IRAQ | Oil & Gas Fields Drilling and Development

[sheytanElKebir]

no oil resumption yet from KRG.

No sign of Kurdish oil exports scheduled for February 1 start
Baghdad (Platts)--1Feb2011/628 am EST/1128 GMT

The semi-autonomous Kurdistan Province in Iraq has not yet started exporting crude oil despite a reported agreement that exports would resume from February 1, Iraqi oil ministry sources said Tuesday.

Two top oil ministry officials, speaking on condition of anonymity, said there had been no additional oil supplied from two producing fields in the Kurdish province despite a reported deal between the Kurdish Regional Government and Baghdad that would have allowed the resumption of exports.

The officials said they did not know when exports would begin.

Kurdish Prime Minister Barham Salih said earlier this month that he had reached an agreement with the Iraqi federal government that would allow oil exports to resume, with Baghdad agreeing to pay foreign contractors operating in Iraqi Kurdistan.

Deputy Iraqi Oil Minister Ahmed al-Shamma subsequently confirmed to Platts that exports would resume on February 1 at a rate of 100,000 b/d from the Tawke and Taq Taq oil-producing fields.

Under an existing agreement with Baghdad, which allowed for brief oil exports from Kurdistan in 2009, the Kurdish crude is exported through the federal pipeline system with the State Oil Marketing Organization selling the crude on the KRG's behalf and the proceeds deposited into the central treasury. The KRG would, in turn, receive 17% of total revenues, in line with its percentage of the Iraqi population.

The Tawke field, operated by Norway's DNO, has current production capacity of 50,000 b/d and is connected directly by pipeline to the Iraqi northern export pipeline at Feysh Khabur, just before it enters Turkey.

The Taq Taq field, being developed by a joint venture between Turkey's Genel Enerji and China's Sinopec, which has been producing 35,000 b/d, is transported by tanker trucks to a central depot and then fed into the export pipeline to the Turkish port of Ceyhan.

The Iraqi 2011 budget assumes oil exports for the year of 2.25 million b/d, including 150,000 b/d to be exported from the Kurdish province. Baghdad made the resumption of Kurdish exports a condition for the KRG receiving its 17% share of revenues, a provision that angered Erbil and prompted Salih's visit to Baghdad to try to resolve the issue and reach agreement on oil exports.

The KRG began exporting oil from Tawke and Taq Taq on June 1, 2009, but oil flow was halted four months later at the request of the foreign contractors, who insisted on being paid before they would agree to resume exports.

The Kurdish government had argued that since the central government was collecting the revenues from the oil sales, it should be responsible for paying the contractors. Baghdad wanted the KRG to pay out of its 17% share.

It was not immediately clear, in view of the reported agreement over payment to contractors, why exports had not yet resumed. The Iraqi government, in a bid to ease tensions with Erbil, had agreed to pay contractors' costs but not profits.

The exact amount and payment mechanism has not been disclosed.

It was not possible to contact a KRG representative for clarification with Kurdish natural resources minister Ashti Hawrami in London for an energy event.

The KRG has signed 40 production-sharing contracts with foreign oil companies which Baghdad says are illegal and refuses to honor.

I'm not sure how the oil ministry expected tawke and taq taq to produce 100k/day when the companies haven't been paid OR bought out by Iraq (as was planned), not to mention that the foreign companies haven't even installed production wells and are expecting to be "paid" for installing the temporary wells!

i expect this story to drag out for some time...

[BigDreamer]

this entire issue has been nothing but political theater by both Baghdad and Erbil..

[BigDreamer]

from the wall street journal (3 hours ago):


Iraqi Kurdish Oil Exports To Resume Within Days

LONDON (Dow Jones)--Iraqi Kurdistan is set to resume oil exports in days after an 18-month hitch, a few days later than planned, a person familiar with the situation told a London gathering Tuesday.

The resumption could offer some relief to oil markets after Egyptian disruption fears pushed prices to the $100 a barrel threshold.

Speaking to an audience at a Chatham House energy conference in London, the person said the pipeline is currently being tested and exports are due to start in the "next few days."

The autonomous region said in a statement Jan. 22 it had resolved an 18-month dispute over oil-revenue sharing with Iraq's central government, enabling international sales to resume.

Though the Kurdish authorities had said exports would restart Feb 1, the person insisted the delay was immaterial.

"There are no problems, [no] political problems," he said.

