Iraq tries to persuade Lukoil to stay at West Qurna

By John Lee.

Oil Minister Ihsan Abdul Jabbar has reportedly told reporters that Iraq hopes LUKoil will keep its stake in the West Qurna-2 oil field.

Russian news agency TASS quotes the Minister as saying that Iraq is "negotiating improvement of conditions" for the project.

In  July, Lukoil Chief Executive Vagit Alekperov was quoted as saying that the company may reduce its stake in the field.

(Source: TASS)

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Norwegian-led Consortium to build Solar Plant in Karbala

By John Lee.

Iraq signed an agreement to build a 525-MW solar power plant in Karbala.

The project will be built by a consortium of companies led by the Norwegian Scatec, whose main shareholder is Equinor (formerly Statoil).

Also involved are Egypt's Orascom and Iraq's Al-Bilal.

The signing comes after recent announcements of renewable energy projects by Masdar, TotalEnergies and PowerChina.

(Source: Ministry of Oil)

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UniHouse to run Talented Iraqi Program for Eni

By John Lee.

Italian energy company Eni S.p.A has signed an agreement with UniHouse to execute the Talented Iraqi Program.

Under the scheme, high-caliber, talented Iraqi students will be placed in the UK to study for Bachelor of Medicine degrees.

UniHouse will provide a full range of services, including preparation, exams, orientation, and in-country academic support and consultancy to Eni for the successful execution of the project.

Since 2010, Eni has been part of the consortium developing the Zubair Reservoir in Southern Iraq.

(Source: UniHouse)

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INOC to be Partner in TotalEnergies Basra Projects

By John Lee.

The Iraqi cabinet has approved a plan for the newly-formed Iraqi National Oil Company (INOC) to be a financial partner with TotalEnergies in its projects in Basra.

It said it will support INOC to "maximize revenues and financial returns to the general budget."

In September, TotalEnergies signed a number of major agreements covering several projects in the Basra region, designed to enhance the development of Iraq's natural resources to improve the country's electricity supply.

These agreements include:

  • The construction of a new gas gathering network and treatment units to supply the local power stations, with TotalEnergies also bringing its expertise to optimize the oil and gas production of the Ratawi field, by building and operating new capacities.
  • The construction of a large-scale seawater treatment unit to increase water injection capacities in southern Iraq fields without increasing water withdrawals as the country is currently facing a water-stress situation. This water injection is required to maintain pressure in several fields and as such will help optimizing the production of the natural resources in the Basra region.
  • The construction and operation of a photovoltaic power plant with a capacity of 1 GWp to supply electricity to the grid in the Basra region.

(Source: Govt of Iraq)

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Iraq in talks on Gas Exploration in Western Desert

By John Lee.

Iraq's Oil Minister Ihsan Abdul-Jabbar Ismail has said that the Iraqi National Oil Company (INOC) has opened a dialogue about gas exploration in the Western Desert in Anbar Governorate.

The company involved was not named, but was described as "one of the major international companies".

The Minister said Iraq is keen to attract investments, expertise and advanced global technology to explore for hydrocarbons, especially gas, and to work to increase national production of "free gas" in addition to investing associated gas.

(Source: Ministry of Oil)

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Iraq Petroleum Sector Chronicle

By Ahmed Mousa Jiyad.

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

The Iraqi economy structure is lopsided with heavy dependency on export of natural raw material, i.e., crude oil. The modest unbalanced growth that was accumulated by the end of 1970s began eroding and all economic accomplishments had washed-away, gradually, since then. Four decades of wars, sever sanctions, political tyranny and America-led occupation pushed the country into the brinks of a failed state.

The post occupation sectarian political sharing system, known in Iraq al-muhasasa, brought the most devastating manifestation of "resource curse" in the form of formalized legalized high level corruption, or Kleptocracy. When upstream petroleum became, once again but more urgently, the only sector capable for funding annual state budget for social welfare, reconstruction and development, it became the target for the corruptors, the Kleptocrats and domestic politics abuse.

Also, under the then prevailed political order, upstream petroleum redevelopment and development were sought through active and substantive participation of the international oil companies- IOCs; this brings to the fore of debate the complex issues of the political economy of such participation.

The essence of the international political economy of petroleum relationship between the IOCs and a developing economy, e.g., Iraq, is the relative comparative strength of both parties to maximize their interest through any formalized relationship; this is premised on two basic issues: sovereignty and petroleum rent.

Sovereignty relates to ownership of petroleum (both reserves and production) or claim of title on them on one side and the decision making structure and mechanism of that relationship on the other.

