KRG Delays Payments to Oil Firms

By John Lee.

The Kurdistan Regional Government (KRG) has delayed payments to oil producers by several weeks.

In statements to the markets on on Thursday, Genel Energy, Gulf Keystone Petroleum (GKP) and Shamaran Petroleum said that payments relating to invoices for oil production in August and September, which were due to be paid in November and December, will be received in January 2020.

(Sources: Genel Energy, Gulf Keystone Petroleum (GKP), Shamaran Petroleum)

DNO announces Oil and Gas Discovery

DNO ASA, the Norwegian oil and gas operator, today announced issuance of a notice of discovery to the Kurdistan Regional Government of Iraq on the Baeshiqa-2 exploration well, in accordance with the requirements of the Production Sharing Contract, after flowing hydrocarbons to surface from the upper part of Triassic Kurra Chine B reservoir.

Following acid stimulation, the zone flowed variable rates of light oil and sour gas. Further testing of this and other Jurassic and Triassic zones is ongoing and will determine the next steps towards appraisal and assessment of commerciality.

The Baeshiqa-2 well was spud in February 2019 and drilled to a total depth of 3,204 meters (2,549 meters TVDSS).

DNO acquired a 32 percent interest and operatorship of the Baeshiqa license in 2017. Partners include ExxonMobil with 32 percent, Turkish Energy Company (TEC) with 16 percent and the Kurdistan Regional Government (KRG) with 20 percent.

(Source: DNO)

Baghdad sends delegation to Erbil to Resolve Disputes

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

Iraqi President Barham Salih met separately Sept. 18 with four Kurdistan Regional Government (KRG) leaders — President Nechirvan Barzani, Prime Minister Masrour Barzani, parliament Speaker Rewaz Fayaq and Deputy Prime Minister Qubad Talabani in Erbil, the KRG capital.

The purpose of Salih’s visit was to warn the KRG about the region’s share in Iraq’s federal budget for 2020, scheduled to be passed by the national parliament by the end of the year.

A well-informed source close to the ruing elites in both Baghdad and Erbil told Al-Monitor on condition of anonymity that the Iraqi president — who is Kurdish — cautioned the Kurdish leadership that the federal government in Baghdad will cut the Kurdistan region’s share of budget, including salaries of the KRG employees, if Erbil fails to hand over a portion of its oil to the State Organization for Marketing of Oil. The organization is responsible for selling Iraq’s oil.

Click here to read the full story.

New Pipeline to Transport Iraqi Oil to Turkey

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

New pipeline in works to transport Iraqi oil to Turkey

Ankara and Baghdad are working toward building a new oil pipeline with the capacity to transport one million barrels per day from Iraq’s Kirkuk fields to the Turkish border.

“The Iraqi government is now examining tenders for the new oil pipeline between Iraqi and Turkey, after having finished with the engineering and technical studies,” Iraqi Ministry of Oil spokesperson Assem Jihad told Al-Monitor recently.

He added that construction will probably get underway in 2020.

Click here to read the full story.

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.

Hawrami to be Top Energy Official in new KRG Cabinet

By John Lee.

The Kurdistan Regional Government’s long-serving Minister of Natural Resources (MNR), Ashti Hawrami (pictured), is to be appointed to the post of Assistant Prime Minister for Energy Affairs in the new KRG cabinet.

According to a report from Rudaw, it is not currently clear whether the move will result in the scrapping of the Ministry of Natural Resources.

Hawrami was first appointed as Minister for Natural Resources in 2006.

(Source: Rudaw)

Iraqi Kurdistan Cabinet finally sees daylight

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

Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani presented his new Cabinet July 10, vowing to institute reforms and reinvigorate the semi-autonomous government in Erbil, Iraq.

Three main parties in Iraqi Kurdistan were able to reach an understanding on their ministerial nominations to finally form the new government: the Kurdistan Democratic Party (KDP), Patriotic Union of Kurdistan (PUK) and Gorran (Change) movement.

Parliament now has confirmed 21 ministers for the Cabinet, though the controversial post of the natural resources minister remains vacant.

Click here to read the full story.

The debate over Iraqi Kurdistan’s share of Budget

The Al-Bayan Center for Planning and Studies has just published a new report from our Expert Blogger Ahmed Tabaqchali:

The current debate over the interpretation of the 2019 budget that governs the Kurdistan Regional Government’s (KRG) share of the federal budget in return for contributing 250,000 bbl/d to federal oil exports has echoes of the first conflict in April 2012 on the issue.

The adept quote above by the International Crisis Group (ICC), in its description of the relationship between the two sides leading to that conflict, is as applicable today as it was then, and over the many repeats of similar conflicts in the intervening years.

The current flare up is initiated by members of the federal parliament against the Government of Iraq (GoI) over its continuing payments to the KRG, under the terms of the 2019 budget, while the KRG has not or refused to honour its obligations under the terms of the same budget.

The internal and external dynamics of the players on both sides, the federal politicians and the regional Kurdish politicians, follow the same trajectory that led to countless struggles over this issue and others since 2003. Each side is not only blind and deaf to the other side’s needs and motives but views it with suspicion and mistrust.

Unless something breaks the mould, either an intervention by Iraq’s international stakeholders or a change in the balance of relative power between the two, both will continue to think and act in the same manner that each had acted in the past, while still expecting a different outcome for the conflict or a different response form the other side.

Read Ahmed Tabaqchali’s full report here.

Nechirvan Barzani in Baghdad to discuss Oil

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

President Nechirvan Barzani of the Kurdistan Regional Government (KRG) left Erbil for the first time since taking office and headed to the Iraqi capital on June 20 to discuss several outstanding issues with the central government, especially KRG oil exports, the public budget and the situation in the disputed city of Kirkuk.

After meeting with Iraqi Prime Minister Adel Abdul Mahdi, Barzani said they agreed to resolve outstanding issues based on the constitution and to convene a joint committee next week to negotiate oil, the budget, the peshmerga forces and Article 140 of the Iraqi Constitution, concerning a census in Kirkuk.

The most important issues addressed during the visit were Kurdish oil and KRG salaries. Baghdad has not yet received its share of KRG oil in about six months, but the federal Ministry of Finance continues to deliver salaries to KRG employees.

Click here to read the full story.