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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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US Donates COVID-19 Vaccines to Iraq

The United States Donates More Than 500,000 COVID-19 Vaccines to Iraq

U.S. Ambassador to Iraq Matthew H. Tueller joined Iraqi Acting Minister of Health Hani al-Oqabi and other partners to receive the delivery of more than 500,000 doses of Pfizer COVID-19 vaccine to the Iraqi Ministry of Health as part of the ongoing partnership of the United States with the people of Iraq.

The vaccines were delivered via COVAX in coordination with the World Health Organization (WHO), the United Nations International Children’s Emergency Fund (UNICEF), the Coalition for Epidemic Preparedness Innovations (CEPI), and Gavi, the Vaccine Alliance.

The United States provided these 503,100 vaccine doses free of charge to Iraq in reflection of our commitment to our shared fight against the COVID-19 pandemic.  This commitment was one of several made during the most recent session of the U.S.-Iraq Strategic Dialogue, held in Washington, D.C., July 23-26.

The United States, through the U.S. Agency for International Development (USAID), has provided more than $60 million to Iraq to combat the COVID-19 pandemic.

“The United States is proud to partner with the Iraqi people to help save lives and defeat COVID-19.  Together, we will continue to build a world that is safer and more secure against the threat of infectious disease,” said Ambassador Tueller.

This delivery of vaccines helps fulfill the White House global vaccine sharing allocation plan, announced on June 3, 2021, that prioritized an allotment for Iraq.

As President Biden promised, the United States is sharing vaccines with Iraq and many other countries to save lives and lead the world in ending the pandemic.

These safe and effective vaccines are key to protecting Iraqi lives and boosting Iraqi economic recovery.

(Source: US Embassy)

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New Report on Iraqi Health Sector

The report offers a description of the structure of the health sector in Iraq.

The categories and stakeholders that comprised the sector. Mainly the public and the private sector, alongside, international agencies that work in Iraq.

These agencies include the likes of the World Health Organization, the International Red Cross and Red Crescent Movement, UNICEF, the Iraq Health Access Organization, and Médecins Sans Frontières.

Many of which have been in Iraq for decades, offering assistance and partnerships with the Ministry of Health (MOH).

Click here to download the full report.

(Source: Kapita, in partnership with GIZ)

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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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KRG Approves DNO Purchase of Exxon Stake in Baeshiqa

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today announced that the Kurdistan Regional Government has approved the Company’s acquisition of ExxonMobil‘s remaining 32 percent interest in the Baeshiqa license, doubling DNO’s stake.

In parallel, commerciality has been declared on the license with plans submitted for fast-track development including early production from previously drilled but suspended wells.

DNO has already demonstrated proof of concept of producing these wells through temporary test facilities, having trucked some 15,000 barrels of 40 degree API and 22 degree API oil for export in 2019 and 2020 from the Baeshiqa-2 and Zartik-1 discovery wells.

Following the transaction, the joint venture comprises DNO as operator with a 64 percent (80 percent paying) interest, the Turkish Energy Company (TEC) with a 16 percent (20 percent paying) interest and the Kurdistan Regional Government with a 20 percent carried interest.

Bijan Mossavar-Rahmani, DNO’s Executive Chairman, said:

“This acquisition and plans for fast-track development underscore our belief in the potential of the Baeshiqa license and more broadly our long-term commitment to Kurdistan.

“Once we get the green light from the authorities to proceed, first production will be a matter of months rather than years.“

DNO’s 3,204 meters discovery well, Baeshiqa-2, tested hydrocarbons to surface from multiple stacked Jurassic and Triassic zones. Two zones flowed naturally at rates averaging over 3,000 barrels of oil per day (bopd) of light gravity oil each and another averaged over 1,000 bopd also of light gravity oil. DNO drilled Zartik-1, the second discovery well, 16 kilometers to the southeast of Baeshiqa-2, to a depth of 3,021 meters. This well tested hydrocarbons to surface from several Jurassic zones, with one zone flowing naturally at rates averaging 2,000 bopd of medium gravity oil.

DNO acquired its first 32 percent interest and assumed operatorship of the Baeshiqa license from ExxonMobil in 2018. As consideration for both acquisitions DNO has covered ExxonMobil’s share of exploration costs since January 2019 and the seller will receive payment of USD 15 million.

In addition to the 327-square kilometer Baeshiqa license, DNO operates the Tawke license containing the Tawke and Peshkabir fields in Kurdistan. Combined production from these fields averaged 110,300 bopd in the second quarter of 2021.

(Source: DNO)

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Genel Energy Increases Dividend

By John Lee.

