Petrel Resources’ Focus will be Iraq

By John Lee.

In its preliminary results for the year ended 31st December 2020, Petrel Resources made the following statement on its interests in Iraq:

Meanwhile Petrel continues to push its interest in Iraq and Ghana. For the foreseeable future oil will play a major part in world economic development.

“Iraq has some of the best oil deposits in the world. In a stable era Iraqi oil production would be 2 or 3 times the current under 4 million barrels a day.

“For more than 20 years Petrel has been in Iraq. Activities have languished in year past but the addition of an Iraqi director, Riadh Mahomud Hameed and the contact of French investors led to a re-opening of contacts.

“It has been, and remains a difficult and dangerous place to explore. Led by Riadh we are putting exploration proposals to the authorities. We are particularly keen to revisit the Merjan field where we earlier produced development proposals …

“Our focus in the immediate future will be Iraq

(Source: Petrel Resources)

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Iraqi Cabinet Awards Energy Contracts

By John Lee.

At its regular meeting on Tuesday, the Iraqi Cabinet agreed to send an invitation, “in a single bid manner“, to the French company Total to invest in a project to generate 1,000 megawatts of solar electric power.

The project was originally agreed in March as part of a larger engagement with the French energy company, which last week announced that it would rebrand itself as TotalEnergies.

The cabinet also approved a request from the Ministry of Electricity to award a contract “in a single bidding manner” to the Chinese company PowerChina (Power Construction Corporation of China).

(Source: Govt of Iraq)

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Increasing Oil Production at West Qurna 2

By John Lee.

Iraq’s Oil Minister, Ihssan Abdul-Jabbar Ismail, has announced the start of experimental operations at the Yamamah reservoir in the West Qurna 2 oil field, with the aim of increasing output from the reservoir from 10,000 barrels per day (bpd) to 350,000 bpd.

When fully implemented, the development would bring total production at the field to 800,000 bpd.

The Minister praised the work of Russian company Lukoil, which is developing the field.

(Source: Ministry of Oil)

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Genel Energy receives March Oil Payments from KRG

Genel Energy has announced that payments have been received from the Kurdistan Regional Government (‘KRG’) for its entitlement for oil sales during March 2021.

Those payments are made up as follows:

(all figures $ million) Payment
Tawke 14.3
Taq Taq 2.1
Sarta 3.4
Total 19.8

As announced on 13 May, Genel and other KRI operators received a letter from the KRG proposing an amendment to the recovery mechanism and payment schedule for monies owed for oil sales from November 2019 to February 2020 and the suspended override from March to December 2020.

The entitlement payments for oil sales were, in line with other operators, received ahead of the proposed amended schedule.

The Company has not yet received payments for March’s invoices under the recovery mechanism, regarding which it is engaging with the KRG on their proposed amendments, nor the Tawke override.

Assuming the proposed revision to the terms of recovery stands, the recovery payment will be $3.1 million. The override payment will be $8.2 million. Given the proposed new schedule, Genel expects to receive both payments shortly.

(Source: Genel Energy)

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Iraq Finalises Oil Exports for April

By John Lee.

Iraq’s Ministry of Oil has announced finalised oil exports for April of 88,398,319 barrels, giving an average for the month of 2.947 million barrels per day (bpd), effectively the same as the 2.946 million bpd exported in March.

The exports from the oilfields in central and southern Iraq amounted to approximately 85,534,916 barrels, while exports from Kirkuk amounted to 2,863,403 barrels.

Revenues for the month were $5.550 billion at an average price of $62.779 per barrel.

March’s export figures can be found here.

(Source: Ministry of Oil)

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Rumaila Oilfield “delivers Strong 2020 Performance”

The Rumaila Operating Organisation (ROO) has announced its 2020 performance results.

The field’s oil production rate averaged 1.392 million barrels per day (bpd), despite the impact of COVID-19, a budget reduction and compliance with instructions from BOC to reduce oil production, which reflected OPEC+’s request for Iraq to curtail oil exports.

The year’s strong performance has been attributed to the dedication of the field’s workforce (which is 96% Iraqi) to adapt to and overcome major new challenges. These included a revised and reprioritized production strategy, which benefitted from the strong foundations laid in previous years to modernize facilities, optimize wells and deploy advanced technologies.

Basra Oil Company (BOC) Director General, Mr Khalid Hamza Abbas, said:

“Rumaila’s achievements in 2020 deserve great recognition, not least within the context of the global pandemic. My thanks go to every member of staff who did his or her utmost to ensure the field continued to serve the nation at this most difficult time.”

Rumaila’s 2020 achievements included record-breaking levels of water injection, averaging 1.35 million bpd of water – volumes never previously seen at the field. New digital technologies were deployed to maximize efficiencies; 21 new wells were drilled, 115 wells were optimized or renewed, and almost 7,000 well services jobs were conducted to further maintain production, while preventative maintenance and repairs ensured the continued performance of ageing facilities.

In addition, new projects were initiated to reduce Rumaila’s operational carbon emissions, particularly utilizing electricity from the gas-fired Rumaila Power Plant, rather than diesel generators, to power some key facilities in the field.

Rumaila also continued to support local communities living near or within the field during the pandemic, with ongoing initiatives to help the Al-Khora Primary Health Care Clinic and the North Rumaila Mobile Health Clinic; ROO also oversaw and delivered the procurement, shipping, installation and training on a computed tomography (CT) scanner for the Basra Al-Sadir Teaching Hospital. Major renovation works also took place at Al Sikak, Al Rumaila and Al Nukhaila schools in order to enhance the quality of local education.

