DNO ASA, the Norwegian oil and gas operator, today reported stepped up investments across its portfolio on the back of higher production and significantly improved liquidity outlook as the Company recovers from the oil market turmoil that upended the second quarter of 2020.

Operated production in July at the Company’s flagship Tawke license in the Kurdistan region of Iraq is up 15,000 barrels of oil per day (bopd) month-on-month to 115,000 bopd following a well intervention campaign fast tracked in June with the stabilization of oil prices and improved export payment terms.

In the North Sea segment, DNO projects receipt of USD 215 million in tax refunds in the second half of the year, including USD 70 million from the recently announced temporary changes to petroleum taxation in Norway.

“The worst of the coronavirus pandemic hit to our business is behind us and DNO is back identifying and capturing opportunities,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “Still, we are prepared to act quickly, as we did in March, if a strong second wave comes,” he added.

Second quarter Company Working Interest (CWI) production stood at 89,700 barrels of oil equivalent per day (boepd) of which Kurdistan contributed 71,900 bopd and the North Sea 17,800 boepd.

Gross operated Tawke license production averaged 102,000 bopd, including 58,100 bopd from the Tawke field and 43,900 bopd from the Peshkabir field, together down 11 percent from the first quarter as development activity dropped off to preserve cash at a time of historically low and uncertain oil prices.

Second quarter revenues slid to USD 72 million and operating losses climbed to USD 81 million, both driven by weak commodity prices across the portfolio and lower cargo liftings of produced oil in the North Sea.

At the Baeshiqa license in Kurdistan, DNO continued drilling the third exploration well on a second structure (Zartik) some 15 kilometers southeast of the Baeshiqa-2 discovery well. The rig has been released and testing will commence in August in Lower Jurassic and Upper Triassic zones intersected by the well and expected to last three months. Evaluation of the Baeshiqa-2 results is ongoing to determine commerciality.

During the first half of 2020 DNO received a total of USD 224 million in payments from the Kurdistan Regional Government. In addition, the Company received a USD 23 million June entitlement payment after the end of the reporting period. Discussions are ongoing to reach an agreement on acceptable terms and timing of payment of arrears totaling USD 240 million due to DNO for the November 2019-February 2020 entitlements and November 2019-June 2020 override payments.

Notwithstanding the interruption of these payments and DNO’s repayment of the remaining USD 138.5 million of the DNO01 bond at maturity on 18 June 2020, the Company exited the first half of 2020 with a strong cash balance of USD 427 million. Net debt at the end of the second quarter stood at USD 537 million, down from USD 559 million at the end of the first quarter.

Last month, DNO commissioned the Peshkabir-to-Tawke gas reinjection project, the first enhanced oil recovery project in Kurdistan, to unlock additional oil volumes at Tawke while significantly reducing gas flaring and CO2 discharges at Peshkabir.

Prompted by the tax changes in Norway, the Company is working with partners to accelerate infill drilling at the Ula, Tambar and Brage producing fields, revisit development options for the Brasse field and actively evaluate the Iris/Hades, Fogelberg and Trym South discoveries.

DNO will remain an active explorer in the North Sea, targeting 4-6 wildcat wells a year.

(Source: DNO)

By John Lee.

The UK’s Serious Fraud Office (SFO) has secured convictions against two former oil executives who conspired to give corrupt payments to secure contracts in Iraq.

A jury at Southwark Crown Court found Ziad Akle guilty on two counts and Stephen Whiteley guilty on one count of conspiracy to give corrupt payments. The convictions follow the guilty pleas of co-conspirator Basil Al Jarah who, in July 2019, admitted five offences of conspiracy to give corrupt payments.

In the years of reconstruction following the overthrow of Saddam Hussein in 2003, the three men conspired with others to pay bribes to public officials at the Iraqi South Oil Company (SOC) and, and in Basil Al Jarah’s case the Iraqi Ministry of Oil, to secure oil contracts for Unaoil and its clients.

