What is the fate of Baghdad-Erbil’s Oil-for-Budget Agreement?

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.

What is the fate of Baghdad-Erbil’s oil-for-budget agreement amid ongoing protests?

The Kurdistan Region of Iraq has vast proven oil and gas resources; however, mismanagement, corruption and ruling parties’ monopoly on power have brought the region to the brink of financial collapse amid longstanding controversies with the Iraqi government over the region’s share of federal budget.

Following extensive negotiations, the Kurdistan Regional Government (KRG) announced Nov. 27 that a final oil-for-budget deal with the Iraqi federal government had been reached in which the KRG agreed to submit 250,000 barrels per day of crude oil to Iraqi State Oil Marketing Company in return for receiving a fair share of the country’s budget for 2020.

The KRG currently produces 500,000 barrels per day, and has been exporting most of its oil independently through Turkey since 2013.

Click here to read the full story.

Atrush Field performing “Exceptionally Well”

By John Lee.

ShaMaran Petroleum has reported that the Atrush Field continues to perform “exceptionally well“.

Average production for the month of November was 43,360 bopd. The CK-15 well is now online and wells currently are undergoing normal-course maintenance.

The Company reiterates its Atrush 2019 average daily production guidance of between 30,000 and 35,000 bopd and a target 2019 exit rate between 45,000 bopd and 50,000 bopd. The Company shares in this production, pursuant to a production sharing contract, with a working interest of 27.6%.

Since the beginning of the year, production has increased 56% and the Company has invested significantly in infrastructure to facilitate continued production growth.

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 oil production started in July 2017. In its over two years of production the Atrush field has sold all its production to the Kurdistan Regional Government of Iraq at international market prices.

(Source: ShaMaran Petroleum)

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)

Oil Trail reveals Turkey funding Syrian Kurdish rivals

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

Oil trail reveals Turkey funding Syrian Kurdish rivals

At the Halifax Security Forum, an annual event attended by high-powered government officials, business titans and assorted other movers and shakers from across the globe, national security adviser Robert O’Brien took the stage with PBS’ Nick Shifrin and let the cat out of the bag.

When the veteran correspondent grilled O’Brien Nov. 23 about President Donald Trump’s decision to keep US troops in northeastern Syria “for the oil,” noting that the Pentagon’s Syrian Kurdish allies were selling it to the Syrian regime in defiance of sanctions, O’Brien responded, “Some of it goes to the regime. Some of it is used locally. Some of it goes to Iraqi Kurdistan. Some of it goes to Turkey.

The key, though, is not where the oil goes but where the revenue goes.” The main thing, he concluded, was to ensure that none of it got to the Islamic State.

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GKP launches second Share Buyback Programme

Gulf Keystone Petroleum (GKP) has provided an operational and corporate update. 

Operational

  • Average gross production for the year up to 30 November 2019 of 32,127 barrels of oil per day (“bopd”).
  • November gross production averaged 40,582 bopd, with current production rates from the field at c.42,000 bopd.
  • GKP is therefore on track to meet its original gross production guidance for 2019 of 32,000-38,000 bopd.
  • The first well of the drilling campaign, SH-12 came onstream on 13 November. During commissioning, the well produced at rates up to 4,600 bopd, in line with expectations and is currently producing at c.4,000 bopd. 
  • The second well in the drilling campaign, SH-9 is a crucial part of the long-term field gas management plan and is designed to assess the gas reinjection potential of the Jurassic formation. The well, which was spudded on 19 October, encountered a faulted section requiring the well to be side-tracked to the Jurassic reservoir target.
  • The SH-9 side-track necessitates a revision to the drilling schedule. Assuming a duration of one month for the side-track, the Company now expects to reach the 55,000 bopd gross production target at Shaikan in Q3 2020.
  • The planned maintenance and debottlenecking shutdown at PF-2 was completed safely during October.
  • The PF-1 export pipeline is complete. Full oil export operations are expected to commence in the next 24 hours marking the end of export by trucking from the Shaikan Field.
  • Operations at Shaikan remain safe and secure, with no Lost Time Incidents (“LTI”) recorded in over 500 days.

Corporate

  • Cash balance of $206 million as at 9 December 2019.
  • With a robust cash position and the Company’s confidence in its delivery of the Shaikan project, a second share buyback programme for a further $25 million has been approved and an initial tranche of $15 million will be initiated today.

Jón Ferrier, CEO, commented:

The Company has made significant progress on a number of fronts; with the successful addition of SH-12 to the PF-2 production inventory and drilling of the gas appraisal well SH-9 where operations continue.  The imminent start of export through the PF-1 pipeline means all production from Shaikan will now be exported directly via pipeline, benefitting safety, reducing environmental impact and improving netbacks. 