Distribution of petroleum (resource) rent is decided formally through the type and terms of the contracting modality on one side and, empirically, through actual management of such contracting modality on the other. "Government take" is the clearest manifestation of rent distribution; the higher is the government take the better it is for the host country, but what matters, in the final analysis, is the actual distribution more than the formal and contractual. This highlights the importance of the effective and efficient contract management, at all levels, during the entire life-cycle of the related contract.

Needless to say that host government and IOCs petroleum relationship are not, always, exclusive to them only, as the subject matter has other geopolitical and geostrategic considerations that go beyond the two parties; this implies the comparative strength of the host government on one side and the IOCs together with the geopolitics of their home-country government on the other has a lot to impact the petroleum relationship and their contractual modalities. More often than not geopolitical pressure and leverage are used to promote, enhance or even guarantee the interest of the IOCs through different ways and means and, when competition is transparent and tense the intervention becomes more intrusive an coercive. Those who failed winning in competitive bidding say that outcome reflects the dark side of transparency!!

One year after the invasion, Iraq pursued in 2004, what seems analytically and proven factually, a Grand Opining Big Push Policy in its petroleum sector by offering IOCs and foreign investors unprecedented opportunities to having access to and expansion in, particularly, upstream petroleum sub-sector.

Between 2004 to end 2008, the Ministry of Oil- MoO concluded over 40 memoranda of understanding/cooperation (MoU/Cs) with IOCs from 23 countries, with overwhelming dominance of the US (9); Japan and Norway (4 each); China, UAE, UK and Canada (2 each) and one company from each of other 16 countries.

For IOCs, MoU/Cs represent invaluable direct contact with Iraqi staff and professionals at all layers of responsibility and provide them access to most archives and database relating to upstream petroleum; that helped IOCs exploring where and what they could do to chart their way towards business in Iraq's upstream petroleum and beyond.

These MoU/Cs contributed in formulating and development of a model contract, and by the time they were terminated MoO succeeded, through direct government-to-government talks (with China), in converting Al-ahdab oilfield from production sharing to service contract.

The first bid round, for producing (brown) oilfields, was held end June 2009, followed by the second bid round for discovered but not commercially developed (green) fields on December 2009 and a third one for free-gas fields in October 2010.

120 IOCs participated in the qualification process for the bid rounds, 55 from 27 countries were qualified: Japan (9); USA (7); Russia (5); China and UK (4 each); Australia, India and Italy (2 each), and 19 other countries with one company each.

The outcome of the three bid rounds and Al-ahdab are: 14 oilfields contracted to 15 IOCs from 12 countries; total contracted/ targeted plateau production was 12.3mbd and their total proven reserves ca. 67 billion barrels (58% of the country's proven reserves at that time). Three gas fields were contracted to 3 IOCs from 3 countries with total plateau production of 820 mcfd and proven reserves of 11.2tcf.

Moreover, the period prior to end 2010 witnessed developments relating to other important issues particularly the proposed federal oil and gas law-FOGL and INOC Law; promulgated private investment in refinery law and proposing many new modern refineries for foreign investors; conclude HoA that led, latter, to establishing Basra Gas Company joint venture with Royal Shell and Mitsubishi among others

Also during those years, the upstream petroleum in the country was a magnet of attention by the occupying countries, the IOCs, international legal and consulting firms and business and  media sources and alike; the number, frequency and substance of what was published internationally on Iraq is a manifestation of that attention. That could be explained by or attributed to a "Newness factor" as the country was reopened for the outside world after almost half a century of restricted access; to the "Invasion factor" that made accessing the country easy after 2003 occupation since the invasion was "all about oil"; to the "Business factor" for IOCs and petroleum service companies to have a share in exploiting the vastness of petroleum in the country; the last frontiers for least cost petroleum. Much of the attention and preference of the occupying forces, IOCs and pro-IOCs entities was for Production Sharing Agreements/Contracts-PSA/C.

On the other side, most Iraqi oil professionals and experts inside the country, particularly from the South Oil Company, and those residing outside the country demonstrated vibrant engagement and strong keenness by calling, individually or collectively, for protecting the country petroleum wealth through sovereign national efforts and opposing any form of PSA/C; they premised their stand on still valid important laws and the 2005 Constitution.

Obviously, the course of events prior to end 2010 highlights different pathways for upstream petroleum contracting modalities; long term service contract emerged as the preferable choice.

One of the International Compact with Iraq-ICI offspring's was the formalization, for the first time in modern Iraq, of transparency principles and working modalities in Iraq petroleum sector. On 10 February 2010, Extractive Industries Transparency Initiative (EITI) Board accepted Iraq as an EITI Candidate country; a new component in the governance of national upstream petroleum began in earnest with continuity and promising expectations, but time will tell!

Not surprisingly therefore that the period ended by December 2010 witnessed the most concerted efforts and vigorous debate among Iraqis relating to what could have been very significant milestones in the development of Iraq petroleum sector. Hence, the choice of end-2010 is the appropriate demarcation time-frame for this volume.

