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KRG Denies seizing control of Oil Fields

By John Lee.

The Kurdistan Regional Government (KRG) has denied seizing the Bai Hassan and Dawd Gurg oil fields in Kirkuk from the Iraqi federal government’s Ministry of Oil.

On Saturday, the North Oil Company (NOC), which is owned by the Iraqi National Oil Company (INOC), claimed that the KRG took over the fields in what it said was a contravention of Iraqi law.

The KRG has issued a statement saying the claims are, “completely untrue and are aimed at sowing discord.“

Bai Hassan was originally controlled by the Ministry of Oil (Baghdad), but seized by KRG forces in July 2014. It was subsequently returned to Baghdad (NOC) control in 2017.

(Sources: NOC, KRG)

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Iranian Gas passed off as Iraqi Origin

By John Lee.

Media in Pakistan report that Iranian LPG has been illegally imported into the country under the guise of Iraqi product.

According to Business Recorder, the latest case is one of five ships which are allegedly involved in the illegal import of Iranian LPG using a falsified declaration of origin.

Pakistan’s Ministry of Interior (MoI) has reportedly directed the authorities to take action against the carrier.

More here.

(Source: Business Recorder)

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DNO Profits Surge on Back of High Oil and Gas Prices

DNO ASA, the Norwegian oil and gas operator, today reported an 84 percent jump in operating profit in the first quarter of 2022 to USD 236 million on the back of high oil and gas prices and solid production performance. Net debt dropped USD 126 million quarter-on-quarter to USD 27 million.

“Oil and gas are back,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani, “and of course, DNO never left.” Operations have continued uninterrupted across the portfolio, notwithstanding the challenges faced by the industry in the past two years. “We’ve remained true to our commitment to develop oil and gas in a cost-effective and responsible way,” he added.

In addition to raising investments in its core business with the additional financial firepower, the Company will now step up to pay down debt and return cash to shareholders, according to Mr. Mossavar-Rahmani.

Yesterday, DNO announced a USD 200 million partial redemption of the DNO03 bond. In addition, USD 23.8 million of the bond previously acquired by the Company will be cancelled. At the late May AGM, the Company will ask shareholders to authorize an increase in annual dividend payments from NOK 0.40 to NOK 1 per share and retain the flexibility to resume its buyback program.

As previously reported, gross production at the Company’s flagship Tawke license in Kurdistan averaged 106,500 barrels of oil per day (bopd) during the quarter, of which the Peshkabir field contributed 64,500 bopd and the Tawke field 42,000 bopd. Of the total, 79,800 bopd were net to DNO’s interest. North Sea net production averaged 12,700 barrels of oil equivalent per day (boepd), bringing the Company’s total quarterly net production to 92,500 boepd.

In Kurdistan, DNO has ramped up drilling activities to maintain Tawke license gross production of 105,000 bopd on average in 2022. The first phase field development of the Baeshiqa license has been fast-tracked, with a third well, Zartik-2, currently drilling ahead at 2,300 meters.

In the North Sea, the Company projects net production in 2022 to remain 13,000 boepd on average. DNO’s active 2022 exploration program comprising seven wells was kicked off with the Kveikje discovery well (25-50 million boe gross resources and a DNO participating interest of 29 percent) which has proven up a new play concept in an area offshore Norway in which DNO has a significant acreage position. Six additional exploration wells will be drilled this year.

An earnings call with DNO CFO Haakon Sandborg will be held today at 11:00 (CET). A link to the call is available on the Company’s homepage www.dno.no.

Key figures

Q1 2022 Q4 2021 Full Year 2021
Gross operated production (boepd) 106,465 107,472 108,713
Net production (boepd) 92,548 94,175 94,477
Revenues (USD million) 339 396 1,004
Operating profit/-loss (USD million) 236 128 321
Net profit/-loss (USD million) 140 65 204
Free cash flow (USD million) 152 227 362
Net debt (USD million) 27 153 153

(Source: DNO)

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Genel Energy issues update on Trading and Ops

Genel Energy has issued the following trading and operations update ahead of the Company’s Annual General Meeting (‘AGM’), which is being held today:

Bill Higgs, Chief Executive of Genel, said:

“Our robust financial position continues to strengthen, supporting investment in our organic portfolio as well as our progressive dividend. Despite the result of Sarta-5, the well delivered useful data that we will incorporate together with the results of our next well, Sarta-6, into our forward plans for the field. As we look to add production and further bolster our progressive dividend and create value for stakeholders, we continue to review both organic and inorganic opportunities.”

