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Iraq has postponed its next energy licensing round by more than a month to May 30, a senior government official has said.

Speaking to Reuters on January 31, Abdul Mahdy al-Ameedi, the Oil Ministry’s Director-General, said the decision to move the date back had been made to allow potential bidders more time to study the contracts following a number of alterations by the department.

“We have made major changes and amendments on the initial contract that concern the economic and contractual terms, and the result was a new model contract,” he said.

“The changes and amendments on the exploration contract were mainly touching the pricing formula and profits of the companies, and how to determine their shares in the contract.”

The two-day round had been scheduled for April 11.

This was the second postponement, with the original auction date delayed last month after a number of requests from international oil companies (IOCs).

“The [existing] technical service contracts are very tight, [as] the Iraqis managed to squeeze companies quite heavily on the terms,” Sam Ciszuk, an analyst with KBC Energy Economics, told The National.

“IOCs were still moving forward with this because of potential future opportunities. Now it seems like those opportunities look fairly unattractive and the Iraqis have seen that they need to do something about that.”

More than 40 operators have qualified to take part in the round, which is expected to add 29 trillion cubic feet (812 bcm) of gas and 10 billion barrels of oil to Iraq’s reserves once exploration work begins.

These include major names such as BP, Shell, ExxonMobil, Lukoil, Total, China National Petroleum Corp (CNPC), Eni, Occidental Petroleum and Chevron.

In total, 12 exploration blocks are being made available, ranging in size from 5,500 to 9,000 square kilometres.

According to the ministry, seven of these are believed to contain natural gas, and five are thought to contain crude oil.

The blocks are located in the provinces of Basra, Najaf, Babil, Muthanna, Diwaniyah and Dhi Qar, south of Baghdad, Nineveh and Diyala to the north and Anbar to the west.

(Source: NewsBase)

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The Nabucco gas pipeline project is facing collapse, reports AFP.

The scheme to ship more than 30 billion cubic meters of gas per year from the Caspian and beyond to Europe, bolstering Europe's energy security, may founder following Turkey's decision to allow Russia's rival South Stream project to run through its Black Sea waters. Construction of the 63 billion cubic meters (bcm) per year pipeline is planned to start by the end of this year.

Turkey also signed a deal with Azerbaijan to build the Trans-Anatolia Pipeline (TANAP) to carry 10 bcm per year of Azeri gas to European markets, plus 6 bcm for itself, casting further doubt on Nabucco which is having difficulty getting commitments of gas supplies.

Nabucco was to run some 3,900 kilometres (2,400 miles) across Turkey then up through Bulgaria, Romania and Hungary to reach Austria where it would link up with a major distribution network.

Necdet Pamir, a former deputy director of Turkey's TPAO oil company, told AFP:

"The Nabucco project was in a coma long before the South Stream agreement, but nobody dares to say Nabucco is already dead."

"Turkey was not completely onboard on Nabucco," said Andrew Neff, senior energy analyst at IHS Global Insight, adding: "Turkey sees itself as a power arbitrator."

"Nabucco has been an incomplete project since the very beginning," said Mete Goknel, former director of Turkey's state-owned pipeline company, Botas, which is one of the Nabucco consortium partners. "Who will ship the gas through the pipeline?"

Central Asia is Moscow's backyard and Russia's Gazprom has most supply tied up, while sourcing from Iraq's northern Kurdistan region is fraught given the political frictions with the central government in Baghdad.

The main shareholders of Vienna-based Nabucco include Austrian energy company OMV, German utility RWE , Hungary's MOL, Romania's Transgaz , Bulgaria's Bulgargaz, and Turkey's Botas.

(Sources: AFP, Reuters)

Russia’s LUKoil is set to become the only foreign operator of the West Qurna-2 oil project in Iraq after its partner, the Norwegian company Statoil, asked Iraq's oil ministry for permission to sell its stake, according to The Voice of Russia.

The Iraqi Oil Ministry has reportedly approved the deal, which would give LUKoil a 75% stake in the oilfield, with the remaining 25% belonging to the Iraqi state.

