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CBI tries to find way to pay Russian Oil Companies

By John Lee.

Mustafa Ghaleb Mokhif, the Governor of the Central Bank of Iraq (CBI) has met with the Russian Ambassador to Iraq, Elbrus Kutrashev, to discuss the payments due to Russian companies operating in Iraq.

In a statement after the meeting, both parties expressed the need to find appropriate solutions to this issue.

Payments to Russian companies have become more complicated as a result of sanctions imposed following Russia’s invasion of Ukraine in February.

(Source: CBI)

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WFP Iraq Country Brief, July 2022

In Numbers

256,176 people assisted in July 2022

US$3.2 m cash-based transfers made

US$44.2 m six months (August 2022-Jan 2023) net funding requirements

Operational Updates

  • In July, WFP provided cash and food assistance to 184,091 internally displaced persons (IDPs), 68,725 refugees, and 3,360 people from vulnerable communities through resilience building initiatives.
  • In early July 2022, the Ambassador of Japan in Iraq visited WFP’s resilience projects in Anbar, funded by Japan. The visit provided an opportunity for Japan to receive a firsthand account of the impact of the projects which rehabilitated 24 pumping and sewage drainage station. The stations continue to support 37 hectares of land enabling communities to grow and harvest crops.
  • In July, WFP handed over mechanized farming equipment (tractors) to the Directorate of Ninewa to support small holder farmers in the governorate and enhance the agricultural sector in Ninewa.
  • Under the National School Feeding Programme, WFP is preparing for the implementation of the School Feeding programme (SFP) with the Ministry of Education for the new academic year 2022/2023, that is expected to start in September.
  • Data collection under the WFP retargeting exercise across its entire beneficiary base continued in the month of July. The exercise seeks to ensure that the most vulnerable families who are unable to survive without assistance continued to receive support to meet their needs. Results will be verified and issued once the targeting exercise is concluded.
  • In July, the conflict sensitivity team conducted a mission to Thi-qar, Basra and Muthana to assess the social cohesion component of the resilience programme. This mission took place to ensure WFP resilience activities are conducted in conflict-sensitive manners.
  • Under the reform of Iraq’s Public Distribution System (PDS), WFP continues to assist the government to print smart cards as part of an overall digital approach. As of July 2022, 34,000 digital PDS smart cards were printed for citizens at the Sadr city branch in Baghdad.
  • WFP together with UNICEF and ILO completed consultations with federal government leaders on policy making and the development of a strategy to create a single registry. The consultation sessions took place in Baghdad with representatives from relevant ministries (MOP, MOLSA, MOI, MOE, and MOH) and UN agencies.

Please click here to download the full report.

(Sources: ReliefWeb, WFP)

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Iraq to provide Lebanon with Fuel for Another Year

By Al Monitor staff. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Iraq agrees to provide Lebanon with fuel for another year

Lebanon’s fuel crisis is showing no signs of letting up, but an exchange with Iraq is keeping one source flowing.

Click here to read the full article.

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Iraq’s Economic Capital “engulfed in Trash”

From Rudaw. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Iraqi economic capital engulfed in trash, suffers from dilapidated electricity

Home to Iraq’s richest oil wells, Basra should have wealth and development to rival the Emirates.

Instead, the southern province is one of Iraq’s most impoverished – its residents deprived of even the most basic services and infrastructure.

Click here to read the full article.

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DNO Raises Kurdistan Output Forecast

DNO ASA, the Norwegian oil and gas operator, today reported strong second quarter operational and financial results powered by high oil and gas prices and by solid production in its operated flagship Kurdistan Tawke license.

Spurred by quarterly revenue of USD 361 million and free cash flow of USD 167 million, the Company reduced debt and exited the quarter in a positive net cash position for the first time since 2018.

“DNO is committed to put its capital to work in its core competency and capture new opportunities created as peers and even some of the largest European companies scale back spending and focus instead on harvesting,” said Executive Chairman Bijan Mossavar-Rahmani. “We believe in the oil and gas business and in our responsibility to all stakeholders, including host governments who want to capitalize on current prices and consumers who now call for more production, not less,” he added.

Operational cash flow totaled USD 341 million, including USD 50 million towards arrears built up by Kurdistan from non-payment of certain 2019 and 2020 Tawke invoices. These arrears, which stood at USD 259 million at yearend 2020, were reduced to USD 87 million as of 30 June 2022, excluding interest.

The Company’s operational spend in the second quarter totaled USD 198 million in line with the USD 800 million projection for the year. During the quarter, operational spend of USD 81 million in Kurdistan was divided between the Tawke license (USD 66 million) and the Baeshiqa license (USD 15 million); operational spend in the North Sea stood at USD 117 million.

Operating profit dropped to USD 81 million from USD 236 million in the previous quarter due to asset impairments of USD 127 million primarily related to the Ula area in the North Sea and expensed exploration of USD 48 million.

The Company reduced its interest-bearing debt through a USD 200 million bond redemption and exited the quarter with cash deposits of USD 801 million. With USD 671 million in bond and reserves-based lending debt, net cash stood at USD 129 million.

Gross production at the Tawke license averaged 106,900 barrels of oil per day (bopd) during the second quarter, of which Peshkabir contributed 62,300 bopd and Tawke 44,600 bopd, the latter representing the first quarterly production increase since 2015 at this legacy field as new wells are drilled, workovers conducted on existing ones and gas injection continued.