Genel Energy has increased its interim dividend, announced in its unaudited results for the six months ended 30 June 2021:

Bill Higgs, Chief Executive of Genel, said:

“Genel continues to deliver on its strategy and demonstrate the merits of its business model. Capital investment made last year, despite the low oil price and over $150 million of deferred payments, has meant this period has benefitted from the addition of oil from Sarta and increased production from Peshkabir, with production having increased in line with guidance.

“This high-margin production will generate sufficient cash flow in 2021 to more than cover investment in growth and the increased dividend, and we are set to end the year in a net cash position.

“Our appraisal campaign at our exciting growth assets Sarta and Qara Dagh is now well underway, and we look forward to the results of three of these high-potential wells later this year. Given the cash generation of the business, our strong balance sheet, and the resilience of our business model, we are fulfilling our aim of paying a progressive dividend by increasing the interim payment.“

Results summary ($ million unless stated)

H1 2021 H1 2020 FY 2020
Average Brent oil price ($/bbl) 65 40 42
Production (bopd, working interest)  32,760 32,100  31,980
Revenue  151.5 88.4  159.7
EBITDAX1  123.1 65.1  114.6
  Depreciation and amortisation  (81.8) (82.6)  (153.7)
  Exploration expense – (1.3) (2.2)
  Impairment of oil and gas assets – (286.3) (286.3)
  Impairment of receivables – (34.9) (36.9)
Operating profit / (loss) 41.3 (340.0) (364.5)
Cash flow from operating activities 91.1 85.5 129.4
Capital expenditure 58.2 58.5 109.7
Free cash flow2 22.2 6.5 (4.4)
Cash 266.4 355.3 354.5
Total debt 280.0 300.0 280.0
Net (debt) / cash3 (2.2) 57.2 6.2
Basic EPS (¢ per share) 9.3 (128.9) (152.0)
Dividends declared for the period (¢ per share) 6 5 15
  1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation, exploration expense, impairment of property, plant and equipment, impairment of intangible assets and impairment of receivables
  2. Free cash flow is reconciled on page 10
  3. Reported cash less IFRS debt (page 11)

Highlights

  • Strong cash generation from low-cost oil production:
    • Net production averaged 32,760 bopd in H1 2021, slightly above the average in the prior year and in line with guidance (H1 2020: 32,100 bopd)
    • Low production cost of $3.7/bbl, oil price increase, and restart of the override helped deliver an overall margin from our production assets of $111 million
    • Free cash flow for the period was $22 million, despite the Kurdistan Regional Government (‘KRG’) changing its payment schedule from one to two months in arrears, moving c.$30 million that was due in H1 into July
    • $123 million of cash proceeds were received in H1 2021 (H1 2020: $110 million)
  • Investing in growth:
    • Our high-potential drilling campaign is well underway, with the QD-2 well at Qara Dagh having spud in April, and the Sarta-5 well in June
    • $58 million of capital expenditure in H1 2021, with activity accelerating in H2
  • Financial strength to underpin a material and progressive dividend:
    • Cash of $266 million, with net debt of $2.2 million
    • Due to the rise in the oil price boosting expected cash generation, and Management’s confidence in Genel’s future prospects, interim dividend increased to 6¢ per share (H1 2020: 5¢ per share)
  • A socially responsible contributor to the global energy mix:
    • Zero lost time injuries (‘LTI’) and zero tier one loss of primary containment (‘LOPC’) events at Genel and TTOPCO operations. Now no LTIs since 2015, with over 14 million work hours since the last incident, and no LOPCs since 2017
    • Second GRI compliant Sustainability Report issued today

Outlook

  • Production guidance for 2021 of slightly above the 2020 average of 31,980 bopd maintained
  • 2021 capital expenditure guidance maintained at $150 million to $200 million, with the expectation that expenditure will now be around the middle of this range, following delays in approvals from the KRG and ongoing challenges relating to COVID-19 causing some planned activity to move to Q1 2022
  • High-impact appraisal results to come in 2021:
    • Results from the QD-2 and Sarta-5 wells are expected around the end of Q3 2021
    • The Sarta-1D well is set to spud in coming days
    • Sarta-6 well is scheduled to get underway immediately following the completion of drilling at Sarta-5
  • Genel expects to generate free cash flow in 2021 and end the year in a net cash position, despite material investment in growth

More here.

(Source: Genel Energy)

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Iraqi Oil Exports for July Exceeded $6.5bn

By John Lee.

Iraq’s Ministry of Oil has announced preliminary 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 $6.513 billion at an average price of $72.001 per barrel.

June’s export figures can be found here.

(Source: Ministry of Oil)

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