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By John Lee.

Janus Global Operations (JGO) has announced that it has been selected by "an integrated oil and gas multinational corporation based in Malaysia", to provide security and risk management services for the company’s operations in central Iraq.

Some 600 JGO U.S. and foreign national employees will be responsible, during the two-year contract, for security and risk management for the Malaysian International Oil Company’s (IOC) oil exploration and development program in central Iraq, to include the company’s base camp, facilities, and also mobile security for company personnel.

Matt Kaye (pictured), JGO’s chief executive officer, said:

“We’re proud that the Malaysian IOC has selected JGO for this security responsibility.

“JGO has worked in Iraq with commercial and government clients for more than 13 years on demining and unexploded remnants of war clearance, munitions management, security and risk management, and other tasks critical to clients’ operations.”

The Malaysian IOC has a 10-year relationship with JGO, Kaye added.

Although not named in the announcement, Malaysia's state-owned Petronas is the operator of the Garraf [Gharraf] oil field in Dhi Qar Governorate, in which it holds a 45-percent stake. The company also has interests in Iraq's Majnoon, Halfaya and Badra fields.

(Source: JGO)

By Adnan Abu Zeed for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News. 

On July 21, farmers complained about a gas pipeline dredging their farmlands. The pipeline carries gas from Iran to Baghdad through Bismayah, which is located in southeast Baghdad.

Meanwhile, reports on May 22 revealed that the pipeline caused damage to an archaeological site under which it passes.

On March 17, 2016, Iran announced the completion of a 100-kilometer (62-mile) Iranian gas pipeline. It starts at the South Pars gas field and continues to Baghdad to provide fuel for the electricity stations. As part of the project, the Oil and Energy Committee of the Iraq Council of Ministers decided to extend the pipeline through Bismayah to provide gas for electricity stations there.

Many residents in Bismayah were happy at first. However, their happiness did not last as they were forced to vacate parts of their land for the project. According to testimonies documented in a video report broadcast by an Iraqi channel on May 22, a farmer said that a military force stormed onto his land and forced him to accept the extension of the pipeline into his land without providing any documents, which he considered a violation of his rights and of applicable laws.

On July 12, Al-Monitor contacted the Nahrawan police directorate, which said, “The security force securing the site has orders to protect the project of extending the Bismayah gas pipeline and remove any constraints that may hinder its accomplishment.”

By Ahmed Mousa Jiyad.

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

Developing Border Oilields and Utilizing Associated Natural Gas: Important Projects, Dubious and Non-Transparent Contracts

Information from and about the Ministry of Oil has been published and circulated extensively, in the last few days,  concerning two important subjects or projects, each of which could have immense direct and effective impacts on the Iraqi economy and on the national interest.

The first concerns the development of border fields with Iran and Kuwait, and the second is related to utilizing associated natural gas from Nassiriyah and Gharraf oilfields in Thi Qar province.

After thorough reviewing all information from the mentioned sources and analyzing what relates to both projects, I made a few remarks, diagnosed some flaws, inaccuracies and inconsistencies, and then proposed some practical suggestions and alternatives that I hope will attract the attention of the Ministry; especially those related to the necessity of utilizing “National Efforts” in developing border fields.

The extent and implications of lacking competitiveness and transparency, which consequently lead to questioning the integrity of the contractual process, have also been clearly identified.

It should be recalled that the Iraqi Constitution emphasizes two basic principles directly related to these two projects: the first concerns achieving "the highest benefit for the Iraqi people" and the second “using the most advanced techniques of the market principles". In the light of what was presented and analyzed below, it is clear that the Ministry did not comply with these Constitutional requirements and obligation.

The paper discusses the border fields/ blocks first then addresses the utilization of associated gas.

Please click here to download the full report.

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.

Iraqi Oil Minister Jabar Ali al-Luaibi [Allibi] has officially launched the new Dhi Qar Oil Company (DQOC) [Thi-Qar Oil Company].

At a ceremony in Nasiriya, the Minister said he is working to develop the Nasiriya oil field and the other exploratory blocks and fields in the region, and called on international companies to invest in the new Nasiriya refinery project.