Of total Kurdistan production, 80,400 bopd were net to DNO’s interest. North Sea net production averaged 11,600 barrels of oil equivalent per day (boepd), bringing the Company’s total quarterly net production to 92,000 boepd.

In the second quarter, four new production wells were brought onstream in the Tawke license with three at Tawke and one at Peshkabir. Together with wells drilled in the first quarter, natural field decline has been arrested and reversed, including at Tawke, raising the Company’s full-year projection to 107,000-109,000 bopd.

Following government approvals, DNO commenced trucking of production in mid-June from the Zartik-1 discovery well in the operated Baeshiqa license for export at an average rate of 600 bopd. Production from the well has been choked back as the Company targets zones with lower gas-to-oil ratios to avoid flaring. Development of the license continues with the drilling of Zartik-2 and Zartik-3, to be followed by Baeshiqa-3 in the fourth quarter.

In the North Sea, operated Brasse field development progressed into front end engineering and design ahead of planned project sanction by yearend 2022. The Company remains an active North Sea explorer with three more exploration wells to be drilled this year in addition to the four already drilled in the first half of 2022, one of which, Kveikje (DNO 29 percent), is considered a likely commercial discovery, as previously reported.

Key figures

Q2 2022 Q1 2022 Full Year 2021
Gross operated production (boepd) 107,178 106,465       108,713
Net production (boepd)    91,937    92,548         94,477
Revenues (USD million)       361        339          1,004
Operating profit/-loss (USD million)         81        236             321
Net profit/-loss (USD million)         72        140             204
Free cash flow (USD million)       167        152             362
Net debt (USD million)      -129          27             153

(Source: DNO)

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Tawke Oilfield: First Quarterly Production Increase since 2015

Genel Energy notes that DNO ASA, as operator of the Tawke PSC (Genel 25% working interest), has today issued an update on licence activity.

Gross production at the Tawke licence averaged 106,900 bopd during the second quarter, of which Peshkabir contributed 62,300 bopd and Tawke 44,600 bopd, the latter representing the first quarterly production increase since 2015 at this legacy field as new wells are drilled, workovers conducted on existing ones and gas injection continued.

In the second quarter, four new production wells were brought onstream on the Tawke licence with three at Tawke and one at Peshkabir. Together with wells drilled in the first quarter, natural field decline has been arrested and reversed, including at Tawke, raising DNO’s full-year projection to 107,000-109,000 bopd (previously 105,000 bopd).

Genel’s production guidance for 2022 is unchanged, with net portfolio production currently expected to be between 30-31,000 bopd for the full-year.

(Source: Genel Energy)

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Dana Gas: “Strong Operational and Financial Performance”

Dana Gas PJSC has announced its financial results for the half year ended 30 June 2022.

In the first six months of the year, the Company generated a net profit of AED 407 million ($111mm) or 5.8 fils per share, an 82% increase compared to an adjusted net profit (excluding reversal of impairment) of AED 225 million ($61mm) in H 1 2021.

The gains in Dana Gas’s profitability in the first half were driven by elevated hydrocarbon prices, the Company’s continued commitment to maintaining a low-cost base and strong operational performance in the Kurdistan Region of Iraq (KRI).

The Company’s revenue for the first six months of the year increased 31% to AED 1,041 million ($284mm) as compared to AED 792 million ($216mm) in H1 2021 and its operating costs dropped 16%. The Company’s realized prices during the first half of the year averaged $87/bbl for condensate and $44/boe for LPG compared to $48/bbl and $32/boe respectively in H1 2021.

Despite the challenging security situation, the Company’s current operations in the KRI have continued uninterrupted. Production from the KRI increased 1% in the first half and the KM250 expansion project has progressed well. During the first half, drilling of the project’s first development well was completed, and drilling operations for the second well are currently in progress. Whilst EPC construction work on KM 250 was suspended in June amid heightened security concerns, the Company is working with the authorities to address security concerns and to resume construction.

Given the strong operational and financial performance the Board expects to maintain its semi-annual dividend payment in keeping with the Company’s dividend policy.   The interim dividend will be decided by the Board at its meeting in September.

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, commented:

“Dana Gas delivered strong half year results, supported by our robust operational performance, low cost base and favourable energy market conditions. Despite an increased uncertainty around the global economy amid high inflation, the outlook for the remainder of 2022 is still encouraging with both energy prices and demand remaining high.”

Operations & Production

The Group’s overall production in H1 2022 was  61,100 boepd, a 5% reduction from 64,000 boepd in H1 2021. This was due to a 9% production drop in Egypt mainly as a result of natural field decline. Production output in the KRI increased by 1%, with production averaging 34,500 boepd in H1 2022 versus 34,300 in H1 2021.

Operations have continued as normal during the period. Heightened uncertainty in the region and subsequent precautionary security measures have impacted the Khor Mor expansion project. As a result, the KM250 project remains on temporary suspension. The Company and its partners are working closely with the KRG to address all concerns and all parties remain committed to implementing the expansion project and resume construction activities as soon as possible.

Liquidity and Collections

The Company’s cash position at the end of H1 2022 stands AED 759 million ($207mm) including AED 436 million ($119mm) held at the Pearl level.

The Group collected a total of AED 660 million ($180 mm) during the H1 2022, with the KRI and Egypt contributing AED 495 million ($135mm) and AED 165 million ($45mm) respectively.

(Source: Dana Gas)

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