Over the last twenty years I have been compiling various, but related and relevant, documents, reports, studies, data and statistics and, accordingly, I have now very large, well organised, structured thematically and updated regularly, at least weekly, Database. Moreover, I developed and maintained relatively large network of contacts comprising senior government officials at different levels, parliamentarians, professionals, scholars, research institutions, academics, civil society organisation and media among others; such networking proved to be invaluable source of relevant insights, confidential materials and views from "inside the box".

My Database includes separate annual reports, exclusively, on the oil sector the first covers 2010 and earlier years and the latest is for 2021; these annual reports are the core of the archival efforts comprising well referenced, accurate, and verifiable data and sources. While archiving each annual report I read, commented and make different remarks on each item included in each annual report. Contents of parts two and three of this book are extracted from the annual report for 2010 and earlier years, but without incorporating my comments and remarks made on them then; I do not want to influence the readers' understanding of these items with my own views.

Also, my Database comprises significant statistical data and time-series on different aspects of petroleum sector, which I compile, regularly, from formal and credible sources, both Iraqi and non-Iraqi.

In the same way I followed closely the related development in the country and had my own contributions through various research work, analyses, publications, presentations, consulting assignments and commentaries among others.

I found it opportune to launch major research and publication project aiming at documenting, professionally and objectively, the development of the petroleum sector in the country by presenting different informed thoughts, views and insights that impacted the debate, policies and course of events.

The project comprises many volumes and begins with this recently published book, the details of which are summarized as follows:

Book title: Iraq Petroleum Sector Chronicle

Book Sub-title: Grand Opening for Big Push Strategy, Volume 1, 2010 & earlier

Author: Ahmed Mousa Jiyad

Publisher: Lambert Scientific Publication

ISBN-13: 978-620-4-20851-0; ISBN-10:6204208519; EAN:9786204208510

Pages: 434

Price: 98.90 € (Euro)

My prime purpose for preparing this book is to make it convenient reference for those interested in Iraqi petroleum sector, to understand the complexity of related issues and the discourse that prevailed in 2010 and positions taken by different parties; what, when by whom and, probably, why!!

This book is "Volume 1" and I intend, hopefully, to publishing further volumes covering years 2011 onward, since I have done already the basic research and have the needed documents and statistics in my Database. 

The book provides different perspectives on Iraqi petroleum issues that prevailed during the period covered by the book: my own, other Iraqis, international views and statistics; it was structured according to these perspectives respectively in its four parts. Hence, the book is premised on "evidence-based research" that was thoroughly done, mostly during 2010 but also covers a couple of earlier years.

For those years prior to 2011, as was the case since then and as mentioned above, I compiled and documented my own Database, the oil annual reports and numerous thematic, i.e., issue specific, folders.

Part one of the book comprises a selection of my own essays and research work.

Each of my "Essays.." has its own methodology, structure, assumptions, analysis, discussion and consulted references; information on each essay was provide, when and where it was published and the web-link to access it, if that is permissible by the related websites.

Part two of the book comprises views of and positions taken by some selected well-known Iraqi oil professionals, senior government officials and others aiming at presenting a balance of wide spectrum of different, and sometimes opposing, views positions and affiliations; these are presented in a form of own articles, interviews and collective statements. They reflect the richness and diversity of opinion that shaped the discourse among Iraqis at that time and, consequently, enriched the value of this book. Official views, expressed, through detailed interviews and statements, by senior government officials and decision makers reflect the political vision and economic aspiration of the dominant political parties, groups, religious/ politicized individuals and different associations and gatherings of professionals, notably oil experts and professionals inside and outside the country.

Part three comprises outside foreign and international standpoints and contributions to the debate about Iraq's petroleum and its prospect; a large number of items compiled from many and different external sources includes reports, studies, articles and media reporting among others, most if not  all, were written by non-Iraqis.

This part adds the third perspective of the book; how the outside world looked to Iraqi petroleum matters, what was their preoccupation, how did they understand or failed to understand, analyse, debate the issues and foresee the implications. It is really amazing to revisit the then prevailed insights and wisdom!!

Part four provides the statistical perspective through many annexes which are extracted from my Database; these include the most important statistical data (without further statistical analysis) pertaining to petroleum sector for 2010. The purpose is to supplement the expressed views with the "material evidence" in the form of data and statistics.

I would like to make the following remarks and caveats

Methodologically, the book is chronicle/archival of some of what was written, debated and published in 2010 and, a few belongs to, earlier years. Hence all items included in parts one, two and three are reproduced "as is/was", i.e., exactly as they were published in 2010, except the necessary editing to unify the text of the book to comply with publisher guidelines and requirements.

