Cursor International executes projects and collaboration activities across several industries.
By John Lee.
Oil and gas company TechnipFMC has agreed to pay more than $5 million to settle an Iraq-related corruption case with the US Securities and Exchange Commission (SEC).
The company is alleged to have taken part in bribery between 2008 and 2013 to secure business from Iraqi state-owned oil companies.
Just last month, the company announced that it would demerge its operations into two separate companies.
The full statement from the SEC can be read here.
(Source: SEC)
By John Lee.
Irish-based Petrel Resources has said that one of its main priorities has been re-building its presence in Iraq.
In its financial results for the six months ended 30th June 2019, the company said:
“While challenges remain, the Iraqi government encourages international investors with Iraqi operating experience. The security situation has dramatically improved since 2018. Iraq remains exempt from OPEC quotas, and Iraqi oil output has reached 4.7 million barrels of oil daily.
“The next Iraqi bidding round (for exploration of blocks with gas potential) is expected during 2020. The model contract is expected to be an updated version of the Iraqi hybrid exploration and development contract, incorporating aspects of service contract and production sharing. These terms are more attractive for international explorers than in prior bid rounds.
“The improving security situation in western Iraq has again made possible field-work on prime western desert exploration blocks, including Block 6, on which we worked from 2002. Similarly, the Merjan oil discovery, by Mobil in 1982, which has recently been packaged with Kifl & west Kifl oilfields, has arisen as a possible development project.
“The Merjan oilfield and surroundings, on which Petrel operated a Technical Cooperation Agreement in joint venture with Japanese giant Itochu from 2004 through 2007, has recently been covered by 1,000 km sq a 3d seismic survey conducted by the Iraqi Oil Exploration Company. This enhanced data should further minismise the risks & costs of development.“
(Source: Petrel Resources)
By Ahmed Mousa Jiyad.
Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.
Monetization Strategies for Joint Development of Border Fields in MENA Region
Many hydrocarbons fields and exploration blocks, with billons barrels of petroleum, straddle sovereign borders (both onshore and offshore) in the Middle East and North Africa- MENA region, present significant development opportunities as well as potentially risk and source of conflict.
So far, they have been mostly source of conflicts, contentious and acrimonious relationship; it’s about time to pursue the other mutually beneficial approach whenever possible and feasible.
The number, prospects and potential of border fields in MENA Region indicate to billions barrels of oil equivalent -BOEs of proven hydrocarbon (oil, gas and condensates) reserves, with more to add through further exploration and technological advancement, generating billions of cash flows with attractive returns on investment.
Brief examples and as of today’s data and information are the following:
Empirical evidence and analytical premises suggest that sovereign border hydrocarbons fields or exploration blocks could be developed either through “competitive” or “collaborative” strategies; the first follows “rule of capture” or “use it before losing it”, while the second adopts “feasibility & optimization”; the first is harmful to the field, its structure and reservoir(s) while the second adheres to efficiency considerations, prudent natural resource management and international best practices; the first is premised on “sovereign exclusivity” while the second is formulated on “Bi/trilateral inclusivity”; the first is “conflict-prone” while the second serves “mutuality of interests”; the first is “short-term focused” while the second has “phasic orientation” and finally, from investment vs. net revenue perspectives, the first is “own-risk” while the second is “burden and benefit-sharing”.
What should be highlighted is that collaborative development of a border field could be done through two broad (comprising various versions) distinct modalities with different investment, revenue structures and legal modalities: unitization (mostly trilaterally structured) or joint venture (mostly bilaterally structured).
For this purpose the presentation proposes TELG Approach for monetizing these resources, which basically integrates four fundamental broad spheres of professional knowledge-base and analysis and the needed institutional, managerial and governance setups applicable to the collaborative mode of border fields development in both modalities- unitization and joint venture.
TELG Approach is helpful for unitization requirements of both onshore and offshore across-sovereign borders as well as across contracted areas within each country.
After discussing the essence of cross-border fields exploitation as “Hotelling game”, basic contesting strategies, phases of unitization agreements and elaborate on TELG approach and its requirements, the presentations provides examples on the “ambiguity” of legal provisions on unitization in the Iraqi service contracts, the July 2019 Iraq-Kuwait contract with ERCE and a list of modalities governing UK-Norway unitization of fields.