The post-occupation Iraqi government had commissioned the South Oil Company to run projects as part of a “Master Plan” to rebuild Iraq’s oil industry and thereby expand the country’s oil export capacity. This included the installation of offshore mooring buoys and new oil pipelines.

To ensure Unaoil benefitted from these state-run projects, the defendants and co-conspirators conspired to bribe public officials at the South Oil Company and Ministry of Oil to secure contracts for Unaoil and its clients SBM Offshore. Basil Al Jarah also conspired to bribe public officials at the South Oil Company and the Ministry of Oil to secure contracts for Unaoil and its client Leighton Offshore.

Basil Al Jarah admitted to paying bribes totalling over $6million to secure contracts worth $800m for the supply of oil pipelines and offshore mooring buoys. Ziad Akle and Stephen Whiteley were found guilty of paying over $500,000 in bribes to secure the $55m contract for the offshore mooring buoys.

SFO Director Lisa Osofsky said:

These men dishonestly and corruptly took advantage of a government reeling from dictatorship and occupation, and trying to reconstruct a war-torn state. They abused the system to cut out competitors and line their own pockets.

“It is our mission to pursue and bring to justice those who use criminal means to weaken the integrity of business.

The SFO would like to thank the Australian Federal Police, the French Parquet National Financier, the Police Judiciaires of the Principality of Monaco, the Fiscal Information and Investigation Service (FIOD) of the Netherlands, the United States Department of Justice, Greater Manchester Police, the Metropolitan Police, the National Crime Agency and West Mercia Constabulary for their valuable assistance in this case.

The men are due to be sentenced on 22 and 23 July 2020.

More here.

(Source: UK SFO)

By John Lee.

The Cabinet held its regular meeting in Baghdad on Tuesday under the chairmanship of Prime Minister Mustafa Al-Kadhimi.

At the start of the meeting, the Prime Minister extended his condolences and paid tribute to Dr. Hisham Al-Hashimi who was assassinated by a group of armed outlaws.

The Prime Minister said that the perpetrators of this crime will be pursued and brought to justice, as will those who have spilled the blood of other Iraqis.

The Prime Minister made it clear that he will not allow Iraq to be held to ransom by gangs, and that the government is determined to reassert the authority of the state and the rule of law.

The Prime Minister said that this government came into office in very challenging circumstances, and it will take the necessary action to fulfill the aspirations of Iraqis.

The Cabinet then received a briefing from the Minister of Health on the latest developments in relation to Covid-19, and the ongoing efforts to combat the pandemic.

Following discussions, the Cabinet decided to:

  • Approve a draft law on the pension rights of medical and health professionals who died as a result of their work caring for Covid-19 patients, and to submit it for parliamentary approval
  • Approve the recommendations of the Ministerial Council on Human Development on secondary education, including the creation of a new arts track in secondary education, in addition to the current science and humanities tracks
  • Commission the Ministry of Labour and Social Affairs to prepare an urgent study on the actual numbers of those entitled to social security benefits, the cost of their inclusion in the system, and the measures taken by the Ministry to address any abuse of the social security network
  • Authorise the Minister of Finance to sign a memorandum of understanding between the Ministry of Finance and the German Development Bank regarding a grant in the amount of 15,000,000 euros to equip five temporary hospitals for Covid-19 patients in various locations
  • Renew the licenses of mobile phone companies for five years, on conditions they pay 50% of their outstanding debt, and commit to introducing 4G commercial services by early 2021

The Cabinet also discussed other policies and draft laws and issued several directives.

(Source: Govt of Iraq)

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 9th July 2020).

Please click here to view a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD576 (-1.2%) / $602 (-0.4%) (weekly change) (-12.6% and -14.1% YTD change, respectively). The number of week traded shares was 3.7 bn and the weekly trading volume was IQD2.1 bn ($1.7 mn).

