By John Lee.

Russia’s Gazprom Neft is reported to be interested in expanding its operations in Iraq.

Reuters says boss Alexander Dyukov told the annual general meeting on Friday that the company, which is already developing the Badra oilfield, is also “looking at” the Mansuriyah gas field near the Iranian border.

It says that Iraqi government is expected to launch a tender to develop Mansuriyah later this year. Iraq Business News understands that the field is currently being developed by TPAO (37.5%), Oil Exploration Company (25%), Kuwait Energy (KEC) (22.5%), and Kogas (15%).

(Source: Reuters)

In connection with the UK Serious Fraud Office (SFO)’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010.

These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.

The charges included the following:

Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.

Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract.  Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.

  • Fao [Faw] Terminal, Iraq

Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”).  The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.

  • Saudi Arabia

Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:

  • Payments of approximately USD $5.8 million were ultimately made by Petrofac to its agent in respect of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012 and worth approximately USD $463 million;
  • Payments of approximately USD $21.4 million were ultimately made by Petrofac to its agent in respect of EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012 and worth approximately USD $1.7 billion; and
  • Payments of approximately USD $19.5 million were ultimately made by Petrofac to its agent in respect of the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015 and worth approximately USD $1.56 billion.

Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.

David Lufkin will be sentenced at a later date.

The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.

Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channelWhen providing information please quote ‘Petrofac Investigation’.  Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.

(Source: UK SFO)

In connection with the UK Serious Fraud Office (SFO)’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010.

These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.

The charges included the following:

Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.

Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract.  Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.

  • Fao [Faw] Terminal, Iraq

Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”).  The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.

  • Saudi Arabia

Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:

  • Payments of approximately USD $5.8 million were ultimately made by Petrofac to its agent in respect of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012 and worth approximately USD $463 million;
  • Payments of approximately USD $21.4 million were ultimately made by Petrofac to its agent in respect of EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012 and worth approximately USD $1.7 billion; and
  • Payments of approximately USD $19.5 million were ultimately made by Petrofac to its agent in respect of the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015 and worth approximately USD $1.56 billion.

Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.

David Lufkin will be sentenced at a later date.

The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.

Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channelWhen providing information please quote ‘Petrofac Investigation’.  Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.

(Source: UK SFO)

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)

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)

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)

Gazprom Neft Badra, operator of the Badra field, has undertaken the largest ever maritime shipment of oil for export in the company’s history, with 1.78 million barrels of hydrocarbons being despatched for the United States in the New Solution crude oil tanker.

This is, to date, the second oil consignment to the American market by Gazprom Neft Badra — recipients of the preceding 12 shipments having been European companies and refining facilities in the Asia—Pacific region.

Hydrocarbon exports from Iraq by Gazprom Neft are delivered by the State Oil Marketing Company (SOMO) and comprise the cost-recovery component of Gazprom Neft’s development of Badra field.

(Source: Gazprom Neft)

By John Lee.

Russia’s Gazprom Neft has reportedly started production of liquid petroleum gas (LPG) at its Badra field in Wasit Province.

According to Energy Business Review, the company has started trial shipments of LPG to Iraq’s state-owned gas filling company, and to the Az-Zubaydiyah power station.

The facility is expected to be operation in the fourth quarter of this year.

(Source: Energy Business Review)

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Jabbar al-Luaibi, Minister of Oil of the Republic of Iraq, took place in St. Petersburg today.

The parties discussed the Badra project, which is implemented in Iraq by Gazprom Neft. Currently, the Badra field produces as much as 77,000 barrels of oil per day.

Gazprom Neft continues to construct oil and gas infrastructure, with start-up underway for a comprehensive gas treatment unit. The first and second trains of the project will go into operation in the 2nd and 3rd quarters of 2017, respectively.

Gazprom Neft is a vertically integrated oil company focused on oil & gas field exploration and development, oil refining, and petroleum product processing and marketing. The company’s largest shareholder is Gazprom (95.68 per cent); the rest of its shares are in circulation.

On May 31, 2014, Gazprom Neft started developing the Badra field located in the Wasit Province in the eastern part of Iraq. According to estimates, Badra holds 3 billion barrels of oil.

In January 2010, the consortium of Gazprom Neft, Kogas (Korea), Petronas (Malaysia), and TPAO (Turkey) signed a contract with the Iraqi Government for the development of the Badra field following a competitive tender. Gazprom Neft, as the project operator, holds a 30 per cent stake in the project, Kogas – 22.5 per cent, Petronas – 15 per cent, and TPAO – 7.5 per cent.

The Iraqi Government represented in the project by the Iraqi Oil Exploration Company (OEC) holds a 25 per cent stake. The Badra development project’s lifecycle is 20 years, with a possible five-year extension.

The cumulative oil production from Badra is in excess of 5 million tons.

Gazprom Neft allocated USD 10 million for social projects in the Wasit Province. The funds were used to build three schools, purchase computer equipment and school supplies, buy two minibuses for the University of Wasit, renovate and expand power grids in the neighboring population centers, provide local hospitals with medical equipment, and buy two ambulances.

At present, over 3,000 Iraqi citizens work at the Badra field. Gazprom Neft spent upward of USD 12 million on training programs for those workers.

(Source: Gazprom)

Gazprom Neft Badra, a subsidiary of Russia’s Gazprom Neft, has produced the five-millionth tonne of oil at its Badra oil field.

Thanks to the application of cutting-edge production and transportation technologies, this outcome has been achieved in just over two and a half years’ of commercial production. Total cumulative oil production since the start of 2017 is now in excess of 679,000 tonnes (five million barrels).

Four wells, with a total production rate of 27,000 barrels per day, have been commissioned at the field in 2017, bringing the total number of production wells at the field to 14, with total daily production increasing to 80,000 barrels. All wells are operating under free-flow production.

Pursuant to the agreed field development programme, Gazprom Neft is continuing the construction of oil and gas infrastructure. Pre-commissioning works are currently ongoing at the field’s gas treatment plant, with piping connections being installed, as well as electrical fixtures and automatic control systems. The first stage of this project will be commissioned in 2Q2017 and the second in 3Q2017.

Denis Sugaipov, Director of Major Projects, Gazprom Neft, commented:

“The Badra project is going according to plan, and it’s clear that the infrastructure necessary for increasing oil production is already in place. Badra is Gazprom Neft’s first project abroad, and one of our most successful major projects. Field infrastructure continues to expand, and is, already, now a major production complex, unique to the region.”

(Source: Gazprom Neft)