The DQOC was spun off from the South Oil Company (SOC) last year, and has responsibility for Garraf and Nasiriyah oil fields; following the transfer of assets to the DQOC, the SOC has become the Basra Oil Company (BOC).

The Iraqi Ministry of Finance approved a start-up capital of $42 million for the new company.

(Source: Ministry of Oil)

The end of 2016 saw several new members join the Iraq Britain Business Council (IBBC), each of which are underpinned by strong reputations for innovation, reliability and a commitment to investing in Iraq.

GE, Khudairi Group, Pell Frischmann, Petronas and Siemens join 51 other world- and region-leading companies that form IBBC’s Council of Members.

“IBBC warmly welcomes the addition of these five world-class companies to our membership,” IBBC Managing Director Christophe Michels says. “We greatly look forward to working closely with them and supporting them with the important work they are doing in Iraq.”

New members

GE has operated in Iraq for over 40 years. The world-leading company has three offices around the country – in Baghdad, Erbil and Basrah – which are manned by 120 staff. GE supports the country’s infrastructure needs in power generation, oil and gas and water processing, as well as in healthcare and aviation.

The Khudairi Group is a leading provider of services to the oil and gas, engineering and construction industries in Iraq. It is owned and run by the Khudairi family, one of the country’s most prominent commercial families. The company is active throughout Iraq across six primary business units: Engineering, Procurement and Construction; Oilfield Supply and Services; Heavy Machinery Dealership; Heavy Machinery Rentals; Distribution and FMCG Distribution.

Siemens provides solutions to help tackle the world’s major challenges, focusing on electrification, automation and digitalisation. In March 2016, the company signed a Memorandum of Understanding with the Government of Iraq, in collaboration with the Ministries of Electricity and Oil & Gas, to support the development and optimisation of the country’s power generation and grid infrastructure including power generation mix.

Pell Frischmann is one of the UK’s leading firms of consulting engineers, with major operations throughout Europe, the Middle East and Asia. The company has been working in Iraq since 2004. Its projects include the Mid-Western Water Supply Project, one of the biggest rebuilding projects in Iraq. In 2006, the firm received the Queen’s Award for Enterprise for its work in the reconstruction Iraq.

Established in 1974, Petroliam Nasional Berhad (PETRONAS) is Malaysia’s fully integrated oil and gas multinational ranked among the largest corporations on FORTUNE Global 500. It operates in Iraq under the name PETRONAS Carigali Iraq Holding B.V. Activities the company has been involved in developing the Garraf, Halfaya, Majnoon and Badra oil fields.

For more information on IBBC membership, please email the IBBC team at [email protected]

(Source: IBBC)

By John Lee.

A senior Iraqi oil official has told Reuters that international oil companies (IOCs) have warned of delays to projects to increase its crude oil output if the Iraqi government insists on drastic spending cuts this year.

Investments by IOCs are repaid with crude oil, which has become a problem since oil prices have fallen and Iraq has been struggling to find enough oil to repay the companies for their investments.

Due to budgetary pressures, Iraq has asked IOCs to cut their development budgets for a second year, but the two sides have failed so far to agree on spending levels.

BP has been asked to cut its 2016 budget for Rumaila to $2.48 billion, and to target output of 1.4-million barrels per day. (BP proposed a budget of $3.25 billion for 2015).

Lukoil is expected to cut spending to $1.26b illion and aim for a production of 400,000 bpd at West Qurna 2 project; it proposed a 2015 budget of $2.1 billion.

Eni should cut spending to $1.62 billion and aim for production of 351,000 bpd at Zubair.

ExxonMobil was asked to slash spending to $878 million and aim for output of 379,000 bpd at West Qurna 1. Last year, according to Reuters, it "insisted" on spending $1.8 billion.

Shell should cut spending to $855 million and aim for 200,000 bpd from Majnoon. Last year, it proposed a budget of $1.5 billion.

Petronas should reduce costs to $712 million and target production of 100,000 bpd at Garraf.

