TotalEnergies signs $10bn New Deals in Iraq

TotalEnergies, the Iraqi Ministries for oil and electricity, and the country's National Investment Commission (NIC) have signed, in the presence of the Prime Minister of Iraq, major agreements covering several projects in the Basra region, designed to enhance the development of Iraq's natural resources to improve the country's electricity supply.

Iraq, a country rich in natural resources, is indeed experiencing electricity shortages while it faces a sharp increase in demand from the population.

TotalEnergies, with the support of the Iraqi authorities, on the one hand will invest in installations to recover gas that is being flared on three oil fields and as such supply gas to 1,5 GW of power generation capacity in a first phase growing to 3 GW in a second phase, and, on the other hand, will also develop 1 GWac of solar electricity generation capacity to supply the Basra regional grid.

These agreements include:

  • The construction of a new gas gathering network and treatment units to supply the local power stations, with TotalEnergies also bringing its expertise to optimize the oil and gas production of the Ratawi field, by building and operating new capacities.
  • The construction of a large-scale seawater treatment unit to increase water injection capacities in southern Iraq fields without increasing water withdrawals as the country is currently facing a water-stress situation. This water injection is required to maintain pressure in several fields and as such will help optimizing the production of the natural resources in the Basra region.
  • The construction and operation of a photovoltaic power plant with a capacity of 1 GWp to supply electricity to the grid in the Basra region.

These projects represent a total investment of approximately $10 billion (100% share).

Patrick Pouyanné, TotalEnergies' Chairman and CEO, said:

"These agreements signal our return through the front door to Iraq, the country where our Company was born in 1924. Our ambition is to assist Iraq in building a more sustainable future by developing access to electricity for its people through a more sustainable use of the country's natural resources such as: reduction of gas flaring that generates air pollution and greenhouse gas emissions, water resource management and development of solar energy.

"This project perfectly illustrates the new sustainable development model of TotalEnergies, a multi-energy Company which supports producing countries in their energy transition by combining the production of natural gas and solar energy to meet the growing demand for electricity. It also demonstrates how TotalEnergies can leverage its unique position in the Middle East, a region where the lowest-cost hydrocarbons are produced, to gain access to large-scale renewable projects."

(Sources: TotalEnergies, Ministry of Oil)

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Iran Slashes Natural Gas Exports to Iraq

By John Lee.

An Iranian official has said that Iran's natural gas (methane) exports to Iraq have been reduced, but not because of arrears owed by Iraq.

Mohammad Reza Julaei , the Dispatching Director of the National Iranian Gas Company (NIGC), told Shana that exports have been reduced by 38 million cubic meters per day; they were believed to be running about 40 to 45 million cubic meters per day previously.

But he said that this was done based on an agreement and with prior notice, and has "nothing to do with [Iraq's] arrears to Iran."

He added, however, that the need to settle the debts is still on the agenda.

(Source: Shana)

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GKP Shares Rally on Half-Year Results

By John Lee.

Shares in Gulf Keystone Petroleum (GKP), a leading independent operator and producer in the Kurdistan Region of Iraq, were trading 12 percent higher today after the company announced its results for the half year ended 30 June 2021.

Jon Harris (pictured), Gulf Keystone's Chief Executive Officer, said:

"I am pleased to report strong operational and financial performance in the first half of 2021, despite the continuing challenges of the COVID-19 pandemic. Our leverage to the recovery in oil prices, combined with safe and reliable production towards the top end of our guidance range and a continued sharp focus on costs, has resulted in significant cash flow generation. With continued strong production performance from the Shaikan Field, we are tightening the 2021 production guidance range to 42,000 - 44,000 bopd.

"We continue to deliver against our commitment to balance investment in growth and returns to shareholders. Today, we are pleased to declare an interim dividend for 2021 of $50 million, bringing total dividends this year to $100 million.

"The early restart of the drilling campaign in June enables us to maintain production growth momentum and to drill an additional well, SH-G, in 2021 after completion of SH-14, the final well in the 55,000 bopd investment programme. SH-14 is expected to come onstream in Q4 2021, while we expect SH-G to come onstream in Q1 2022.

"We continue to work closely with the MNR and our partner on the preparation of the Shaikan FDP and expect to submit the FDP to the MNR in Q4 2021 for approval."