ISX Company Announcements

  • The CBI signed, on Tuesday, a memorandum of cooperation with the Iraqi Securities Commission (ISC). The memorandum included the possibility of exchanging the information available at the Central Bank and the Securities Commission, in addition to coordination in the field of legislation and regulatory and regulatory standards for bodies subject to the control of both parties. (CBI)
  • ISX will suspend trading of Trans Iraq Bank for Investment (BTRI) starting Jul. 20, 2020 due to the AGM that will be held on Jul. 26, 2020 to discuss and approve 2019 annual financial statements.
  • ISX will suspend trading of Iraqi for Tufted Carpets (IITC) starting Jul. 16, 2020 due to the AGM that will be held on Jul. 22, 2020.
  • ISX will suspend trading of Baghdad Soft Drinks (IBSD) starting Jul. 14, 2020 due to the AGM that will be held on Jul. 21, 2020 to discuss and approve 2019 annual financial statements, discuss suggesting dividend distribution and to elect 9 original and 9 alternative board members.
  • ISX suspended trading of Asiacell (TASC) on Jul. 6, 2020 due to the AGM that will be held on Jul. 12, 2020 to discuss and approve 2019 annual financial statements.
  • ISX will continue the suspension of trading of the following companies due to not disclosing their annual and quarterly financial statements: BUOI, BNOR, IMCM, IMPI, AMAP, IICM, IHLI, ITLI, IIEW, IELI, HISH, VKHF, VBAT and SBAG.
  • Due to the increased number of Covid-19 cases in Baghdad and to commit to the safety measurements, Al-Mansour Bank (BMNS) didn’t hold its intended AGM on Jul. 8, 2020 and hence, wasn’t suspended from trading on Jul. 6, 2020. The bank proposed to the companies’ registrar to hold the AGM on Jul. 15, 2020 and is still waiting for the approval.
  • The ISX invited listed companies for participating in Zoom conference calls for the purpose of communicating with the shareholders and attracting investors. During the conference calls, the listed companies will disclose recent financial results and 2020 plans. Zoom conference calls with the ISX listed companies will continue to be held until the end of Sep. 2020. The speakers of the first two Zoom conference calls will be Bank of Baghdad (Jul. 10th), and National Bank of Iraq (Jul. 11th), respectively.
  • Cross transaction: 2.0 bn shares of Trust International Islamic Bank (BTRU) on Jul. 8, 2020, which represents 0.8% of BTRU’s capital.

By John Lee.

GE Gas Power has reported that it has successfully completed services on four 9F.03 gas turbines, two steam turbines and six generators at Iraq’s Besmaya Power Plant safely and on time, while continuing to execute wider operations and maintenance (O&M) works at the site despite the many challenges posed by the COVID-19 pandemic.

These service activities reduced the risk of unplanned downtime of power generation equipment at the site, enabling the plant to reliably supply up to 3 gigawatts (GW) of electricity to the national grid to help meet the peak summer demand for power.

Owned by Mass Group Holding (MGH), Besmaya is Iraq’s largest power plant. Phases 1 and 2 of the project can generate up to 3 GW and Phase 3, which is currently under construction, is expected to add up to another 1.5 GW. The facility is the first one in the country outside the Kurdistan region to be developed by an independent power producer on a build-own-operate basis for the Iraqi Ministry of Electricity.

GE has supplied eight gas turbines, four steam turbines and 12 generators that are covered by a 20-year service agreement and is also responsible for O&M services for Phases 1 and 2 of the project to ensure smooth operations at the site. Additionally, GE won a contract to supply four 9F.04 gas turbines and four generators for Phase 3. Much of the electricity generated at Besmaya is fed to the capital Baghdad and surrounding areas and its uninterrupted operations are critical to power local healthcare facilities, homes, businesses and more.

Ahmad Ismail, Chairman of MGH, said:

At MGH, we are committed to strengthening Iraq’s power sector further.

“The logistical and mobility constraints resulting from the COVID-19 outbreak led to several unexpected difficulties in carrying out the required service works at Besmaya including delays in the arrivals of parts and challenges in access to technical experts.

