Category: Oil News

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“OPEC Plus” Agreement: Iraq cuts Oil Exports again

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for July of 85,663,290 barrels, giving an average for the month of 2.763 million barrels per day (bpd), down from the 2.816 million bpd exported in June.

These exports from the oilfields in central and southern Iraq amounted to 82,700,381 barrels, while exports from Kirkuk amounted to 2,701,015 barrels. Exports to Jordan were 261,894 barrels.

Revenues for the month were $3.487 billion at an average price of $40.708 per barrel.

June’s export figures can be found here.

(Source: Ministry of Oil)

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DNO “Steps Up Activity”

DNO ASA, the Norwegian oil and gas operator, today reported stepped up investments across its portfolio on the back of higher production and significantly improved liquidity outlook as the Company recovers from the oil market turmoil that upended the second quarter of 2020.

Operated production in July at the Company’s flagship Tawke license in the Kurdistan region of Iraq is up 15,000 barrels of oil per day (bopd) month-on-month to 115,000 bopd following a well intervention campaign fast tracked in June with the stabilization of oil prices and improved export payment terms.

In the North Sea segment, DNO projects receipt of USD 215 million in tax refunds in the second half of the year, including USD 70 million from the recently announced temporary changes to petroleum taxation in Norway.

“The worst of the coronavirus pandemic hit to our business is behind us and DNO is back identifying and capturing opportunities,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “Still, we are prepared to act quickly, as we did in March, if a strong second wave comes,” he added.

Second quarter Company Working Interest (CWI) production stood at 89,700 barrels of oil equivalent per day (boepd) of which Kurdistan contributed 71,900 bopd and the North Sea 17,800 boepd.

Gross operated Tawke license production averaged 102,000 bopd, including 58,100 bopd from the Tawke field and 43,900 bopd from the Peshkabir field, together down 11 percent from the first quarter as development activity dropped off to preserve cash at a time of historically low and uncertain oil prices.

Second quarter revenues slid to USD 72 million and operating losses climbed to USD 81 million, both driven by weak commodity prices across the portfolio and lower cargo liftings of produced oil in the North Sea.

At the Baeshiqa license in Kurdistan, DNO continued drilling the third exploration well on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The rig has been released and testing will commence in August in Lower Jurassic and Upper Triassic zones intersected by the well and expected to last three months. Evaluation of the Baeshiqa-2 results is ongoing to determine commerciality.

During the first half of 2020 DNO received a total of USD 224 million in payments from the Kurdistan Regional Government. In addition, the Company received a USD 23 million June entitlement payment after the end of the reporting period. Discussions are ongoing to reach an agreement on acceptable terms and timing of payment of arrears totaling USD 240 million due to DNO for the November 2019-February 2020 entitlements and November 2019-June 2020 override payments.

Notwithstanding the interruption of these payments and DNO’s repayment of the remaining USD 138.5 million of the DNO01 bond at maturity on 18 June 2020, the Company exited the first half of 2020 with a strong cash balance of USD 427 million. Net debt at the end of the second quarter stood at USD 537 million, down from USD 559 million at the end of the first quarter.

Last month, DNO commissioned the Peshkabir-to-Tawke gas reinjection project, the first enhanced oil recovery project in Kurdistan, to unlock additional oil volumes at Tawke while significantly reducing gas flaring and CO2 discharges at Peshkabir.

Prompted by the tax changes in Norway, the Company is working with partners to accelerate infill drilling at the Ula, Tambar and Brage producing fields, revisit development options for the Brasse field and actively evaluate the Iris/Hades, Fogelberg and Trym South discoveries.

DNO will remain an active explorer in the North Sea, targeting 4-6 wildcat wells a year.

(Source: DNO)

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Fmr Unaoil Exec Jailed for Iraq Bribery

Ziad Akle, Unaoil‘s territory manager for Iraq, has been sentenced to five years’ imprisonment for paying over $500,000 in bribes to secure a $55m contract to supply offshore mooring buoys.

The new buoys formed part of the post-occupation Iraqi government’s “Master Plan” to rebuild Iraq’s oil industry and thereby expand the country’s oil export capacity. To ensure Unaoil benefitted from these state-run projects, Akle, conspiring with Stephen Whiteley and others, bribed public officials at the South Oil Company to secure contracts for Unaoil and its clients.

In his sentencing, HHJ Beddoe said:

“The offences were committed across borders at a time of serious need for the government of Iraq to rebuild after years of sanctions and the devastation of war. They were utterly exploitative at a time when the economic and political situation in Iraq was extremely fragile.”

