Russia


Baghdad denies Russian Claims regarding KRG Oil Deals

By John Lee.

The Iraqi Ministry of Oil has denied reports that Russian Energy Minister Alexander Novak discussed Russian oil companies’ operations in Iraqi Kurdistan with the Iraqi prime minister or oil minister during his trip to Iraq.

Novak had been quoted as saying that Baghdad had no problems with Russian companies doing business with the Kurdistan Regional Government (KRG).

Baghdad reasserted that while it welcomes foreign investment in the country, “oil is a sovereign resource and therefore all contracts … must be signed with the federal government and the Ministry of Oil.

(Sources: Reuters, Rudaw)

Gazprom Neft commissions New Gas Plant at Badra

Russia’s Gazprom Neft has launched the commercial operation of a 1.6 billion cubic metres capacity gas processing plant at its Badra field, Iraq.

Alexander Novak, Minister of Energy of the Russian Federation, was present at the opening ceremony for the new facility, together with the Minister of Oil of the Republic of Iraq, Jabbar al-Luaibi, and Gazprom Neft CEO Alexander Dyukov.

Dry feed gas, processed at the Badra field, is transported via a 100-kilometre pipeline to the Az-Zubaidiya power station, supplying electric power not just to provinces throughout Iraq, but also to the capital city of Bagdad.

In addition to this, gas will be used to meet the Badra project’s own needs as fuel for the gas-turbine power plant. Five gas turbines are able to produce a total 123.5 MW of electric power, supplying oil and gas processing facilities, drilling rigs and oil-producing wells. A 10-MW overhead power line will soon begin feeding into the Gazprom Neft Badra accommodation complex, as well as into the town of Badra and neighbouring population centres.

Natural gas liquids (NGLs) produced at the Badra project’s gas processing plant will be used to produce LPG to be supplied to the Iraqi state-owned Gas Filling Company. The plant also includes facilities for sulphur production and granulation.

Alexander Dyukov, Gazprom Neft CEO, made the following comment at the official opening ceremony of the gas plant:

Gazprom Neft is continuing its development of the Badra field, in strict adherence to the field development plan. Today sees the full-cycle gas plant — built by our company using the most cutting-edge technologies available on the world market — going into commercial production.

“This is a unique enterprise for the region, at which Gazprom Neft has, since starting work, been able to monetize all of the hydrocarbons produced here, ensuring associated-petroleum-gas (APG) utilisation of at least 95 percent.

(Source: Gazprom Neft)

SOMO Awards Diesel Tenders

By John Lee.

Sources have told Reuters that China’s state-run Zhenhua Oil will supply diesel (500 parts per million (ppm) sulphur) to Iraq’s State Oil Marketing Organization (SOMO) through a term contract for the first time.

It will supply 600,000 tonnes of the 2.37 million tonnes sought by SOMO in a tender for delivery in the 2018 calendar year.

The company is part of defence conglomerate China North Industries Group Corp (NORINCO).

BB Energy, Litasco (the international marketing and trading arm of Russia’s Lukoil) and Lima Energy (a joint venture between Litasco and SOMO) will also supply about 25 percent each.

(Source: Reuters)

Rosneft in the Kurdish Region: Moscow’s Balancing Act

By Ahmed Tabaqchali. Originally published by Iraq in Context; re-published by Iraq Business News with permission. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Between February 2017 and mid-October, Rosneft signed a number of deals with the Kurdish Regional Government (KRG) that established for it, and by extension for Russia, a major position as both an investor and stakeholder in the Kurdish Region of Iraq (KRI)’s hydrocarbon resources and infrastructure.

The move was interpreted, especially by the KRG, as implicit support for the KRG in its bid for independence, especially in light of the latest deal signed following the reassertion of Iraq’s federal control over Kirkuk and other disputed territories. While there is an element of truth to this thinking, the deals are part of a wider geopolitical positioning for Russia as a major gas supplier to Europe and as an emerging power in the Middle East.

The deals provide Rosneft, and by extension Russia, effective control of the KRG’s Oil & Gas infrastructure, and a controlling stake in the region’s finances in more ways than one.

