KRG Bureaucracy Delays DNO Investment

DNO ASA, the Norwegian oil and gas operator, has reported operating profit of USD 61 million in the quarter ending 30 June 2021, its second consecutive profitable quarter since the onset of the COVID pandemic. Revenues totaled USD 184 million, up USD 14 million from the previous quarter, as higher oil and gas prices more than compensated for lower North Sea volumes sold.

Gross operated production at the Company's flagship Tawke license in Kurdistan averaged 110,300 barrels of oil per day (bopd) in the second quarter, of which the Peshkabir field contributed 63,000 bopd and the Tawke field 47,300 bopd. Of the total, 82,700 bopd were net to DNO's interest during the quarter.

DNO's North Sea net production dropped to 9,900 barrels of oil equivalent per day (boepd) in the second quarter, primarily due to planned summer maintenance shutdowns at Marulk and Alve and infill drilling at Ula and Tambar. The Company expects the North Sea contribution to average 13,000 boepd for the year.

In the wake of an ongoing reorganization of Kurdistan's Ministry of Natural Resources, the Company has experienced extended delays to the final approval of its 2021 Tawke field work program and budget as well as to the approvals necessary to fast track early production from the Baeshiqa license. The delays are expected to defer USD 50 million in 2021 DNO net spending in Kurdistan which could have generated up to 15,000 bopd gross production across DNO's three operated fields (Tawke, Peshkabir and Baeshiqa) going into 2022.

With no new wells coming on production at the Tawke field in more than a year, the natural production decline has been partially offset by pressure support from reinjection of over 20 million cubic feet of gas per day from the Peshkabir field in addition to workovers and interventions of existing wells.

"We are eager to invest and produce more oil in Kurdistan," said DNO's executive chairman Bijan Mossavar-Rahmani. "In nearly two decades of operations in Kurdistan, DNO has confronted and overcome multiple challenges and we are well positioned to continue to do so," he added.

In the North Sea, DNO maintains an active drilling program in 2021, including two appraisal wells on previous discoveries and three exploration wells, the first of which has been drilled leading to a discovery. In addition, the Company plans 10 development wells this year.

Recently, the DNO-operated Brasse project selected the Equinor-operated Oseberg facilities as the preferred development host. With total field reserves of 35 million boe and a relatively modest topside construction scope on Oseberg, Brasse has robust project economics based on a 2022 project sanction target.

With an operational cash flow of USD 160 million, an increase of 135 percent from the first quarter, the Company reduced its bond debt to USD 700 million through a USD 100 million partial bond redemption. DNO exited the quarter with a net interest-bearing debt of USD 396 million, the lowest level since yearend 2018.

DNO received USD 159 million in the second quarter from Kurdistan, up from USD 75 million in the first quarter of 2021. Additional payments this week bring the total 2021 receipts from Kurdistan to USD 290 million year-to-date. The arrears built up as a result of Kurdistan's withholding of payment of certain invoices to DNO in 2019 and 2020 total USD 214 million, excluding any interest.

(Source: DNO)

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China Buys “nearly Half” of Iraq’s oil

By John Lee.

An advisor to Iraqi Prime Minister Mustafa al-Kadhimi has said that nearly half of the country's oil exports go to China, making China the number one market for Iraqi oil.

Speaking on Thursday, Mazhar Muhammad Salih said that China accounts for about 40-44 percent of Iraqi oil exports, equating to about 800,000 barrels of oil per day.

(Source: INA)

(Pictured: Former Prime Minister Adil Abdul Mahdi with China's Premier Xi Jinping, in September 2019)

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Nassiriyah Hospital Fire: Arrest Warrants Issued

By John Lee.

Authorities in Iraq are facing accusations of negligence following the fire at the al-Hussein coronavirus hospital in Nassiriyah on Monday.

Estimates of the death toll range from 60 to over 100, with more than 100 people injured.

The fire is believed to have started when sparks from faulty wiring caused an oxygen tank to explode.

Arrest warrants have been issued for several officials.

(Sources: Reuters, BBC, The New Arab)

The post Nassiriyah Hospital Fire: Arrest Warrants Issued first appeared on Iraq Business News.

Will Baghdad, Erbil fulfil Budget Obligations?

From Amwaj Media. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

With deal in hand, will Baghdad, Erbil fulfil budget obligations?

To what extent will the Kurdistan region of Iraq (KRI) be seriously committed to the provisions of the federal budget now that it has been approved?

And will the convulsions of the bilateral relationship between Erbil and Baghdad reappear if one of them violates these provisions or does not abide by them?

The full report can be viewed here (registration required).

The post Will Baghdad, Erbil fulfil Budget Obligations? first appeared on Iraq Business News.

Iraqi Cabinet allocates $34m for Emergency Electricity Work

By John Lee.

Prime Minister Mustafa Al-Kadhimi chaired the regular session of the Iraqi cabinet on Tuesday.

Addressing the ongoing crisis in electricity supply, the cabinet agreed to allocate 50 billion Iraqi dinars ($34 million) for emergency expenses and maintenance of the electricity infrastructure.

This will be achieved by profitable Ministry of Oil companies lending the funds to the Ministry of Electricity companies.

(Source: Govt of Iraq)

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China to Snap Up Iraqi Oil Assets?

By John Lee.

Both BP and Lukoil are reported to be considering quitting upstream oil operations in Iraq.

Reuters quotes Iraq's Oil Minister, Ihssan Abdul-Jabbar Ismail, as making the comments during a parliamentary session last week.

Last month, BP was said to be planning to spin off its Iraqi operations in Iraq into a separate company, which would be jointly owned with its partner in the giant Rumaila project, the China National Petroleum Corporation (CNPC).

Meanwhile, the Minister said Russia's Lukoil is thought to be trying sell its 75-percent stake in the West Qurna-2 oilfield to Chinese firms.

More here and here.

(Sources: Reuters, Oil Price)

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Deloitte Report on Kurdistan Region Oil and Gas

Deloitte report on Oil and Gas review in the Iraqi Kurdistan Region - Q1 to Q4 of 2020

The KRG has published a report containing verified statistics covering the Kurdistan Region's oil exports, consumption and revenues for period 1 January 2020 to 31 December 2020, along with the consolidated report for the year 2020.

The report, available in Kurdish, English and Arabic, provides a quarterly analysis of oil export information and average prices.

The data verification was performed by Deloitte.

Transparency being central to the cabinet agenda, the KRG regularly assesses what additional disclosures would enhance the transparency of its oil and gas sector. Accordingly, from 2019 the KRG started providing information on the prepayment balances it owes to oil traders and in 2020 disclosures are further extended to include reconciliation between production and exports and local consumptions.

The KRG acknowledges the positive feedback received so far from domestic and international stakeholders. The council reiterates its commitment to the people of Kurdistan that Deloitte will continue to independently review the region's oil and gas sector.

A frequently asked questions handbook (also available in Kurdish, English and Arabic) will help readers to understand the report's contents.

Click here to download the reports.

(Source: KRG)

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