By John Lee.

Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] has officially opened the Rumaila power station.

The construction of the 235 MW plant was supervised by the China Petroleum Engineering & Construction Corporation (CPECC), the engineering and construction subsidiary of the China National Petroleum Corporation (CNPC).

The Minister said the project is considered as one of the largest projects organized by the Rumaila Operating Organization (ROO), which includes Basrah Oil Company (BOC), BP and PetroChina.

(Source: Ministry of Oil)

Kirkuk Governorate Council has reportedly filed a complaint at the Iraqi Supreme Court against the federal government for taking unilateral steps on the governorate’s oil.

A press report on February 19 cited three moves that it said Baghdad has taken without consultation with local government: An agreement with British Petroleum (BP) to develop Kirkuk oil fields; efforts to export oil to Iran and Turkey; and exporting oil to Iran via tankers.

Though the report referred to these three steps as “contracts“, only the third relates to an agreement that is already being realised. The other moves remain in the initial stages.  The head of the Kurdish Fraternity List at Kirkuk Governorate Council, Muhammad Kamal, told press:

“In accordance with the federal constitution, in provinces that produce oil, there should be coordination with the local governments and no contracts should be signed without consultation with the local administrations”. 

Head of Kirkuk Governorate Council, Rebwar Talabani, stated that the federal government “does not listen to any articles of the constitution or laws“.  He said the majority at the council were hoping that “our demands take the form of a legal case against the Iraqi government“.

According to the report, the council has filed 13 complaints at the Supreme Court against the Iraqi government concerning “violations” by Iraqi security forces and the government since October.

It added that since the federal takeover, the people of Kirkuk have not benefited from the governorate’s oil wealth, whereas prior to the takeover local government was given 10m dollars per month by the Kurdistan Regional Government for exporting its oil.

(Source: GardaWorld)

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)

By Salam Zidane for Al Monitor. Any views expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News. 

Iraq has much to gain from gas-supply pact with Kuwait

Kuwait will begin importing natural gas from neighboring Iraq this year, a development welcomed in Baghdad as it could improve Iraq’s relations with the Gulf countries — relations that ruptured when Iraq invaded Kuwait in 1990.

Most of Iraq’s gas is associated petroleum gas, also known as flare gas. Associated petroleum gas is a byproduct of oil production, as opposed to natural gas that comes directly from gas reservoirs in the ground.

The Iraqi Ministry of Oil has decided to export associated petroleum gas from international oil companies operating in southern Iraq to Kuwait via a gas pipeline near Basra. Kuwait would then turn it into dry gas, condensates and liquid gas, among other types. According to the Ministry of Oil, Iraq flares 1.5 billion cubic feet of gas daily.

Ministry spokesman Assem Jihad told Al-Monitor, “Iraq will export to Kuwait the associated gas, part of which is flared on a daily basis. Processing natural gas is a complex and expensive industrial process that requires building plants through local and foreign companies.”

Jihad said, “Iraq is set to supply Kuwait with 50 million cubic feet of gas daily, which will gradually increase to 200 million cubic feet [depending on] international prices. The gas will be exported through the three-decade-old pipeline linking the two countries. The pipeline, however, needs maintenance. Iraq will take care of maintenance over the 30 kilometers [19 miles] of pipeline stretching within its territory, while Kuwait will handle its part of the pipeline.”

Iraq has lost billions of dollars annually as a result of wasteful gas flaring and its importation of diesel fuel for electricity. That’s not to mention the low levels of energy efficiency because many Iraqi power stations run on dry gas, which is not produced locally.

What has compounded the problem is the reluctance of some oil companies to exploit associated gas despite the increase in Iraq’s crude oil production from an average of about 1 million barrels per day in 2003 to roughly 4.3 million per day in December, which increased gas flaring from 700 million cubic feet to 1.5 billion cubic feet daily.