(Source: Reuters)

By John Lee.

Iraq's new Dhi Qar Oil Company (DQOC) is getting US$42 million in start-up capital following approval from the Iraqi Ministry of Finance, according to a report from OilPrice.

The company was spun off from the South Oil Company (SOC) in January, taking over four of its fields in Dhi Qar governorate; the SOC has been renamed the Basra Oil Company (BOC).

The Garraf and Nasiriyah oil fields currently produce about 170,000 barrels per day, but Dhi Qar says it plans to ramp up production to 200,000 bpd by the end of this year.

Two other fields not yet in production are the Saba field and the al-Amoud field. Saba is expected to come online later this year with an initial 30,000 bpd, while al-Amoud is being developed and there are no indications as of yet when this field will be brought into production.

(Source: OilPrice)

By John Lee.

Iraqi Oil Minister Adel Abdel Mahdi [Adil Abd Al-Mahdi] has said that Iraq’s oil and gas industry will need an investment of $300 billion over the next 15 years.

He made the statement during a visit to Japan, at which he also discussed the long relationship between the two countries in the energy sector, including the building of the north refinery in Baiji, the two gas treatment complexes for the North Gas Company (NGC) and the South Gas Company (SGC), and the contribution of Japex in developing the Garraf oilfield as a part of the consortium with Petronas.

He added that Iraq plans to increase production to 7 million barrels per day over the next 5 years.

(Source: Ministry of Oil)

By John Lee.

Iraq has this week established the Dhi Qar Oil Company (DQOC), which will take over responsibility for the Nassiriya and Garraf oil fields.

The South Oil Company (SOC) has been renamed the Basra Oil Company (BOC), following the transfer of the Dhi Qar assets to the new company.

(Source: Reuters)

By Ahmed Mousa Jiyad.

The Minister of Oil, Mr. Adil Abdul Mahdi, made a recent statement through which he highlighted three interrelated important issues:

• the first is that Iraq “lost $14,448,146,000” since 2011 up to the end of 2014 as “compensation” payment to IOCs;
• the second he referred to article 12.5 of the long term service contracts; and
• third he attributed this to “bad planning or due to obsolete instruction or measures”.

He then concluded by stating that “this is the real corruption.., and this is due to the real absence of planning and matured management” (http://www.alitthad.com/News_Details.php?ID=27986 (31 March 2015)

In my humble view the stated amount of paid compensation is so huge that neither legal premise nor actual production could justify it. Hence, there is something seriously wrong, suspicions and scandalous, as explained below.  

Let me take and address these three issues but in a reverse order.

Absence of sound planning and good follow-up

I fully agree with the Minister regarding the absence of good and sound planning, lacking of prudent resource management and prevalence of real corruption. I would even add further that the Ministry of Oil suffers from many serious and daunting skills and capacity gaps, especially with regards to development of upstream petroleum projects and their contracts.

There are ample examples and evidence in support of the above assertions especially post 2003 period. Moreover and without hesitation I could even argue that this unfortunate profile extends beyond the Ministry of Oil to the entire country on the macro-level whether that relates to the annual state budget, the four year national development plans or the Electricity Master Plan 2006-2015, or any other efforts at ministerial, sectoral and national levels.

In many of my documented contributions and interventions I had constantly criticized what I called the “Big-bush” strategy of the bid-rounds and highlighted the weaknesses or disadvantages (for Iraq) of the basic model of the long term service contracts-LTSC.

That said and based on a comparative analysis these LTSCs are better than PSCs and, thus, they do serve best “the highest interest of the Iraqi people” principle as enshrined in the Iraqi Constitution.

Therefore, the repeated recent attempts (by the Minsters of Oil and of Finance) to attributes all these shortcomings, malpractices and financial irregularities to the type of LTSC seems to be part of a concerted orchestrated campaign to advocates and lobby for PSCs contracts; and they (the two ministers) are only releasing testing balloons to measure the reaction to their calls for converting the federal ministry of oil LTSC to PSCs similar to those of the KRG; deliberately ignoring how disadvantageous those PSCs to KR economy.