Exports are set to kick off at 100,000 barrels a day and reach about 200,000 barrels a day by year-end from fields operated by Norway's DNO International ASA and Turkey's Genel Enerji.

Crude futures Monday pushed to a symbolic level of $100 a barrel on fears oil routes crossing Egypt to western markets could be disrupted by unrest in that country but also on concerns rising oil demand won't be matched by supplies.

The Organization of Petroleum Exporting Countries, which controls close to 40% of global oil supplies, has so far seen no need to change its production cap, while experts estimate non-OPEC production will broadly stagnate in the coming months.

Against this backdrop of supply concerns, Iraq, which isn't subject to OPEC quota restrictions, has been fast ramping up output after signing 12 deals over the last year to develop some of its prized oil fields.

Production rose to 2.710 million barrels a day in January, according to Vienna-based consultancy JBC, up 230,000 barrels a day the previous month.

Iraqi Kurdistan, which signed contracts early on with the likes of Dallas-based Hunt Oil Co., has played a key part in this production boost and its role is set to increase with the exports resumption.

Iraq is targeting oil production of 8 million barrels a day by 2017, though some question whether it can reach this level.

[sheytanElKebir]

great news...

can we hope to see 3M barrels / day broken by end of march! ? Its a possibility!

[alankurdi]

yeah this is great news .... but barham saleh KRG PM said he is waiting on iraqi finance minister to arrive in Erbil for the oil resume

[alankurdi]

everyone knows or suspects 60+ billion barrels of OIP across KRG’s blocks, but no-one is prepared to release any information that might confirm it.... at least not until after the Government is formed and Shahristani has gone totally which now seems to be the case finally.

[sheytanElKebir]

i don't quite understand the rational reason for hating shahristani. I mean he put in place the best oil contracts imaginable. signed contracts to expand production threefold, made a joint venture with Schlumberger and Iraqi Drilling Company, got rid of all the "fake" contracts of old, and in my experience of working on oil ministry contracts, there was absolutely no bribing or graft.

so, i am really curious, why the hatred? I mean Shahristani has been PROMOTED to "energy deputy minister" and now he oversees both the electricity AND oil ministries, so for the next 4 years at least he won't be gotten rid off...

I mean is the view due to the phenomenon of "always support the kurd against the arab" ? Or is it based on a reasonable technical or financial argument?

[kurd123]

Sheytan I don't have a problem with shahristani as a person, I have a problem with his actions, first you have to ask yourself what's your stance on Erbil signing it's own contracts, if your answer is no problem then you'd agree that shahristanis actions were wrong becuase he said that any company that signs contracts with Erbil bill be banned from Baghdad, and to counter that Erbil had to give the very generous contracts to win over some of the companies. If you believe everything should be centrilsed (which I think is wrong) then you'd probably agree with shahristani, but at the end of the day shahristani lost and his actions had negative effects on both Erbil and Baghdad as now we have to pay more money to the companies, so in my opinion shahristanis actions were wrong. I suppose in an ideal world Erbil should have waited, but to be honest I believe that Baghdad would not cave in unless the political situations were as they are.

Just my opinion.

[BigDreamer]

if Kurdistan had contracts as good as shahristani's.. than no one would have a problem you see..

it's not a matter of oil being centerlised or not.. if KRG worked with Baghdad from the start, then the contracts wouldn't be profit sharing from the start !

Shahristani did more for Iraq than anyone in government.. his strategy literally saved Iraq.. and that's much more than any politician in KRG can claim !

what i'm saying has nothing to do with who controls the oil.. it's just numbers..
At the end of the day, and according to the constitution, all oil revenue would be shared across Iraq, so no matter where the oi is, it will affect us all.. the revenue from basra will help kurdstan, and the revenue from krudstan will help the rest of Iraq..

So therefore Baghdad has the right to care about what kurds do with their contracts..

[kurd123]

Bigdreamer, your not understanding me.

Shahristani insisted on all contacts being signed in Baghdad.
Erbil said that they want to sign their own contracts.
In return Shahristani stated that all companies that sign with Erbil will get banned, thinking that no one will go to kurdistan.
In return hewrami offered companies a more relaxed deal to drive some of the middle band and one biggie (chinese) companies from the south to kurdistan, by offering more proft.

