Author: Editor

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GKP to Invest Further in Shaikan

Gulf Keystone Petroleum (GKP), operator of the Shaikan Field in the Kurdistan Region of Iraq, is today providing an operational and corporate update.

This is in advance of the Company’s full year results for the period ended 31 December 2017 which are expected to be announced on Wednesday 11 April 2018. The information contained herein has not been audited and may be subject to further review and amendment. 

Operational Update

  • GKP has continued its strong safety performance in 2017 and into 2018 with no lost-time incidents at the Shaikan field. Operations in the area remain secure.
  • Plant uptime of 99% in 2017 helped contribute to an average gross production of 35,298 barrels of oil per day (“bopd”), in the middle of our guidance range of 32,000-38,000 bopd for the year.
  • Since 15 November 2017, the Kurdistan Regional Government’s (“KRG”) Ministry of Natural Resources (“MNR”) has resumed exporting the Shaikan crude via the export pipeline to Turkey. The Company sees the latest export development as confirmation of the suitability of the Shaikan crude within the Kurdish blend.
  • The Company was encouraged by the signature of the crude oil sales agreement announced on 16 January 2018. The Company is also in dialogue with the MNR on the terms of a potential 2nd PSC Amendment.
  • Subject to resolution of the commercial matters and the KRG continuing regular payment of monthly invoices, the Company currently intends on investing this year in wells and facilities to expand production capacity to 55,000 bopd.
  • Part of these investments would include the hook-up of a short (400m) spur pipeline from Production Facility 2 to the Atrush export line, which links to the main export oil line to Turkey.  This will reduce trucking requirements, HSE risk and improve netbacks.
  • Final investment plans for 2018 are under review and will be provided to the market in due course.
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DNO Reports Payment for Tawke Deliveries

DNO ASA, the Norwegian oil and gas operator, today reported receipt of USD 53.71 million from the Kurdistan Regional Government as payment for October 2017 crude oil deliveries to the export market from the Tawke license.

The funds will be shared by DNO and partner Genel Energy plc pro-rata to the companies’ interests in the license.

The payment to DNO of three percent of gross Tawke license revenues during October 2017, as provided for under last August’s receivables settlement agreement, was previously received by the Company.
  
DNO operates and has a 75 percent interest in the Tawke license, which contains the Tawke and Peshkabir fields. Combined production from the two fields currently averages 110,000 barrels of oil per day.

(Source: DNO)

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Bina Bawi and Miran West gas resource update

Genel Energy has announced that RPS Energy Consultants, as part of its work on the updated competent person’s reports (‘CPRs’) for the Bina Bawi and Miran West fields (Genel 100% and operator), has finalised its evaluation of the contingent gas resources at both assets:

  • The RPS evaluation confirms a significant upgrade to the combined 2C gross (100% working interest (‘WI’)) raw gas resource estimate for the Bina Bawi and Miran West fields:
    • The RPS assessment of the combined gross 2C raw gas resource for both fields now stands at 14,792 Bscf, a figure which excludes associated condensate volumes attributable to the upstream partners
    • The RPS assessment of the combined gross 2C condensate volumes potentially recovered from raw gas production at both fields totals 137 MMstb
    • As at end-2016 Genel’s reported 2C resources included net raw gas resources from Miran and Bina Bawi totalling 1,421 MMboe1, which related to Genel’s respective 80% and 75% interests in the Bina Bawi and Miran PSCs at that time
    • In February 2017 the Company increased its interest in both PSCs to 100%, resulting in a combined pro-forma end-2016 Genel 2C resource of 1,815 MMboe (10,530 Bscf2)
    • The 2018 RPS estimates of combined 2C resources from both fields have increased c.40% compared to the pro-forma end-2016 2C resource
  • The revised Bina Bawi 1C gross raw gas resource estimate is more than 50% higher than the gas volume agreed to for the field under the Gas Lifting Agreement (‘GLA’). The revised Miran West 1C gross raw gas resource estimate is in line with the volume agreed to for the field in the GLA

A comparison of the revised 2C gross contingent resource numbers for both fields and the Company’s end-2016 number, which was based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases, is summarised in the following table. Further detail is provided in an appendix to this announcement.

Gross (100% WI) 2C Contingent Resources Raw gas (Bscf)

Previous

Revised

change

Bina Bawi

6,472

8,230

27%

Miran West

3,688

6,562

78%

RPS’s updated analysis of the raw gas resources on both fields has benefitted from updated reservoir simulation modelling combined with analogue analysis jointly created and developed by the Company and Baker Hughes since the original reports were produced. As a consequence, the recovery factors for the gas reservoirs in both fields have, in most resource categories, been increased to reflect a better understanding of potential reservoir performance. Further appraisal activity, which is currently under consideration, could help refine reservoir performance and these recovery factor estimates.

