Iraq Postpones Oil and Gas Auction

By John Lee.

Iraq’s Ministry of Oil has reportedly postponed its oil and gas bidding round for 11 new blocks to 25th April.

Abdul Mahdi al-Ameedi, director general of the Petroleum Contracts and Licensing Directorate (PCLD), told Reuters:

“The bidding process was rescheduled to be on April 25. It is just to give the companies a little bit more time to submit the bid bonds and be prepared for the bidding.”

However, Oil Ministry Spokesman Asim Jihad told Bloomberg he was unaware of any postponement in the auction, originally scheduled for 15th April.

Just two weeks ago, the ministry said it was changing to a new “hybrid” type of oil contract.

(Sources: Reuters, Bloomberg)

5 Firms Shortlisted for Major Water-Injection Project

By John Lee.

According to a report from Platts, Iraq has shortlisted five international engineering companies to bid for the first phase of the Common Seawater Supply Project (CSSP), a major water-injection project that will help the country boost long-term production from its southern oil fields.

The project would take in around 5 million barrels per day (bpd) of water from the Persian Gulf, process it for field injection, and deliver it by pipeline to a half dozen fields in Basra province.

It has been under discussion for nearly a decade, and wsa priced at $12 billion when capacity was to be 10 million bpd of water.

More here.

(Source: Platts)

GKP Shares Rise on Annual Results

Shares in Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, closed up more than 4 percent on Wednesday following the announcement of its results for the year ended 31 December 2017.

Highlights to 31 December 2017 and post reporting period

Operational

  • Strong safety performance during 2017; 3 million man-hours without a Lost Time Incident achieved.
  • Average gross production of 35,298 barrels of oil per day (“bopd”) – in the middle of 32,000-38,000 bopd guidance for the year.
  • Plant uptime of 99% in 2017.
  • Shaikan production for Q1 2018 averaged 31,588 bopd.
  • Gross production guidance for 2018 is set at 27,000-32,000 bopd. 

Financial

  • Signing of the Crude Oil Sales Agreement, which was announced in January 2018, represents a key milestone for the Company.
  • Moved to a more transparent invoicing mechanism with the MNR; payment now linked to international oil price and total production at Shaikan.
  • Profit for the first time since entry to Kurdistan – net profit of $14.1 million (2016: net loss of $17.4 million).
  • Revenue of $172 million (2016: $194 million).
  • The cash component of revenue increased by 28% to $157 million from $122 million in 2016.
  • Positive cash flow driven by steady operating activities, payments from KRG and limited investment.
  • 11 payments received during 2017 from the KRG amounting to $132 million net (2016: $114 million net to GKP).
  • Cash balance of $160 million as at 31 December 2017 (2016: $93 million).
  • Continued cost optimisation, with additional initiatives to lower costs achieved against stable production.
  • Reduction of operating costs per barrel year-on-year to $2.8/bbl (2016: $3.5/bbl).
  • Further reduction of G&A to $21.3 million from $25.5 million in 2016.
  • GKP has received payments in Q1 2018 from the KRG totalling $75.1 million gross ($59.3 million net).
  • Robust financial position as at 10 April 2018, with cash balance of $203 million against $100 million of debt.

Corporate developments

  • Jaap Huijskes assumes the role of Non-Executive Chairman, as of today.
  • Updated KPIs were introduced in 2017, as part of GKP’s continued efforts to achieve high standards of corporate governance.

Outlook

  • The Crude Oil Sales Agreement is an important commercial event and moves the business closer to finalising commercial negotiations with the MNR
  • Subject to finalising certain commercial and contractual matters, the Company is ready to resume investment into Shaikan in 2018.

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said: 

We are pleased to have reported a net profit for the year of $14.1 million, compared with a net loss of $17.4 million in 2016.  We made considerable commercial progress during the year and into 2018, with the signing of the Shaikan Crude Oil Sales Agreement being a key milestone for the Company. 

“We were pleased to achieve average gross production of 35,298 bopd at Shaikan, in the middle of our target guidance of 32,000-38,000 bopd for 2017.  We are confident that once we are able to restart investment into Shaikan we will be able to lift production towards our near-term target of 55,000 bopd, a step towards the full field development.

“I would like to thank our shareholders for their support, our hosts the Kurdistan Region of Iraq, and all Gulf Keystone employees, for their commitment and professionalism during 2017.  I would also like to welcome our incoming new Chairman, Jaap Huijskes, and reiterate our thanks to his predecessor, Keith Lough.

