Category: Oil News

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Zoom Invitation: Iraq 2020, a Country at the Crossroads

You are invited
to hear a discussion of the IBBC Advisory Council’s paper on
‘Iraq 2020, a country at the crossroads’

When: Monday 15th June at 2pm UK
Where: Zoom Platform

The paper published for the new Iraqi Government recommends a number of decisive changes to be implemented without delay, in order for Iraq to be able to navigate the rapidly deepening economic crisis she is facing.

This open public forum takes place in partnership with IRIS (Institute of Regional and International Studies) at AUIS (American University of Iraq, Sulaimani) and Chatham House.

Speakers include:

  • Professor Frank Gunter, Lehigh University
  • Dr Renad Mansour, Chatham House
  • Mr Ahmed Tabaqchali, IRIS at AUIS
  • Professor Mohammed Al-Uzri, University of Leicester
  • Mr Abdul Aziz Shwan Ahmed, Iraqi Government
  • Mr Hani Akkawi, CCC

Click below to read the full paper:

Iraq 2020: a country at the crossroads – English

Iraq 2020: a country at the crossroads – Arabic

CLICK HERE TO REGISTER

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BOC Boss to Head Iraqi Oil Ministry

By John Lee.

Iraq’s parliament has approved the appointment of the former head of the Basra Oil Company (BOC) as Minister for Oil.

Variously named as Ihsan Ismaeel, Ihsan Abdul Jabbar Ismail, and Ihsan Ismaael, he was one of seven cabinet ministers approved on Saturday, completing Prime Minister Mustafa al-Kadhimi’s 22-member government.

The other posts filled were foreign affairs, trade, culture, agriculture, justice and migration.

According to Al Jazeera, Fuad Hussein, who served as finance minister in the previous government, is the only member of the old government to join the new team, returning as Minister of Foreign Affairs. The veteran Kurdish politician is reported to be close to Kurdish leader Masoud Barzani.

(Sources: AFP, Iraq Oil Report, Reuters, Al Jazeera)

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Iraq’s May Oil Revenue Slightly Up

By John Lee.

Iraq’s Ministry of Oil has announced oil exports for May of 99,585,283 barrels, giving an average for the month of 3.212 million barrels per day (bpd), down from the 3.438 million bpd exported in April.

These exports from the oilfields in central and southern Iraq amounted to 96,039,852 barrels, while exports from Kirkuk amounted to 3,545,431 barrels.

Revenues for the month were $2.092 billion at an average price of $21.005 per barrel.

April’s export figures can be found here.

(Source: Ministry of Oil)

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Petrofac secures Contract Extension with Basra Oil Company

Petrofac‘s Engineering & Production Services division (EPS) has secured a further six-month contract extension with Basra Oil Company (BOC) for its long-standing Iraq Crude Oil Export Expansion Project (ICOEEP).

According to a statement from Petrofac, the confirmation of the contract extension is recognition of Petrofac’s successful seven-and-a-half-year track record of safe and efficient delivery and ability to sustain and improve export levels as incumbent operations and maintenance service provider.

The facility, which is one of the largest export terminals in the Gulf and handles around 50% of Iraq’s crude oil exports, is located 60 km offshore the Al Fao Peninsula in Southern Iraq. It comprises a central metering and manifold platform and four Single Point Moorings (SPMs) which facilitate oil export onto awaiting crude carrier tankers. In addition, Petrofac is responsible for almost 300 km of subsea pipelines, 1800 metres of subsea and floating hose infrastructure and a marine spread comprising 14 vessels.

Mani Rajapathy, Managing Director, EPS East, said:

“We are delighted to be awarded this further contract extension in Iraq by our longstanding client BOC. During this current challenging period for operations we have continued to work well together, improving the daily export beyond two million barrels. We thank BOC for their consistent support and look forward to maintaining the best-in-class operation of this important national asset.“

Mr Ihsan Ismaael, Director General of BOC commented:

“Petrofac continues to be a true partner to BOC, ensuring uninterrupted and record exports. We appreciate their commitment, particularly during this recent period, and congratulate them for hitting new export highs.“

Petrofac has been present in Iraq since 2010. Today, Petrofac employs around 400 people in country and is currently working on a number of projects for a variety of NOC and IOC clients.

(Source: Petrofac)

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Iraq’s Oil-Rig Count Tumbles

By John Lee.

Iraq’s oil-rig count has reportedly fallen by almost two-thirds this year.

Iraqi sources told S&P Global Platts that the total now averages 32 rigs operated by IOCs this month, down from 88 rigs in December 2019.

Federal Iraq is averaging 31 rigs this month, compared with 76 in December, while the Iraqi Kurdistan is averaging only one rig in May compared with 12 in December.

The reductions come after international oil companies were ordered to cut spending because of the oil-price crash.

More here.

(Source: S&P Global Platts)

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DNO Guides 2020 Production and Spend

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today provided production and spend guidance for the balance of the year ahead of its Annual General Meeting on Wednesday.

The Company reported that it has implemented the target 35 percent reductions across all spend categories to shrink its 2020 budget by USD 350 million to USD 640 million in response to turbulence and uncertainty in global oil and financial markets triggered by the coronavirus pandemic.