Highlights to 30 June 2021 and post reporting period

Operational

  • Remain focused on safe and reliable operations with No Lost Time Incident ("LTI") recorded for over 600 days and no recordable incidents for around 550 days
  • Continuing to manage the challenges presented by COVID-19 to protect the health of staff and contractors
  • Strong average gross 2021 production to 31 August 2021 of c.42,900 bopd, up 18% from the corresponding period in 2020 and towards the top end of 2021 guidance; gross production on 31 August 2021 was 42,842 bopd
  • Drilling activities progressing well following early restart in June; SH-13 expected to come onstream imminently ; drilling of SH-14 underway with completion and hook-up expected in Q4 2021
  • Capitalising on early restart of drilling and opportunity to maintain a continuous drilling programme, planning to spud SH-G in Q4 2021, after completion of SH-14. SH-G is expected to commence production in Q1 2022
  • SH-G, the first well after the 55,000 bopd expansion programme, is an opportunity to maintain growth and momentum while we prepare the Shaikan Field Development Plan ("FDP")
  • Completed debottlenecking of PF-2, increasing total field processing capacity to c.57,500 bopd

Financial

  • H1 2021 revenue up 162% to $130.7 million (H1 2020: $49.9m) contributing to a return to profit after tax of $64.8 million (H1 2020: $33.1 million loss)
  • Adjusted H1 2021 EBITDA of $93.8 million, more than triple $27.5 million in H1 2020, driven by the Company's strong leverage to the recovery in oil prices, increase in production and low-cost base:
    • Realised price up 129% to $43.7/bbl (H1 2020: $19.1/bbl)
    • H1 2021 gross average production up 17% to 43,516 bopd (H1 2020: 37,159 bopd)
    • H1 2021 gross Opex per barrel of $2.4/bbl, below 2021 guidance range of $2.5-$2.9/bbl
  • Net Capex of $14.1 million (H1 2020: $38.5 million), with the restart of the 55,000 bopd expansion programme
  • Total dividends of $50 million paid to date, including an annual dividend of $25 million and a special dividend of $25 million
  • Robust cash balance of $177.4 million at 1 September 2021

Outlook 

  • Tightening 2021 average gross production guidance range from 40,000 - 44,000 bopd to 42,000 - 44,000 bopd
  • Maintaining 2021 gross Opex per barrel guidance of $2.5 to $2.9/bbl
  • The addition of SH-G increases 2021 net Capex guidance from $55-$65 million to $75-$85 million
  • With continued constructive engagement with the Ministry of Natural Resources ("MNR") and the Company's partner Kalegran B.V. (a subsidiary of MOL Hungarian Oil & Gas plc) ("MOL"), Gulf Keystone is expecting to submit an FDP in Q4 2021 to the MNR for approval
    • The FDP includes the continued ramp-up of Jurassic oil production, appraisal of the Triassic reservoir and a Gas Management Plan
    • We continue to optimise the scope, schedule and cost of the FDP
  • Developing Gulf Keystone's sustainability strategy, with the primary environmental focus on more than halving CO2 per barrel by 2025 by eliminating flaring
  • In line with the Company's strategy of balancing investment in growth and returns to shareholders, Gulf Keystone is pleased to declare an interim dividend for 2021. The 2021 interim dividend is $50 million to be paid on 8 October 2021 based on a record date of 24 September 2021
  • Following payment of the interim dividend, the Company will have distributed $100 million of dividends in 2021
  • With continuing strong oil prices and cash flow generation, there may be opportunities to consider further distributions to shareholders and to optimise the capital structure

More here.

(Sources: GKP, Yahoo!)

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DNO Completes $400m Bond Placement

DNO ASA, the Norwegian oil and gas operator, has completed the private placement of USD 400 million of new five-year senior unsecured bonds with a coupon rate of 7.875 percent.

The placement met strong investor demand across international markets and was significantly oversubscribed, leading the Company to upsize the new bond issue from USD 300 million to USD 400 million.

Settlement is expected on or about 9 September 2021, subject to customary conditions precedent, and an application will be made for listing of the new bonds on the Oslo Stock Exchange.

Net proceeds will be used towards refinancing of the DNO02 bonds (ISIN: NO0010823347) and general corporate purposes. In connection with the placement, the Company has agreed to buy back USD 154 million in nominal value of the DNO02 bonds with a call notice for the remaining DNO02 bonds and other details to be announced upon settlement of the new bond.

Pareto Securities AS acted as Global Coordinator and Joint Lead Manager together with Danske Bank and SEB as Joint Lead Managers.

(Source: DNO)

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Iraq Oil Exports Exceed 3m BPD

By John Lee.

Iraq's Ministry of Oil has announced preliminary oil exports for August of 94,660,239 barrels, giving an average for the month of 3.054 million barrels per day (bpd), up from the 2.918 million bpd exported in July.

The exports from the oilfields in central and southern Iraq amounted to approximately 91,655,930 barrels, while exports from Kirkuk amounted to 3,004,309 barrels.