(Sources: Voice of Russia, Reuters)

Despite objections from Baghdad, ExxonMobil already has personnel on the ground in Iraqi Kurdistan, according to Reuters.

Whiel the company has kept silent on its exploration agreement with the Kurdistan Regional Government (KRG), one central government regards as illegal, one Western industry source in Erbil told the news agency:

"They [Exxon] are definitely here and they are definitely assessing living and working accommodation ... There are around 10 individuals here at any one time looking at what it takes to fully mobilise here - office space, housing space, these types of things. No oil company comes in in a day."

Executives from Exxon reportedly met Ashti Hawrami, the region's Natural Resources Minister, last week, and are preparing to issue a tender for seismic work for at least some of the six exploration blocks acquired in October.

Exxon has been summoned to the oil ministry in Baghdad for final talks, but it is unclear whether the discussions would take place before the company's fourth quarter results on 31st January, when it is expected to publicly announce its Kurdistan investment.

In the meantime, however, it is business as usual at Exxon's West Qurna-1 field in the south of the country, where output has risen to about 390,000 barrels per day, and where Exxon continues to lead a multi-billion dollar water injection project that is crucial to boosting output in the area.

The KRG is in talks with other oil majors and further agreements are expected in the coming months. Sources say France's Total, which has a minority stake in the Halfaya oil field in southern Iraq, is keen to move into the north, possibly linking up with Anglo-French explorer Perenco in the Sindi-Amedi block along the Turkish border.

A Lukoil spokesman, on the other hand, dismissed the possibility of the Russian company heading north.

(Source: Reuters)

Iraq's cabinet announced that it had approved a $998 million oilfield service contract on Tuesday with a South Korean company for the West Qurna 2 oilfield, according to Reuters.

While the memo did not name the company, Samsung Engineering was the only South Korean company on the final shortlist.

Iraq and its partners, Russia's Lukoil and Norway's Statoil, had shortlisted five companies to compete for the West Qurna Phase Two oilfield development contract.

The other companies were Saipem, SNC Lavalin Group Inc, Punj Lloyd Ltd, Globalstroy Engineering and South Korea's Samsung Engineering, an oil official said.

The tenders announced were for the construction of an oil export pipeline, a tank farm at Tuba, a power distribution station and an associated gas processing plant, and also an oil gathering system, central processing facilities and a water supply system.

They are expected to help production at the field hit 150,000 barrels of oil per day (bpd) in January 2013, an Iraqi oil official said.

(Sources: Reuters, AKnews)

Iraq would be drastically affected should Iran block the Hormuz Strait. Most of the oil Iraq produces is exported via the Strait. The scenario is seeing Iraq, distinct because of its good relations with both the US and Iran, practice its new diplomacy again, according to this article from NIQASH.

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

Iran’s threats to block seagoing traffic in the Hormuz Strait, one of the most important waterways in the world, have caused strong reactions in Iran’s neighbour, Iraq, as well. Iran has made the threats in response to possible European and US economic sanctions. And despite the current internal political turmoil in Iraq, it has also led to another significant attempt by Iraq at international diplomacy.

Around one fifth of all crude oil passes through the narrow shipping channel, which lies between the Gulf of Oman and the Persian Gulf. Iraq is currently heading OPEC (the Organization of the Petroleum Exporting Countries) and as such, Iraq’s Minister of Oil Abdul-Kareem Luaibi announced that he would be travelling to Tehran this week in order to extract assurances from Iran that they wouldn’t block the Strait.

In terms of diplomacy, this is another notable attempt at mediation by Iraq. The most recent involved Iraq’s intervention between the Arab League and Syria, which continues this week with Iraq declaring further intentions to continue to assist in trying to defuse the Syrian crisis.

In terms of the Hormuz Strait issue, Iraq is really the only nation that can do this kind of thing, as it has good relationships with the US and Iran. Iraq also sits in the middle between the nations like Saudi Arabia who are friendly towards the US and nations that consider themselves resistant to US influence, such as Iran. It’s hard to say whether this diplomatic role will continue in the future – some believe that Iran’s influence will grow and lead Iraq into that country’s corner whereas others say that US influence will remain strong.

