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Baghdad hits back at Rosneft/KRG Deal

By John Lee.

Iraq’s Ministry of Oil has hit back at Rosneft‘s recent decision to enter a production-sharing deal with the Kurdistan Regional Government (KRG) without its approval.

In a statement, the Ministry warned:

“The ministry of oil warns seriously all the countries and oil companies from contracting or dealing with any authority inside Iraq without taking the approval from the federal government and the ministry of oil”.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] (pictured) added:

“… irresponsible statements from some of the officials inside & outside Iraq or the foreign companies about their intention to sign oil contracts with any authority inside the geographic borders of Iraq without telling the federal government or the ministry of oil, is considered as a Blatant interference in the internal affairs and a derogation from national sovereignty, and an outright violation of international norms.”

Rosneft boss Igor Sechin insisted that the company strictly followed the law. AFP quotes him as saying:

“If there are problems between the government of Iraq and Kurdistan they need to solve the problems themselves … I am not a politician, my job is to produce oil.”

In addition to the production-sharing deal, Rosneft has just agreed to start work on a new oil pipeline project in Iraqi Kurdistan.

(Sources: Iraqi Ministry of Oil, AFP)

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Rosneft to Build New Kurdistan Oil Pipeline

Russia’s Rosneft and Kurdistan Regional Government (KRG) have announced the start of joint implementation of an infrastructure project for the operation of the oil pipeline in the Kurdish Autonomous Region.

According to a statement from Rosneft, its share in the project “may amount to 60%“.

“The other project participant with 40% share will be KAR Group, who is the current pipeline operator,” it added.

Rosneft Chief Executive Officer Igor Sechin (pictured) said:

“The entry into the infrastructure project will contribute to achievement of Rosneft’s strategic objectives and will enable Rosneft to enhance the efficiency of oil transportation to the end customers including supplies to the Company’s refineries in Germany”.

(Source: Rosneft)

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GKP Confirms Shaikan Operating Securely

Gulf Keystone Petroleum (GKP) confirmed on Friday morning that its operations in Kurdistan continue safely and securely with the Company achieving average production of 34,525 bopd from Shaikan since the beginning of October 2017.

Shaikan is performing as expected with cumulative production from the field now at 42.4 million barrels, an average of 35,966 bopd in 2017. The Company is on track to meet gross production guidance of 32,000-38,000 bopd for the year.

In line with the Ministry of Natural Resource’s crude export strategy, Shaikan crude production is still being exported via trucks to Turkey. Trucking operations continue uninterrupted with approximately 200 trucks loaded daily.

Following the recent payment for the October 2017 Reinstated Notes coupon of $5 million, the Company’s current cash position is $147.2 million.

Gulf Keystone will keep the market appraised of any changes to its normal operations.

Commenting on today’s announcement, CEO, Jón Ferrier, said:

“We remain committed to ensuring safe and secure operations in Kurdistan, and we continue to monitor the geo-political situation closely. Despite the challenges facing the region, we are maintaining stable operations.”

(Source: Gulf Keystone)

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Luaibi asks BP to Return to Kirkuk Oilfields

By John Lee.

Iraqi Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] (pictured) has asked UK-based BP to develop the disputed Kirkuk oilfields.

The move comes just a day after Baghdad regained control of the area from Kurdish forces. Control of the field remains split between the Kurdistan Regional Government (KRG) and Baghdad’s North Oil Company (NOC).

According to the Financial Times, BP’s chief executive Bob Dudley said before lunchtime yesterday that he had not yet heard from the Iraqi oil minister, but indicated the company could be interested.

(Sources: Ministry of Oil, Financial Times)

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Genel Energy Updates on Kurdistan Operations

Genel Energy has issued a trading and operations update for Q3 2017. The information has not been audited and may be subject to further review.

Murat Özgül (pictured), Chief Executive of Genel, said:

“During the quarter Genel executed a landmark settlement agreement with the KRG over historical receivables, which we expect to materially enhance our cash flows going forward. Ahead of those payments commencing we continued to generate meaningful free cash flow, resulting in a further 13% reduction in net debt during the period.

