Category: Oil News

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KRG hits back at Genel Energy Claims

By John Lee.

The Kurdistan Regional Government (KRG) has responded to the statement on Friday by Genel Energy regarding the production-sharing contracts (PSCs) at Bina Bawi and Miran.

The KRG strongly denies that it is in repudiatory breach of the PSCs, and denies that Genel is entitled to any compensation.

It adds that it will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel’s renunciation of the PSCs.

The full statement from KRG follows:

On 10 December 2021, the Kurdistan Regional Government received a letter from a subsidiary of Genel Energy plc (“Genel”). In this letter, Genel confirmed that it did not intend to continue to perform its obligations under the Bina Bawi and Miran PSCs, and purported to terminate the PSCs with immediate effect. The Government understands that Genel Energy plc has made the same assertions in a public press release dated 10 December 2021.

Genel’s letter and the related press release were prompted by the Government’s issuance on 5 December 2021 of formal Notices of Termination, which validly terminated the PSCs subject only to the completion of the dispute resolution process set out in the PSCs.

Genel has sought to justify its termination of the PSCs by wrongly asserting that the Government is in repudiatory breach. The Government strongly denies that it is in repudiatory breach of the PSCs. Genel has also falsely claimed that the Government stated it would not perform its obligations under the PSCs. On the contrary, the Government has always acted in accordance with its obligations under the PSCs, and has consistently communicated the same to Genel.

However, Genel’s 10 December 2021 communication confirmed unequivocally that Genel had renounced the PSCs, and the Government has therefore confirmed today to Genel that the PSCs are validly terminated with immediate effect.

The Government regrets that Genel has failed to offer any credible proposals to develop the Bina Bawi and Miran oil and gas fields, and notes that this failure has significantly delayed the ability of the Government to develop those fields on a timely basis.

The Government also notes Genel’s public statement that it will pursue a substantial claim in international arbitration from the Government as a consequence of the termination of the PSCs. The Government strongly denies that Genel is entitled to any compensation. The Government will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel’s renunciation of the PSCs.

(Source: KRG)

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Unaoil Bribery Conviction Quashed

By John Lee.

Ziad Akle, Unaoil‘s territory manager for Iraq, has had his conviction for bribery quashed by the UK’s Court of Appeal today (Friday).

He had been sentenced to five years’ imprisonment in July 2020 having been found guilty of paying over $500,000 in bribes to secure a $55-million contract to supply offshore mooring buoys in Iraq.

The court found that the refusal by Serious Fraud Office (SFO) to provide key documents to the defence was “a serious failure by the SFO to comply with their duty,” adding that “that failure was particularly regrettable given that some of the documents had a clear potential to embarrass the SFO in their prosecution of this case.“

Paul Bond, a former senior sales manager at SBM Offshore (SBM), which was a client of Unaoil, had his request for leave to appeal against his sentence denied.

The full judgement can be read here.

 More here, here and here.

(Source: England and Wales Court of Appeal – Criminal Division)

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Genel Energy to Claim Compensation from KRG

Shares in Genel Energy opened down more than five percent on Friday morning, before recovering some ground, after the company said it will claim compensation from the Kurdistan Regional Government (KRG).

It says the claims, which relate to KRG’s intention to terminate the Bina Bawi and Miran production sharing contracts (PSCs) are “substantial”, and will be brought in a London-based international arbitration.

The statement from the company this morning:

Genel Energy plc (‘Genel’) provides the following update on the Bina Bawi and Miran Production Sharing Contracts (‘PSCs’).

Further to Genel’s announcement of 20 August 2021 that notices of intention to terminate the Bina Bawi and Miran PSCs had been received from the Ministry of Natural Resources of the Kurdistan Regional Government (‘KRG’), Genel has received from the KRG formal notices purporting to terminate the PSCs. The KRG has also stated that, pending resolution of the dispute as to whether such notices are effective to terminate the PSCs, it will not perform those obligations under the PSCs that would enable Genel to progress the development of the Bina Bawi and Miran fields. 

