Atrush Production exceeds 1m Barrels in July

Abu Dhabi National Energy Company PJSC (TAQA) has announced that its subsidiary, TAQA Atrush B.V. (TAQA Iraq), has set a new production record from the Atrush oil field in the Kurdistan Region of Iraq.

For the first time since the field commenced production operations in July 2017, the total monthly production volume exceeded 1 million barrels of oil in July 2019.

The 1 million barrel mark is a key milestone in TAQA Iraq’s ongoing production improvement and expansion plans for the Atrush block and is a testimony to the effort, professionalism, and commitment to deliver safe and efficient operations in Iraq.

The current rate of gross production at the Atrush block is approximately 34,000 barrels of oil per day, which is line with the company’s targets for Q2 2019. The increase in production was largely due to new wells coming on stream and the impact of de-bottlenecking work over the past few months, which has increased the capacity of volumes handled by the production facility.

The facility has continued to meet targets at minimal spend and is a result of a focus on integrated planning and optimization.

Speaking on the milestone, TAQA Chief Executive Officer Saeed Al Dhaheri said:

This significant achievement is a direct result of our Iraq team’s technical expertise and strategic planning efforts. As a global energy player with operations spanning four continents, our operations in Iraq have allowed us to strengthen our expertise as a leading developer of greenfield projects.

“We look forward to building on this achievement to continue to deliver energy to our strategic partners in the Kurdistan region, and to continue to forge strong relationships with local communities around the Atrush block.”

AbdulKhaliq Al Ameri, Managing Director of TAQA Iraq, added:

“Our focus for the past two years has been to improve the value of our asset while ensuring cost-optimization and uphold our commitment to health and safety. I am particularly proud of our team, which comprises more than 300 people, many of whom are from the Kurdistan region. This achievement is a result of their hard work and dedication to TAQA’s vision.”

The Atrush field is located 85 km northwest of Erbil and is one of the largest new oil developments in the Kurdistan Region of Iraq. The field was first discovered in 2011 and production started in 2017. In its two years of production, the Atrush field has produced of 17 million barrels of oil, with increasing efficiency.

In May 2019, TAQA Iraq completed the acquisition of an additional 7.5% working interest in the Atrush block from Marathon Oil KDV B.V. With this acquisition, TAQA Iraq’s working interest in the Atrush block increased from 39.9% to 47.4% and represents an AED 116 million addition to the company’s assets.

TAQA Iraq is the operator of the Atrush block and has a 47.4% working interest under the Atrush block Production Sharing Contract. TAQA Iraq’s partners in the project are the Kurdistan Regional Government (25%) and General Explorations Partners, Inc. (27.6%).

(Source: TAQA)

Oil Ministry’s “Odious Contract’ Trap” with ExxonMobil

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

The Ministry of Oil and the “Odious Contract’ Trap” with ExxonMobil’ Consortium

Talks have intensified recently about the continuation of negotiations between the Ministry of Oil (MoO) and ExxonMobil/CNPC consortium that might lead to the signing of a contract for the “South Iraq Integrated Project (SIIP)” at an estimated cost of $53 billion and a duration of 30 years, but no official confirmation or indications on the fundamental contractual provisions that were agreed on and those still pending.

In the light of the available information, material evidence, actual examples, international geopolitical considerations and comparative analysis, a detailed evidence-based research and Report* was done on the project and related negotiation.

The report on SIIP’ possible contract comprises:

  • A necessary introduction and caveat;
  • Political and geopolitical implications of ExxonMobil behavior and its apparent link to the “deep state” based on many evidences that actually and factually had negative consequences on oil projects, for example, in Russia and in Iraq.

In Russia, ExxonMobil caused a delay of almost four years in the development of the Pobeda oil discovery in the Kara Sea when ExxonMobil withdrew, in late 2014, from its deal with Rosneft due to imposing US sanctions on Russia.

Iraq had three bad experiences with this company in recent years. The first, when ExxonMobil negotiated secretly and concluded, against declared government policy, deals with KRG in 2011 soon after the company secured West Qurna 1 contract through first bid round with the federal ministry.

That move led to excluding ExxonMobil from leading Common Seawater Supply Project (CSSP), reduce its Participating Interest in WQ1 and blacklisting it from any upstream project.

The second and third bad experience occurred this year when the company evacuated, unilaterally and without government consent, all its foreign staff from WQ1. All these three incidents caused tremendous damage to Iraqi economic interest.

  • Potential strategic risks, of an enormous scale, on SIIP that could be generate from the growing deterioration of the American-China relations as evidenced from the blacklisting of two major state oil companies, i.e. Zhuhai Zhenrong Corp and Sinopec. US escalating tension against Iran adds further geopolitical risks;
  • Analyses of what would be SIIP contract was premised on what was reported by national and international sources that are originally based on information given by unnamed Iraqi officials. That was due to the absence of clarity and lack of transparency of the ministry regarding essential contractual terms and conditions.