The presentation ends with call upon Arab related entities such as OAPEC, ESCWA and the Economic and Social Council of the Arab League among others to take necessary and serious measures to address unitization, and request Arab petroleum professionals to produce international best-practice guide and formulate basic model for unitization agreement in efforts to help in efficient exploitation of such natural resources in a prudent and effective way and finally provide Illustrative Hypothetical Case for Unitization Negotiation Game.
This presentation was delivered before the 12th Middle East and North Africa Oil & Gas Conference, organized by Target Exploration at Imperial College, London, UK. 19 September 2019; I am very grateful to Target Exploration for sponsoring my participation.
Click here to download the PowerPoint slides presented at the conference.
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.
Iraq’s Commission of Integrity yesterday announced that it had returned $135 million of misappropriated funds to the oil ministry, the Anadolu Agency reported.
The commission said that the company for the distribution of oil products misappropriated funds through contracts with two oil investment companies.
Iraq is among the world’s most corrupt states according to Transparency International’s corruption index.
The commission revealed in 2018 that it had issued more than 2,000 arrest warrants in 2017 related to corruption in the country.
It said that 290 arrested warrants were issued against state officials including ministers.
(Source: Middle East Monitor)
By Omar Sattar for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.
New pipeline in works to transport Iraqi oil to Turkey
Ankara and Baghdad are working toward building a new oil pipeline with the capacity to transport one million barrels per day from Iraq’s Kirkuk fields to the Turkish border.
“The Iraqi government is now examining tenders for the new oil pipeline between Iraqi and Turkey, after having finished with the engineering and technical studies,” Iraqi Ministry of Oil spokesperson Assem Jihad told Al-Monitor recently.
He added that construction will probably get underway in 2020.
Report on Payments to Governments for 2018
This report sets out details of the payments made to governments by Gulf Keystone Petroleum Ltd and its subsidiary undertakings (“Gulf Keystone”) for the year ended 31 December 2018 as required under Disclosure and Transparency Rule 4.3A issued by the UK’s Financial Conduct Authority (“DTR 4.3A”) and in accordance with The Reports on Payments to Governments Regulations 2014 (as amended in 2015) (“the UK Regulations”) and our interpretation of the Industry Guidance on the UK Regulations issued by the International Association of Oil & Gas Producers.
DTR 4.3A requires companies listed on a stock exchange in the UK and operating in the extractive industry to publicly disclose payments to governments in the countries where they undertake exploration, prospection, discovery, development and extraction of oil and natural gas deposits or other materials.
This report is available to download on the Company’s website: http://www.gulfkeystone.com/investor-centre/presentations-and-reports.
Basis for preparation
Total payments below £86,000 made to a government are excluded from this report, as permitted under the UK Regulations.
All of the payments made in relation to the Shaikan Production Sharing Contract (“Shaikan PSC”) in the Kurdistan Region of Iraq have been made to the Ministry of Natural Resources (“MNR”) of the Kurdistan Regional Government (“KRG”).
Production entitlements
Production entitlements are the host government’s share of production during the reporting period from the Shaikan Field operated by Gulf Keystone. The figures reported have been produced on an entitlement basis, rather than on a liftings basis. Production entitlements are paid in-kind and the monetary value disclosed is derived from management’s calculation of estimated revenue.
Royalties
Royalties represent royalties paid in-kind to governments during the year for the extraction of oil. The terms of the royalties are described within the Shaikan PSC. Royalties have been calculated on the same basis as production entitlements.
Taxes
Taxes include taxes levied on the income, production or profits of companies, excluding taxes levied on
consumption such as value added taxes, personal income taxes or sales taxes.
Bonuses
Bonuses include signature, discovery and production bonuses.
Licence fees
These include licence fees, rental fees, entry fees, capacity building payments, security fees and other considerations for licences or concessions.
Infrastructure improvement payments
These include payments for infrastructure improvements, whether contractual or otherwise, such as roads, other than in circumstances where the road is expected to be primarily dedicated to operational activities throughout its useful life.