“We are pleased to confirm that we are on track to achieve our initial average production guidance for 2019, and whilst the need to side-track SH-9 has slightly impacted our timing guidance for delivering 55,000 bopd, we remain on course to achieve further significant production growth in 2020.  

We are also pleased to announce the launch of a second $25 million share buyback programme, which is in line with our focus on returning value to shareholders, whilst retaining the capital necessary to grow the business.

(Source: GKP)

Genel Energy Chairman Steps Down

Following the announcement of 16 May 2019, in which it was stated that Steve Whyte (pictured), Chairman of Genel Energy, would not be standing for re-election at the 2020 Annual General Meeting, the Company announces that Steve has now resigned with immediate effect.

George Rose, Senior Independent Non-Executive Director, will act as interim Chairman until the ongoing search for a permanent Chairman is completed.

George Rose, interim Chairman of Genel, said:

When Steve joined Genel the Company had net debt of almost $150 million and unpaid oil receivables of over $400 million. He was a driving force behind the Receivable Settlement Agreement, which has transformed Genel’s financial position. We now have a stronger portfolio with exciting growth options and the right team to deliver them.

“Our highly cash generative oil production more than funds this growth, with sufficient cash left over to pay a material and progressive dividend. I would like to thank Steve for his efforts at Genel and look forward to seeing his future successes.”

(Source: Genel Energy)

Oil Exports Slightly Up in October

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for November of 105,014,772 barrels, giving an average for the month of 3.500 million barrels per day (bpd), up from the 3.447 million bpd exported in October.

These exports from the oilfields in central and southern Iraq amounted to 102,005,095 barrels, while exports from Kirkuk amounted to 2,381,065 barrels, and from Qayara 293,962 barrels. Exports to Jordan were 334,650 barrels.

Revenues for the month were $6.282 billion at an average price of $59.821 per barrel.

October export figures can be found here.

(Source: Ministry of Oil)

Constitutional Amendments Relating to Petroleum Issues

By Ahmed Mousa Jiyad.

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

Constitutional Amendments Relating to Petroleum Issues

The “October Uprising” is sustained, vertically and horizontally, causing on one side regrettable loss of human lives, inflicting serious damage and destruction to public, business and private properties among other things, and on the other advancing, forcefully, many legitimate important demands, some of which are accepted by the authorities and political blocks; the constitutional amendments is one of them.

Many actions were quickly taken regarding this particular demand.  To begin with, the protesters themselves designate specific “Tent for Re-Writing the Constitution” located at the central gathering place, i.e., Tahrir Square, and invited experts, legal specialists, academics and others to submit their proposals to and participate in the ongoing debate at the “Tent”.

The House of Representatives (the Parliament) formed special temporary entity, Constitutional Amendments Committee-CAC, which has to finalise its mandate within four months. Again, CAC at the commencement of its duty called for contribution from outside sources and devised different ways and means for that purpose. Similarly, the Office of the Presidency (of the Republic), formed a parallel committee (the Presidency Committee for the Constitutional Amendments- PCCA) for the same purpose; both committees are of official formal nature, causing confusions and doubt on the real intention of the establishment.

Responding to the protesters demand, the proposals by the United Nations Mission in Iraq, UNAMI, include amendment of the Constitution and its readiness to provide technical support in this regard. This was seen, by many commentators, as a step towards “internationalization” of the matter and calls for external interventions; a replica off 2005. On the political platform, a dozen of “political blocks” that has influential position in the prevailing system since 2003 issued a statement supportive to amending the constitution. Finally, other entities, writers and professionals expressed the same urgent demand to re-write the current constitute or even have a completely a new one.

In the light of the above, this article is a modest contribution in this endeavour.

Based on my continuous follow-up and evaluation of actual practices and formal positions that have adopted or relied upon different interpretation of constitutional articles, I am emphatically convinced it is necessary, inevitable and urgent to amend those constitutional articles. This is particularly vital for articles that are related, directly and indirectly, to oil, gas and energy issues, especially those related to upstream petroleum sub-sector, i.e., exploration, development and production, and export of oil.

This is a summary of a more detailed and lengthy report written in Arabic and posted directly, among others, to a significant number of high-level officials at the three branches of government.

At the outset and before proceeding with the contents of this contribution, it is vital to make a few important notes:

First, I used, in preparing this contribution, the text of the constitution published in the Iraqi Official Gazette (Alwaqaee Aliraqiya) No. 4012 on 28/12/2005.