Volumes agreed under the GLAs total 2,800 Bscf from Bina Bawi, and 2,000 Bscf from Miran West over a 12 year period, consisting of a two year build-up period and 10 year plateau period. The revised 2C and 3C raw gas resources for both fields significantly exceed these volumes. Following the completion of the upstream field development plans (‘FDPs’), sufficient progress on the midstream facilities and sales gas export route, and subsequent final investment decision, the Company expects that a percentage of the contingent raw gas resources will be converted to reserves, dependent on the volumes set to be produced under the FDPs.

 

The upstream FDPs for the gas and oil fields in the Bina Bawi and Miran PSCs, which are being carried out by Baker Hughes, are expected to be completed shortly.

RPS is continuing its evaluation of the oil bearing reservoirs at both fields, the results of which will be announced once finalised.

Appendix

Summary of Contingent Resources – Development unclarified (Gross 100% working interest basis) attributable to the Bina Bawi and Miran West fields as of 31 December 2017

Gross (100% WI) Contingent Resources

Gross (100% WI) Contingent Resources

BINA BAWI

Raw gas (Bscf)

Condensate (MMstb)

MIRAN WEST

Raw gas (Bscf)

Condensate (MMstb)

1C

4,651

34

1C

1,967

18

2C

8,230

62

2C

6,562

75

3C

13,036

99

3C

18,429

233

1 Genel figure based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases

2 Based on a conversion factor of 5.8 MMscf/bbl

(Source: Genel Energy)

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BP to Boost Oil Production at Kirkuk Oilfields

By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has signed on Thursday a memorandum of understanding with BP to rehabilitate the oil fields in Kirkuk governorate.

Michael Townsend, CEO of BP, said that the company is going to prepare the necessary studies to increase production at the Kirkuk oil fields to 750,000 bpd.

The two men inspected the Kirkuk fields on Thursday and ordered a speeding-up of rehabilitation operations.

(Source: Oil Ministry)

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BP to Boost Oil Production at Kirkuk Oilfields

By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has signed on Thursday a memorandum of understanding with BP to rehabilitate the oil fields in Kirkuk governorate.

Michael Townsend, CEO of BP, said that the company is going to prepare the necessary studies to increase production at the Kirkuk oil fields to 750,000 bpd.

The two men inspected the Kirkuk fields on Thursday and ordered a speeding-up of rehabilitation operations.

(Source: Oil Ministry)

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Chevron to Resume Drilling in Kurdistan

By John Lee.

US-based Chevron plans to resume drilling at the Sarta 3 block in Iraqi Kurdistan.

According to a report from Bloomberg, the company had temporarily halted exploration work in October after the Kurds voted in favour of independence.

Chevron acquired Reliance Exploration & Production DMCC‘s 80 percent interest and operatorship of the production sharing contracts (PSCs) covering the Rovi and Sarta blocks in 2012; Austria’s OMV holds of the other 20 percent interest.

The blocks are located north of Erbil and cover a combined area of approximately 490 square miles (1,124 square kilometers).

(Sources: Bloomberg, Reuters)

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Deloitte Report on Oil and Gas in Kurdistan

As the Kurdistan Regional Government has promised, and to prove its commitment to transparency in the entire oil and gas sector of the Kurdistan Region, today the first report by the international auditing company, Deloitte, is released.

The report, which includes verified numbers of export and sales of oil in the Kurdistan Region for the first six months of 2017, is available to the public.

According to the validated numbers, the total revenue generated from oil sales is 3,328,211,119 US Dollars, after deducting expenses. The average oil sales price for that period was 41.29 $/bbl for exported barrel of oil through pipelines, at a time when average Dated Brent price was approximately 51.71 $/bbl.

The auditing project was ordered by the Council of Ministers of the Kurdistan Regional Government through Decision No. (73) on 3rd of February 2016, as a continuation of Oil and Gas Law, and Oil and Gas Trust Fund Law.

In a transparent process and in accordance with the World Bank guidelines, the Regional Council for Oil and Gas Affairs invited the Big Four international auditing firms in the world and consequently signed Master Service Agreements (“MSA”) with Deloitte and Ernst & Young, after following international tendering standards. According to the MSA’s, the oil and gas sector will be subject to audit, including the historical data.

