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Petrel: “Interest is Reviving in Iraq”

By John Lee.

In its preliminary results for 2018, Petrel Resources gave the following update on its activities in Iraq:

We had high hopes of commercial success in Iraq. It has the best oil geology on the planet with drilling success over 90% and a $2 to 4 a barrel production cost. But the political risk offsets all of this.

Petrel first entered Iraq in 1997 and had initial success in obtaining a large exploration block in the Western Desert between Baghdad and Amman Jordan. We were seeking development rights to any one of the many proven but undeveloped oil fields but we needed to establish our credentials. We undertook exploration work but were frustrated by sanctions which stopped us from drilling.

We continued involvement with the Iraqi Oil Ministry and undertook extensive technical work, with Itochu of Japan on the Merjan oil field.

Post 2003 we were awarded a development contract on the Subba and Luhais oil fields. Bureaucratic interference and payment problems forced Petrel to sell out in 2010.

We maintained our interest and appointed an Iraqi Arman Kayablian to work in Iraq. We purchased a 20% stake in Amira Hydrocarbon which had joint operations with Oryx Petroleum, in the Wasit province.  The joint venture failed to obtain a licence. In 2018 the agreement was dissolved and some 20 million Petrel shares returned to the company.

We have recently appointed Riadh Mahmoud Hameed to the Petrel board. Riadh worked as project co-ordinator for six years for Petrel in Iraq.

Activities are normalising in Iraq. There are many oil projects in Iraq which need to be developed. Petrel will be making a case to be part of the development.

Interest is reviving in Iraq. We now have the people to seek out operations on the ground.  

(Source: Petrel Resources)

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$1bn Japanese Financing for Basrah Refinery

JICA to Support Iraq’s Reconstruction and Revitalization through Upgrade of Basrah Refinery

Signing of Japanese ODA Loan Agreement for Iraq

On 16 June, 2019, the Japan International Cooperation Agency (JICA) and the Iraqi Government signed a loan agreement at Ministry of Finance in Baghdad.

The ODA (Official Development Assistance) loan amounting to JPY 110,000 million (approximately USD 1 billion) will be used for Basrah Refinery Upgrading Project. The loan agreement was signed by H.E. Mr. Fuad Mohammed Hussein, Minister of Finance and Masayuki Hirosawa, Chief Representative of JICA Iraq Office, in the presence of H.E. Mr. Hamid Younis Salih, Deputy Minister of Oil and H.E. Mr. Naofumi Hashimoto, Japanese Ambassador to Iraq. This concessional ODA loan aims to support the Government of Iraq in its efforts to reconstruct the country and revitalize its economy.

The loan named “Basrah Refinery Upgrading Project (II)” is the second tranche loan for Basrah Refinery Upgrading Project, one of the mega projects known in the region. For the same project, JICA previously concluded two loan agreements for (i) the engineering services loan in the amount of JPY 2,079 million and (ii) the first tranche loan in the amount of JPY 42,435 million.

The entire project aims to increase the quantity and quality of oil products including gasoline, diesel and kerosene, by installing a new refining plant called Fluid Catalytic Cracking (FCC) Complex in Basrah Refinery, which is one of the biggest oil refineries currently operational in Iraq. It will be implemented by South Refineries Company, Ministry of Oil.

Iraq has the world’s fifth-largest proven oil reserves and is currently OPEC’s second-largest producer. Nevertheless, most of the existing refineries in the country have been shut down or decreased their production capacity, suffered from damages and deterioration in the previous decades of conflicts. Many of the plans to construct new refineries have faced with challenges and delays and are yet to achieve substantial increase of the refining capacity.

On the contrary, the ongoing reconstruction efforts in liberated areas and the revitalization of socio-economic activities across the country have prompted huge demand for fuels, such as gasoline and diesel. As a result, despite being one of the largest oil producers, Iraq has no choice but to import the significant amount of oil products from neighboring countries so as to meet the demand for transport, power generation and industrial production.

Against this backdrop, the project to construct Iraq’s first-ever FCC Complex will increase the volume of the high-value added oil products, promote the transfer of refining technologies from Japan and help save valuable foreign currencies to import huge amount of fuels. The new plant will also reduce sulfur content in the products in accordance with the international environmental standards. Furthermore, the project is expected to pave the way for energizing private sector involvement in the downstream of Iraq’s energy industry and provide economic opportunities for the people of Iraq, especially in Basrah.

The loan is very concessional with the low interest rate and long repayment period: the interest rate of 0.20% and the repayment period of 40 years including 10-year grace period.

(Source: JICA)

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Successful Appraisal Drilling at Eridu Field in Iraq

Lukoil and Inpex Corporation have successfully completed testing of the fifth well as part of the appraisal phase at the Eridu field (Block 10) in the southern part of Iraq.

The well recorded daily flow rate of more than 1,500 cubic meters of oil from the Mishrif formation and proved the current geological model of the Eridu field as effective.

Lukoil continues geological exploration at Block 10. For instance, in the mid-term the Company plans to drill and test several appraisal wells, complete 3D seismic surveys at the Eridu field and 2D seismic surveys at the block’s southern and central parts.

(Source: Lukoil)

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Japan donates $3.4m for Children in Iraq

The government of Japan has donated US$3.4 million to provide lifesaving health and nutrition assistance for vulnerable children in conflict affected areas in Iraq.

Approximately 4.2 million people have returned to their homes after fleeing the violence that erupted in 2014, however many find their homes and communities have been reduced to rubbles and essential health services overstretched.

“Across all conflict affected governorates, hospitals have been destroyed and those that are functioning are overwhelmed and struggling to meet health and nutrition needs, placing the lives of the most vulnerable children at risk of deadly diseases, including polio and measles,” said Peter Hawkins, UNICEF Representative to Iraq.

