Custom Search

By Simon Kent.

Iraq's Deputy Oil Minister Fayadh Nema, who is currently acting Oil Minister until Abadi's new cabinet is finalized, has recently announced a trip to Tehran to discuss cross border oil fields.

Once a controversial topic between Tehran and Baghdad, Iraq's many cross border oil fields are now back on the agenda as sanctions fall away from Iraq's neighbour.

Plans are now underway to develop a series of fields including Huwaiza in Maysan province, south of Baghdad, and Naft Khana in Diyala province, north east of the capital. In Basra, the field of Sindbad [Sindibad] is also being discussed.

Initial accounts suggest the Maysan Oil Company [Missan Oil Company] has been in talks with PetroChina, who would represent the Iraqi government in a Joint Venture to develop the Huwaiza field.

(Source: Platts)

By John Lee.

Shafaaq reports that Iraq will pay foreign oil companies about $2 billion in remaining arrears for 2015 in April.

The arrears were accumulated to international oil companies (IOCs) such as BP, Shell , ExxonMobil, Eni and Lukoil, which operate in under service contracts, whereby they are paid a fixed dollar fee for additional volumes produced.

Deputy Oil Minister Fayadh al-Nema, who is in charge of upstream operations, told Reuters that amended contracts could be in place by the middle of the year, which would ease the pressure on Iraqi finances.

He added that one way to reduce companies’ costs was to hand drilling operations over to the state-run Iraqi Drilling Company (IDC), while another was to replace foreign workers with locals.

Iraq’s output rise in 2016 will be “very modest,” Nema forecast, due to the shrinking investment budgets of foreign contractors, which are affected by the drop in oil prices.

Nema said a deal with PetroChina, ExxonMobil and other energy companies could be reached by the end of the year over investing in a project to boost output from its smaller southern oilfields.

The multi-billion dollar “Integrated South Project” consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf to maintain pressure and enhance oil recovery.

Investing companies will help raise production from the Artawi and Nahr Bin Umar oilfields and build energy infrastructure. Revenues from rising output from the two oilfields will be used to repay investors, Nema said.

Nema also said Iraq was working with BP to upgrade an old water injection facility in Garmat Ali, north of Basra, to provide oilfields of Rumaila and Zubair with water needed to boost output.

(Source: Shafaaq)

By John Lee.

Iraq has reportedly approached PetroChina and ExxonMobil about investing in a multi-billion dollar project to help boost output from a number of smaller southern fields.

The Deputy Chairman of the South Oil Company (SOC), Basim Abdul Kareem, told Reuters that the "Integrated South Project" consists of building oil pipelines, storage facilities and a seawater supply project to inject water from the Gulf to maintain pressure and enhance oil recovery.

The project targets the Luhais, Nassiriya, Tuba, Nahr Bin Umar and Artawi oilfields, which are currently producing about 240,000 bpd currently and SOC's initial plan calls for raising that to about 350,000 bpd in 2016.

Petrochina has shown more interest than ExxonMobil in the project, according to another SOC official who declined to be identified.

(Sources: Reuters)

By Simon Kent.

Iraq is developing a new strategy for its southern oil fields in relation to the ongoing Common Sea Water Supply Facility project, which opened bidding for completion last year.

ExxonMobil and PetroChina were approached to invest in the critical strategic water injection project, which has been long delayed.

In a statement to Reuters,  Iraq's South Oil Company deputy chairman Basim Abdul Kareem said that the new water injection project will also target smaller fields in southern Iraq, such as the Nasiriyah field, in the hope of raising the output of these fields by around 100,000 barrels, to 350,000 bpd.

The project's main goal, to boost production at the giant fields of Majnoon, Rumaila, West Qurna and Zubair, will continue, operated by the major IOCs who are working on those fields--BP, Shell, Eni and Lukoil.

Abdul Kareem noted that any new contracts would not be service contracts, and that they would be designed to be beneficial to all under low price scenarios.

(Source: Reuters)

(Oil drilling rig image via shutterstock)

Highlights from December’s London Conference.

By Robert Tollast.

According to current plans, the Kurdish region of Iraq will be able to export 1 million barrels of oil in the not too distant future--by some accounts by the end of 2015.

By 2020 as much as 10 billion cubic metres of gas will be exported from the region to Turkey under a 2013 agreement and this could rise to 20 bcm.

 
In the south of Iraq, this is rivalled by some ambitious expansion plans with Iraq’s South Oil Company, BP and PetroChina leading the charge at Rumaila, where they recently announced plans to double production at the super-giant field.

 
Meanwhile, the Shell-Petronas-Missan consortium continue plans at the vast Majnoon field. As the axis of global energy consumption shifts east, such expansion remains justified even as prices have tumbled.

But while the history of oil and gas in southern Iraq goes back decades, the Kurdish region remains in many ways an energy frontier. For example, in 2009 there were no official exports while today the Taq Taq and Tawke fields alone will bring an extra 160,000 bpd available for export and processing by the end of 2015.That impressive point was not the most important thing mentioned at the 4th Kurdistan-Iraq Oil and Gas Conference in London, a superbly well-organized event from CWC.