The Kurdistan Regional Government considers the auditing process as an important step for strengthening transparency in the oil and gas sector of the Kurdistan Region. The KRG has approved Deloitte’s recommendations to further enhance the processes and address any shortcomings. The KRG is also working to develop the accounting and auditing capabilities of the financial monitoring agencies in the Region, in order to empower them for future projects.

This is the first time that reputable and major international companies audit the oil and gas sector in the Kurdistan Region. In the near future, the validated numbers for the second half of 2017, and for the past years will be released to the public.

For further questions, contact information will be provided soon.

  1. Deloitte’s report for first six months of 2017 is accessible through this link (PDF format), in Kurdish, Arabic, and English.
  2. This link (PDF format) consists of 27 frequently asked questions in Kurdish, Arabic and English to help the readers better understand different sections of the report.
  3. This link (PDF format) includes a snapshot (info-graphics) regarding oil exports, local consumption and revenues in the Kurdistan Region, especially average daily exports and daily price of Kurdistan Region’s oil compared to Dated Brent price for the first six months of 2017 in Kurdish, Arabic and English.

(Source: KRG)

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Genel receives Payment for Taq Taq Exports

By John Lee.

Genel Energy has announced that the Taq Taq partners have received a gross payment of $10.10 million from the Kurdistan Regional Government for oil sales during October 2017.

Genel’s net share of the payment is $5.55 million.

(Source: Genel Energy)

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Turkey’s Optimistic Plans in Iraq seem to be Faltering

By Mahmut Bozarslan for Al Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The partnership Turkey, Iran and Iraq formed against the Kurdistan Regional Government (KRG) independence referendum in September has left Tehran pleased but left Ankara severely disappointed.

Ankara had two basic expectations about the partnership. First, Turkish officials believed that a new pipeline would be built to carry oil from Kirkuk, Iraq, to Turkey’s Ceyhan oil terminal, replacing a damaged line and bypassing the KRG. And second, as an alternative to the border crossing from Habur, Turkey, into Iraq — which provides lucrative income to the KRG — a new border crossing to Iraq would open at Ovacik in Turkey.

Ankara calculated that a crossing at Ovacik, at the junction of Iraqi-Syrian-Turkish borders, would:

  • Deprive the KRG of income from customs taxes.
  • Provide a shorter road connection between Tal Afar and Mosul, which features in Turkey’s “New Ottoman” dreams.
  • Strengthen relations with Turkmens and sever the connection between the Kurdistan Workers Party (PKK) at the Yazidi town of Sinjar and the Kurdish Rojava region in northern Syria.
  • Be linked to the main highway to Mosul with a 120-kilometer (75-mile) road upgraded to international standards and a new bridge to be built over the Tigris River.

But the Ovacik project has been shelved and an alternative pipeline plan — involving Iran — has emerged, marginalizing the proposed new pipeline to move oil from Kirkuk to Ceyhan.

For three years, the KRG sold oil from the Kirkuk-Ceyhan pipeline. But the central government in Baghdad took over the Kirkuk oil fields after the Kurds threatened in September to seek independence.

On Oct. 16, Baghdad implied that the Kirkuk oil would be sent out via Turkey as in the past. The pipeline had been used irregularly during the battle against the Islamic State (IS), and Baghdad cut off the flow completely after the September independence referendum. Turkey expected the flow to resume — but it hasn’t.

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IBN Expert Blogger Co-Authors New Book

Iraq Business News is proud to announce that our Expert Blogger Ahmed Mousa Jiyad has just contributed to a major new book on the regulation of the upstream oil and gas industry.

The second edition of Upstream Law and Regulation: A Global Guide, published by Globe Law and Business, summarises the upstream regulation and the key concerns in over 30 important and emerging oil and gas jurisdictions.

Globe Law and Business offers IBN readers a 20% discount off the normal price. Please enter the code “IBNGLB” on the website checkout page to receive the discount.

This fully updated new edition of the practical handbook, now in two volumes, takes an in-depth look at the most relevant petroleum provinces, summarising upstream regulation and key concerns in over 30 important and emerging oil and gas jurisdictions.

Issues featured include the key terms of petroleum law, the types of legal arrangement in place, the fiscal terms, how to qualify to acquire acreage, governing law, dispute resolution mechanisms, decommissioning and governmental control.

As a result, the book provides a comprehensive global resource for upstream investments. New areas of coverage for this edition include Algeria, Ecuador, Israel, Lebanon, Morocco and Oman.

Mr Jiyad has written the chapter on Iraq, and we are sure that this will be an important resource for oil industry professionals with an interest in Iraq’s most important sector.

Congratulations Ahmed!