Based on the analyses and findings of the report, I am compelled to clearly alert and strongly, frankly and loudly warn both the Prime Minister and the Minister of Oil of the danger of pushing Iraq into a “trap of an odious contract” and by specifying ten of its most grave risks and disadvantages:

  1. ExxonMobil, as the consortium leader, is granted a monopoly position that allows the company directly controlling all vital oil projects in southern Iraq, and thus the entire national economy, for thirty years;
  2. It poses a multiplicity of major threats to national security and economic interest due to what can be called contractually-connected high strategic and geopolitical risks, since SIIP comprises many critical and vital projects such as Common Seawater Supply project-CSSP (for water injection), pipelines, storage tank-farms, export facilities, gas processing units and two oilfields;
  3. It contravenes the fundamental premises of the Iraqi Constitution because the contract requires “mortgaging/ reserving/ booking” two oilfields, with a combined plateau production of 500kbd, exclusively for the two foreign oil companies, i.e. ExxonMobil and CNPC, for the entire term of the contract- 30 years;
  4. It offers “Profit-Sharing Contract”, which, in reality, represents the monetary side of a “Production Sharing Contracts”, which, is impermissible by the Constitution;
  5. The announced astronomical cost (of $30bilion) increased already by $11billion in less than ten weeks while negotiating!;
  6. It offers all rent (windfall) resulting from oil price increases exclusively to the two foreign companies, nothing for Iraq!;
  7. It prevents SOMO (the only State Oil Marketing Company) from performing its role in marketing crude oil from the “mortgaged” two oilfields; this contravenes established policy, undermines annual state budget laws and weakens almost 50 years of SOMO’s function;
  8. It reduces the “national efforts” in the development of oilfields, thus, contradicting declared Ministry policy, weakens Iraq’s flexibility to comply with OPEC decisions through “swing fields”;
  9. Inconsistent with the regulations for tendering and contracting government projects;
  10. It lacks both transparency and competitiveness.

Therefore, I suggested to the Ministry of Oil not to continue on wasting time and causing further delays: it should officially declare that it is not in Iraq’s economic interest and national security to award SIIP to ExxonMobil-CNPC (and for this matter to any one consortium) and end, immediately, all and any related negotiations.

In the event that the Ministry of Oil and/or the Government insist on going ahead with this Odious Contract with ExxonMobil-CNPC, it becomes inevitable to refer the matter to the Federal Supreme Court to invalidate the contract on the bases of incompatibility with the Constitution; for eradicating the highest interest of the Iraqi people, including future generations (principle of inter-generational equity)  and for returning Iraq to what looks like abhorrent concessions of the, colonial, past.

*A brief of the original Arabic text of the entire report was circulated widely within many networks and was published by and posted on many websites, and accessible on the following links:

الحذر يا وزارة النفط من “فخ العقد البغيض” مع شركة اكسون موبل

https://www.akhbaar.org/home/2019/8/261291.html

http://www.tellskuf.com/index.php/mq/83987-as174.html

http://www.sahat-altahreer.com/?p=49115

Click here to download the full article in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

Oil, Budgets, Kirkuk still nag Baghdad-Erbil Relations

By Omar Sattar for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News

 Oil, budgets, Kirkuk still nag Baghdad-Erbil relations

Meetings last month between representatives of Iraq’s federal government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil failed to produce any clear resolutions of their ongoing differences.

A high-level delegation from the Baghdad government visited Erbil on July 25 for talks with the newly elected government there. Discussions focused on KRG oil exports, its share of the federal budget and control of disputed, oil-rich Kirkuk.

The Baghdad representatives included Oil Minister Thamer Ghadhban and Finance Minister Fouad Hussein, national security adviser Faleh al-Fayadh and the director of the prime minister’s office, Mohammed al-Hashemi.

Click here to read the full story.

Al-Sumoud Refinery unaffected by Fire

By John Lee.

Iraq’s Oil Ministry has confirmed that the Al-Sumoud refinery in Baiji is operating at capacity, following a fire in the area.

The director general of the North Refineries Company (NRC), Qassem Abdul Rahman, said the fire was near the refinery but not in it.

He pointed out that:

“The fire that broke out in the vicinity of the Sumoud refinery in Baiji because of the fall of one of the transmission lines of electricity on abandoned agricultural land near the refinery and led to the movement of wind, set fire to dry grass … The fire was outside the refinery’s perimeter and did not affect its production.”

(Source: Ministry of Oil)

(Picture: Baiji refinery)

Atrush Block drives Production Gains at TAQA

By John Lee.