Revenues for the month were $6.533 billion at an average price of $69.017 per barrel.

July's export figures can be found here.

(Source: Ministry of Oil)

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Iraqi Cabinet approves BP Plan to spin off Rumaila

By John Lee.

The Iraqi cabinet has approved a plan to restructure the ownership of the giant Rumaila oilfield.

The field will be taken over by the newly-created Basra Energy Company (BEC), which in turn will be owned by BP and the China National Petroleum Corporation (CNPC).

According to a statement from the Ministry of Oil, it appears that the CNPC interest will be held through the company's subsidiary, PetroChina.

(Source: Ministry of Oil)

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Iraq Confirms Oil Exports for July almost $6.5bn

By John Lee.

Iraq's Ministry of Oil has announced finalised oil exports for July of 90,467,794 barrels, giving an average for the month of 2,918 million barrels per day (bpd), slightly up from the 2.892 million bpd exported in June.

The exports from the oilfields in central and southern Iraq amounted to approximately 87,455,359 barrels, while exports from Kirkuk amounted to 3,012,435 barrels.

Revenues for the month were $6.476 billion at an average price of $71.578 per barrel.

June's export figures can be found here.

(Source: Ministry of Oil)

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Japan extends $300m Loan for Basra Refinery

By John Lee.

Japan's Minister for Foreign Affairs, Motegi Toshimitsu, visited Iraq on Saturday, meeting with Foreign Minister Fuad Hussein, Prime Minister Mustafa Al-Kadhimi, and President Barham Salih.

Minister Motegi announced that Japan intends to extend the "Basrah Refinery Upgrading Project (Phase 3)" Yen loan project (up to the amount of 32.7 billion yen) [$300 million], and expressed his hopes that this project would contribute to providing the stable supply of energy and to creating jobs in Iraq. In response, Minister Hussein expressed his gratitude.

Minister Motegi added that he appreciates the publication of the "White Paper for Economic and Financial Reforms", and stated that Japan looks to support Iraq's reform efforts together with the international community through the "Iraq Economic Contact Group."

Both sides also exchanged views on measures to prevent the spread of COVID-19 and means to improve the business and investment environment in Iraq.

(Source: Govt of Japan)

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Shares in Genel Energy fall as KRG to Terminate Contracts

By John Lee.

Shares in Genel Energy fell more than 15 percent in mid-morning trading after the company announced that the Kurdistan Regional Government (KRG) intends to terminate its contracts at Bina Bawi and Miran.

In a statement, the company said:

"Genel has received notice from the Ministry of Natural Resources of the Kurdistan Regional Government ('KRG') of its intention to terminate the Bina Bawi and Miran PSCs. 

"Genel believes that the KRG has no grounds for issuing its notices of intention to terminate. 

"Genel wishes to continue operations under the PSCs and to work with the KRG on the development of these fields. However, Genel will take steps to protect its rights under the PSCs and, if necessary, seek compensation, including for its material investment. As a first step, Genel intends to issue notice of dispute to the KRG under each PSC, contesting the right of the KRG to issue any such termination notice and, in doing so, trigger an obligation to hold good faith negotiations to resolve this matter promptly and without the need for either party to refer the matter to international arbitration.

"As stated at our half-year results, Genel has found it difficult to engage the KRG under the PSCs to obtain the necessary approvals to proceed with the development of the assets, and every effort has been made to obtain these so that the projects can be progressed. Genel had earlier reached a commercial understanding with the KRG in September 2019 to develop the fields using a staged and integrated oil and gas development concept. In the course of those negotiations leading to updated terms of the parties' agreements, the KRG confirmed to Genel that it would not serve notice of intention to terminate the PSCs while these negotiations remain ongoing. Genel has subsequently prepared and submitted proposals to the KRG, which honoured the terms agreed in September 2019, each of which would have resulted in the progression of development of the assets."

(Sources: Genel Energy, Yahoo!)

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Wood Wins 5-Year Contract in Iraq

By John Lee.

Scottish-based Wood, the global consulting and engineering company, has announced that it has been awarded a five-year contract to deliver specialist engineering solutions at a major oilfield in Iraq.

The company did not specify which oilfield, or the value of the contract. It has previously won business at the West Qurna 1 field.

In a statement, Wood said it will improve day-to-day operations of the oilfield's producing assets and supporting facilities, while continuing to invest in local talent development programmes and exploring opportunities to reduce greenhouse gas emissions.

The contract will be delivered by Wood's in-country teams in Basra, supported by the company's engineering office in Dubai.

(Source: Wood)

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