More here.

(Sources: GKP, Yahoo)

Iran Oil Ministry: Iraq to Blame for Delay in Oil Swap

Iran’s Oil Ministry linked a 4-month delay in the implementation of an oil swap deal with Iraq to the Arab country’s unpreparedness and technical problems.

In a letter to the Tasnim News Agency in response to a recent report on the lengthy delay in implementation of the oil swap deal with Iraq, Iran’s Oil Ministry said the problem lies in the Arab country’s failure to remove the obstacles.

The slight delay in implementing the major deal on swapping the crude oil produced in northern Iraq is mainly because of unprepared infrastructures and some logistical deficiencies on Iraq’s part,” the letter read.

It said the oil swap operation will begin soon, dismissing reports on “oil diplomacy negligence” or secret issues being behind the delay.

In February 2017, Iraq’s Oil Ministry said it had signed a deal with Iran to carry out studies on the construction of a pipeline to export crude oil from the northern Iraqi fields of Kirkuk via Iran.

In December, the two neighbors finalized the agreement, according to which Iran would provide Iraq’s southern ports with oil of the same characteristics and in the same quantities as those it would receive from Kirkuk.

Between 30,000 and 60,000 bpd of Kirkuk crude will be delivered by tanker trucks to the border area of Kermanshah, where Iran has a refinery.

The two countries are planning to build a pipeline to carry the oil from Kirkuk, so as to avoid trucking the crude.

(Source: Tasnim, under Creative Commons licence)

Antonoil, Petrofac to take over Majnoon from Shell

By John Lee.

Oil executives have told Reuters that the Iraqi Oil Ministry has signed a two-year contract with China’s Anton Oilfield Services (Antonoil) and Petrofac to operate the giant Majnoon oilfield (pictured).

The companies will operate the oilfield on behalf of the state-owned Basra Oil Company (BOC), which will take over operations from Shell by the end of June.

(Source: Reuters)

Southern Refineries to Increase Capacity by 33%

By John Lee.

Iraq plans to increase capacity at its southern refineries to 280,000 barrels per day by the end of 2018.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] made the announcement at the opening of the second phase of the fourth unit project in the south refineries in Basrah governorate.

The new project will have a capacity of 70,000 bpd, and will increase production from its current level of 210,000 bpd.

It is being implemented by the Czech company Techno Export, and includes the construction of two units for liquid gas production and water treatment.

(Source: Ministry of Oil)

Million+ Households to Benefit from new Financial Programs

The World Bank Group approved the Emergency Social Stabilization and Resilience Project (ESSRP), a US$200 million project that aims to improve the livelihoods of over one million Iraqi in liberated areas through the provision of cash, short-term employment, and other means of social support, namely to the most vulnerable.

As the Government of Iraq (GoI) is moving quickly back into ISIS liberated areas, the ESSRP will support the Government of Iraq in providing social support to the existing populations and returnees within the overall Iraq Social Protection Strategic Roadmap.

It will increase short-term employment and livelihood opportunities, and thus provide 150,000 households with cash for work support, benefiting about 840,000 individuals, and generating about 15,000,000 work days. The project will also increase access to psychosocial services for more than 150,000 people who will receive mental health and gender based violence assistance services to mitigate the psychological impact of the conflict on the population and would strengthen the systems to expand the provision of social safety nets.

At the same time, ESSRP will support the medium-term development of resilient social safety nets and provision of livelihood support, through financing small and micro enterprises benefiting about 12,000 households

This project is vital for ensuring that rebuilding Iraq is not only about rebuilding brick-and-mortar infrastructure, but also about improving the lives of Iraqis and bringing social stability,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “This project will support individuals and households to address the impact of the recent conflict and help communities to kick-start economic activity and create more jobs.

The project will leverage existing social workers and payment methods and would also introduce robust social accountability, citizen engagement, and grievance redress mechanisms to build social cohesion, trust, and strengthen the relationship between the central and local governments.

These mechanisms will also consider gender aspects and support for vulnerable and marginalized groups, helping to address some of the root causes of violence. The project is part of a full World Bank package of support to the reconstruction and development process in the liberated areas which focus on both the infrastructure and social dimensions.

