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Iraq to Exploit Massive Natural Gas Reserves

Iraq Moves To Exploit Its Massive Natural Gas Reserves

Writing in Oil Price, Simon Watkins says that despite Iraq’s huge potential gas resources, it has made little progress on developing this potential either for associated or non-associated gas.

But last week, a heads-of-agreement deal was announced with Total, to work jointly on four major projects that include developing the associated gas sector.

Click here to read the full story.

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Iraq Oil Exports slightly Down in March

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for March of 91,311,929 barrels, giving an average for the month of 2.946 million barrels per day (bpd), down slightly from the 2.960 million bpd exported in February.

These exports from the oilfields in central and southern Iraq amounted to approximately 88,240,184 barrels, while exports from Kirkuk amounted to 3,071,745 barrels.

Revenues for the month were $5.783 billion at an average price of $63.329 per barrel.

February’s export figures can be found here.

(Source: Ministry of Oil)

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Protesters Block Entrances to Oil Facilities

By John Lee.

Protesters have reportedly blocked the entrances to the Dhi Qar Oil Company (DQOC), Dhi Qar Refinery, and the Oil Products Distribution Company.

According to Anadolu Agency, they were protesting the passing of the 2021 budget by the Iraqi parliament, which did not meet their expectations regarding guaranteed employment.

More here.

(Source: Anadolu Agency)

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Iraqi Parliament Approves 2021 Budget

By John Lee.

Iraq’s Parliament (House of Representatives) has approved the Federal Budget Law for 2021 on Wednesday night.

The budget is reportedly based on an oil price of $45 per barrel, and oil exports of 3.25 million barrels per day, giving a budget of 129 trillion Iraqi dinars ($89 billion) and a budget deficit of 28.7 trillion trillion Iraqi dinars ($19.79 billion).

The 2021 budget set an oil price of $45 a barrel with expected oil exports of 3.25 million barrels per day.

More here, here, and here.

(Sources: Iraqi Parliament, Bas News, Shafaq, AP)

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GKP claims “Strong Start to 2021”

Gulf Keystone Petroleum (GKP) has announced its audited results for the full year ended 31 December 2020.

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

“Against the backdrop of extraordinary global challenges in 2020, GKP acted decisively to successfully manage the impact of COVID-19 on our staff, contractors and production operations. We achieved all of our cost reduction targets and annual average production of 36,625 bopd, 11% higher than 2019.

“We have had a strong start to 2021. The updated independent Competent Person ‘s Report reaffirmed the significant upside production potential of the field with gross 2P reserves + 2C contingent resources of c.800 MMstb. Average gross production from Shaikan in 2021 to 29 March is 43,190 bopd, up c. 13% from the corresponding period in 2020. 

“Recently, we resumed the 55,000 bopd investment programme and today we are pleased to be announcing the reinstatement of at least a $25 million annual dividend, in keeping with our commitment to balance investment in growth and returns to shareholders.“

Highlights to 31 December 2020 and post reporting period

Operational

  • Effectively managing the impact of COVID-19 on production operations and continue to prioritise the welfare of workforce and contractors whilst maintaining production momentum.
  • Continued strong safety performance, with no Lost Time Incident (“LTI”) recorded for over 450 days.
  • 2020 a verage gross production of 36,625 bopd, exceeding revised guidance and the highest annual average production rate to date from the field.
  • Gross average production from the field in 2021 to date of 43,190 bopd, in line with guidance of 40,000 – 44,000 bopd for the year.
  • Updated Competent Person’s Report (“CPR”) published with c.800 MMstb gross 2P+2C reserves and resources volumes, which was in line with the 2016 CPR, after adjusting for production over the period, supporting GKP’s view of the geological model.

Financial

  • GKP achieved its 2020 cost reduction targets, reducing Opex and G&A by more than 20% compared to 2019 and delivering gross unit Opex of $2.6/bbl, below the low end of the guidance range and down over 30% versus 2019.
  • Net Capex was $45.9 million net (FY 2019: $90 .0 million) within the $40-48 million revised guidance range despite the addition of low-cost, high impact investments during the fourth quarter that contributed to record 2020 annual average production.
  • Loss after tax of $47.3 million (FY 2019: $43.5 million profit) and reduced revenue of $108.4 million (FY 2019: $206.7 million) were driven by a decline in Brent oil prices that averaged $42/bbl in 2020 compared to $64/bbl in 2019.
  • Consistent payments from the Kurdistan Regional Government (“KRG”) for the last eleven months.  Repayment mechanism in place to recover outstanding arrears of $73.3 million net for the period November 2019 – February 2020 with the first payment of $2.6 million net recently received.
  • Cash balance of $147.8 million at year end (FY 2019: $190.8 million). Cash balance of $161.0 million at 30 March 2021.
  • The Company has hedged c.60% of Q2 and Q3 2021 forecast net production at a floor price of $35/bbl and $40/bbl respectively, while retaining full upside exposure.