“However, the determination, flexibility and efficiency GE displayed by being able to draw on local teams on the ground, remote support from experts and access to a global supply chain, enabled us to keep the plant operational with high levels of reliability and efficiency and to deliver on our commitments.

Beginning February 2020, over 110 GE and FieldCore (a GE-owned field services execution company) staff members liaised closely with MGH to execute the services safely and as per schedule. The works conducted included the first phase of Hot Gas Path inspection services of the gas turbines, steam turbine minor inspections and generator MAGIC (Miniature Air Gap Inspection Crawler) inspections.

Experts based in the Middle East and Europe liaised with the local site team through digital tools, video conferences and phone calls on a daily basis to remotely support mechanical and commissioning works, identify and transport stocks of parts that needed to be replaced and keep track of overall project progress. To reduce the risk of exposure to COVID-19, additional hygiene, health and safety measures were implemented at the site, including more frequent disinfection and cleaning activities, thermal screenings of everyone entering the site, distribution of additional mandatory personal protective equipment such as gloves and masks, COVID-19 prevention training sessions, accommodation for staff on-site, as well as other precautions.

Joseph Anis, President and CEO of GE Gas Power, Middle East, North Africa and South Asia said:

As we work through these exceptional times, our resolve to support the Ministry of Electricity and people of Iraq by providing the electricity needed to power everyday life, growth and progress remains unchanged. Our top priority remains the safety of our people, while continuing to deliver results for our customers and the communities we serve.

“I would like to thank the supportive staff at GE and MGH who stayed away from their loved ones for months, working long hours to secure reliable power supplies during this unprecedented period and for the hot summer months ahead. Together, we are honored to make a positive difference to the lives of millions of Iraqi citizens.

GE and FieldCore have up to 300 people across Iraq. The company has supported the development of the country’s energy infrastructure for over 50 years and since 2011, helped to bring up to 15 GW of power online across Iraq, including up to 1.4 GW in conflict affected areas such as Diyala and Mosul.

The company has also helped bring over US$2.4 billion in financing for energy sector projects in Iraq in collaboration with export credit agencies, commercial banks and other organizations.

(Source: GE)

By John Lee.

Swedish company Linxon has won an order of around $80 million to the Ministry of Electricity in Iraq for delivery of four turnkey 132/33 kV GIS substations. The contract forms part of the Electricity Sector Reconstruction Project (Phase 2) financed by Japan International Cooperation Agency (JICA).

The delivery includes all needed equipment (High Voltage 132 kV GIS, 132/33 kV power transformers, 33 kV switchgear, control & protection system, communication system etc) as well as design, civil construction works, installation and commissioning. The delivery time is 18 months and the project will start around July, 2020.

Frédéric Tréfois, CEO of Linxon, said:

We are honoured to have received this mandate and are grateful for the collaboration and support by JICA in financing this project.

“This type of EPC (Engineering, Procurement and Construction) project truly demonstrates the confidence of our clients in our comprehensive offering and our ability to deliver enhanced value.

“We have a good relationship and long-standing experience working with the Ministry of Electricity in Iraq in helping the country to ramp up it’s electricity capacity. I am proud of the Linxon team demonstrating resilience and winning this award during the current situation“.

JICA is the agency implementing Japan’s Official Development Assistance (ODA). JICA works proactively to address development challenges in Iraq by utilizing Japanese ODA loans. The Electricity Sector Reconstruction Project supports construction of power transmission and distribution facilities in Iraq, where the demand for electricity is especially high.

Linxon is a joint venture company set up in 2018 by SNC-Lavalin and ABB to deliver turnkey electrical AC substation projects.

(Source: Linxon)

By John Lee.

Swedish company Linxon has won an order of around $80 million to the Ministry of Electricity in Iraq for delivery of four turnkey 132/33 kV GIS substations. The contract forms part of the Electricity Sector Reconstruction Project (Phase 2) financed by Japan International Cooperation Agency (JICA).

The delivery includes all needed equipment (High Voltage 132 kV GIS, 132/33 kV power transformers, 33 kV switchgear, control & protection system, communication system etc) as well as design, civil construction works, installation and commissioning. The delivery time is 18 months and the project will start around July, 2020.