FINANCIAL PERFORMANCE

  • $95 million cash proceeds received in Q1 2022 from the Kurdistan Regional Government
  • Free cash flow of $43 million in Q1 2022
    • Margin of $30/bbl in Q1 2022 (2021: $24/bbl), with Brent averaging $102/bbl (2021: $71/bbl)
    • Capital expenditure of $35 million in Q1 2022, of which $19 million was spent at Tawke, and $12 million at Sarta
    • Of the $35 million total invoiced for December 2021 oil sales, $17 million was received in Q1 2022, with $18 million of invoices being received after period end
  • Cash of $356 million at 31 March 2022 ($314 million at 31 December 2021)
  • Net cash of $86 million at 31 March 2022 ($44 million at 31 December 2021)

PRODUCTION

  • Net production of 30,520 bopd in Q1 2022, in line with guidance
  • Zero lost time injuries or Tier 1 losses of primary containment in Q1 2022
  • Tawke PSC (25% working interest)
    • Gross production of 106,470 bopd in Q1 2022, 26,620 net to Genel, of which Peshkabir contributed 64,500 bopd and Tawke 41,970 bopd
    • A high level of activity was maintained at Tawke in Q1 2022, with five wells spud across the Tawke and Peshkabir fields, with a fourth drilling rig set to be added
    • The Peshkabir-Tawke gas project has captured 12 billion cubic feet of otherwise flared gas, equivalent to 766,000 tonnes of CO2 equivalent, since start up in mid-2020 through the first quarter of 2022. Phase 2 is a $25 million expansion underway at the Tawke field to capture breakthrough gas, set to start in the fourth quarter of 2022. The operator, DNO, is also debottlenecking the Peshkabir gas plant originally designed for 50,000 bopd to handle larger volumes of associated gas from higher field production, which is now averaging 65,000 bopd
  • Sarta (30% working interest and operator)
    • Gross production of 5,590 bopd in Q1, 1,670 bopd net to Genel
    • Sarta-1D was brought onto production on 8 March from the Mus and Upper Adaiyah reservoirs, the same zone on production at Sarta-2. On well test at Sarta-1D the Lower Adaiyah produced at low oil rates with a high water cut while oil was discovered in the Butmah, achieving flow rates of over 1500 bopd, but again with a high water cut. Since coming onstream, production from the Mus and Upper Adaiyah reservoirs at Sarta-1D has been choked back in order to manage pressure decline between the two adjacent take points of Sarta-1D and Sarta-2, and water cut at Sarta-1D
    • Total field production has averaged c.6,150 bopd in May, as we continue to work through a programme to optimise production from the three producing wells
    • Sarta-5 testing completed on 9 May and the well is now suspended. As previously stated, the presence of oil associated with both the primary and secondary Jurassic reservoir intervals, 12 km southeast of the Sarta pilot EPF, will be subject to further investigation and integration into the joint venture’s understanding of the Sarta field and future planning
    • Test results from the Sarta-6 well, c.6 km to the west of the pilot EPF, are expected in Q3
  • Taq Taq PSC (44% working interest and joint operator)
    • Gross production of 5,070 bopd, 2,230 bopd net to Genel
    • As the margins at Taq Taq have increased, planning is underway for the resumption of drilling, with a well expected to spud around the end of 2022

PRE-PRODUCTION

  • Qara Dagh (40% working interest and operator)
    • The evaluation of the QD-2 well and its results is underway, with a decision on licence next steps to be taken later this year
  • Somaliland (51% working interest and operator)
    • Following the successful farm-out in December 2021, preparation is under way for the drilling of a well on the highly prospective SL10B13 block around the end of 2023
  • Morocco (75% working interest and operator)
    • Petroleum Agreement and Association Contract expected to be signed with ONHYM in Q2 2022, with a farm-out programme scheduled to begin later this year

ESG

  • Genel’s 2021 Sustainability Report has been issued today, detailing our environmental performance and the positive impact that we strive to have on the communities in which we operate. 2021 highlights include:
    • 11 social investment and community projects funded and delivered in 2021
    • Zero waste to landfill from operations at Sarta, with 92% recycled
    • Renewable energy feasibility study progressing at Sarta
  • Genel is marking twenty years of operating in the KRI with its Genel20 programme, increasing the scope of our social activities, including a new education initiative set to be launched next week at an event in Dohuk

2022 OUTLOOK AND GUIDANCE

  • Guidance reiterated, with production for 2022 at around the same level as the 2021 average
  • The Board is recommending the approval of a final dividend of 12¢ per share (2021: 10¢ per share) at today’s AGM, a distribution of $33.5 million, as we continue to fulfil our aim of paying a progressive dividend

(Source: Genel Energy)

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AirSada wins Medevac Contract with Hyundai in Basra

By John Lee.

The Turkish-based private jet charter company AirSada has won a second contract to supply medical evacuation (medevac) services, this time to South Korea’s Hyundai Engineering and Construction in Iraq.

The contract with AirSada, which runs to September 2025, includes air ambulance and medical treatment services.

It was signed by Mr Tolga Urcu, CEO of AirSada, and Mr Joonhwi Lee, Project Manager for Hyundai in Basra.

Earlier this year, the company won a similar contract with Japan’s JGC Corporation.