A jury at Southwark Crown Court found Akle guilty on two counts of conspiracy to give corrupt payments. Another individual, Stephen Whiteley, was found guilty of one count of conspiracy to give corrupt payments in relation to the same crime. He will be sentenced on a date to be determined.

SFO Director Lisa Osofsky said:

“Ziad Akle and his co-conspirators exploited a country reeling from years of dictatorship and military occupation to line his own pockets and win business. It is this combination of greed and heartless avarice that led to these convictions.

“Today’s sentencing sends a clear message that the United Kingdom and the SFO will not tolerate criminal activity that undermines the fairness and integrity of international business.“

The convictions followed the guilty pleas of co-conspirator Basil Al Jarah who, in July 2019, admitted five offences of conspiracy to give corrupt payments. Al Jarah, who admitted to paying bribes totalling over $6million to secure contracts worth $800m for the supply of oil pipelines and offshore mooring buoys, is due to be sentenced at Southwark Crown Court on 8 October 2020.

(Source: SFO)

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Oryx Petroleum Announces Change in Control

Oryx Petroleum Corporation has announced that the Corporation’s two largest shareholders have informed the Corporation that Zeg Oil and Gas Ltd. acquired control of the Corporation from AOG Upstream BV on July 23, 2020 in the context of the previously announced transaction.

The acquisition was conditional upon and subsequent to the closing of the Loan Settlement announced by the Corporation on July 23, 2020.

In connection with the change in control, Jean Claude Gandur has resigned from the Board of Directors of the Corporation.

As part of securing consent for the change in control of the Corporation’s interest in the Hawler license area from the Ministry of Natural Resources of the Kurdistan Region of Iraq (“MNR”), the Corporation has agreed to amend certain terms of the Production Sharing Contract governing the Hawler license area (pictured).

Specifically, the Corporation has agreed to a 22% reduction in the cost pool related to its interest, and to finance all costs attributed to the 35% interest it does not own for the duration of the development period and without a cap on such financing facility.

Previously, the Corporation was financing only the costs attributable to a 20% interest in the license, to a maximum of US $300 million. The MNR has agreed to waive any rights it has to audit costs incurred up to December 31, 2020.

Depending on actual future revenue and cost profiles, the changes may or may not result in a lower share of future cash flows attributable to the Corporation’s interest compared to the applicable terms prior to amendment.

(Source: Oryx Petroleum)

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Oil Ministry Finalises Export Figures for June

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for June of 84,489,016 barrels, giving an average for the month of 2.816 million barrels per day (bpd), down from the 3.212 million bpd exported in May.

These exports from the oilfields in central and southern Iraq amounted to 81,006,497 barrels, while exports from Kirkuk amounted to 3,482,519 barrels.

Revenues for the month were $2.871 billion at an average price of $33.984 per barrel.

May’s export figures can be found here.

(Source: Ministry of Oil)

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Webinar: Opportunities and Challenges for Diversification in Iraq

Iraq Business News would like to recommend an excellent and informative webinar from the Iraq Britain Business Council (IBBC)‘s Young Executives Network (YEN), featuring a discussion with Ali Al-Saffar, the Middle East and North Africa Program Manager at the International Energy Agency (IEA) in Paris.

Ali shared his insights on “The importance of oil and gas to Iraq’s economy and the opportunities for and challenges to diversification“.

Also on the panel were Mr Sammy Sharifi, Co-Chair of IBBC YEN, and Ms Layla Al-Hassani of BP and Co-Chair of IBBC YEN.

To watch this Webinar please click here or here.

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Weatherford signs 18-Mth Deal in Iraq

Weatherford International has announced that it has signed an 18-month contract with the Iraqi Drilling Company (IDC) to provide services and project management for the drilling and completion of twenty wells in the Al-Nasiriyah field in the Dhi Qar province in southern Iraq.

Basim M. Khudair, General Director for IDC, said:

“Signing this contract between IDC and Weatherford is a great accomplishment for both parties. It sets the right ground for our mutual and constructive joint cooperation in the future.”

IDC will provide rigs, civil works and drilling services; Weatherford will provide project management and all other associated services. The operation will be performed with four rigs provided by IDC.

Frederico Justus, President, International Operations, Weatherford, noted:

“This joint operation with IDC is an honor for Weatherford. Together, IDC and Weatherford will work as one team, providing project management solutions that deliver efficient and effective execution of the contract.”

IDC is a leading Iraqi service company focusing on rig services and is a key player in the nationalization program for the country’s oil and gas sector.

(Source: Weatherford)

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Soden Re-joins GKP Board

Further to the recent announcement that Garrett Soden was to be re-appointed to the Board of Gulf Keystone Petroleum (GKP) as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria GmbH, the Company is pleased to confirm that the formal appointment process has now been completed and as such welcomes Mr Soden back to the Board of Gulf Keystone.

