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Iraq's state-run Iraqi Drilling Company plans to drill 76 wells in 2011 as part of a national effort to boost oil output to more than 200,000 barrels per day, the head of the firm said on Friday.

According to Reuters, the firm's director, Idrees al-Yassiri, said the plan included drilling more than 15 wells at the Nassiriya oilfield, which would help boost output from the field by 50,000-60,000 bpd.

"Our plan for 2011 is ambitious. We have enough energy to accomplish it ... The increase in production through the national effort will be more than 200,000 bpd through 2011," he said in a news conference.

The national effort includes drilling new wells in oilfields Iraq is developing on its own, including some of its giant fields like Nassiriya and East Baghdad.

Yassiri said the Iraqi Drilling Company would also drill wells for oilfields being developed by global oil companies.

"We will drill 23 wells for ENI at the Zubair oilfield and 20 wells for ExxonMobil in West Qurna (Phase One)," he said, adding the company will drill 15 wells as part of a consortium in Majnoon oilfield, which is being developed by Royal Dutch Shell.

"Drilling operations for foreign companies will add close to 150,000 barrels per day in 2011," Yassiri said.

The company has also submitted a bid for a tender to drill 23 wells in West Qurna (Phase Two), which is being developed by Russia's LUKOIL, Yassiri said, adding the development plan for the field included drilling 75 wells in the next two years.

(Source: Reuters)

Two new sub-contracts have been granted for two local companies to participate in developing the Badra oil field in southern Iraq’s Wassit Province, Aswat al-Iraq reports on Thursday.

“The Russian Gasbromneft Company [Gazprom Neft], which won the contract to develop [the] Badra oil field, 90 km to the east of Kut ... has decided to grant two sub-contracts for two local companies to participate in the development works of the oil field,” a source told the news agency.

He said the Russian company had also granted “the local Arab Gulf Company, to carry out the works of eliminating mines and war remnants from the oil field’s site and its surrounding areas”. The work is expected to continue until May.

“Another Iraqi company, specialized in oil and gas excavation works, was granted a sub-contract to carry out seismic works at the Badra oil field, to continue till April next,” he said.

Badra is planned to produce 15,000 barrels of oil per day (bpd) by the year 2013, according to the contract concluded between the company and the Iraqi Ministry of Oil.

(Source: Aswat al-Iraq)

The following profiles of the top ministers ihttps://www.iraq-businessnews.com/wp-admin/post.php?post=14895&action=edit&message=10n the new Iraqi cabinet are based on information from Reuters and Associated Press:

-Prime Minister: Nouri al-Maliki, Shiite, the current premier.

Al-Maliki, 60, was first installed as prime minister as a compromise candidate in 2006 but barely hung onto the job this year when his political coalition fell short of winning the most seats in national elections. Born in 1950 in Hindiya, he holds a master's degree in Arabic and worked at the education ministry before fleeing Saddam Hussein's regime.

-President: Jalal Talabani, Kurd, also currently in office.

With his trademark grin and walrus mustache, Talabani, 77, has positioned himself as a father figure for Iraq. Despite holding a largely ceremonial post, he has flexed political muscle on some issues. He is viewed with suspicion by some Iraqis who believe the president should be an Arab.

Talabani was born near Arbil in northern Iraq in 1933 and became a lieutenant to Mullah Mustafa Barzani, patriarch of Iraqi Kurdish nationalism and founder of the Kurdistan Democratic Party. He split from the KDP in 1974 and formed his own party, the Patriotic Union of Kurdistan, in Damascus the following year. Talabani became Iraq's first elected president in more than 50 years in April 2005 and was selected again in April 2006 as a national unity government was put together.

-Parliament Speaker: Osama al-Nujaifi [Usama al-Najafi], Sunni.

Al-Nujaifi and his brother, Ninevah Gov. Atheel al-Nujaifi, are two of the most powerful Sunni Arabs in Iraq's north and have taken hardline positions against Kurdish power in Mosul. The 54-year-old speaker was born in Mosul and has a degree in electric engineering.

-Deputy prime minister: Saleh al-Mutlaq, Sunni.

The contentious anti-Iran Sunni lawmaker was banned from running in 2010 elections because of alleged ties with Saddam Hussein's disbanded Baath party, but allowed this week to resume his political life under a government power-sharing agreement. He was born in Fallujah in 1947.