Since entering into the PSCs in February 2017, Genel has made every effort to engage with the KRG on the development of the Bina Bawi and Miran fields and has submitted numerous development proposals to the KRG for its approval. However, the KRG has for some time made clear its intention not to permit the development of the fields in accordance with the terms of the PSCs.

In these circumstances, the Board has concluded that it is left with no practical alternative but to accept that the PSCs are terminated as a consequence of the KRG’s repudiatory breach and to claim compensation from the KRG. Genel’s claims are substantial and will be brought in a London seated international arbitration to be commenced in accordance with the disputes process set out in the PSCs.

Genel has a long and constructive relationship with the KRG, and continues to work with the KRG on the development of our other assets, as we look to deliver our mutual goal of increasing production in the KRI for the benefit of all stakeholders.

Genel will update the market on future developments.

Following the termination of the PSCs, the balances associated with holding title to these PSCs will be derecognised and therefore removed from the balance sheet.

(Source: Genel Energy)

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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 and Q2 of 2021

The KRG has published the reports containing verified statistics covering the Kurdistan Region’s oil exports, consumption and revenues for covering period 1 January 2021 to 30 June 2021.

During the first half of 2021, the KRG exported 77.35 million barrels through Kurdistan Export Pipeline. In addition, 3.95 million barrels were allocated to local refineries. Of the exported crude oil, 76.869 million barrels were lifted by the buyers from Ceyhan Export Terminal, at an average price of 53.446 $/bbl.

The KRG has generated revenues of USD 4.1 billion from crude oil export sales during the first half of 2021. After making payments to oil producers, pipeline operators, and repayments to the buyers, the KRG retained net revenues from crude oil sales of US$ 1.737 billion.

The KRG is has engaged in discussions with international buyers and oil producers in continuing its efforts to maximize sales prices and reduce production costs to maximize value for the people of Kurdistan.

Transparency is central to the cabinet’s agenda. The report, available in Kurdish, English and Arabic, provides a quarterly analysis of oil export information and average prices which have been independently reviewed and verified by Deloitte.

The KRG acknowledges the positive feedback received from domestic and international stakeholders. The council reiterates its commitment to the people of Kurdistan that Deloitte will continue to independently review and verify the statistics of the Kurdistan Region’s oil and gas sector.

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

Click here to download the reports.

(Source: KRG)

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New Water Injection Facility at Rumaila

One of the most advanced water pumping facilities in Iraq has been constructed at the Rumaila oilfield to help boost oil production and support the field’s long-term strategy.

Cluster Pump Station Six (CPS-6) is the first CPS facility to be built at Rumaila for around 40 years. It is also the first CPS constructed by the Rumaila Operating Organisation (ROO), the joint venture between the Basra Oil Company (BOC), bp, PetroChina and State Oil Marketing Organisation (SOMO), which operates the field.

Water injection is fundamental for sustaining Rumaila’s high volumes of oil production. After almost 70 years of extracting oil, gas, and water, Rumaila’s mature reservoirs have seen pressure levels fall; injecting water into the subsurface helps to replace this lost pressure and push oil and gas to the surface. Since CPS-6 has become fully operational, 18 formerly producing wells have been reactivated and around 63,000 additional barrels of oil per day are being produced for Iraq.

ROO Deputy General Manager, Hussein Abdul Khadim Hussein, said:

“Rumaila’s daily oil production has increased by around 40% under ROO’s stewardship. Key to this has been the water injection strategy, which rose from around 250 mbds in June 2010 to reach peaks exceeding 1.5 million barrels of water per day (bwpd) in 2021. CPS-6 marks a new chapter as we extend water injection to the south of the field for the first time in more than a decade and will help us to maintain high oil production for years to come.”

Cluster pump stations pressurize treated industrial water to a specified level, which is then sent for injection into water injector wells in the field. With a capacity to inject up to 320,000bwpd, CPS-6’s features include digital monitoring of the site’s key equipment and components to manage pressure levels and ensure performance is maximized from the purpose-built control room.