 
The three day conference provided delegates with nothing less than an immersive experience of the Iraqi energy sector and its emerging opportunities.

By John Lee.

The coming year will see BP expand drilling work and upgrades to equipment at the vast Rumaila oil field in southern Iraq, of which the company have a 50% stake.

BP operate the field with PetroChina, Iraq's South Oil Company and SOMO.

This work is carried out under the umbrella of the Rumaila Operating Organization, which oversees activity at a field which is thought to have some 20 billion barrels available for extraction. Some observers have noted that BP have played a "long game" in Iraq and that their patience with contractual difficulties and initial security concerns is paying off.

The aim of the new plan is to increase production at the field to 2.1 million BPD by 2020, double the current production. This has surprised some observers who are unfamiliar with Iraq's geography and do not realise that the ISIL terror group are operating hundreds of kilometres to the north.

The 25 year contract at the Rumaila field is expected to generate $1 trillion for the Iraqi economy.

(Source: Various publications)

By John Lee.

ExxonMobil signed agreements on Thursday with PetroChina for a 25 percent participating interest in the West Qurna I project in Iraq, and with Indonesia's Pertamina for a 10 percent participating interest in West Qurna I.

ExxonMobil retains 25 percent interest and remains lead contractor.

The transfer has been approved by the South Oil Company, Oil Exploration Company of the Iraqi Ministry of Oil and Shell West Qurna B.V., as members of the West Qurna I contractor consortium.

China is already the top foreign player in Iraq's oilfields.

(Source: ExxonMobil)

(Picture: Rex Tillerson, chairman, president, and CEO of Exxon )

Reuters reports that Exxon Mobil is selling part of its stake in the West Qurna-1 oilfield to PetroChina and Indonesia's Pertamina.

Oil Ministers Abdul Kareem Luaibi [Elaibi] told the news agency that 25 percent will go to PetroChina and 10 percent to Pertamina.

He added that the deal would be done "maybe after two to three weeks".

Exxon Mobil currently has a 60 percent stake in the giant oilfield and is the operator.

(Source: Reuters)

(Picture: Rex Tillerson, Chairman and CEO of ExxonMobil)

China's largest energy firm, PetroChina, will join ExxonMobil in developing Iraq's giant West Qurna oilfield and is in talks with Lukoil to buy into a second project at the field, according to the South China Morning Post.

China is already the top foreign player in Iraq's southern oilfields, and a deal at West Qurna would boost its dominance, making PetroChina the biggest single foreign investor.

"PetroChina will participate in developing the field," said an industry source with direct knowledge of the deal with Exxon.

The  Morning Post's source said that the agreement will be announced in the coming weeks, but declined to give further details on how the world's two most valuable listed energy firms would work together in Iraq. Both PetroChina and Exxon declined to comment.

Exxon holds a 60 percent stake in West Qurna 1, a US$50 billion investment project pumping around 480,000 barrels per day (bpd).

In March, PetroChina's ex-chairman Jiang Jiemin told Reuters that the Chinese energy major was willing to team up with Exxon at West Qurna.

PetroChina is also in talks with Lukoil for a stake in another development project at the field, West Qurna-2, a Lukoil source said. That source also declined to give details on the size of the stake under discussion.

"Lukoil bosses have already said they would prefer an Asian partner, a Chinese partner, in the project to secure a guaranteed market for oil sales," the source said.

Lukoil's chief executive Vagit Alekperov has said that the company wanted a Chinese firm to replace Norway's Statoil at the project, after Statoil agreed last year to sell its 18.75 per cent stake.

West Qurna-2 is expected to produce 500,000 bpd in 2014, and need total investment of US$30 billion. Lukoil plans to invest US$5 billion in the project in 2013 alone.

Last year, Exxon offered to sell its stake in the southern Iraq West Qurna-1 oilfield after a dispute with Baghdad over contracts it signed with autonomous Kurdistan in the north, deals the central government rejects as illegal.

A Morning Post source familiar with PetroChina operations in Iraq said in March the two companies were discussing a deal that would enable Exxon to retain operator status at the oilfield, where Royal Dutch Shell is minority partner with 15 percent.

However, some industry sources have said it is unlikely that PetroChina would buy stakes in both projects, due to their sheer size and scale.

(Source: The South China Morning Post)

By John Lee.

The Wall Street Journal reports that the China Petroleum Pipeline Engineering Corp. (CPPE) and Iraq's State Company for Oil Projects (SCOP) have secured a contract worth up to $317 million to build an oil pipeline from the Missan oil fields to the export terminals in southern Iraq.

Over a period of 14 months the companies will build the 272-kilometer pipeline, with SCOP building 60 kilometers and CPPE building the rest.

The pipeline will link the newly developed Halfaya, Buzurkan, Fuka and Abu Ghareb fields with the export terminals.

PetroChina, a subsidiary of China National Petroleum Corp (CNPC) is the operator of Halfaya oil field along with Total and Petronas. CNOOC, the Hong Kong-listed unit of China National Offshore Oil Corp, is developing three other fields in Missan [Maysan] -- Buzurkan, Fuka and Abu Ghareb -- along with state-run Turkish Petroleum Corporation (TPAO).

(Source: WSJ)

(Picture: CPPE)