-Deputy Prime Minister for Energy: Hussain al-Shahristani, Shiite.

The current oil minister will oversee Iraq's lucrative energy industry in his new post. Al-Shahristani was imprisoned for years during Saddam Hussein's regime. He opposed oil deals signed by Kurdistan government. Born in 1942 in Karbala, and a nuclear scientist by training, he studied in Britain, Russia and Canada.

-Foreign Minister: Hoshyar Zebari, Kurd, currently in the same post.

Articulate and accessible to reporters, Zebari, 64, has worked with American officials for years, going back to when he was the foreign spokesman for the Kurdistan Democratic Party. He speaks fluent English. He was born in the northern Kurdish town of Aqra, near Mosul.

-National Council for Strategic Policies Chairman: Ayad Allawi, Shiite.

The Shiite former prime minister's alliance won the most seats in the March election with strong Sunni support. Born in Baghdad in 1946, Allawi abandoned the Baath party in 1975 and escaped an assassination attempt by Saddam agents in 1978 while he was in London.

-Finance minister: Rafia al-Issawi [Rafie al-Essawi], Sunni.

He is currently serving as a deputy prime minister. He was a fierce critic of U.S. troop activity during the first major battle of Fallujah in 2004 when he was serving as director of the city's hospital, claiming more than 600 people - half of them women and children - were killed in the fighting.

- Oil Minister: Abdul Kareem Luaibi

Born in the Iraqi capital in 1959, Luaibi graduated from the University of Baghdad with a bachelor's degree in oil engineering. He was hired by the government as an oil engineer with the South Oil Company in 1982.

Luaibi worked with the Midland Refinery Company, another Oil Ministry affiliate, from 1993 to 1999 and moved to the technical department of the ministry in 2006. He moved up the ranks quickly, to inspector general, from 2007-09, and then as deputy minister in March 2009.

Luaibi is known to have good relations with international oil companies. He led most of the talks in the first and second bid rounds for Iraq's oilfields and signed many of the contracts with global majors.

(Sources: Reuters, Associated Press)

The following update on output at Iraq's oilfields comes from Early Warning, citing a report from UPI:

Rumaila: Iraq's biggest field with the equivalent of 17.8 billion barrels of oil. That makes it the fourth largest oil field in the world. It contains around 15 percent of Iraq's oil. It is operated by BP and the China National Petroleum Corp (CNPC).

Production is 1.052 million bpd and is expected to reach its initial production rate of 1.065 million bpd by the end of the year, Jafaar says. That's three years ahead of schedule.

West Qurna 1: Contains 8.7 billion barrels. Exxon Mobil of the United States and Royal Dutch Shell secured the production contract in 2009. Production has been slipping but is expected to hit the IPR of 285,000 bpd within a year.

West Qurna 2: Holds 12.9 billion barrels and is operated by a consortium headed by Russia's Lukoil and StatoilHydro of Norway. Peak production of 1.8 million bpd is expected by the end of 2012, sustainable for more than a decade.

Majnoon: With reserves of 12.6 billion barrels, this is one of the top Iraqi fields and lies near the border with Iran. It is operated by Royal Dutch Shell and Petronas, which say they have boosted production from a paltry 46,000 bpd to 70,000 bpd, rising eventually to 1.8 million bpd.

Zubair: Operated by a consortium of Italy's ENI, the U.S. Occidental Petroleum Corp. and the Korea Gas Corp. (KOGAS) of South Korea. It has reserves of 4.1 billion barrels. Production is 200,000 bpd, up from 183,000 bpd in 2009. That's expected to eventually reach 1.2 million bpd.

Halfaya: Contains 4.1 billion barrels and is operated by the China National Petroleum Corp. Production is running at 3,600 bpd but potential output has been pegged as high as 535,000 bpd.

The Baghdad government expects production from just three of these fields -- Rumaila, West Qurna 2 and Zubair -- to hit 7 million bpd within six years.

(Source: Early Warning)

Today's session of United Nations Security Council, which led to the crucially important easing of restriction on Iraq, was chaired by the US Vice President, Joe Biden (pictured). The following is the text of the statement issued from his office, including full details of the decisions made by the Council.