“Our operations in the Kurdistan Region of Iraq are progressing as normal – exports are continuing from Taq Taq and Tawke, payments are being received on time, and operations are proceeding at both fields, with testing now underway on the TT-29w well.“

Q3 2017 OPERATING PERFORMANCE

  • Q3 2017 net production averaged 33,810 bopd, with production for the nine months ending September 2017 averaging 36,030 bopd
  • Production and sales by field during Q3 2017 were as follows:

  • Tawke PSC (Genel 25% working interest)
    • Tawke PSC production in Q3 averaged 110,460 bopd, including long-term test production from the Peshkabir-2 well of 4,670 bopd.
    • In 2017 to date, the Tawke partners have drilled ten wells, including the Peshkabir-2 and 3 wells, four Cretaceous producers, three Jeribe producers and a Jeribe water injector
    • A further four development wells are planned on the Tawke PSC by year-end 2017 – two Cretaceous producers, one Jeribe producer and a Jeribe water disposal well
    • Peshkabir-3 well operations are ongoing, with results expected later in Q4. The Peshkabir early production facility remains on track to be installed by the end of 2017
  • Taq Taq PSC (Genel 44% working interest)
    • Taq Taq field production in Q3 averaged 14,080 bopd, and production has averaged 13,570 bopd during October 2017 to date
    • The TT-29w well, which is appraising the northern end of the Taq Taq field, reached target depth of 3,100 metres in early September 2017. A testing programme is now underway. Further development of the Cretaceous reservoir has been deferred pending results of the TT-29w testing programme
    • The EDC-24 rig has moved to the TT-30 well location, with two shallow horizontal wells set to be drilled in the Pilaspi reservoir before the end of the year
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Petrofac Awarded Iraq PMC from PetroChina

Petrofac has been awarded a contract, valued at around US$30 million, to undertake Project Management Consultancy (PMC) services for the Halfaya Contract Area (Halfaya) in southern Iraq.

Working in support of PetroChina International Iraq FZE (PetroChina), as the lead operator of Halfaya, Petrofac’s Engineering and Production Services (EPS) East business will undertake project management services for five years.

Petrofac is responsible for managing and supervising the development and progress of several engineering, procurement and construction work scopes including: the central processing facility, power plant expansion, gas process plant and all associated facilities. For each work scope, activities will include the management of detailed design, procurement, construction and commissioning.

Manivannan Rajapathy, Managing Director, Petrofac EPS East said:

“This important award reflects our growing capabilities in a core market. Through the provision of PMC services, we are demonstrating our competence and capabilities to oversee large programmes of work. This builds upon our long track record for in-country execution for existing clients, through the delivery of engineering, operations, maintenance and training activities.

“We are pleased to have the opportunity to support PetroChina and the Halfaya partners in the delivery of this key infrastructure project. Our focus is to support sustained production, through the successful conclusion of each phase, towards the overall production plateau target of around 400,000 barrels per day.”

(Source: Petrofac)

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Rosneft, KRG Agree on Oil Cooperation

Russian state-controlled oil company Rosneft and the Government of the Kurdish Autonomous Region of Iraq signed the documents required to put into force Production Sharing Agreements (PSA) with respect to five production blocks located in the Kurdish Autonomous Region.

The share of Rosneft Group Subsidiaries in PSA will be 80%, the amount of payments for the projects farm-in and geological information for each of  five blocks ranges from 40 mln. USD  to 110 mln. USD and may total to 400 mln.USD (incl. 200 mln.USD that can be compensated by oil produced from block), the heads of terms of the agreements and the basic principles of product distribution are similar to the PSA in Iraqi Kurdistan that were signed by other international oil and gas companies.

The parties agreed to implement the geological exploration program and to start pilot production as early as in 2018. In case of success, in 2021 it is planned to start full-field development of the blocks. According to conservative estimates, the total recoverable oil reserves at five blocks may be about 670 million barrels.

The documents were signed in pursuance of the Investment Agreement which was concluded at the St. Petersburg International Economic Forum in 2017.

(Source: Rosneft)

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Assessing the Impact of Shifting Iran-KRG Relations

By Bijan Khajehpour, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iran and the Kurdistan Regional Government (KRG) in Iraq have historically been on good terms. During the Saddam Hussein years, Iran was one of the main countries to host Kurdish leaders. In the post-Saddam era, Tehran and Erbil have enjoyed good neighborly relations.