So you see, if shahristani didn't say that he'd ban people, maybe Erbil would have not offered a 16-17% profit for the companies, besides most of the southern fields are already found, the fields in kurdistan are all new which is more risky.

I prefer mr hewrami over shahristani any old day of the week, Shahristani should not forget who gave him refuge in 1991.

After his initial escape, Shahristani collected his family and fled first to Kirkuk, then to Sulimaniya in the Kurdistan region of Iraq. He stayed hidden in anticipation of a Shi'i and Kurdish uprising. After the United States had successfully ended Saddam Hussein's occupation of Kuwait, President George Bush encouraged the Iraqi Shi'a and Kurds to rise up and overthrow Hussein's regime. The Iraqi Kurds seized control of cities in the north, while the Iraqi Shi'a gained control of regions in the south. Shahristani participated in the uprising from his hiding spot in Sulimaniya.

http://cns.miis.edu/stories/050615.htm

The same goes for maliki.

[kurd123]

The KRG has never said that revenues will not go back to Baghdad. We just want our own contracts for obvious reasons, whether you like it or not, a dictator in Iraq is always a possibility and war alike, and therefore the KRG is just preparing for the worst, you'd do the same if you were us trust me. You keep saying KRG should work with Baghdad, we wanted do that but we also wanted to sign our own contracts! shahristani refused and labeled any contract is illegal! and now his turned back and sais he'll recognize them, why didn't he just do that at the start?

[sheytanElKebir]

In fact Iraq WON'T recognise the KRG contracts. They will "buy out" the foreign companies as far as I understood and bring them in line with the Iraqi government service contracts.

So after all is said and done, KRG contracts are being converted to standard "service contracts" like the rest of Iraq.

As for prefering hawrami to shahristani.. its your own opinion. I for one prefer the one who brings in more MONEY (regardless of his ethnicity) and has shown much more transparency in both contracting and day-day operations. Call me a racist

[BigDreamer]

really, i thought they are still profit sharing, except now the profit part will come out of kurdistan's allowance ?

[BigDreamer]

Originally Posted by kurd123

Bigdreamer, your not understanding me.

Shahristani insisted on all contacts being signed in Baghdad.
Erbil said that they want to sign their own contracts.
In return Shahristani stated that all companies that sign with Erbil will get banned, thinking that no one will go to kurdistan.
In return hewrami offered companies a more relaxed deal to drive some of the middle band and one biggie (chinese) companies from the south to kurdistan, by offering more proft.

So you see, if shahristani didn't say that he'd ban people, maybe Erbil would have not offered a 16-17% profit for the companies, besides most of the southern fields are already found, the fields in kurdistan are all new which is more risky.

I really don't know if Shahristani wanted the contracts to be signed by the ministry or he just wanted the terms of the contract to be acceptable by Baghdad (even if it's signed by KRG).

I don't personally mind at all if the KRG signs its own contracts as long as it has an approval from Baghdad regarding the terms.. because as I said... oil is a national resource, it affects us all.. it's only fair if Baghdad gets a say..

you are right about the kurdistan fields not being explored.. which raises the question, why do we need to explore kurdistan while we have field that have been discovered but not developed ?!!

there are many unexplored fields in all of Iraq not just kurdistan.. I personally believe that the west of Iraq has possibly even larger fields than kurdstan and the south, but there is no point exploring it now while we still have fully mapped fields that have not yet been tapped.. why do we need to waste our money now on exploring, we can do that later when our current fields start to peak !

And this above point points right at the heart of the problem.. the problem isn't oil, or exports, or contracts.. it's the attitude of KRG.. they simply don't care about the rest of Iraq, and treat the KRG as a separate country..

I don't blame the kurds for acting this way, because stupid saddam was a criminal.. and he really destroyed our country from north to south.. but at the same time, if the KRG doesn't care about the rest of Iraq, it will do damage to BOTH parties.. for example, look at how the oil companies exploited the infighting between Baghdad and arbil, and got a barging deal that's unfair for all Iraqis (kurds and non-kurds alike !).

this isn't just oil, if Baghdad and arbil continue with the "us and them" attitude.. our neighbors will exploits us, foreign investments will look for loopholes and exploit us, not to mention terrorist will obviously do the same !

I prefer mr hewrami over shahristani any old day of the week, Shahristani should not forget who gave him refuge in 1991.

