Custom Search

Russia's Lukoil announced on Friday that it has it awarded a 3D seismic contract at Iraq's West Qurna Phase 2 oil field to Terra Seis Trading Ltd. [Terraseis] (TSTL).

TSTL has been conducting seismic exploration in Iraq since 2005 and "possesses vast operational economic and legal experience, and is well aware of the country’s natural and climatic conditions".

The contract is set to run 9 months with a 3D seismic exploration scope of 540 square kilometers, but the value of the contract has not been revealed.

The pilot survey is scheduled for the beginning of December, while the seismic convoys will enter the contract area in the middle of December.

The data obtained will allow the Company to clarify the geological structure of the area under exploration and to develop a comprehensive seismic-facial field model.

The Russian company along with Norway's Statoil won the right to develop the 13-billion barrel West Qurna Phase 2 in Iraq's second postwar licensing auction held in Baghdad in December of last year.

Under the terms of the 20-year-long service contract, Lukoil and Statoil are required to pump at a rate of 1.8 million barrels a day for payment of $1.15 a barrel. That production target needs to be reached in 2017.

Lukoil holds a 56.25% stake in the project, Statoil 18.75% and the Iraqi state company holds the remaining 25%.

(Sources: Lukoil, Wall Street Journal)

A group of Russian companies has been offered the project to build a monorail in Baghdad, according to Aswat al-Iraq.

“Baghdad’s Hanging Train [monorail?] project, offered tp Russian companies, is expected to stretch for 25 kms, with a total capacity of 10,000 passengers per hour, through 16 stations, distributed between Baghdad’s two banks of Rusafa and Karkkh,” Deputy Governor of Baghdad, Kamel Al-Saadi said told the agency on Saturday.

He said that the train would follow two routes, the first beginning from East Baghdad’s Shaab district, passing through Mustansiriya, Kazimiya and end in central Baghdad’s Alawi al-Hilla, whilst the other begins from west Baghdad’s Yarmouk district, passing through Muthann Airport and also ending in Alawi al-Hilla.

In June, Canadian company TransGlobim International won the contract to build a monorail in the holy city of Najaf.

(Source: Aswat al-Iraq)

Kurdistan's Prime Minister, Barham Salih, asserted that Kurdistan has had a successful oil policy and that any prospective government must allow the region to manage its own oil autonomously, according to a report from Rudaw.

Due to the policy under which the Kurdistan Regional Government (KRG) has signed dozens of contracts with foreign companies independently of Baghdad’s central government, the Kurdish region’s energy sector has seen a significant improvement, said Salih.

But Iraq’s Minister of Oil, Hussein al-Shahristani, has long accused Kurdistan of illegal management of oil and considered all the contracts that the region signed null and void.

“The Kurdistan Region has a clear-cut and transparent policy on oil,” said Mr. Salih, in an exclusive interview with Rudaw, rejecting criticisms from the opposition parties that accused a handful of Kurdish officials of “smuggling” oil for their own benefit.

In my October 11 post, I argued that the ISX stands a reasonable chance of joining this year’s emerging markets rally. Today, I’d like to make an even more audacious claim: in 2011, inflows of foreign money could potentially make Iraq the world’s top performing market.

You can get some idea of the upside potential for Iraqi stocks from the chart, which shows the dizzying heights to which a sudden inflow of liquidity can push a tiny new market like this one. Whether the new money is primarily foreign—as in the Russian and Sri Lankan examples—or local—as was the case in China and Vietnam, the resulting bubble looks much the same. In a time span of from one to two years, you might make anywhere from five to ten times your money if you managed to get out at the top. (Note that all four of these markets went on to reach even higher levels in later years.)

These legendary emerging markets of yesteryear can also teach us two important lessons about when to sell. First, no stock is overvalued if it is going to continue going up. In a liquidity-driven market, concern with valuations will only lead you to take profits too early. And second, don’t believe the hype. No matter how rosy the prospects for the local economy and corporate earnings seem to have become, when the supply of liquidity begins to dry up, the bull market is over.