While strengthening its balance sheet, cutbacks in spend will throttle back 2020 Company Working Interest (CWI) production to a projected 88,000 barrels of oil equivalent per day (boepd), of which the Kurdistan region of Iraq will contribute 71,000 barrels of oil per day (bopd) and the North Sea 17,000 boepd. DNO’s CWI production averaged 104,800 boepd last year.

In Kurdistan, DNO has reduced the number of rigs deployed in drilling, testing and workovers from five in 2019 and early 2020 to two; these two rigs are believed to be the only ones currently active in Kurdistan, down from an overall count approaching 20 last summer.

Of the two active rigs, one is drilling the Zartik-1 exploration well on the DNO-operated Baeshiqa license and the other is a Tawke license workover rig that will shortly be moved for scheduled maintenance. However, two third-party rigs have been warm stacked at the Tawke and Peshkabir fields and can quickly be mobilized if oil prices climb and export payments are regularized.

“Our cost cutbacks have been thoughtful and deliberate as we moved at warp speed to preserve cash and our balance sheet,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “The resulting reductions in oil production especially in Kurdistan are reversible with a restart of drilling,” he added. “We have not lost reserves but simply parked a portion until the market recovers. And it will.”

Gross production at the DNO-operated Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, absent drilling of new infill wells to arrest natural field decline, is expected to average 100,000 bopd in 2020. This reflects a drop from 115,210 bopd in Q1 2020 to 100,000 bopd in Q2 2020 and 90,000 bopd over the balance of the year. The Tawke license exit rate at yearend 2020 is projected at 85,000 bopd absent new wells. Production continues to be split 55-45 between the Tawke and Peshkabir fields.

On a CWI basis, DNO’s production in Kurdistan in the second half of the year is projected to average 65,000 bopd (81,220 bopd in Q1 2020 and an estimated 70,000 bopd in Q2 2020). CWI in North Sea operations will contribute another 17,000 boepd in the second half of 2020 (18,640 boepd in Q1 2020 and an estimated 17,000 boepd in Q2 2020).

Budget cuts and the newly announced Norwegian production caps are not expected to make a material change to DNO’s 2020 North Sea projections; the majority of the Company’s fields subject to the restrictions are not fully utilizing their previous higher production permits.

DNO ASA 2020 Projected Spend
Q1 2020 Q2 2020 Q3+Q4 2020 2020 2019
Actual Projected Projected Projected Actual
USD million USD million USD million USD million USD million
Exploration expenditures 34 36 65 135 187
Capital expenditures 78 37 40 155 339
Operating expenditures 59 49 92 200 237
Abandonment expenditures 17 7 7 31 23
Operational spend 187 129 204 520 786
Other 40 34 46 120 203
TOTAL 227 163 250 640 989

Note: Figures above are pre-tax (i.e., before exploration tax refund in Norway). The category
“Other” includes general and administrative expenditures (G&A), net interest payments and

(Source: DNO)

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Petrel Raises Capital to pursue Iraq Prospects

By John Lee.

Petrel Resources Plc (Lon: PET) has announce that the company has arranged a placing with ETX Capital to raise £250,000 (before expenses) via the issue of 7,692,308 new ordinary shares (the “Placing Shares”) at a placing price of 3.25p per Placing Share.

Subject to the appointment of responsible officials by the new Iraqi Government, and the lifting of Covid-19 restrictions, Petrel expects to enter into re-qualification discussions with the appropriate decision-makers at the Ministry of Oil.  Discussions may cover Petrel’s past studies on the Merjan-Kifl-West Kifl area, and the Mesozoic and Paleozoic potential of the Western Desert.

Pending, such discussions, this investment will strengthen the company’s Balance Sheet.

David Horgan, Director, commented:

“Petrel is fortunate to have maintained strong relationships with Ministry of Oil officials, even during the darkest hours of sanctions, invasion, conflict, and Covid-19.  Our Iraqi Director, Riadh, is a son of the renowned “driller”, Mahmoud Ahmed.  In Iraq we found World-class geology.

“Prevailing circumstances obliged Petrel temporarily to dis-engage from on-the-ground operations in 2010.  We saw too many challenges – both governance, political and financial – to justify risking Shareholders’ funds given the then-limited upside available.”

“Recent events are transforming this situation. A three-way rivalry among Saudi Arabia, Russia and American producers – aggravated by an unprecedented demand-hit caused by Covid-19 – crashed the oil price.  This cripples high cost operations offshore, and unconventional reservoirs.  As a low-cost producer, Iraq is now well positioned to exploit this historic opportunity.  I believe that Petrel has the experience, contacts and board commitment to help drive forward the next phase of Iraqi oil development.”

(Source: Petrel Resources)

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UK Drops Unaoil-related Probe into ABB

By John Lee.

The UK’s Serious Fraud Office (SFO) has dropped its investigation into ABB linked to the Unaoil case.

After a thorough and detailed review of the available evidence, the SFO concluded that this case did not meet the relevant test for prosecution as defined in the Code for Crown Prosecutors.

The SFO announced its investigation into ABB Ltd in February 2017 following a self-report by representatives acting on behalf of the company.

(Source: UK SFO)