By Adnan Abu Zeed for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.
The Iraqi State Organization for Marketing Oil (SOMO) announced Nov. 2 that it is arranging with Turkey to allow SOMO to sell Iraqi crude from the disputed territories through the pipeline from Kirkuk to the Ceyhan Turkish port.
The Kurdistan Regional Government (KRG) used to export about 500,000 barrels per day independently through Ceyhan before the Baghdad operation to retake the disputed areas in mid-October.
The operations started about a week after the clashes between governmental forces and Kurdish peshmerga forces. Meanwhile, the Ministry of Oil rushed to increase oil production, and on Oct. 23, the ministry requested the help of the British petroleum company BPin increasing production in Kirkuk oil fields to more than 700,000 barrels per day. The ministry also announced the formation of a ministerial committee to advance the oil industry in the province of Kirkuk.
Kirkuk has more than 35 billion barrels in oil reserves and a production capacity ranging from 750,000 to 1 million barrels per day. The federal government seems determined to control the oil sources, especially in Kirkuk and the disputed areas. In light of this, on Oct. 19, the Iraqi minister of oil warned all countries and international petroleum companies against signing contracts with any Iraqi party without first consulting the federal government.
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”.
Russian oil company Rosneft has completed its due diligence on infrastructure of the export oil pipeline in Iraqi Kurdistan (‘KROP”) and will shortly finalise the legally binding documents on oil pipeline project under the Investment Agreement signed at St. Petersburg International Economic Forum in June 2017.
The Kurdistan Regional Government of Iraq and the Company intend further strengthen and develop cooperation and consider to expand Rosneft footprint in the region. The parties have negotiated Rosneft’s opportunity to participate in the project on funding of the construction project of Kurdistan Region’s natural gas pipeline infrastructure. It is expected that a separate agreement under this project will be finalized by year-end.
The Kurdistan Region gas pipeline will not only supply natural gas to the power plants and domestic factories throughout the region, but also enable exporting of substantial fuel volume to Turkey and European market in the coming years. The investment in the project will be on under a BOOT arrangement, to be recovered through tariff charges and an agreed rate of return basis. The pipeline capacity is expected to handle up to 30 BCMA for gas export, in addition to facilitating gas supply to the key domestic users.
Rosneft and Kurdistan Regional Government are negotiating implementation of the project for construction of gas pipeline system on a fast track basis. Commissioning of the pipeline and first domestic supplies are planned for 2019 and export supplies – 2020.
Successful implementation of the project under discussion will enable Rosneft to play a leading role in the building and expanding Kurdistan Region’s gas transport infrastructure and create synergy with existing projects for development of the oil and gas fields of the 5 blocks awarded to the Company in the region.
Sources close to the deal told Reuters that the investments would amount to more than $1 billion.
Reuters reports that a former Iraqi oil minister said it was necessary for Iraq to regain the Iraqi Pipeline in Saudi Arabia (IPSA), which has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990, and which was confiscated by Saudi Arabia in 2001 as compensation for debts owed by Baghdad.
Bahr Al Olum, who is currently a member of parliament, said he has discussed the issue with Saudi side expected that Riyadh would have a more “positive response” given an improved political environment between the two countries.
(Picture: Haider Al-Abadi meets King of Saudi Arabia, Salman bin Abdulaziz Al Saud, 19th June 2017)
Oil production at the Atrush block is expected to start “around late June to August“, according to a report from Rudaw.
The pipeline (pictured) from the oilfield, in Kurdistan’s Duhok governorate, is reported to be nearing completion, with initial production expected to be about 30,000 bpd.
The website of the Abu Dhabi National Energy Company (Taqa), which paid $600 million four years ago for an initial stake of just more than 53 percent in the project, states that it is estimated to have between 1.5 billion and 2.8 billion barrels of oil in place with recoverable oil columns of 670 million barrels.
A study by the Iraqi Government into a planned oil pipeline that would extend from Iraq to Jordan has revealed that the project will cost between 5 and 7 billion dollars.
Jordanian press quoted energy minister Ibrahim Seif saying that a decision over the implementation of the project is expected from the Iraqi side soon.
“The pipeline will extend from Iraq’s city of Najaf, along the Saudi borders, to (Jordan’s) al-Aqaba,” the minister said, adding that both countries will be adopting a build-operate-transfer (B.O.T) system within 15-20 years in carrying out the undertaking.
Officials from both countries agreed recently in Amman on the project that is meant to transfer nearly 100 million barrels of oil, covering Jordan’s needs of crude oil, which are estimated at 150.000 barrels a day. The remaining amounts are transferred to Egypt and other countries having oil deals with Iraq.
Jordan and Iraq had already signed a deal involving supplies to Jordan at 10.000 barrels of crude oil per day, surging to 30.000. Oil imports from Iraq are on a halt at present, though, due to the unstable security situation in the country.
Iraq’s Oil Ministry announced that Tehran and Baghdad have signed a memorandum of understanding (MoU) to carry out studies on the construction of a pipeline to export crude oil from the northern Iraqi fields of Kirkuk via Iran.
In a statement, the Iraqi ministry said the agreement was signed during a recent ceremony in the Iraqi capital between Iranian Oil Minister Bijan Namdar Zanganeh and his counterpart Jabar al-Luaibi, Reuters reported.
The agreement also calls for a commission to resolve disputes about joint oilfields and the possible transportation of Iraqi crude to Iran’s Abadan refinery, it added.
The two sides have also agreed to cooperate on the policies of the Organization of the Petroleum Exporting Countries (OPEC).
Under the scenario, the Iraqi government would be shipping about 150,000 barrels per day of oil through Iran from fields in Kirkuk, the report added.