south of the country is Iraq’s oil and gas powerhouse, then Basra is its engine. The region is home to 70 per cent of the country’s natural gas and 60 per cent of its crude oil reserves, including supergiant fields such as Rumaila, Majnoon, Zubair and West Qurna I and II. With its sea ports, Basra is also the main export gateway for the country’s oil and gas riches, making it of vital strategic importance and the focus of much-needed investment to unplug the midstream bottlenecks that could undermine future production growth.

The world’s biggest oil companies have already partnered with Iraqi firms to optimise the performance of Basra’s supergiant fields. It is now more than a decade since the Ministry of Oil signed agreements with Shell, BP, ExxonMobil, Lukoil, Eni and other early entrants to rehabilitate and revamp the southern fields, which are key to the country hitting its longer-term production goal of 7.5 million bpd.

Meeting what currently looks like a stretch target will require significant investment in midstream infrastructure. The good news is that this work is already underway: earlier this year the Ministry of Oil announced plans to press ahead with the US$5 billion Iraqi-Jordanian pipeline project with capacity of 1 million bpd. The line will take oil from the Rumaila oilfields to the port of Aqaba on the Red Sea.  Downstream work is underway to increase domestic refining capacity; despite its oil riches, the country is heavily dependent on refined product imports, partly due to damaged or neglected refining assets and partly due to a misalignment between the product yield of existing refineries and its domestic needs.

Those keen to learn more about the opportunities in Basra as it rebuilds for a brighter future would do well to attend the 6th Basra Megaprojects – Oil, Gas & Environment Conference, which will once again take place in Istanbul, Turkey on 22-23 October 2019. Held under the patronage of the Governorate of Basra, the Basra Council and Basra Oil Company, this is the place to meet key officials and industry leaders to discover new commercial opportunities, the latest policy developments and network with the movers and shakers of this oil and gas hotspot. The event is sponsored by: Chevron, Shell, Crescent Petroleum, ILF Consulting Engineers, GardaWorld, Al-Barham Group and ENKA, all of which will have senior representatives meeting with attendees throughout the 2 days.

Of course, when it comes to mega-projects, it’s not just oil and gas infrastructure that needs investment. The region also faces a water crisis, with four million people in Basra province deemed “water insecure” by humanitarian agencies (and 180,000 hospitalised in August 2018 as a result of contaminated water) as the vital Shatt al-Arab river has suffered from reduced flow, sea water intrusion, pollution and mismanagement.

The Basra Megaprojects Conference will bring together professionals from around the world to share their knowledge and best working practices, discuss the changing face of environmental policy in Iraq and how private companies involved in mega-projects can contribute to a more sustainable future for Iraq. As part of this drive, the event will host the CWC Basra Environmental Awards to celebrate those who have implemented sustainable projects in the oil, gas, power and water sectors, with the winner announced during the Awards Dinner on Tuesday 22^nd October 2019.

For anyone with an interest in Iraq’s oil, gas and water mega-projects and the investment and regulatory framework needed to build a more prosperous, sustainable and secure future, the Basra Megaprojects Conference is the strategic gateway into the south of Iraq and not to be missed.

Find out more at: http://www.cwcbasraoilgas.com/

(Source: CWC)

By John Lee.

Scottish-based engineering firm Wood Group plc has said that its operations in Iraq will see increased activity.

In its half-year results for the six months ended 30 June 2019, the company said:

"Growth in 2019 will be led by Operations Solutions, where we expect increased activity in Iraq with customers including Basra Gas, and in Papua New Guinea and Australia with Exxon."

The company combined with Amec Foster Wheeler in 2017.

(Source: Wood Group)

By Ahmed Mousa Jiyad.

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

The Ministry of Oil and the “Odious Contract’ Trap” with ExxonMobil’ Consortium

Talks have intensified recently about the continuation of negotiations between the Ministry of Oil (MoO) and ExxonMobil/CNPC consortium that might lead to the signing of a contract for the "South Iraq Integrated Project (SIIP)" at an estimated cost of $53 billion and a duration of 30 years, but no official confirmation or indications on the fundamental contractual provisions that were agreed on and those still pending.

In the light of the available information, material evidence, actual examples, international geopolitical considerations and comparative analysis, a detailed evidence-based research and Report* was done on the project and related negotiation.

The report on SIIP’ possible contract comprises:

• A necessary introduction and caveat;
• Political and geopolitical implications of ExxonMobil behavior and its apparent link to the “deep state” based on many evidences that actually and factually had negative consequences on oil projects, for example, in Russia and in Iraq.