The project will support poverty reduction and stabilization in the liberated areas,” said H.E. Mr. Mohammed Shayaa Al-Sudani, Minister of Labor and Social Affairs, “At the same time, income generating microfinance programs will allow households to restart business activities, and to create jobs in these areas.

The project will also strengthen the resilience of social safety net programs to allow the GOI to assist poor/vulnerable groups and build resilience to shocks effectively and efficiently.

One key component of this project is to ensure people can address existing and future shocks. This project will improve social safety net programs for 1.2 million households across Iraq. It will allow households to invest in health and education, to break the intergenerational transfer of poverty” said Ghassan Alkhoja, World Bank Senior Social Protection Specialist and Project Team Leader.

(Source: UN)

Direct Appeal to Federal Supreme Court against INOC Law

By Ahmed Mousa Jiyad.

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

Immediately after the Iraqi parliament voted the new INOC Law and after thorough and critical examination and analysis of the law it becomes apparently clear that the law is full of shortcomings, ambiguity, contradictions and above all it contrives the Constitution repeatedly and thus it is unconstitutional. Hence, an appeal to the Federal Supreme Court becomes urgent necessity to revoke this devastating law.

Due to the importance of the law and its highly likely damaging impacts on the petroleum sector and on the Iraqi economy at large, it is imperative and of vital necessity to adopt inclusive and participatory methodology for combating the law. For this purpose I adopted four phases AMTA approach: Awareness, Mobilization, Teaming-up and Action.

Awareness phase aims at highlighting what is seriously wrong with the law by, first, providing preliminary evaluation of the law. The evaluation, written in Arabic on 8 March, was posted on many websites, such as (http://www.akhbaar.org/home/2018/3/241534.html ) and disseminated among my very extensive network of contacts inside and outside Iraq (ca. 2000 contacts). Similarly, an English article was posted on 12 March on IBN website (http://www.iraq-businessnews.com/2018/03/12/inoc-law-dysfunctional-unconstitutional-and-disintegrative/ )

Further article in Arabic was shared, on 20 March, among my network and also published widely provides further specific and with economic evaluation on how this law could violate the constitution, weaken INOC itself and contribute to the disintegration of the country, (http://www.akhbaar.org/home/2018/3/242198.html)

 

Mobilization phase began by calling upon Iraqis, collectively or individually, to protest the law and file “open” appeal to the Federal Supreme Court; two articles in Arabic were shared and posted on 26 and 27 March respectively:  http://www.akhbaar.org/home/2018/3/242229.html   and http://www.akhbaar.org/home/2018/3/242284.html

The call aims at prompting the citizens to know their constitutional rights and empower them with the knowledge base to act as was enshrined in the constitutional article 93, which says the Federal Supreme Court shall have jurisdiction over the following, among others: “Overseeing the constitutionality of laws and regulations in effect” and “The law shall guarantee the right of direct appeal to the Court to the Council of Ministers, those concerned individuals, and others.”

Much of my writings were in comparative and structuralist methodology: by comparing this law with first, the constitution, second, with previous INOC laws, third, with other laws of direct relevance to the topic and fourth with lessons learned from INOC history and structural progression since its foundation in early sixties of the last century.

 

Team working phase began when many oil professionals, lawyers, civil society organization, politicians, parliamentarians and media sources among others supported the idea of appealing to FSC.

Three groups of Iraqi lawyers volunteered to provide legal support on substantive and procedural matters pertaining to the appeal before FSC and a small group of Iraqi oil professionals was assembled in Baghdad to maintain contacts with the lawyers and follow-up the matter inside the country especially with media sources and events organization. The discussion with the lawyers suggests that at this stage, two fundamental steps must be done: the first is to prepare a draft of detailed appeal against the law on article-by-article base and the second is to provide the lawyers with “Power of Attorney” by me and other plaintiffs.

A detailed appeal (in Arabic) was drafted and circulated, 4 April 2018, among the wider network and also posted on many websites such as,  http://www.akhbaar.org/home/2018/4/242627.html . The draft proves that INOC law contravenes ten constitutional articles in addition to other critical flaws; in total there are 29 identified cases for appeal against the law.