Kuwait will lay the pipeline to the neighboring Rumaila oil field, the largest in the world, under the supervision of the BP oil company. The agreement is likely to be implemented soon, since Kuwait has a demand for natural gas that exceeds its supply by an estimated 500 million cubic feet daily. Kuwait has been unable to curb this deficit in part because of tension among Gulf countries that has prevented Qatari gas from flowing into Kuwait via Saudi Arabia; Reuters reports that much of the shortfall is being covered by imports of liquefied natural gas.

The Iraq-Kuwait associated petroleum gas deal should help Iraq pay off the remaining reparations for the invasion of Kuwait, amounting to $4.5 billion.

Iraq’s parliamentary Oil and Gas Committee criticized the government’s energy policy for relying on the development of oil production and neglecting natural gas processing, which could put an end to the country’s electricity crisis and launch petrochemical industries. Committee member Zaher al-Abadi told Al-Monitor, “Iraq is losing billions of dollars in flaring gas, while the Ministry of Oil is standing idly by.”

Oil expert Hamza al-Jawahiri, who is knowledgeable about the agreements between international oil companies and the Ministry of Oil, and between the ministry and various countries, said Kuwait will process the natural gas in Iraq and then transport it to its cities.

“As per the agreement, Kuwait will bear the expenses of building plants, processing and piping the gas,” he said. The gas will be processed in Iraq by separating impurities and non-methane hydrocarbons and fluids to produce dry natural gas.

Jawahiri added that Kuwait signed an agreement months ago with Basrah Gas Company, which is part of the latest gas export agreement, noting that other sources of gas will include rich oil and gas fields in southern Iraq. Basrah Gas is a consortium of three businesses including the majority shareholder South Gas Co., Shell and Mitsubishi. The consortium exploits gas from three oil fields.

Shaalan al-Daraji, Basrah Gas chief information officer, told Al-Monitor the company’s plan, which runs until 2021, aims to end the flaring of gas in the Zubair, Qurna 1 and Rumaila oil fields. “The company currently produces 700 million cubic feet of gas daily and has a strategic plan to stop gas flaring in oil fields,” Daraji said.

Iraqi Prime Minister Haider al-Abadi expressed great support for the Kuwait agreement, which could end Iraq’s long-standing estrangement with the Gulf countries, as Kuwait has asked the United Nations Security Council to lift sanctions on Iraq.

By John Lee.

Reuters has reported that both BP and Eni have expressed an interest in developing the giant Majnoon oilfield, which Shell plans to exit next year.

Iraqi oil officials told the news agency that Iraq’s Ministry of Oil has not yet started negotiations with either company.

BP is currently developing the Rumaila field, while Eni operates Zubair.

Shell is expected to hand over Majnoon operations to the state-owned Basra Oil Company by the end of June 2018.

Both Chevron and Total have been previously reported as being interested in taking over the field.

(Source: Reuters)

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.

It was not long after the Iraqi army took over the oil fields in Kirkuk in a military operation to “impose security,” as described by Prime Minister Haider al-Abadi, that the federal government resumed oil pumping operations.

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 BP in 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.

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.

Rebuilding Iraq is central to the agenda of the Iraq Britain Business Council (IBBC) autumn conference at The Address, Dubai Marina on 12th November.

The opportunity for businesses in the region to engage in Iraq is reflected by the attendance of a number of high profile Iraqi Ministers: from Electricity, Transport, Oil, Construction and Housing, to the Governor of Basrah and International financiers, including the IMF and World Bank.

Vikas Handa, the IBBC UAE representative agrees:

“Iraq is the second largest oil producer in OPEC and has one of the biggest programmes for new power generation projects in the region; Iraq presents massive opportunities for housing, Infrastructure and FMCG businesses. The event is designed to discover the opportunities and projects live and intended in Iraq, for business people to meet the decision makers, to obtain insights and to network”.

UAE is increasingly seen as the regional hub for corporate operations in Iraq and the place where business decisions are determined.

We can confirm this as a range of leading international companies are attending, including GE, Siemens, BP, Wood, Serco, Shell, Petronas, Gulftainer, Zain, KCA Deutag, the International Islamic Bank and more. There will also be plenty of networking and engagement on the sidelines beyond the main stage.