This relationship manifested itself in Iranian forces coming to the rescue of the Kurdish regions in their fight against the Islamic State (IS) in the summer of 2014. However, the recent independence referendum in the KRG has angered Tehran, and it is clear that the Kurdish moves will impact on both bilateral ties and wider regional alignments.

One important aspect to consider when assessing the fallout between Iran and the KRG following the independence vote is the economic dimension of their relationship in the geostrategic context of Iranian concerns.

Iran and the KRG have a multilayered relationship; most importantly, it is not all driven by the government. On the one hand, there are various trade links between the two sides, starting from very active border markets up to cross-border trade and investment.

There are five border markets between Iran and Iraqi Kurdistan. Prior to the recent events, there were plans to expand such entities to create jobs and also shift the unofficial trade toward official channels. In fact, the KRG is an important market for Iranian exporters. The trade volume between the two sides amounted to $8 billion in 2014, which made Iran the KRG’s second-largest trading partner, after Turkey.

In recent years, Iranian exports to the Kurdistan Region have dropped due to the conflict against IS. Yet, according to Kurdish sources, the trade volume between Iran and the KRG stood at $4 billion in 2016. This means that approximately 40% of the Iran-Iraq trade goes through the KRG.

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Baghdad warns Erbil not to Shut Down Kirkuk Oil

By John Lee.

Iraq is reportedly considering using security forces to prevent Kurdistan from blocking oil output from Kirkuk.

A spokesman for the North Oil Company (NOC) told Reuters that Kurdish officials indicated that they would shut down production at the Kirkuk oilfield, ostensibly for security reasons, but as a means of putting pressure on Baghdad.

Kirkuk produces around 200,000 barrels per day, out of total Kurdish production of over 600,000 bpd.

More from Reuters here.

(Source: Reuters)

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Federal Forces in Control of Large Areas of Kirkuk City

Federal forces in control of large areas of Kirkuk city; further Kurdish withdrawals in Nineveh/Diyala

Over the course of October 16, Iraqi federal forces advanced into many parts of Kirkuk city and adjacent military and energy facilities. The Counter-Terrorism Service (CTS), supported by the Iraqi Army and Federal Police took control of the K1 military base, the governor’s palace, the Kirkuk Provincial Council headquarters, the North Oil Company and North Gas Company headquarters, the Kirkuk Regional Air Base, and key areas of Kirkuk city and road junctions.

While Popular Mobilization Units (PMU) took part in operations in rural areas, they were not deployed into the Kirkuk city area.  Local Kurdish forces aligned with the Patriotic Union of Kurdistan (PUK) offered minimal resistance as federal forces moved into the area, many media reports have focused on an agreement in place between the PUK leadership and Baghdad for an orderly transfer of the facilities listed.

As a result, Baghdad is now in control of the portions of PUK-controlled Kirkuk that it held prior to the 2014 military collapse.   Government forces were also reported to have moved into the oil fields of Dibis district that have been held by forces loyal to the Kurdistan Democratic Party (KDP) since 2014. These fields produce 275,000 barrels of oil per day, or nearly half the 620,000-barrel output of the Kurdistan Regional Government (KRG).

Some media reports claimed that thousands of Kurdish civilians have fled Kirkuk city and its surrounding area.  Other reports claimed that crowds of ethnic Turkmen who opposed Kurdish control of the city celebrated on the streets of Kirkuk.  The US has not opposed Baghdad’s return to Kirkuk in part because the move was framed in terms of restoring the status quo before the Islamic State (IS) crisis.  This theme has been echoed by the majority of the international community.

Separate unconfirmed reporting has indicated that Sinjar, 100km west of Mosul in Nineveh province, is now under the control of ISF/PMU forces following the withdrawal of Peshmerga forces from the town. Reporting on October 16 had indicated a build-up of government forces to the south and east of Sinjar.

Reporting last night indicated that talks were underway for a peaceful handover. Yazidi elements of the region’s majority Shia PMU forces had apparently stated their unwillingness to confront Peshmerga owing to the close ties between the groups.  Reports from Diyala province have also claimed that Kurdish forces have withdrawn from positions in the Mandali district northeast of Baquba as Iraqi federal forces entered Khanaqin district to the south of Mandali.

(Source: GardaWorld)