Outlook

  • Resumption of expansion activity with drilling operations expected to begin in Q3 resulting in an increase in gross production towards 55,000 bopd in Q1 2022.
  • Reinstatement of at least a $25 million annual dividend . A $25 million dividend is subject to shareholder approval at the Annual General Meeting (“AGM”) scheduled for 18 June 2021 and is expected to be paid in full on 2 July 2021 based on a record date of 25 June 2021 .
  • With continuing strong oil prices, there may be opportunities to consider further distributions to shareholders this year.
  • Guidance for 2021 of average gross production of 40,000 to 44,000 bopd, net Capex of $55-$65 million and gross unit Opex of $2.5 to $2.9/bbl.

Full announcement here.

(Source: GKP)

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Iraq to Buy More Pfizer Vaccine

By John Lee.

The Iraqi Cabinet held its weekly meeting on Tuesday under the chairmanship of Prime Minister Mustafa Al-Kadhimi.

Following discussions, the Cabinet approved the purchase of an “additional quantity” of the Pfizer vaccine for COVID-19 (coronavirus), but did not specify the amount.

As a result of the steady increase in the number of coronavirus infections, the Cabinet also authorised the Minister of Health to contract with retired doctors and specialists to fill the shortage in health institutions. They will be paid a monthly amount of 1 million Iraqi dinars.

It was also agreed to include foreign diplomats, and workers in international organizations and companies, in the vaccination program, “taking into account the principle of reciprocity“.

(Source: Office of the Prime Minister)

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Iraq signs 4 Major Energy Deals with Total

By John Lee.

Iraq’s Ministry of Oil has signs an agreement of principles with the French company Total for four major energy projects in the country:

  1. Plants to collect and refine associated natural gas at the fields of Artawi [Ratawi], West Qurna 2, Majnoon, Tuba [Subba] and Lahais [Luhais]. This will include a Central Gas Complex at Artawi;
  2. Development of the Artawi field;
  3. The integrated seawater project [Common Seawater Supply Project (CSSP)?], which the ministry has been trying to implement for more than ten years; and,
  4. A 1,000MW solar energy plant.

Full statement here (Arabic)

(Source: Ministry of Oil)

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Iraq Finalises Oil Exports for February

By John Lee.

Iraq’s Ministry of Oil has announced finalised oil exports for February of 82,877,757 barrels, giving an average for the month of 2.960 million barrels per day (bpd), up from the 2.868 million bpd exported in January.

These exports from the oilfields in central and southern Iraq amounted to approximately 79,105,329 barrels, while exports from Kirkuk amounted to 3,727,428 barrels.

Revenues for the month were $5.013 billion at an average price of $60.487 per barrel.

January’s export figures can be found here.

(Source: Ministry of Oil)

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Cabinet approves $480m Drilling Deal in Southern Iraq

By John Lee.

The Iraqi Cabinet held its weekly meeting on Tuesday under the chairmanship of Prime Minister Mustafa Al-Kadhimi.

Following discussions, the Cabinet approved a bid from Schlumberger to drill 96 wells for the Basra Oil Company (BOC) and ExxonMobil.

The company has previously worked at ExxonMobil’s West Qurna 1 field in southern Iraq.

The deal is valued at more than $480 million.

(Source: Office of the Prime Minister)

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GKP Resumes Kurdistan Investment Programme

Gulf Keystone Petroleum (GKP) has announce the resumption of the Company’s growth plans to ramp-up gross production towards 55,000 barrels of oil per day (“bopd”).

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

“After a year of successfully managing the impact of COVID-19 on our people and production operations at Shaikan, we are pleased to announce that we are resuming the 55,000 bopd expansion programme.

“Workstreams have already begun, and we are targeting to restart the drilling of SH-13 in Q3 2021, subject to managing the continuing impact of COVID-19 on the movement of people, services and equipment.“

With support from its partner Kalegran B.V. (a subsidiary of MOL Hungarian Oil & Gas plc), Gulf Keystone has restarted 55,000 bopd expansion activity.

Considering the requirement to manage the ongoing impact of COVID-19 and to remobilise people, services and equipment, the Company currently expects drilling operations to begin in Q3 2021.

Remaining expansion activity includes completion of SH-13, which was suspended last year, drilling SH-I, the final well in the programme from the same pad, and installing electric submersible pumps in two existing wells.

Guidance for 2021 average gross production remains unchanged at 40,000 to 44,000 bopd, with the increase in gross production towards 55,000 bopd expected to occur in Q1 2022.  Remaining Capex required to deliver the 55,000 bopd programme is estimated to be $40-45 million net, resulting in total 2021 Capex of $55-65 million net.

(Source: GKP)

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