In Russia, ExxonMobil caused a delay of almost four years in the development of the Pobeda oil discovery in the Kara Sea when ExxonMobil withdrew, in late 2014, from its deal with Rosneft due to imposing US sanctions on Russia.

Iraq had three bad experiences with this company in recent years. The first, when ExxonMobil negotiated secretly and concluded, against declared government policy, deals with KRG in 2011 soon after the company secured West Qurna 1 contract through first bid round with the federal ministry.

That move led to excluding ExxonMobil from leading Common Seawater Supply Project (CSSP), reduce its Participating Interest in WQ1 and blacklisting it from any upstream project.

The second and third bad experience occurred this year when the company evacuated, unilaterally and without government consent, all its foreign staff from WQ1. All these three incidents caused tremendous damage to Iraqi economic interest.

• Potential strategic risks, of an enormous scale, on SIIP that could be generate from the growing deterioration of the American-China relations as evidenced from the blacklisting of two major state oil companies, i.e. Zhuhai Zhenrong Corp and Sinopec. US escalating tension against Iran adds further geopolitical risks;
• Analyses of what would be SIIP contract was premised on what was reported by national and international sources that are originally based on information given by unnamed Iraqi officials. That was due to the absence of clarity and lack of transparency of the ministry regarding essential contractual terms and conditions.

Based on the analyses and findings of the report, I am compelled to clearly alert and strongly, frankly and loudly warn both the Prime Minister and the Minister of Oil of the danger of pushing Iraq into a "trap of an odious contract” and by specifying ten of its most grave risks and disadvantages:

1. ExxonMobil, as the consortium leader, is granted a monopoly position that allows the company directly controlling all vital oil projects in southern Iraq, and thus the entire national economy, for thirty years;
2. It poses a multiplicity of major threats to national security and economic interest due to what can be called contractually-connected high strategic and geopolitical risks, since SIIP comprises many critical and vital projects such as Common Seawater Supply project-CSSP (for water injection), pipelines, storage tank-farms, export facilities, gas processing units and two oilfields;
3. It contravenes the fundamental premises of the Iraqi Constitution because the contract requires “mortgaging/ reserving/ booking” two oilfields, with a combined plateau production of 500kbd, exclusively for the two foreign oil companies, i.e. ExxonMobil and CNPC, for the entire term of the contract- 30 years;
4. It offers “Profit-Sharing Contract”, which, in reality, represents the monetary side of a “Production Sharing Contracts”, which, is impermissible by the Constitution;
5. The announced astronomical cost (of $30bilion) increased already by $11billion in less than ten weeks while negotiating!;
6. It offers all rent (windfall) resulting from oil price increases exclusively to the two foreign companies, nothing for Iraq!;
7. It prevents SOMO (the only State Oil Marketing Company) from performing its role in marketing crude oil from the “mortgaged” two oilfields; this contravenes established policy, undermines annual state budget laws and weakens almost 50 years of SOMO’s function;
8. It reduces the “national efforts” in the development of oilfields, thus, contradicting declared Ministry policy, weakens Iraq’s flexibility to comply with OPEC decisions through “swing fields”;
9. Inconsistent with the regulations for tendering and contracting government projects;
10. It lacks both transparency and competitiveness.

Therefore, I suggested to the Ministry of Oil not to continue on wasting time and causing further delays: it should officially declare that it is not in Iraq's economic interest and national security to award SIIP to ExxonMobil-CNPC (and for this matter to any one consortium) and end, immediately, all and any related negotiations.

In the event that the Ministry of Oil and/or the Government insist on going ahead with this Odious Contract with ExxonMobil-CNPC, it becomes inevitable to refer the matter to the Federal Supreme Court to invalidate the contract on the bases of incompatibility with the Constitution; for eradicating the highest interest of the Iraqi people, including future generations (principle of inter-generational equity)  and for returning Iraq to what looks like abhorrent concessions of the, colonial, past.

*A brief of the original Arabic text of the entire report was circulated widely within many networks and was published by and posted on many websites, and accessible on the following links:

الحذر يا وزارة النفط من "فخ العقد البغيض" مع شركة اكسون موبل

https://www.akhbaar.org/home/2019/8/261291.html

http://www.tellskuf.com/index.php/mq/83987-as174.html

http://www.sahat-altahreer.com/?p=49115

Click here to download the full article 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.

Iraq is reported to be close to reaching a deal with BP and Eni for an export pipeline project.