But this text, according to new and apparently many credible assertions, is different from the text that was distributed to and voted on by the Iraqi people in 2005. The published text comprises 144 articles while the circulated text for voting contains 139 articles; the added articles were and still are highly controversial ones.

This raises serious fundamental concerns and problems relating to the legitimacy and constitutionality of the added articles and even the entire text of the officially recognized constitution; what was published in the Official Gazette is, procedurally, the valid constitution, while the text voted by the people is, or should be the mandatory/real constitution!! 15 years of what appears to be a fraudulent and deception should end and end soon, according to good number of observers!

Second, the constitutional amendments are govern by articles 126 and 142, and both give any “region” a veto right, with different qualifications, to reject any amendments even if they are accepted and endorsed by the majority of Iraqi voters; what sort of democracy and federation is this1?.

Moreover, based on previous parliamentary deliberations there is a controversy regarding the validity of article 142 causing serious division among the members of CAC; that prompts CAC, a few days ago, to seek opinion from the Supreme Federal Court to resolve and decide on the matter.

I believe the Court, based on the principle of substantially changing circumstances and availability of compelling new material evidence, would make a decision that facilitates and supports the necessary constitutional amendments; the Court cannot risk to be seen acting against the mounting demand for amending a flawed sovereign law.

Third, I certainly see that there are many articles in the Constitution that must be amended or deleted and new articles could be added, in addition to those relating to petroleum issues. In this regard, it might be necessary to distinguish between “political realism” that is premised on “politics is the art of the possible” (promoted by the political establishment) and the “reality of the intifada” that aims to “make the not-possible possible” (promoted by the “uprising” and substantiated by the swift actions to vote, in the parliament, on laws that are proposed, but shelved, many years ago and measures to combat corruption and kleptocracy): to overcome the mistakes and practices of a decade and a half long with a constitution that becomes imperative to modify or even to replace it.

In this regard, thematic contributions, with specific and consistent proposals, are vital and more effective in the current efforts to amend the Constitution. Hence, professionals, experts and associations, among others, should have their say in the ongoing debate and consultations according to their expertise and area of specialisation; if we do not act now, when will we!!

Fourth; despite the structural importance of the petroleum sector in the Iraqi, imbalance, economy, which is well known to everyone, the term ” petroleum policy” is not mentioned in the constitution, while a long list of many other “policies” have been mentioned and highlighted.

What is even more surprising, and suspicious as well, that petroleum sector was not included in the “exclusive powers of the federal authorities”; this certainly constitutes a very serious flaw, by intention or omission, when preparing and approving the constitution and, thus, must be addressed.

Therefore, due to practical considerations and evidence-based analysis , this contribution aims at presenting some specific proposals exclusively designed to amending articles relating, directly and indirectly, to petroleum  issues (oil and gas), keeping in mind the role of these issues and there, unquestionable, repercussions on the sustainable development of the Iraqi economy.

The following methodology was followed in addressing each constitutional article that I found relevant to the subject matter and thus included in this mission:

First: Specify the article under evaluation in terms of: article number, sub-article(s) and the actual text: in whole or in part;

Second: adopt “text analysis approach” considering the three related factors: purpose of the legislator, the practices and conduct of the implementer (executive) and the sovereignty of the text.

This, by necessity, is the most important, most detailed and longest part in the entire exercise since it deals, basically, with issues relating to basic questions: what, which, why and how.

Third: based on such text-analysis, evidence based and relevant material facts, specific textual proposals are suggested, these can be through amendment or cancellation or substitution or addition of a new article(s).

The results of this work are:

  1. There are nine articles that are directly related to and indirectly impacting petroleum issues; these articles are: 80; 110; 111; 112; 114; 115; 121; 126; 141;
  2. The analysis and evaluation of the above articles resulted in fourteen different proposals.

Details of the analysis, the premises for each proposal and the text of each suggestion are included in a research report written in Arabic, which is circulated widely and reposted on many websites and accessible through many, including, the following:

https://www.akhbaar.org/home/2019/11/265005.html

http://www.tellskuf.com/index.php/mq/86059-nn2411.html

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 Ministry Finalises Export Figures for October

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for October of 106,859,982 barrels, giving an average for the month of 3.447 million barrels per day (bpd), down from the 3.576 million bpd exported in September.

These exports from the oilfields in central and southern Iraq amounted to 103,540,855 barrels, while exports from Kirkuk amounted to 2,579,837 barrels, and from Qayara 432,147 barrels. Exports to Jordan were 307,143 barrels.

Revenues for the month were $6.121 billion at an average price of $57.277 per barrel.

September export figures can be found here.

(Source: Ministry of Oil)