The IBBC Dubai conference is also the location for the Governor of Basrah to outline his vision for the future, and it is expected ministers will outline the latest thinking on the evolving situation in Iraq and the opportunities this brings.

To register, please follow the link: http://www.webuildiraq.org/ibbc-conference/autumn-conference/

(Source: IBBC)

By John Lee.

Iraqi Oil Minister Jabar Ali al-Luaibi [Allibi, Luiebi] (pictured) has asked UK-based BP to develop the disputed Kirkuk oilfields.

The move comes just a day after Baghdad regained control of the area from Kurdish forces. Control of the field remains split between the Kurdistan Regional Government (KRG) and Baghdad’s North Oil Company (NOC).

According to the Financial Times, BP’s chief executive Bob Dudley said before lunchtime yesterday that he had not yet heard from the Iraqi oil minister, but indicated the company could be interested.

(Sources: Ministry of Oil, Financial Times)

By Ashley Goodall.

Is the UK overlooking a key USP for British International businesses?

Education and training footprint of British companies around the world has a significant and excellent impact on communities and economies and is often taken for granted.

As the UK ramps up its trade rhetoric and a ‘Global Britain’ emerges, one of the key benefits that British companies bring is being overlooked: Education and training…

The penny dropped for me as I attended a meeting of the Iraq Britain Business Council (IBBC) members to find that one after the other, each company was committed to the concept of a learning organisation that are locally integrated. Not only are British companies employing as many local people as possible, but also training them to deliver increasingly complex managerial and technical roles.

Oil and gas companies, Shell and BP in particular, deliver an extraordinary amount of training in Iraq alone. The effect on the local communities and national economies is a massive injection of know-how and a source of social stability, development, prosperity and economic progress, let alone the transformative power training confers on individuals, families and communities.

Not only are our companies a source of prosperity, but when partnered with UK Universities offer a double whammy for the delivery of global standards and expertise that  few countries can match in country and via external courses, such as delivered by Oxford Brooks and Northampton Universities.

Emerging economies appreciate this expertise, as it raises business operations to global standards and enables them to compete with the best, to encourage inward investment and generate employment opportunities in their regions.

Oil and Power companies in particular make a big social impact on their suppliers. Osama Kadhum Managing Director of Ratba’ contracting in Iraq says his staff received 3885 hours of training in Majnoon Oilfield from Shell alone, ensuring the highest technical and supervisory standards are applied.

GE power likewise employ over 90% of local staff, often sent for technical training in USA or x for 6-12 month stretches supporting local recruitment , diversity of employees, and women for increasingly leadership and supervisory roles. Shell in Iraq train over 7,900 local staff in Basra for whom they are delivering over 200,000 training days per year. BP and its Partners are developing the Rumaila field which is supported by a 93% Iraqi workforce.

Around 2,400,000 training hours have been delivered to staff in a variety of technical disciplines, core skills, leadership and safety.  And these figures do not include community initiatives such as an extensive community vocational training programme that has been running for 3 years, or 400 women from a remote community that have been trained in the Rumaila funded Qarmat Ali Women’s Training Centre.

In Baghdad Serco have set up an ATC Academy for Air traffic Controllers. Multiply this scale of training globally in just Iraq and you begin to see the scale and quality of training that British companies deliver among International, Emerging and Frontier markets.

More widely Rolls- Royce has committed an ambitious plan to reach 6 million people worldwide through their STEM (Science, Technology, Engineering & Maths) education programmes between 2014- 2020. This bold target will encourage a more creative and engaging outreach through the company’s supply chain, through the wider STEM sector and to inspire society to attract talented young people from around the world to the world of STEM.

Businesses are often castigated by the media, but the reality is that they are usually a force for good, prosperity and ultimately stronger communities. So let’s celebrate the important impact British companies’ commitment to education and training brings to millions of people and their ability to change the world.

Ashley Goodall is a martketing consultant to Iraq Britain Business Council (IBBC).