Today marks an important milestone in the restoration of Iraq’s normalized ties to the international community.  The UN Security Council, in a special session chaired by Vice President Biden, took significant steps to return Iraq to the legal and international standing it held prior to the 1990 invasion of Kuwait with the passage of three resolutions.  Additionally, the Security Council issued a Presidential statement reaffirming the Security Council’s commitment to Iraq and support for UNAMI, welcoming Iraqi progress and reintegration into the region, and encouraging Iraq and all regional states to deepen and broaden their relationships.

With today’s action by the Security Council the United States and the international community are keeping their commitments to the Government and the people of Iraq. The resolutions adopted today by the Security Council will lift several longstanding Chapter VII restrictions on Iraqi trade and activity.

The three Security Council resolutions passed today are Resolution 1956, which terminates the UN supervised arrangements for the Development Fund for Iraq on June 30, 2011; Resolution 1957 which ends restrictions related to civilian nuclear cooperation placed on Iraq after the first Gulf War; and Resolution 1958, which ends the residual activities of the Oil for Food program.

Despite hardships, Iraq has made tremendous progress over the past few years and today is a far safer, more secure, and economically stable country. The United States urges Iraq’s neighbors and the international community to work closely with Iraq to resolve remaining outstanding Chapter VII issues, particularly outstanding issues between Iraq and Kuwait.

I used to think that rapid increases in Iraqi oil production would practically guarantee a significant strengthening of the dinar over the next ten years. Surprisingly, however, history suggests that this is far from a foregone conclusion.

While the Oil Ministry claims that Iraqi capacity will rise by 10 million barrels per day (mn bbl/d) to something like 12 mn bbl/d by the end of this decade, few analysts take this projection seriously. In fact, no country has ever achieved such a large incremental increase in a ten-year period. Historically, a recent study by the Energy Policy Research Foundation (available at http://www.eprinc.org/pdf/EPRINC-Iraq-FirstLook.pdf) found that Saudi Arabia came closest, with an increase of about 6 mn bbl/d (up 150%) from 1970 – 79, followed by Iran, which went from around 2 – 6 mn bbl/d from 1965 – 1974, and Russia, which raised production by some 4 mn bbl/d (68%) from 1998 – 2007.

But suppose for the sake of argument that Iraq was able to match these precedents and raised production from approximately 2 mn bbl/d at present to, say, 6 mn bbl/d by 2019. What would happen to the dinar if it followed a trajectory similar to the Saudi riyal, Iranian rial, or Russian ruble during the oil booms in those three countries?

Not much, as it turns out. If it’s like the riyal or the ruble, the dinar would actually depreciate in US dollar terms by 25% or 16%, respectively. And the rial appreciated by just 12% from 1965 – 1974. (See chart. As the indices are based on year-end US$/local currency exchange rates, increases/decreases in an index correspond to appreciation/depreciation against the dollar.)

The problem with the idea that increased oil production must be bullish for the dinar is that it is based on the assumption that nothing changes except the output of oil (what economists call a “ceteris paribus” assumption). In fact, however, many other things can be expected to change. In the case of a large country like Russia, for example, domestic demand for refined products may rise significantly as well so that exports don’t go up at the same pace as crude production volumes. In the Saudi and Iranian cases, oil booms led to import booms, with the result that demand for foreign exchange rose along with increased export earnings. There might also be scenarios in which an increasingly confiscatory taxation regime led to greater dollar demand due to capital flight. And of course exporting more barrels won’t necessarily lead to higher forex revenues during an oil-price slump.

History’s lesson for the dinar is that whether it strengthens or weakens over the next decade will depend not only on Iraq’s success in increasing oil production but also on the economic changes that this increased production induces. If Iraqi demand for imports and refined products were frozen for ten years at current levels, a 4 mn bbl/d production increase would be unambiguously dinar positive. But in a more realistic scenario, supply and demand for foreign exchange are likely to grow together, with the result that the exchange rate may not deviate dramatically from its current level.

The Russian and German ambassadors to Iraq said on Monday that their countries want to open consulates in Basra in order to develop economic relations with the provincial government.

The news was announced following the two ambassadors’ visit to the governor of Basra province, Shiltagh Abboud, yesterday.

The German Ambassador to Iraq, George Christian, told AKnews that he had come to Basra seeking a safe location to open a consulate. He said that Germany is hoping to attract its companies to the province to take advantage of the available investment opportunities.