Frédéric Tréfois, CEO of Linxon, said:

We are honoured to have received this mandate and are grateful for the collaboration and support by JICA in financing this project.

“This type of EPC (Engineering, Procurement and Construction) project truly demonstrates the confidence of our clients in our comprehensive offering and our ability to deliver enhanced value.

“We have a good relationship and long-standing experience working with the Ministry of Electricity in Iraq in helping the country to ramp up it’s electricity capacity. I am proud of the Linxon team demonstrating resilience and winning this award during the current situation“.

JICA is the agency implementing Japan’s Official Development Assistance (ODA). JICA works proactively to address development challenges in Iraq by utilizing Japanese ODA loans. The Electricity Sector Reconstruction Project supports construction of power transmission and distribution facilities in Iraq, where the demand for electricity is especially high.

Linxon is a joint venture company set up in 2018 by SNC-Lavalin and ABB to deliver turnkey electrical AC substation projects.

(Source: Linxon)

Siemens Energy and the Iraqi Ministry of Electricity have signed a contract for the Al Hamudhia substation, which will provide reliable and efficient power supply to the cities of Ramadi, Fallujah, Saqlawyah, Khalediyah and surrounding areas in Al Anbar governorate, North West of Baghdad.

Located about 20 kilometers away from Ramadi city, the turnkey 400- kilovolt (kV) Al Hamudhia substation will support greater grid connectivity and allows for a higher utilization of the Al Anbar power plant’s generated power, supporting anticipated energy demand growth of 10% annually.

Ammar Mohammed Kadhim, General Director of Planning and Studies Department, Iraqi Ministry of Electricity and the Head of the Japanese loan team “IQP22” projects at the Ministry, which are being financed by the Japan International Cooperation Agency (JICA), said:

A top priority for the new government of Iraq is rebuilding the country’s power infrastructure. Upgrading and strengthening the Iraqi power grid is crucial to this ambitious plan, which will ultimately support Iraq’s economic, industrial and infrastructure development.

“We’re already working on comprehensive grid projects across the country in collaboration with international partners, like Siemens, to deploy the most reliable and advanced technologies.

The new substation will connect up to 750 Megavolt Amperes (MVA) to the national grid, helping decrease bottlenecks and transmission losses. Construction of Al Hamudhia station is expected to start in July 2020, and is scheduled for completion in July 2022.

Mahmoud Hanafy, Senior Vice President, Transmission Solutions at Siemens Energy, Middle East, said:

The new substation will support in providing reliable power to the homes and industries in the governorate of Al Anbar.

“Our grid technology enables more reliable, sustainable, efficient and flexible power systems. From transporting electricity from power plants to the distribution stations, all the way to the citizens, our ability to optimize flexibility and efficiency will contribute to boosting the transmission infrastructure of Iraq.

Part of the JICA’s projects in Iraq, the 400-kV Al Hamudhia’s scope of work includes the design, construction, equipment supply, erection, testing and commissioning and training of personnel. The project will be completed by Siemens Energy’s engineers in collaboration with specialized local Iraqi subcontractors.

The company is currently building 13, 132/33-kilovolt substations as part of the Siemens Roadmap for the Electrification of Iraq. These projects aim to strengthen the country’s electricity transmission and distribution network – with a particular focus on the governorate of Basra as well as the other governorates that are located in the middle and south of the country. Siemens is also supplying 35 power transformers to support the Iraqi power grid.

In April 2019, Siemens and the Government of Iraq signed an agreement to implement Phase 1 of the Roadmap, which is designed to meet the country’s reconstruction and power sector goals, and includes the addition of new and highly-efficient power generation capacity, rehabilitation and upgrade of existing power plants and the expansion of transmission and distribution networks. Following Siemens Roadmap for the Electrification of Iraq agreement, 791 MW of electricity has already been added to the country’s grid.

(Source: Siemens)