Summary of payments
|
KRG |
|
|
Production entitlements in-kind (1) (mboe (3) ) |
3,877 |
|
Production entitlements in-kind (1) (2) ($ ‘000) |
190,077 |
|
Royalties in-kind (1) (mboe (3) ) |
926 |
|
Royalties in-kind (1) (2) ($ ‘000) |
45,419 |
|
Taxes in-kind (4) ($ ‘000) |
2,838 |
|
Bonuses ($ ‘000) |
16,000 |
|
Licence fees in-kind (5) ($ ‘000) |
12,566 |
|
Infrastructure improvement payments ($) |
430 |
|
Total (mboe (3) ) |
4,803 |
|
Total ($) |
267,330 |
Notes
(1) All of the crude oil produced by Gulf Keystone was sold by the KRG. All proceeds of sale were received by or on behalf of the KRG, out of which the KRG then made payment for cost oil and profit oil in accordance with the Shaikan PSC to Gulf Keystone, in exchange for the crude oil delivered to the KRG. Under these arrangements, payments were made by or on behalf of the KRG to Gulf Keystone, rather than by Gulf Keystone to the KRG. However, for the purposes of the reporting requirements under the UK Regulations, we are required to characterise the value of the KRG’s production entitlements under the Shaikan PSC (for which the KRG receives payment directly from the market) as a payment to the KRG.
(2) The realised prices for crude oil sales remain subject to audit and reconciliation.
(3) Barrels of oil.
(4) Per the Crude Oil Sales Agreement (dated 10 January 2018), road tax is payable on export sales of Shaikan crude oil transported by road from 15 November 2017 until 31 December 2018 at $7/ton. The road tax was paid in kind, as the value of the road tax was deducted in calculating the value of production entitlements payable by the KRG to Gulf Keystone.
(5) No cash payments were made by Gulf Keystone to the KRG. Instead, the value of these fees has been accrued and will be settled with the KRG upon finalisation of the second PSC amendment.
(Source: GKP)
By John Lee.
Iraqi oil minister Thamir Ghadhban has reportedly said he plans to offer a new Basrah Super Light grade, with up to 38 API gravity, in the next few years.
According to S&P Global Platts, he added that this would depend on the development of the country’s southern fields.
A Basrah Medium grade, with an API gravity of 29-30 and 2 percent sulfur, is dependent on refurbishments to Iraq’s southern export and storage terminals.
Iraq currently ships Basrah Light and Basrah Heavy, which it introduced in mid-2015.
(Source: S&P Global Platts)
By John Lee.
Iraq’s Deputy Foreign Minister Muayad Salih has said that he expects Russian companies to increase their investment in Iraq.
Tass quotes him as saying that a Russian company is starting to develop of fields in the area of the Ramadi city, adding:
“Hopefully investments there will top $45 billion by 2030.”
Meanwhile, the head of the Legal Department at the Iraqi Foreign Ministry, Mr. Luqman Al-Faily, met with the Russian ambassador to Baghdad Mr. Maxim Maksimov, at the Ministry’s headquarters in Baghdad.
During the meeting, they discussed procedures for the mutual exemption of entry visas between the two countries for holders of diplomatic, service and special passports.
(Sources: Iraqi Foreign Ministry, Tass)
By John Lee.
The Iraqi Drilling Company (IDC) has signed a contract with the Dhi Qar Oil Company to drill 20 wells at Nasiriyah oil field.
Fayyad Hassan Nehmeh, Undersecretary for Extraction Affairs, said the new wells will increase the field’s oil production by 40,000 bpd, in addition to the investment of gas associated with rates up to 20 million standard cubic feet of gas to be used as fuel for power plants.
(Source: Ministry of Oil)
Gulf Keystone Petroleum (GKP), a leading independent operator and producer in the Kurdistan Region of Iraq (“Kurdistan” or “Kurdistan Region”), has announced its results for the half year ended 30 June 2019.
Highlights to 30 June 2019 and post reporting period
Operational
Financial
Corporate
Outlook
Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:
“The first half of 2019 saw high levels of operational activity as we continue to develop Shaikan targeting a significant, phased, production uplift. Despite some operational delays, we have made considerable headway towards our 55,000 bopd production target.
“Activity has further increased during H2 2019 as we remain on track to achieve this milestone in the first half of 2020. As a consequence of the work to increase production in the longer term, the near-term production guidance for the full year has been reduced. However, the Shaikan reservoir, the cornerstone of our equity story, continues to behave strongly.
“The Company has a robust balance sheet which supports operational funding requirements and expansion plans in addition to returning funds to shareholders. The Company is therefore well positioned to deliver on its growth objectives for the benefit of all stakeholders.”
(Source: Gulf Keystone Petroleum)