“The consulate….will attract German investors working in many sectors”.

For his part, the Russian Ambassador, Werbyal Gabriel, said that his country hopes to open a consulate in the region because of its unexploited investment opportunities, particularly following the entry of the Russian firm Lukoil into the oil investment sector.

"Russian companies will enter the large investment market in Basra and will not be limited to any particular sector,” he enthused, adding “including the armaments field.”

Shiltagh Abboud, the governor of Basra told AKnews that this week will be seen as a week of international visits, following meetings with the French Ambassador on Sunday, the Russian and German Ambassadors on Monday and the British Ambassador’s scheduled visit on Tuesday.

“…these ambassadors all seek to open consulates for their countries in the province and expand trade relations with Basra,” he said.

Mr Abboud told our reporters that the province will provide all the necessary support to countries wishing to establish consulates on its territory.

“The province is host to Turkish and Iranian consular offices with Egyptian, Russian, French and German consulates to follow.”

(Source: AKnews, National Media Center)

Iraq has received the last two in an order of eight Russian-made multi-purpose helicopters which cost 156 million dollars, the US army has said.

The purchase is Iraq’s latest effort to bolster the capacity of its armed forces ahead of a complete withdrawal of US forces by the end of next year, as the US military still provides much of Iraq’s transport and logistics.

The two Mi-171E helicopters were delivered to the Iraqi army’s base at Taji, 25 kilometres (15 miles) north of Baghdad, completing the order. “These Russian-made aircraft will be used to conduct a variety of missions, including counter-terrorism, airlift and intelligence, surveillance and reconnaissance,” the US army said in a statement.

Iraq’s fleet of multipurpose helicopters now includes eight Mi-171Es and 16 Mi-17 helicopters.

(Source: AFP, United States Forces)

Shares in Heritage Oil Plc (LSE: HOIL), the independent upstream exploration and production company with operation in Iraqi Kurdistan, were up more than 5% this morning after the company issued an Interim Management Statement for the periond July 2010 to 17 November 2010.

Highlights

• The Miran West-2 well, in the Kurdistan Region of Iraq, has reached a total depth of 4,426 metres
• The well has encountered indications of hydrocarbons from intervals within the Cretaceous, Jurassic and Triassic in excess of 2,500 metres
• Numerous zones for testing have been identified and testing operations have commenced
• Production in Russia averaged 516 bopd for the third quarter of 2010
• As at 30 September 2010, Heritage's cash position was $614 million, excluding reserved amounts related to the tax dispute in Uganda

EXPLORATION ASSETS

Kurdistan Region of Iraq

The Miran West-2 well has reached a total depth of 4,426 metres. The well encountered indications of hydrocarbons from intervals within the Cretaceous, Jurassic and Triassic in excess of 2,500 metres. A number of zones within these intervals have been identified for testing in both the deeper exploration targets and the initial appraisal objective in the Cretaceous. Testing operations have commenced and a further update will be provided on completion of these tests, expected within the next couple of months.

The acquisition of approximately 550 square kilometres of 3D seismic over the Miran Block has recently commenced. This, along with an extensive fieldwork study that began in October 2010, will help establish future drilling locations to exploit the reservoirs' fracture networks.

Heritage is looking to contract at least one rig to continue the drilling programme across the Block in 2011 which will include an exploration well on the Miran East structure.  Heritage has operated in Kurdistan for approximately 700 days without any lost time or environmental incidents.

Other Assets

Swedish truck maker Scania paid $5 million in kickbacks through the U.N.'s oil-for-food program in Iraq, possibly violating both U.S. and Swedish laws, an anti-corruption investigator said on Friday, according to a report from Associated Press.

Swedish prosecutor Nils-Eric Schultz told the agency he is preparing to file charges in Sweden against several company officials later this year or in early 2011.

He sent a letter this week to the U.S. Justice Department and the Securities and Exchange Commission, presenting his findings and offering to provide more information on the case. Scania was listed on the New York Stock Exchange during the alleged kickback scheme, but applied to be delisted in late 2002.

"I believe the laws of the U.S. may have been breached," Schultz said in the letter, which was obtained by AP.

He said Scania did business with Saddam Hussein's regime through Tunisian and Russian companies, and that kickbacks of at least $5 million were paid for contracts worth about $70 million.