(Source: AirSada)

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Russian: ‘No objections’ to Kurdistan exporting Gas to Europe

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Russian ambassador to Iraq: ‘No objections’ to Kurdistan Region exporting gas to Europe

Elbrus Kutrashev (pictured) spoke to the Kurdish news outlet Rudaw about plans to export natural gas from the autonomous part of northern Iraq to Europe in response to the war in Ukraine.

Click here to read the full article.

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Shares in Genel Energy slump on Sarta Result

By John Lee.

Shares in Genel Energy were trading down 7 percent on Tuesday morning after the company announced disappointing results at the Sarta-5 appraisal well:

“Genel Energy plc (‘Genel’ or ‘the Company’) announces the following update on the Sarta PSC (30% working interest and operator).

“Testing of the Sarta-5 appraisal well has been completed. While oil was recovered to surface from a number of intervals, notably c.800 bbls of light oil from the Najmah formation, stable and sustained commercial flow of oil was not achieved from the primary reservoir objectives of the Mus and Adaiyah formations nor the secondary Lower Sargalu or Najmah formations. None of the intervals tested were able to support sustained flow of reservoir fluids, indicating that the reservoirs at this location are tight. This was identified as a critical pre-drill risk of this appraisal well.

“The presence of oil associated with both the primary and secondary Jurassic reservoir intervals, 12 km southeast of the Sarta pilot EPF, will now be subject to further investigation and integration into the joint venture’s understanding of the Sarta field and future planning. The well will now be suspended according to KRI regulations.

“The Sarta appraisal programme continues at Sarta-6, c.6 km to the west of the pilot EPF, with test results expected in Q3.”

(Source: Genel Energy)

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Iraq Revenues to Exceed $150 Billion

By John Lee.

A financial advisor to the Iraqi Prime Minister has said he expects Iraq’s revenues this year to exceed $150 billion.

Speaking to the state-controlled Iraqi News Agency (INA), Mudhar Muhammad Salih said sustained high oil prices, combined with non-oil revenues of “no less than $8-10 billion“, will result in total revenues for whole of Iraq (including the Kurdistan Region) of at least $150 billion.

His estimates were based on IMF assumptions, including an average oil price of  $104, and daily exports of crude oil from the Baghdad-controlled region of 3.4 million barrels per day.

(Source: INA)

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IBBC appoints Industry Specialist as Strategic Development Officer

IBBC appoints industry specialist as Strategic Development Officer

As the Iraq Britain Business Council (IBBC) Board and Executive Committee re-fresh their strategic plan to continue a pathway to success for Iraq and its business community, it has appointed a Strategic Development Officer to bring industry expertise and experience to its management team.

Colin Findlay brings over 40 years of experience in the Oil & Gas sector and in industrial manufacturing as a Chief Executive Officer and Industry Association Chairman.  Colin led Severn Glocon Group’s Iraq operations from 2012 onwards and was an active member of the IBBC during that time.

Colin says:

“I am delighted to take up this appointment. I took 3 months carrying out an in-depth strategic review of IBBC, its aims, objectives and member activities before joining and feel able now to support its future strategic development.

“My review further consolidated my understanding of the IBBC’s reputation and merits as an influencer in the Iraq & British business community. My initial activities will focus on improving the capacity of the IBBC to reach its goals before supporting Christophe in the delivery of long term strategic objectives.“

Christophe Michel’s IBBC’s Managing Director commented:

“We are delighted that Colin has chosen to join IBBC and support our work. His strategic review was very timely and has helped focus our thinking on the future of IBBC and how it delivers its work across the region.

“The IBBC has always sought to bring industry experience together with international relations expertise and also to ensure that we offer value to our members and business associates. The addition of Colin to the team will add strength and capacity to our work.“

Please see Colin Findlay’s bio here.

(Source: IBBC)

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Iraq Petroleum Sector Chronicle, Volume 2 – 2011

Iraq Business News Expert Blogger, Ahmed Mousa Jiyad, has completed the second volume of his chronicle of the Iraqi oil industry, this time covering 2011.

The first volume, published in October 2021, covers the development in the upstream petroleum in Iraq prior to 2011 and has a subtitle “Grand Opening for Big Push Strategy“.

The subtitle reflects the mood, sentiments, actions and views that prevailed then both inside and outside Iraq, expecting Iraq to be a game changer in the international petroleum scene; that was premised on the concluded service contracts pursuant to the bid rounds, particularly the first and the second, as evidenced by the contents of volume one of the book.

One year later, in 2011, signs of powerful restraints began to emerge and thoughts for revising downwards the unrealistic, unattainable oil production targets were contemplated; many views and opinions covered by volume 2 of the book were explicitly or implicitly advocating such revision.

Hence, the subtitle for this second volume reflects that dramatic shift from high expectations originally formulated after concluding the above mentioned contracts; it is “A Game Changer, No More“.

Click here to read the introduction to the book.

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