The site has a pumping house with five powerful Sulzer pumps, each individually capable of pressurizing up to 80,000bwpd; a manifold to direct water to 20 injector wells; 2.5 km of piping inside the facility; 75 km of supporting pipeline infrastructure outside the facility, and an office for staff.

Construction entailed more than a million hours of work, and the installation of 16,700 metres of electrical cabling, 1,721 flanges and 575 valves. Multiple logistical challenges had to be overcome in order to adapt to the pandemic and to create a COVID-safe working environment, which included erecting fences inside the compound to delineate which contractor could operate in each part of the site.

ROO General Manager, Orkhan Guliyev, said:

“The full operation of CPS-6 is a major milestone in our drive to maintain oil production in the south of the field. For the past 11 years, water injection has been focused in North Rumaila – which has seen production increase by more than 150%. Safely injecting water in South Rumaila is a key part of ROO’s strategy for future success.”

Rumaila Special Deputy General Manager, Fan Jianping, added:

“Work has also begun to construct a second new pumping station, CPS-7, which will further our ambitions to ensure the reservoirs in South Rumaila continue to produce effectively and efficiently.”

(Source: ROO)

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Iraq Oil Exports increase again in November

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for November of 98,192,317 barrels, giving an average for the month of 3.273 million barrels per day (bpd), up from the 3.120 million bpd exported in October.

The exports from the oilfields in central and southern Iraq amounted to approximately 95,860,149 barrels; we are still awaiting details of exports from Kirkuk, and via road to Jordan.

Revenues for the month were $7.590 billion at an average price of $77.333 per barrel.

October’s export figures can be found here.

(Source: Ministry of Oil)

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KRG PM meets President of the Iraq Britain Business Council

The Prime Minister of the Kurdistan Regional Government (KRG), Masrour Barzani, on Saturday met Baroness Emma Nicholson, President of the Iraq Britain Business Council (IBBC).

Prime Minister Barzani highlighted the reforms of the ninth cabinet, its bid to diversify the economy and crucially to make the Kurdistan Region a focal point for business.

Baroness Nicholson gave a briefing on the council’s work, especially its last conference which was held in Dubai and which concentrated on developing UK, Iraq, and Kurdistan Region trade relations.

(Source: KRG)

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Block 10 More Attractive for Lukoil than West Qurna 2

Writing in Oil Price, Simon Watkins points out that the $5.99-per-barrel remuneration that Lukoil will receive under its technical service contract at Block 10 is considerably better than its $1.15/barrel payment at West Qurna 2.

Block 10 includes the Eridu field, which has indicated oil reserves of between 7 and 12 billion barrels, and a proposed peak production rate of 250,000 barrels per day (bpd).

Lukoil has a 60-percent stake in Block 10, with Inpex owning 40 percent.

Click here to read the full article.

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Iraq Finalises October Oil Exports

By John Lee.

Iraq’s Ministry of Oil has announced finalised oil exports for October of 96,708,660 barrels, giving an average for the month of 3.120 million barrels per day (bpd), up slightly from the 3.081 million bpd exported in September.

The exports from the oilfields in central and southern Iraq amounted to approximately 93,386,975 barrels, while exports from Kirkuk amounted to 3,011,917 barrels. Exports to Jordan by truck totaled 309,768 barrels.

Revenues for the month were $7.666 billion at an average price of $79.274 per barrel.

September’s export figures can be found here.

(Source: Ministry of Oil)

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Basra Energy Company established to run Rumaila Oilfield

By John Lee.

The Iraqi Ministry of Oil has officially established the new Basra Energy Company (BEC), which will be the main contractor at the giant Rumaila oilfield, under a Technical Service Contract (TSC).

Representing BEC at the ceremony, Zaid Elyaseri (BP) said the field will be developed to reach a peak production of 1.7 million barrels per day (bpd), up from the current level of approximately 1.45 million bpd.

Oil Minister Ihsan Abdul Jabbar added that, “PetroChina and BP are the two shareholders with SOMO and Basra Oil Company (BOC).” PetroChina is a subsidiary of the China National Petroleum Corporation (CNPC).

(Source: Ministry of Oil)

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