Within the oil space it has established this in three ways. The first was by providing USD 1.5bn in financing via forward oil sales payable over 3-5 years. This would be payable in kind from the KRG’s exports, until recently at about 550,000-600,000 barrels per day (bbl/d). However, the loss of the Kirkuk fields takes away about 430,000 bbl/d of production or eventually about half of the KRG’s exports.

This leaves the KRG with a tiny revenue stream after payments to International Oil Companies (IOC)’s, from which to make payments on forward oil sales of up USD 3.5 bn including Rosneft’s USD 1.5bn. A complicating factor is the repayment of other KRG debt, estimated at over USD 21bn by end of 2017, which will have to be factored into debt payment sustainability.

Baghdad seeks broader Economic Cooperation with Russia

Iraq’s foreign minister Ibrahim Jaafari (pictured) met his Russian counterpart in Moscow on October 23 where he said Baghdad seeks stronger economic ties and the development of a strategic partnership with Russia.

Relations are already at an excellent level in various areas: politics, economy, security. After turning the page of the fight against terrorism, our task is to give impetus to the economic development,” Jaafari told reporters prior to his meeting with Sergei Lavrov.

Russia’s Foreign Minster Sergey Lavrov said that Russia would continue business interactions with the Kurdistan Region, but in coordination with Baghdad.

I want to confirm once again our commitment to the respect for sovereignty and territorial integrity of Iraq, the commitment to solving all the problems that arise through an inclusive national dialogue, involving and taking into account the interests of all ethnic, religious and political groups,” Lavrov said.

Neither commented on the recent deal signed between Russian oil giant Rosneft and the Kurdistan Regional Government (KRG) which if implemented give the Russian company a controlling percentage of oil production in the Kurdish region.

(Source: GardaWorld)

Gazprom Neft not to Cut Production at Badra

By John Lee.

Russia’s Gazprom Neft has said it expects production at the Badra oilfield to stay between 85,000 and 90,000 barrels per day (bpd) in 2018.

Deputy chief executive Vadim Yakovlev (pictured) told Reuters that Baghdad has not asked the company to curtail production, despite reports that the Oil Ministry had asked foreign producers to cut investment to reduce the cash-strapped government’s contribution in shared ventures.

Yakovlev added that production at Badra is expected to plateau as high as 110,000 bpd in the future.

(Source: Reuters)

Baghdad hits back at Rosneft/KRG Deal

By John Lee.

Iraq’s Ministry of Oil has hit back at Rosneft‘s recent decision to enter a production-sharing deal with the Kurdistan Regional Government (KRG) without its approval.

In a statement, the Ministry warned:

“The ministry of oil warns seriously all the countries and oil companies from contracting or dealing with any authority inside Iraq without taking the approval from the federal government and the ministry of oil”.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] (pictured) added:

“… irresponsible statements from some of the officials inside & outside Iraq or the foreign companies about their intention to sign oil contracts with any authority inside the geographic borders of Iraq without telling the federal government or the ministry of oil, is considered as a Blatant interference in the internal affairs and a derogation from national sovereignty, and an outright violation of international norms.”

Rosneft boss Igor Sechin insisted that the company strictly followed the law. AFP quotes him as saying:

“If there are problems between the government of Iraq and Kurdistan they need to solve the problems themselves … I am not a politician, my job is to produce oil.”

In addition to the production-sharing deal, Rosneft has just agreed to start work on a new oil pipeline project in Iraqi Kurdistan.

(Sources: Iraqi Ministry of Oil, AFP)

Rosneft to Build New Kurdistan Oil Pipeline

Russia’s Rosneft and Kurdistan Regional Government (KRG) have announced the start of joint implementation of an infrastructure project for the operation of the oil pipeline in the Kurdish Autonomous Region.

According to a statement from Rosneft, its share in the project “may amount to 60%“.

The other project participant with 40% share will be KAR Group, who is the current pipeline operator,” it added.

Rosneft Chief Executive Officer Igor Sechin (pictured) said:

“The entry into the infrastructure project will contribute to achievement of Rosneft’s strategic objectives and will enable Rosneft to enhance the efficiency of oil transportation to the end customers including supplies to the Company’s refineries in Germany”.

(Source: Rosneft)