...and it looks like it is going to get it.

Iraq has lofty investment targets for the next five years. Sami al-Araji, chairman of Iraq's National Investment Commission, told Reuters:

"We'd like to go ahead and shoot for $600 billion. We hope of course we can realize it, but we will be very happy if we realize a good percentage of it. That's if we pass the 50% in a solid way."

This does not seem too far-fetched. New deals are reported in a steady stream by Iraq Business News, from budgets of $75m to complete hundreds of small deals to  a $50bn deal to build one million housing units for millions of people.

It doesn't stop there. "If we go for the two million housing units, by itself, that will give us a good chunk of that mark," Araji continued in his interview. "As of today, 132 companies have applied. We are concentrating on 35."

Just this week, Baghdad Province completed deals with Russian and Ukrainian companies worth $20bn for projects in various sectors: bridges, education, energy, health, roads, sewers, tourism, water and youth.

A statement from the Office of the Mayor of Baghdad, Salah Abdul-Razzaq, said that the projects include "building nine hospitals accommodating 200 beds and 400 schools with laboratories, cafeterias and gymnasiums. There are other projects in the fields of housing and tourism through building a hotel at Baghdad International Airport and 50,000 housing units."

"Other projects include transport field through building an expressway adjacent to Tigris river 250 km long...which contributes to transport 10,000 passengers an hour, in addition to building five bridges in different areas of the capital and other projects in the field of youth including building 14 swimming pools, 20 entertainment and sports clubs, 12 women's clubs, football and basketball fields and 28 houses for culture and arts; and a power station with capacity of 1,300 mw will be built as well."

(Sources: Reuters, Nina, Office of the Mayor of Baghdad)

Reuters reports that Russia is talking directly with Iraq's oil-rich Kurdistan region about investment opportunities there, Russia's ambassador to Iraq said on Tuesday, a strategy that could irritate Iraq's central government.

Baghdad is at odds with the semi-autonomous northern region and has strongly opposed oil deals the Kurds have signed independently with foreign companies. The row has interrupted exports from Kurdish oilfields.

Speaking inside the heavily fortified Russian embassy compound in Baghdad, ambassador Valerian Shuvayev said Russian delegates often visited Kurdistan to explore opportunities.

"They go to Kurdistan quite a lot. There is nothing concrete but both sides are thinking about how to take this further," he said in an interview.

Asked if Russian companies considered signing contracts with Kurdistan directly, Shuvayev said: "Why not? If (a project) is feasible, then why not. And there have been talks." He was tight-lipped on the details and declined to name the companies.

Russia’s Lukoil aims to produce 120,000 barrels of oil a day at Iraq’s   field by the end of 2012, and is seeking customers for the fuel in Asia, according to a report from BusinessWeek.

The Moscow-based company plans to begin selling crude from the field in 2013, Paul Hawkins, director of supply and trading at Litasco (Lukoil International Trade and Supply Company) said in a presentation in Singapore on Wednesday. Lukoil won rights in December to develop phase 2 of the West Qurna deposit together with Norway’s Statoil.

West Qurna 2 is likely to yield heavy, sour crude from the Mishrif reservoir during the early stages of production. Lighter, sweeter crude from the Yamamah reservoir in the same deposit is set to begin production later and be marketed from as early as 2016, Hawkins said.

The lightness or heaviness of oil refers to how thick it is, a key consideration for refiners. Sourness or sweetness refers to how much environmentally harmful sulfur it contains. Lighter, sweeter crudes are typically easier to refine and command higher prices.

Lukoil plans to invest $300 million in the field this year, with as much as $4.5 billion earmarked for the next four to five years, Hawkins said. Output from the field is set to rise to 650 million barrels a year by 2017, he said.

(Source: BusinessWeek)

Iraq's Ministry of Oil will auction off more gas fields on the 20th October 2010.