 

Action phase began with many different actions:

–          Many of the contacts in my professional network recirculated the articles above mentioned among their own networks;

–          One lawyer convened a big gathering in one of Baghdad known hotels attended by active parliamentarians;

–          A well-respected journal, Al-Thaqaf al-Jadeda,  convened, on 7 April, in Baghdad,  a roundtable debate on the law attended by known professionals on both side of the isle, my participation was in absentia and the PowerPoint was presented by one of the supporting group there;

–          A report on the debate was published on 8 April on Tareeq Al-Shaab Newspaper;

–          A group of Iraqis abroad launched on 4 April an online-campaign against the law (http://ehamalat.com/Ar/sign_petitions.aspx?pid=1002 )- the number of cite visitors exceeds 8000 (at 13 PM Norway time today 8 April 2018).

Copy of the “Power of Attorney” was circulated among “the  willing and like-minded” to authorize specified two lawyers to pursue the appeal once the law was published on the Official Gazettes- Al-Waqaee Al-Iraqiya. It is also available for anyone willing to pursue the appeal action. 

All components of the AMTA approach are ongoing and continue until this atrocious law is revoked.

Those willing to see the text of draft appeal in Arabic can access it freely through

تفاصيل الطعن المباشر بقانون شركة النفط الوطنية العراقية http://www.akhbaar.org/home/2018/4/242627.html

For endorsing our campaign against the law one can sign on the electronic appeal through

http://ehamalat.com/Ar/sign_petitions.aspx?pid=1002

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, Rosneft discuss increasing Cooperation

By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has met with Deder Kasemero, the vice president and the regional manager of Rosneft, to discuss the expansion of cooperation in the Iraqi oil and gas sector.

The Minister said he is open for international companies such as Rosneft to participate in investment projects to rehabilitate oil pipelines, develop oil fields, build refineries and invest in flare gas.

(Source: Ministry of Oil)

GE “Helps Najibiya Power Plant Reduce Downtime”

GE Power has installed its Advanced Gas Path (AGP) gas turbine upgrade solution at the Iraqi Ministry of Electricity’s (MOE’s) Najibiya Power Plant.

The solution is expected to enable the MOE to increase the duration between the maintenance inspections of the gas turbines. This will decrease the downtime of the turbines and improve the availability and performance of the plant, allowing each gas turbine to feed power into the national grid for longer periods, helping to meet the country’s growing energy needs. It will also help the MOE to lower annual operations and maintenance costs.

Mussab Almudaris, official spokesperson of the Iraqi Ministry of Electricity, said:

“We are focused on enhancing access to electricity for our people and one of the critical means to achieve this goal is to make the best possible use of existing power generation infrastructure. GE’s upgrade technology at the Najibiya Power Plant is helping us to do just that, supporting the delivery of electricity for longer periods of time from the same turbines. This was a much-needed solution, particularly with Ramadan, the month of fasting, and the hot summer months right around the corner.”

Operational since 2015, the Najibiya Power Plant is equipped with four GE 9E gas turbines, and runs primarily on heavy fuel oil (HFO) to generate a total of up to 500 megawatts (MW) of power that is fed into the national grid. The site is located in the southern governorate of Basra, close to the Iraq-Kuwait border – one of the hottest inhabited locations in the world, where temperatures often exceed 50 degrees Celsius.

The power generated at the facility is largely supplied to residents, businesses and industries in the area, and vital for the local population to cope with the extreme temperatures in Basra, helping to operate fans and air conditioners.

Joseph Anis, President & CEO of GE’s Power Services business in Africa, India and the Middle East, said:

“Access to uninterrupted electricity is a cornerstone of modern civilization and essential to a high quality of life … GE’s Advanced Gas Path solution can help each turbine at the Najibiya Power Plant run for up to an additional three months per year when the plant is powered by heavy fuel oil, substantially increasing the amount of electricity available for both domestic and commercial use.”

In addition to providing the AGP solution, GE Power has also signed a five-year agreement in 2015 for the supply of parts, repairs and services at the Najibiya Power Plant. Furthermore, GE Power is providing round-the-clock on-site monitoring services for the gas turbines at the facility, whereby parameters such as the units’ temperature, vibration, speed and other indicators are continuously tracked and any disturbances immediately reported so the underlying issue may be identified and fixed to prevent faults and unplanned downtime.

Najibiya Power Plant is one of 8 sites where GE is installing a total of 36 AGP units under the Power Up Plan II. To date, over 130 GE turbines have been installed across Iraq and GE-built technologies generate up to 50 percent of Iraq’s power. The company has supported the development of the energy, healthcare and transportation sectors in Iraq for over 40 years and employs up to 300 people in the country, more than 95 percent of whom are Iraqi nationals.

(Source: GE)