Garrett Soden has extensive experience as a senior executive and board member of various public companies in the natural resources sector. He is currently President and CEO of Africa Energy Corp., a Canadian oil and gas exploration company focused on South Africa, and is also a Non-Executive Director of Etrion Corporation, Noble Group Holdings Limited and Panoro Energy ASA. Mr Soden has undertaken to conform to UK corporate governance standards in respect of external appointments.

Directorships held within the past five years:

Phoenix Global Resources plc

Gulf Keystone Petroleum Ltd

Petropavlovsk plc

PA Resources AB

RusForest AB

(Source: GKP)

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Iraq Corruption Case: Former Oil Execs Convicted

By John Lee.

The UK’s Serious Fraud Office (SFO) has secured convictions against two former oil executives who conspired to give corrupt payments to secure contracts in Iraq.

A jury at Southwark Crown Court found Ziad Akle guilty on two counts and Stephen Whiteley guilty on one count of conspiracy to give corrupt payments. The convictions follow the guilty pleas of co-conspirator Basil Al Jarah who, in July 2019, admitted five offences of conspiracy to give corrupt payments.

In the years of reconstruction following the overthrow of Saddam Hussein in 2003, the three men conspired with others to pay bribes to public officials at the Iraqi South Oil Company (SOC) and, and in Basil Al Jarah’s case the Iraqi Ministry of Oil, to secure oil contracts for Unaoil and its clients.

The post-occupation Iraqi government had commissioned the South Oil Company to run projects as part of a “Master Plan” to rebuild Iraq’s oil industry and thereby expand the country’s oil export capacity. This included the installation of offshore mooring buoys and new oil pipelines.

To ensure Unaoil benefitted from these state-run projects, the defendants and co-conspirators conspired to bribe public officials at the South Oil Company and Ministry of Oil to secure contracts for Unaoil and its clients SBM Offshore. Basil Al Jarah also conspired to bribe public officials at the South Oil Company and the Ministry of Oil to secure contracts for Unaoil and its client Leighton Offshore.

Basil Al Jarah admitted to paying bribes totalling over $6million to secure contracts worth $800m for the supply of oil pipelines and offshore mooring buoys. Ziad Akle and Stephen Whiteley were found guilty of paying over $500,000 in bribes to secure the $55m contract for the offshore mooring buoys.

SFO Director Lisa Osofsky said:

“These men dishonestly and corruptly took advantage of a government reeling from dictatorship and occupation, and trying to reconstruct a war-torn state. They abused the system to cut out competitors and line their own pockets.

“It is our mission to pursue and bring to justice those who use criminal means to weaken the integrity of business.“

The SFO would like to thank the Australian Federal Police, the French Parquet National Financier, the Police Judiciaires of the Principality of Monaco, the Fiscal Information and Investigation Service (FIOD) of the Netherlands, the United States Department of Justice, Greater Manchester Police, the Metropolitan Police, the National Crime Agency and West Mercia Constabulary for their valuable assistance in this case.

The men are due to be sentenced on 22 and 23 July 2020.

More here.

(Source: UK SFO)

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Mousa Jiyad: Transparency in the Iraqi Petroleum Sector

By Ahmed Mousa Jiyad.

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

Transparency in Iraq petroleum sector – More symbolic formality than impacting effectiveness

The petroleum sector is the only sector of the Iraqi economy that has been subject to a formal, articulated, transparency regime for almost a decade, as result of the new emerging international entity, the Extractive Industry Transparency Initiative (EITI).

As totally new concept in Iraqi governance mindset, transparency was introduced post 2003 invasion and Iraq went through distinct phases in its association with EITI from application in 2009 as candidate to a compliant country by end 2012 to suspension in late 2017, and since then Iraq works hard to re-instate its compliancy status.

This article discusses and assesses Iraq experience with transparency and the path it followed in its implementation of this new concept for prudent management of its finite natural resources of petroleum. Specifically, what prompted or compelled Iraq to adopt EITI norms; what measures it had taken to gain the compliant status; why that status was suspended; what has Iraq to do if it wants to regain that status and, above all, what are the outcomes and how sustainable are they.

Though Iraq EITI (IEITI) experience is characterized as bureaucratic formality and symbolic, the article would argue that good, comprehensive and regular reporting on transparency enhances transparency and contributes to good governance in the petroleum sector. Hence, the article argues further, that what is needed is how to transform IEITI into real, effective and impacting change agency.

Click here to download the full report in pdf format.

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.