Al Jazeera quotes senior Iraqi oil officials as saying that the project was initially planned as part of a "megadeal" with ExxonMobil.

They said that under the proposed $400-million agreement, BP and Eni would build two seabed oil pipelines for Iraq's southern exports through the Gulf.

(Source: Al Jazeera)

This weekend, the Iraq Britain Business Council (IBBC) hosted its annual members’ retreat at Cumberland Lodge, Windsor Park, which was generously sponsored by Al Burhan Group.

As with previous years, it was very well attended by over seventy delegates, and allowed our members to mingle and network with representatives of other businesses, civil servants, and Iraqi government dignitaries.

Speakers and organisations represented included:

• Dr Falah Al Amiri, Advisor to the Ministry of Oil, Government of Iraq
• Dr Hameed Ahmed, Deputy Higher Education Minister
• Eng. Dara Rasheed, Deputy Minister of Housing, Construction & Municipalities
• Jon Wilks CMG, HM Ambassador to Iraq
• Beverley Simpson, Director, Department of International Trade (DIT) in Iraq
• Dr Victoria Lindsay, Director, British Council, Iraq
• Emma Sky, Director, Greenberg World Fellows Program, Yale University
• Nicolas Pelham, The Economist
• Professor Toby Dodge, London School of Economics
• Dr Renad Mansour, Chatham House
• Al Burhan Group
• Al Maseer Insurance
• Basra Gateway Terminal
• Bath Spa University
• BP
• Chevron
• Constellis
• EAME
• ENKA
• ExxonMobil
• Financial Times
• G4S
• GulfTek Saudi
• KBR
• Management Partners
• Mosul University
• OiLSERV Kuwait
• Perkins+Will UK, Ltd
• Petrofac
• Petronor
• Pro-Technique Group
• Rolls-Royce
• Serco
• Shire Oak International
• Stirling Education
• Tube Tech International
• TurnKey LLC
• Unihouse Global
• University of Dundee
• University of Liverpool
• University of Northampton
• University of Sheffield
• Wood Plc
• Zaha Hadid Architects

Sessions included discussions and panels on the state of Iraq, contemporary Middle Eastern politics, meetings for our various sector tables (including oil and gas, and construction and infrastructure), economic development strategies for Iraq, and how higher education partnerships could be developed between the UK and Iraq. A biannual council meeting for representatives of our member organisations was also held.

Christophe Michels, Managing Director of the IBBC was happy with how the weekend went:

“As in previous years the Retreat has attracted some of the finest minds from business, academia, politics, media and diplomacy working on Iraq to conduct truly meaningful and intimate discussions”.

Baroness Emma Nicholson, President of the IBBC and the Prime Minister’s Trade Envoy to Iraq, Azerbaijan, Kazakhstan and Turkmenistan said:

“IBBC has had a fantastically happy and hugely productive busy weekend. We call it a retreat, but I am not sure what it was a retreat from! People were working morning, noon, and night, and they were making great achievements, and huge strides in the various different table meetings…one of the best I can ever remember”.

For more information on the Iraq Britain Business Council, visit our website at https://www.iraqbritainbusiness.org/

(Source: IBBC)

By John Lee.

ExxonMobil's giant oil project in southern Iraq is reportedly on hold.

According to Reuters, a combination of contractual difficulties and security concerns is delaying agreement on the $53-billion Southern Iraq Integrated Project, which includes the construction of a water treatment plant needed to boost oil production. The deal would have seen Exxon get the rights to develope the Nahr Bin Umar and Artawi oilfields.

Last month, Oil Minister Thamer al-Ghadban criticised ExxonMobil‘s decision to temporarily evacuate staff from the West Qurna oil field following an attack in the area.

More here.

(Source: Reuters)

By John Lee.

A rocket has hit a residential and oil operations headquarters near Basra city, wounding three workers at an Iraqi drilling company.

The short-range Katyusha missile hit a compound in Burjesia which is used by several international oil companies (IOCs), including ExxonMobil.

Oil production and exports are not expected to be affected.

(Sources: The Guardian, Bloomberg, Xinhua)

By John Lee.

Production at the West Qurna 1 oilfield has reportedly reached 465,000 barrels per day (bpd), following the completion of new crude processing facilities and oil storage tanks.

Officials told Reuters on Monday that the field was previously producing about 440,000 bpd.

Exxon's foreign staff were present at a ceremony to launch the new facilities, having returned to the oilfield on 2nd June.

(Source: Reuters)