“Japan has recently decided on a new assistance package for Iraq amounting to 63 million US dollars, including this project as contribution in health and nutrition sectors. With this package, the total amount of Japan’s assistance to the people affected by the crisis in Iraq reaches 500 million US Dollars,” said H.E. Mr. Naofumi Hashimoto, Ambassador of Japan to the Republic of Iraq said.

UNICEF is grateful to the Government of Japan in their unwavering support to vulnerable children and families in Iraq. Since 2015 UNICEF Iraq has partnered with Government of Japan to support the needs of children caught in cycles of violence.

The latest funding of US$.3.4 million will compliment Japan and UNICEF’s investment for Iraqi children by building the capacity of health workers, strengthening health systems in conflict affected governorates as well as providing immunization and nutrition services to nearly 1 million children and breastfeeding mothers in areas of returns as well as in the camps for displaced people.

(Source: UN)

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Lukoil confirms Geological Model for Eridu Field

Russia’s Lukoil has successfully completed testing of the fourth well as part of Eridu field (Block 10) appraisal phase in the south of Iraq.

The testing resulted in the commercial flow of dry crude oil that proves the current geological model of Eridu field as effective. ​

Lukoil continues geological exploration at Block 10. For instance, the company plans to drill and test several appraisal wells and to complete 3D and 2D seismic surveys for Eridu field and the block’s southern and central parts, respectively.

Block 10, covering 5.8 thousand square kilometers, is located 150 kilometers west of Basra, 120 kilometers away from West Qurna-2 field.

Interests in the project: Lukoil – 60% (operator), Inpex Corporation (Japan) – 40%. The Iraqi party to the agreement is represented by the state-owned Dhi Qar Oil Company (DQOC).

(Source: Lukoil)

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BGC to Increase Gas Output by 16% by end-Dec

By John Lee.

The Basra Gas Company (BGC) is expected to increase production from its current level of 900 million cubic feet per day (mcf/d) to 1,050 mcf/d by the end of this year.

A statement from the Ministry of Oil on Thursday added that the project aims to reach a target of 2,000 mcf/d from the fields of Rumaila, Zubair and West Qurna 1.

Shell has a 44-percent stake in the $17-billion, 25-year BGC project, with Iraq having 51 percent, and Japan’s Mitsubishi 5 percent.

(Source: Ministry of Oil)

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Shell plans Major Expansion at BGC

By John Lee.

Having sold its stake in the West Qurna 1 project to Japan’s Itochu, Shell is now said to be “fully committed” to the giant Basra Gas Company (BGC), which captures gas from Iraq’s southern oilfields.

Frits Klap, managing director of BGC, told Reuters that processing capacity has more than tripled to 938 million standard cubic feet (scf) per day since operations started in 2013, and further expansion is planned:

“We are going to go for something called BNGL, or Basra NGL (natural gas liquids) expansion, which really is going to take us from 1 bcf to 1.4 bcf through two trains, each of 200 million scf per day.”

Shell has a 44-percent stake in the $17-billion, 25-year project, with Iraq having 51 percent, and Japan’s Mitsubishi 5 percent.

More here.

(Source: Reuters)

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Iraq may build Oil Storage in Japan, South Korea

By John Lee.

Reuters reports that Iraq is studying the possibility of building crude oil storage facilities in South Korea and Japan.

Alaa al-Yasiri, head of the State Oil Marketing Organization (SOMO), said the move is part of a plan to increase sales to Asian clients:

“SOMO’s new strategy is to form trade arms in Asian markets to maximize profits and boost crude shipments to Asian markets.”

More here from Reuters.

(Source: Reuters)

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Shell Sells West Qurna-1 stake for $406m

Shell EP Middle East Holdings B.V. has agreed to sell the entire share capital of Shell Iraq B.V (SIBV), which holds its 19.6% stake in the West Qurna 1 oil field, for $406 million, to a subsidiary of Japan’s Itochu Corporation.

The purchaser will also assume debt of $144 million as part of the transaction. The sale has received the necessary regulatory consent, is expected to complete in the next few days, and has an effective date of 31 December 2015.

Since joining the project in 2009, Shell has enjoyed successful cooperation with its partners in the West Qurna 1 venture, which will continue to be operated by ExxonMobil.

Shell’s Upstream Director, Andy Brown (pictured), said:

“Iraq is an important country for the Shell Group, and exiting West Qurna 1 allows us to focus our resources on other assets in our Iraq portfolio. We are grateful for the support of the Iraqi government during the divestment process.

“Shell remains committed to working with its partners to redevelop Iraq’s energy infrastructure by capturing associated gas, through the Basrah Gas Company (BGC) Joint Venture, for domestic and regional consumption.

“This deal maintains the momentum behind Shell’s $30bn divestment programme and is in line with the drive to simplify our upstream portfolio and reshape the company into a world class investment.”

Shell’s other businesses in the country will not be affected by this divestment.

(Source: Shell)

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Japanese Firm Buys Shell’s Stake in West Qurna 1

By John Lee.

Japan’s Itochu has reportedly bought Shell‘s 20 percent stake in the West Qurna 1 oilfield.

Ihsan Abdul Jabbar, the head of state-run Basra Oil Company (BOC), told Reuters that the oil ministry discussed the required financial investments and operations at the field with Itochu, and approved the deal.

West Qurna 1, operated by ExxonMobil, currently produces around 405,000 barrels of crude oil per day.

The deal comes as Shell is also preparing to exit the Majnoon oilfield, handing it over to the BOC by the end of June 2018.

(Source: Reuters)