Xinhua was told by an official: "The bidding for the gas fields of Akkas in Iraq's western province of Anbar, Mansuriyah in eastern Diyala province and Siba in the southern province of Basra, will be held on October 20th." Ministry of Oil figures put the gas reserves of these fields at 11.23tn cubic feet. Currently, the country is producing just 1.5bn to 1.65bn cubic feet per day from proven reserves of 112tn.

This auction has been delayed from May, as firms needed time to look into the contracts, which could last 20 years, according to Nina News. There was a symposium last month so that firms could review the petroleum reserves of the fields.

Countries with interested companies include: France, India, Japan, Kuwait, Norway, Turkey, Russia, South Korea and the UK.

In the first two rounds of licensing, the Ministry of Oil signed 12 contracts, with the aim of increasing oil production to 12m barrels per day by 2017. Currently it produces about 2.5m barrels and exports about 2m.

Read more on oil and gas.

(Sources: Nina News, Xinhua)

A final investment decision on investment for the Nabucco pipeline will definitely not happen this year, and will be delayed until 2011 because gas supply talks with Azerbaijan are dragging on, an Austrian newspaper reported on Friday.

The 7.9 billion euro ($11 billion) Nabucco pipeline is part of the EU's effort to diversify its natural gas supplies by bringing up to 31 billion cubic metres of gas annually from the Caspian region to an Austrian hub via Turkey and the Balkans.

Construction on the project, which has already been subject to several delays, is scheduled to start next year with the first gas deliveries at the end of 2014.

"We are definitely not going to manage it (the decision) this year, it will not happen until 2011," Michael Ulbrich, head of international pipeline projects at Austrian energy group OMV, was quoted in the daily Der Standard as saying.

Der Standard said longer-than-expected talks with Azerbaijan had led to the delay.

Azerbaijan has been in talks with more than 20 firms and consortiums and will decide later this year which project gets gas from its giant Shah Deniz II gas fields, co-led by BP (BP.L) and Statoil (STL.OL).

The government has said the gas contracts will go to the company that offers the highest price, and the Nabucco and Russian offers are seen as the main contenders.

Russian gas export monopoly Gazprom (GAZP.MM) said recently its competitors would not be able to beat its price for gas from Shah Deniz.

Nabucco expects the pipeline will transport its first gas from Iraq, 10 billion bcm, and another 8 billion bcm from Shah Deniz in 2015.

Nabucco's other shareholder(MOLB.BU), Romania's Transgaz (TGNM.BX), Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE (RWEG.DE).

(Source: Reuters)

Sonoro announced that its wholly owned subsidiary, Sonoro Energy Iraq, and its partner, Berkeley Petroleum Mesopotamia Asphalts Limited (together, the "Licensee"), have signed an Asphalt License Agreement (the "Agreement") with the Al-Salah ad Din Provincial Government in the Republic of Iraq.

The Salah ad Din Province lies just to the North of Baghdad and lies within the trend of mega oilfields including production of roughly 300,000 barrels oil equivalent per day. It is estimated that Iraq may hold the world's fourth largest heavy oil resources behind Canada, Venezuela and Russia. The key terms of the Agreement are the following:

Sonoro Iraq will have a 70% working interest and will be the operator and Berkeley will have a 30% working interest.

Licensee has the exclusive rights to explore, develop and produce asphalts and related organics within the entire Al-Salah ad Din

Province and to sell the asphalts and its related organics produced (and/or the by-products after processing) domestically and/or internationally.

The Agreement provides for an initial exploration period of 5 years and is followed by a 30 year exploitation period with extensions for any carved out exploitation areas to develop asphalts and related organics.

Licensee has the right to construct and operate asphalt-heavy oil topping facilities within the Al-Salah ad Din Province, with certain processing capacity commitments.

Licensee is entitled to 50% of the revenues from the sales of asphalts and related organics (and its by-products after processing), after tax and after cost recovery.

80% of the revenues are available for cost recovery. Licensee is committed to a minimum initial investment commitment of US $1.5 million.