Abu Dhabi National Energy Company PJSC (TAQA) has announced that the group’s oil and gas business delivered strong performance with an 11% increase in revenue, mainly driven by increased production volumes from its assets in Europe and Iraq.

In its financial results and operational highlights for the six-month period ending June 30, 2019, it said its overall capex also rose to AED 957 million in the first six months of 2019, a 15% increase when compared to the same period in 2018.

The increase in Oil and Gas capex was largely driven by the AED 116 million acquisition of an additional 7.5% working stake in the Atrush Block from Marathon Oil Kurdistan B.V. in May of this year. The acquired stake increases TAQA’s working interest in the project from 39.9% to 47.4%.

“Additional capex in Iraq was focussed towards bringing new wells on stream and the impact of debottlenecking work to increase the capacity of the current production facility. This has proven to be a worthwhile investment, with TAQA’s entitlement production increasing to 5,728 boe/d in H1 2019, a 149% improvement compared to the previous year.”

It added that this has proven to be a worthwhile investment, with TAQA’s entitlement production increasing to 5,728 boe/d in H1 2019, a 149% improvement compared to the previous year.

The average production by the oil and gas business for the first half of the year increased 3% to 124,760 boe/d, aided by strong well performance in Europe and Iraq.

Commenting on the positive performance, Saeed Mubarak Al Hajeri, Chairman of TAQA, said:

Our solid performance in H1 2019 is underpinned by our strong operational performance.  The Group’s balance sheet remains healthy, and with stable revenues and a further reduction in debt coupled with strong liquidity we remain on course to meet our long term objectives. The recent ratings affirmation from Moody’s is a testament to the stability of our operational performance.

“We also made exciting progress in advancing our strategy of maintaining capital discipline with focused investments in our core assets, such as the Atrush Block. Looking ahead, we remain optimistic and believe that our investments in the UAE and other strategic markets will contribute to a sustained growth story.

(Source: TAQA)

Iraq turns to BP, Eni for Oil Export Pipeline

By John Lee.

Iraq is reported to be close to reaching a deal with BP and Eni for an export pipeline project.

Al Jazeera quotes senior Iraqi oil officials as saying that the project was initially planned as part of a “megadeal” with ExxonMobil.

They said that under the proposed $400-million agreement, BP and Eni would build two seabed oil pipelines for Iraq’s southern exports through the Gulf.

(Source: Al Jazeera)

Genel Energy declares maiden Interim Dividend

Genel Energy has announced its unaudited results for the six months ended 30 June 2019.

Bill Higgs (pictured), Chief Executive of Genel, said:

These results demonstrate the continued success of our strategy -highly cash generative productionunderpins capital investment in growth opportunities that deliver rapid returns and enables a compelling cash return to shareholders through our dividend.

“Our production grew 17% in H1 2019, and pro forma free cash flow rose to $76 million. This cash generation, and our strong balance sheet, allows us to both increase investment in growing the business as well as returning cash to shareholders via dividends. Accordingly, we have today announced an interim dividend of $14 million.

“Disciplined capital allocation remains at the core of our business. The speed with which our investments pay back means that cash is quickly recycled to create most value for shareholders. The cash that our production generates funds worknow underway at Sarta and Qara Dagh, with plenty left over to both pay a dividend and seek new opportunities, as we progress Genel’s growth strategy.

Results summary ($ million unless stated)

H1

2019

H1

2018

FY

2018

Production (bopd, working interest) 37,400 32,100 33,700
Revenue 194.3 161.1 355.1
EBITDAX 1 167.3 137.4 304.1
  Depreciation and amortisation (74.8) (63.6) (136.2)
  Exploration (expense) / credit (0.6) (0.5) 1.5
  Impairment of intangible assets (424.0)
Operating profit / (loss) 91.9 73.3 (254.6)
Cash flow from operating activities 142.3 125.1 299.2
Capital expenditure 72.2 34.1 95.5
Free cash flow2 56.7 70.1 164.2
Pro forma free cash flow2 75.6 70.1 164.2
Dividend payments 27.4
Cash3 353.3 233.2 334.3
Total debt 300.0 300.0 300.0
Net cash (debt)4 55.8 (63.8) 37.0
Basic EPS (¢ per share) 27.2 21.3 (101.6)
Underlying EPS (¢ per share)1 59.9 49.2 109.0
  1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation ($74.8 million) and exploration expense ($0.6 million). Underlying EPS is EBITDAX divided by the weighted average number of ordinary shares
  2. Free cash flow is set out on page 7 and does not include $18.9 million, invoiced for Tawke production and due in June 2019 and received late on 9 July 2019, with the delay due to a change in the Operator’s banking arrangements. Pro forma free cash flow of $75.6 million includes this payment.
  3. Cash reported at 30 June 2019 excludes $10 million of restricted cash and the $18.9 million noted above
  4. Reported IFRS debt less cash