After his initial escape, Shahristani collected his family and fled first to Kirkuk, then to Sulimaniya in the Kurdistan region of Iraq. He stayed hidden in anticipation of a Shi'i and Kurdish uprising. After the United States had successfully ended Saddam Hussein's occupation of Kuwait, President George Bush encouraged the Iraqi Shi'a and Kurds to rise up and overthrow Hussein's regime. The Iraqi Kurds seized control of cities in the north, while the Iraqi Shi'a gained control of regions in the south. Shahristani participated in the uprising from his hiding spot in Sulimaniya.

http://cns.miis.edu/stories/050615.htm

The same goes for maliki.

so why fight ? we all are all brothers at the end? and this applies to everyone not just kurds or arabs.. it's time that we move on.. honestly, it will only make our adversaries stronger when we are divided

[sheytanElKebir]

actually big dreamer the oil ministry has just issued the latest auction for oil exploration in Iraq's south western deserts...

[BigDreamer]

Iraq started exporting crude on Thursday from the Kurdish region's Tawke oilfield, a major step toward resolving fierce disputes between the war-torn country's majority Arabs and minority Kurds, officials said.

Shipments from the Tawke oilfield operated by Norway's DNO International (DNO.OL) and Turkey's Genel Enerji began at 10,500 barrels per day and were expected to reach 50,000 bpd in two to three days, officials at Iraq's North Oil Company said.

Exports from the semi-autonomous Kurdish region briefly flowed in 2009, but were halted when the Iraqi government in Baghdad refused to pay the companies involved. Baghdad views oil contracts signed by the Kurds with foreign firms as illegal.

The impasse over oil is part of a broader dispute over land, power and the distribution of the country's natural wealth that U.S. military officials fear could one day spark a war in Iraq.

"This morning we registered 10,500 bpd of Kurdish exports from the Tawke field," said one North Oil Company official, who asked not to be identified because he was not authorised to speak about the matter.

"This is the first shipment of crude officially registered for the Kurdish authorities," the official said.

A senior North Oil Company, who also asked not to be identified, said exports from Tawke to the Turkish port of Ceyhan were expected to rise to 50,000 barrels per day in the next two to three days.

Shares of DNO rose 3 percent after the company said it had started test production for exports from Tawke. [ID:nOSN005000]

Once exports fully resume, shipments from Tawke and a second field, Taq Taq, operated by Chinese company Sinopec and Genel Enerji, should reach 100,000 bpd.

Exports from the region were stopped over the dispute between Iraqi Kurdistan and the Arab-led government in Baghdad over the legality of contracts awarded by the Kurds to foreign companies.

Earlier this year, the two sides said they had reached a deal. Under the agreement, first proposed by Baghdad last year, the Iraqi government will pay the companies for their exploration and development costs but not cover their profits.

http://www.reuters.com/article/2011/...7120K020110203

[BigDreamer]

Originally Posted by sheytanElKebir

actually big dreamer the oil ministry has just issued the latest auction for oil exploration in Iraq's south western deserts...

yes, that's true.. now they want to pay for exploration all over the place.. something that's not necessarily very urgent..

in any case, I'm very happy that kurdistan is contributing to the oil export. it's a positive move for everyone..

[sheytanElKebir]

the reason its GOOD that kurdistan (and the rest of Iraq) is exploring for oil is due to the issue of OPEC quotas which are based as a "% of proven oil reserves"

so Iraq cannot ramp up oil production without ramping up the proven reserve figures.

[BigDreamer]

OPEC wont be an issue for many years to come.. and even by then, Iraq should leave OPEC.. it's becoming more useless by the day anyway

[alankurdi]

i also see shahristanis former policies a failure , look now oil resumed from KRG and people cant say oh KRG is taking Basras money to rebuild , its not like KRG didnt wanna send oil in the 1st place , cos shahristani called all the contracts it signed with the companies illegal and didnt wanna pay for there expenses !!! but the new oil minister is smart and knows his work and made the issue disappear in the favor of iraqi people in general and Kurdistan in particular. why make things more complicated if it can be fixed easily ? he should have remembered Kurdistan sheltered him when he was in need and should have returned the faver . oh well at least oil is now resumed and shahristani is gone for good , we can put all the issues behind and look to a brighter future.


according to a deal in 2005 between Baghdad and KRG "oil fields that been discovered are to be centralized but newly discovered oil and gas will be controlled by the region where its found in". its not KRG's fault Baghdad retreated on the deal !!.