OAO Gazprom Neft started drilling a second appraisal well at the Badra oilfield, according to a report from Bloomberg.

The Russian producer, which started drilling the first such well at Badra in November, expects to complete the second well in spring, and plans to approve the field development plant in February 2013.

(Source: Bloomberg)

Russia’s Interfax news agency reports that OAO Bashneft is in talks to form a consortium to develop Iraqi oil fields.

The company, controlled by billionaire Vladimir Evtushenkov’s AFK Sistema, reportedly wants to be a junior partner in a consortium that will bid in the next round of tenders for Iraqi oil fields.

(Source: Bloomberg)

International learning and skills specialist Atlas has expanded the global footprint of facilities capable of delivering the groundbreaking new global training initiative IMIST for the oil and gas industry with the approval of the first centre in Iraq.

The accreditation of the Al Delma facility in Basra City demonstrates Iraq’s commitment to developing its energy industry and creating a workforce trained to the globally recognised basic safety standard, IMIST online.

It brings the total number of invigilation centre’s approved to deliver International Minimum Industry Safety Training (IMIST) around the world to 16, with facilities spanning Australia, Thailand, Singapore and the Philippines as well as the United Arab Emirates, Qatar, Nigeria and Russia among others.

The Al Delma centre will be capable of delivering the programme to up to 250 people every day.

Bilal Mahmood, CEO of Al Delma said:

“Long-term underinvestment in the development of our oil and gas personnel has meant considerable training is needed if we are to accomplish the goal of a safe and skilled workforce for the future.

“As one of the biggest training centres in Iraq we have built our reputation on being quick, smart and reliable and we are delighted to be the first to gain approval to deliver this new international training and be a model to others in the country.”

Developed by global oil and gas training standards body OPITO International, IMIST brings for the first time a standardised level of basic safety training to an estimated 1.5million oil and gas workers worldwide. The training assesses basic safety knowledge in nine subject areas including risk assessment, asset integrity, the use of hazardous substances, working at height and mechanical lifting among other subjects.

IMIST online, which was launched in the Middle East in July 2011, is delivered in partnership with Atlas via approved invigilation centres only.

By gaining Atlas approval to deliver the course, workers using the Al Delma centre will have their IMIST training accepted by employers all over the world. It will also reduce the burden of training costs for companies with both new entrants and experienced workers able to undergo a full range of mandatory and voluntary health and safety courses under one roof.

Atlas chief executive John Rowley said:

“This is a significant step forward for the oil and gas workforce in Iraq in terms of creating a safe, sustainable and profitable oil and gas industry for the country.

“It is also a major milestone in the adoption of a common industry standard for basic safety and competency in oil and gas around the world. The support which has been shown for this initiative is evident in the rapidly increasing footprint of centres which now spans across all four corners of the globe and is testament to the industry’s desire to improve safety at all levels.”

IMIST is being rolled out across 30 countries worldwide throughout Asia, Africa and the North America over the next two years. It will be delivered via e-learning and tailored to meet each region’s specific workforce, language and geographic needs.

Iraqi Foreign Minister Hoshyar Zebari has told the Trend news agency that his country was keen on taking part in the planned Nabucco natural gas pipeline.

"Iraq is able to propose its resources for this strategic project, which is of great importance for the country," he was quoted as saying.

UPI reports that Europe aims to break the Russian grip on the regional energy sector through a package of projects dubbed the 'Southern Corridor,' which includes the Nabucco pipeline.

Nabucco, however, has faced economic obstacles and hasn't received firm commitments from natural gas suppliers.

Azerbaijan is weighing proposals for resources from its Shah Deniz 2 gas field from pipeline groups involved in the Southern Corridor.

As there's not enough natural gas available from Azerbaijan to fill Nabucco's planned capacity, Nabucco said they would look at feeder lines, notably from Iraq, to provide additional supply.

Regarding disputes between the Kurdish and central governments in Iraq over natural resources, Zebari said both sides would "cooperate for the good of the population."

(Source: UPI)