Highlights

  • Working interest production averaged 37,400 bopd in H1 2019 (H1 2018: 32,100 bopd), an increase of 17% compared to H1 2018
    • 8 wells completed in H1 2019, resulting in year-on-year production increases at both the Tawke and Taq Taq PSCs
  • Free cash generation of $57 million in H1 2019 (H1 2018: $70 million), which increases to $76 million when including the post period receipt of $19 million, with annual free cash flow yield of c.20% of current market capitalisation
  • Net cash of $56 million at 30 June 2019 (net debt of $64 million at 30 June 2018)
    • Following the receipt of all payments relating to April 2019, Genel had $390 million of cash as of 5 August 2019, a net cash position of $92 million
  • Addition of Sarta and Qara Dagh to the portfolio in January 2019 provides near-term production and material future growth potential
  • Maiden dividend distribution of 10¢ per share paid on 24 June 2019
  • Interim dividend of 5¢ per share confirmed
  • Genel retains an open mandate for a share buy-back programme of up to $10 million, and will continue to review purchasing opportunities

Outlook

  • Net production guidance in 2019 maintained at close to Q4 2018 levels of 36,900 bopd, an increase of c.10% year-on-year
  • Drilling programme ongoing, with over 10 wells set to be completed by early 2020
  • Active discussions with the Kurdistan Regional Government (‘KRG’) regarding Bina Bawi are ongoing, focused on agreeing the detailed commercial terms for the integrated Phase 1 oil and gas development and approval of the associated field development plans
  • Work continuing at Sarta to prepare for production by the middle of 2020
  • QD-2 well location agreed at Qara Dagh, well pad civil engineering work set to begin
  • Farm-out process relating to Somaliland acreage to begin in late Q3 2019
  • Genel expects to generate material free cash flow in H2 2019, even while investment in growth increases
    • 2019 capital expenditure is expected to be towards the top end of the $150-170 million guidance range
  • Searches for a new Chairman and Chief Operating Officer are progressing
  • The Company continues to actively pursue growth and is assessing opportunities to make value-accretive additions to the portfolio

More details here.

(Source: Genel Energy)

Palestine considers Importing Fuel from Iraq

By Huda Baroud for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Palestinian Prime Minister Mohammad Shtayyeh visited Iraq July 15 to discuss importing Iraqi fuel. This falls within the Palestinian Authority (PA)’s quest for gradual economic disengagement from Israel.

Shtayyeh was accompanied to Baghdad by a delegation composed of Minister of Finance Shukri Bishara, Minister of Foreign and Expatriate Affairs Riyad al-Malki, Minister of National Economy Khaled Assali, Minister of Agriculture Riyad Attari and Palestinian intelligence service head Majid Faraj. The delegation met with Iraqi Prime Minister Adel Abdul Mahdi, President Barham Salih and parliament Speaker Salim al-Jabouri.

Click here to read the full story.

Iraq “has No Ties to Oil Tanker Seized by Iran”

Iraq’s oil ministry said on Sunday it has no connection with an oil tanker seized by Iran’s IRGC in the Persian Gulf for smuggling fuel, a report said.

“The ministry does not export diesel to the international market,” the Arab country’s oil ministry said in a statement, Iraqi News Agency reported.

Iraq’s relevant authorities are working to gather information about the seized vessel, it added.

Two Iraqi port officials said initial information obtained show that the seized ship is owned by a private shipping company which is owned by an Iraqi private trader.

In a statement on Sunday, the IRGC Navy’s Public Relations Department said that the foreign ship had been captured by the military vessels patrolling the second naval zone in the Persian Gulf as part of the operations to detect and fight against organized smuggling.

The IRGC Navy’s patrol vessels confiscated the foreign tanker that was carrying 700,000 liters of smuggled fuel in a surprise operation after coordination with judicial authorities, it added.

According to the statement, the foreign ship was seized near Farsi Island, a tiny, barren island in the Persian Gulf.

(Source: Tasnim, under Creative Commons licence)

Video: New Iraqi Oil Pipeline via Jordan

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Iraq is planning to build a new oil pipeline to Jordan which it is banking on to revive revenue sources, after years of war and instability.

In addition to expanding refineries and oil fields, Iraq is also planning to rehabilitate a pipeline via Turkey.

But it is not the first time Iraqis have heard plans like these and many say they will believe it when they see some change in their lives.

Al Jazeera’s Osama Bin Javaid visited Basra refinery in the third part of his series on Iraq’s energy sector: