Russia


Oil Minister meets with the CEO of Lukoil

By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has met with Kati Al-Juboori, the CEO of Russia’s Lukoil, and his entourage.

During the meeting the two parties discussed ways to develop the oil sector in Iraq.

Mr. Al-Juboori praised the keenness of the Ministry of Oil to cooperate with global companies and provide the appropriate work environment to execute the plans of the associated administrations of the oil fields.

(Source: Ministry of Oil)

Gazprom Neft Halves Badra Production Target

By John Lee.

Russia’s Gazprom Neft has reportedly revised down its output plateau for the Badra oil field.

Denis Sugaipov, head of Gazprom Neft’s department of large projects, told Reuters that the consortium running the project has proposed setting the output plateau for the next few years at its current level of around 85,000 bpd, as the field is more geologically complex than previously thought.

This is half the level initially planned as a plateau to be reached in 2017.

The field is being developed by Gazprom (30%), KOGAS (22.5%), Petronas (15%), TPAO (7.5%), Iraqi state-owned Oil Exploration Company (25%).

According to Reuters, $4.0 billion has been invested in the plant so far, including $1 billion for a gas processing plant; another $2.5 billion is planned to be invested by 2030.

(Source: Reuters)

New Firms Qualified for next Oil Licensing Round

By John Lee.

Iraq’s Petroleum Contracts and Licensing Directorate (PCLD) has announced the five additional companies have been approved to bid for Iraq’s “borderline onshore & offshore exploration blocks & fields.”

The companies are listed as:

  • Dana Gas (UAE)
  • Dragon Oil (UAE)
  • Geo-Jade Petroleum (China)
  • Schlumberger (USA)
  • Zarubezhneft (Russia)

Eight companies had applied for approval.

The five successful companies will be eligible to compete along with the following companies which are qualified from previous licensing rounds:

The areas to be offered include the onshore exploration blocks of Khudher Al-Mai, Jebel Sanam (Jabal Sanam) and Umm-Qasr on the Kuwaiti border; the Sindbad, Huwaiza, Shihabi, Zurbatia and Naft Khana blocks on the Iranian border; and the offshore exploration blocks in the Iraqi regional waters of the Arab gulf.

The bidding process should commence in May, according to the following schedule:

(Source: Oil Ministry)

Lukoil signs Contract for Exploration at Block 10

Russia’s Lukoil has signed contracts with the state-owned Iraqi Oil Exploration Company to carry out seismic surveys at the Eridu field in Block 10, and also at Block 10’s southern and central parts, previously not part of the survey.

The scope of appraisal works at Eridu field includes a 3D seismic survey of 983 square kilometers to update the extension of the field and its geological structure.

At Block 10, 2D seismic acquisition of the southern and central parts is planned to be accomplished over an area of 3,500 linear kilometers to ensure the mapping of targets for prospect drilling.

The approved geological exploration plan for Eridu field envisages the drilling of additional appraisal wells on a mid-term horizon.​

Block 10, covering 5,600 square kilometers, is located in the governorates of Dhi Qar and Muthanna, 120 kilometers west of Basra. The interests in the project are: Lukoil – 60% (operator), Inpex Corporation (Japan) – 40%.

The Iraqi party to the agreement is represented by the state-owned South Oil Company (SOC).

The drilling of the first exploration well, Eridu-1, in February of 2017 led to the discovery of a major oilfield. Preliminary data indicate it is the most significant discovery in Iraq for the past 20 years.

The drilling of the second and third wells confirmed the field’s earlier assumed geological model.Block 10, covering 5,600 square kilometers, is located in the governorates of Dhi Qar and Muthanna, 120 kilometers west of Basra.

(Source: Lukoil)

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.