Therefore, it is vital to emphasise that the book is NOT about 2010 written from 2021 perspectives or in retrospective; rather it is on 2010 as was written in 2010 or earlier.

Each and every item included in parts two and three of the book has its source, the web-link, date of publication and the date I accessed it and compiled it in my Database. Sources, for the tables of part four of the book, are also provided. This is vital for verification, acknowledgement of copy right and helpful for further research on Iraqi petroleum.

A note of caution is due regarding websites availability; some websites do not exists anymore, some are changed to other identification, others are not accessible, for whatever reason, and some require subscription or fee for access.

Intentionally and for logistical reasons, I excluded items written in Arabic.

The book is a fruition of almost two decades of constant follow-up, research, direct involvement, networking and archiving. I encountered too many challenges during the course of those years, but with patient and determination I managed to overcome them; this book is the testimony for perseverance!

I would like to sincerely and wholeheartedly thank Tariq Shafiq for his kind "Preface" of the book; much appreciated Akhi Abu Ehsan.

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), Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad's biography here.

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Iraq OKs talks with Chevron on Oil Exploration

By John Lee.

Iraq's Ministerial Energy Council approved discussions with US-based Chevron on the development of four exploration blocks in Dhi Qar.

The statement from Iraq's Ministry of Oil gave no further details, but the project had previously been discussed during Prime Minister Mustafa al-Kadhimi's visit to the United States in August.

Chevron currently has interests in the Sarta and Qara Dagh blocks in Iraqi Kurdistan.

(Source: Ministry of Oil)

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Sonangol meets with INOC to discuss Production at Qayara

By John Lee.

The President of the Iraqi National Oil Company (INOC), Oil Minister Ihsan Abdul-Jabbar Ismail, has chaired a meeting with the CEO and management of Angola's Sonangol, the main operator of the Qayara [Qayyarah] oil field in Nineveh Governorate.

Also joining the meeting was the management of the North Oil Company (NOC) and the Department of Oil Contracts and Licensing.

The meeting included discussion on increasing production and improving quality at Qayara.

(Source: Ministry of Oil)

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Petrofac Fined $105m; Shares Rally Futher

By John Lee.

Shares in Petrofac were trading up more than 7 percent on Monday, as the company was ordered to pay GBP 77 million [$105 million] after the UK's Serious Fraud Office (SFO) secured further convictions in its investigation into bribery and corruption at the Jersey-registered energy services company.

On Friday, Petrofac Limited pleaded guilty to seven separate counts of failing to prevent bribery between 2011 and 2017.

Petrofac Limited admitted that it failed to prevent former senior executives of the Petrofac Group from paying GBP 32 million (USD 44 million) in bribes, to help the Petrofac Group win over GBP 2.6 billion (USD 3.5 billion) of contracts in the oil and gas industry in Iraq, Saudi Arabia and the United Arab Emirates.

The Court heard how, over a period of six years, senior executives within the Petrofac Group engaged in elaborate schemes to corrupt the awarding of contracts, using agents to systematically bribe officials to win lucrative contracts by unfair and dishonest means.

A key feature of the case was the complex and deliberately opaque methods used by these senior executives to pay agents across borders, disguising payments through sub-contractors, creating fake contracts for fictitious services and, in some cases, passing bribes through more than one agent and one country, to disguise their actions.

Lisa Osofsky, Director, Serious Fraud Office, said:

"By pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed. The company's failure to prevent this conduct distorted competitive market conditions and tainted the oil and gas industry.

"Today's result should serve as a warning; the SFO will use all the powers at its disposal to root out and prosecute companies and individuals, whose criminal activity detrimentally affects the reputation and integrity of the United Kingdom.

"The SFO welcomes Petrofac Limited taking responsibility for its conduct."

This is the third set of convictions secured by the SFO in its four-year investigation into cross-border corruption at the Petrofac Group. David Lufkin, former Head of Sales at Petrofac pleaded guilty to 11 counts of bribery in 2019 and 3 counts of bribery in 2021.

Lufkin was today sentenced to a two-year custodial sentence, which was suspended for 18 months. In addition to pleading guilty, David Lufkin co-operated with SFO investigators and assisted with the investigation.

The SFO continues to investigate this case.

Petrofac Chairman René Médori said:

"This draws a line under a regrettable period of our history. We have taken responsibility, reformed and learned from these past mistakes, as acknowledged by the SFO and the Court. Most importantly, the extensive work that we have done since the SFO investigation began means that the Petrofac of today has a comprehensive compliance and governance regime that meets or exceeds international best practice.

"The past behaviour uncovered by the SFO would not be possible today, and we look to the future a better and more focused company, well positioned to capitalise on the opportunities we see before us."

(Sources: SFO, Petrofac)

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