With the onset of the pandemic, global oil demand contracted, resulting in the already low international oil price falling further and causing governments and companies around the world to review their plans. Iraq was no exception and resulted in the ROO’s annual budget reduced by around 30%, with adverse impacts on some development projects and well and production-raising activities.

In addition, government-requested curtailments averaged 55,000 bpd over the course of the year, partly in response to Iraq’s compliance with OPEC+’s request to reduce the country’s overall oil exports.

2020 was therefore a year defined by COVID-19. It has always been ROO’s commitment to place the health and safety of staff members above all other considerations. COVID-19 therefore required multiple preventative and responsive activities to limit the transmission of the virus. Field personal protective equipment (PPE) was sourced and distributed, including 300,000 sets of gloves, 20,000 masks, and 1,300 units of hand sanitizing products. Two new clinics were established; additional respiratory and life support equipment were secured; 4,370 diagnostic tests were carried out; contact tracing was instigated after each suspected and confirmed COVID-19 case, and wellbeing initiatives were introduced.

Operationally, the field had to adapt to major disruptions to the way everyday work was delivered. Field staff had to contend with working fewer, yet longer shifts patterns; movement was restricted at Rumaila headquarters which is staffed by a limited number of Iraqi and international colleagues who all adhered to strict quarantining protocols on arrival; hundreds of Iraqi and expatriate staff adapted to working from home. A new IT terminal server enabled staff working remotely in Basra and around the world to securely access emails, files and industry applications, while the number of videoconferencing users increased 960%.

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

“With the virus making its way to Iraq, we knew we had to do everything we could to keep our people as safe as possible while at work. We also had to move quickly, to ensure that the day-to-day operation of the entire field could be maintained, so that Rumaila could continue to deliver for Iraq. The human cost of COVID-19 has been felt by everyone at Rumaila; to everyone affected, we extend our deepest sympathies.”

ROO General Manager, Orkhan Guliyev, said:

“The tremendous co-operation and teamwork between BOC, bp and PetroChina, which in previous years had been key to Rumaila surpassing targets, expressed itself in 2020 through a shared sense of resilience. The determination, dedication, patience and endurance of our people enabled us to continue to make progress during what was an extraordinarily challenging year for everyone.”

Rumaila Special Deputy General Manager, Fan Jianping, added:

“It has been a difficult operating environment for national and international oil companies across the world. At Rumaila, it has been humbling to see such strength of purpose in overcoming complex challenges. 2020 has further illustrated that our partnership has the focus, fortitude and capability to face tough challenges.”

(Source: ROO)

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Petrofac Iraq Revenues Down

By John Lee.

Petrofac has announced that for the year ended 31st December 2020, the company had revenues of $238 million in Iraq — $105 million in engineering and construction, and $133 in engineering and production services.

This represented about 6 percent of the company’s total turnover, and was down from a total of $325 million in 2019 ($145 million in engineering and construction, and $180 in engineering and production services).

In its Annual Report for the year,  the company said that Iraq accounts for 7 percent of its total backlog of $1.7 billion, implying a backlog in Iraq of approximately $119 million.

(Source: Petrofac)

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The Dutch Disease and Iraq’s Foreign Exchange Rate

By Dr. Zeki Fattah, for The Iraqi Economists Network (IEN). Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Dutch Disease and Iraq’s Foreign Exchange Rate

Economists who studied the reasons for the low per capita growth of GDP in developing countries that rely on revenues from abundant natural resources, (called ‘resource curse’), found it was actually caused not by high exchange rates, but by wrongly conceived economic policies over a long period of time.

We will visit this point again at the end of the paper. Meanwhile, and until recently, monetary economists in Iraq explained the fall in the Dinar exchange rate against the Dollar (a change within the expected norm) as a passing event caused by falling oil prices, and trepidation in the markets in the wake of COVID-19.

This explanation whilst went some way toward dampening the need for currency devaluation for a while, it didn’t help the Iraqi Government to raise the cash it needed to meet its obligations. Recently, the Government had to reduce the Dinar exchange rate against the Dollar considerably to increase the Dinars it receives from the Central Bank in exchange for the Dollar it receives mainly from oil exports.

Please click here to read the full report.

(Source: IEN)

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Gulf Keystone announces Special Dividend

Gulf Keystone Petroleum (GKP) has announced that its Board has approved the declaration of a special dividend of $25 million.

Jon Harris (pictured), Gulf Keystone’s Chief Executive Officer, said:

“Given continuing strong oil prices, improving macroeconomic conditions and our robust financial position, we are pleased to deliver on our commitment to consider further shareholder distributions and declare a $25 million special dividend, bringing total dividends for shareholder approval at the upcoming AGM to $50 million.

“We will continue to balance investment in growth and returns to shareholders as we develop and realise value from the Shaikan Field for the benefit of all stakeholders.”

Following the previously announced resumption of the Company’s annual dividend policy and declaration of a $25 million dividend, Gulf Keystone will be seeking shareholder approval at the Annual General Meeting (“AGM”) on 18 June 2021 to pay total dividends of $50 million, comprising the $25 million annual dividend and today’s announced $25 million special dividend.

The annual dividend of $25 million is expected to be paid on 2 July 2021, based on a record date of 25 June 2021. The special dividend of $25 million is expected to be paid on 6 August 2021, based on a record date of 30 July 2021.

Both dividends will be payable in pounds sterling and converted from dollars at the spot rate prevailing on the relevant record dates.

As at 12 May 2021, the Company had a cash balance of $179 million.

(Source: GKP)

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