China’s Recon Technology has announced that it has signed a $2.8-million engineering and construction service subcontract with Grand Energy Development Limited on a heavy oil transportation system project (the “Project”) at the Garraf oilfield in Iraq for the services that Recon has provided.

Pursuant to the subcontract, Recon shall carry out all the engineering design services, provide the technical support to the procurement, construction, commissioning activities and provide the training services of the heavy oil transportation system project.

Garraf oilfield is located in the province of Thi Qar, Iraq, approximately 5km north-west of Al-Refaei city and 85km north of Nasiriya city. The oilfield is 17.5km long and 5.5km wide. It is estimated to hold 1.3 billion barrels of oil reserves.

Based on the Final Development Plan approved by the Government of Iraq in 2018, the oilfield is undergoing further development in stages to achieve crude oil production of 230,000 barrels per day by the end of 2020.

As part of the Project, the heavy oil pipeline with a total intended capacity of 275,000 barrels per day will be built to support the Garraf production target. By providing the services under the Project, Recon has played an important role in building the heavy oil pipeline.

Shenping Yin, co-founder and CEO of Recon said:

With advanced technique and wide experiences in the automation and digitalization of oil and gas industry, Recon has a relatively competitive advantage in the engineering design and construction businesses in oilfield segment.

“With the successful completion of the project, we expect to construct more oilfield projects and hope to help more oilfields reduce costs and maintain yields at a healthy level in the near future.

Recon Technology, Ltd. (RCON) is China’s first non-state-owned oil and gas field service company listed on NASDAQ.

(Source: Recon)

By John Lee.

Malaysia’s Petronas has said it has shut down production and safely evacuated all of its Malaysian employees from Iraq due to coronavirus (COVID-19).

In a statement, the company said:

In view of the COVID-19 pandemic and as a precautionary measure to ensure the health, safety and well-being of our employees, PETRONAS has safely evacuated all 80 of our Malaysian employees from PETRONAS Carigali Iraq Holding B.V. (PCIHBV), located at the Garraf Contract Area, in the Thi Qar Province, Republic of Iraq.

“This is certainly an unfortunate and unforeseeable event that is not within PCIHBV’s control. PCIHBV had accordingly issued the necessary notice in accordance with the provisions of the Development and Production Service Contract and engaged with the host authority prior to the suspension of operations and evacuation of our employees.

“Operations at the Garraf Contract Area are now temporarily suspended until further notice.

“We are also closely monitoring the situation.

(Source: Petronas)

By John Lee.

Production at the Garraf [Gharraf] oil field in southern Iraq has reportedly fallen to an average of around 93,000 barrels per day (bpd) in January.

According to S&P Global Platts, officials from Japan Petroleum Exploration (JAPEX) said on Monday that the drop was due to delays in drilling works.

It added that takeholders remained committed to increasing output to 230,000 bpd by the end of 2020.

Japex, which has a 35-percent stake in the field, issued results for the nine months to the end of December on Monday – see here and here.

(Source: S&P Global Platts)

By John Lee.

Japex is reportedly planning to increase production at the Gharaf oil field from around 90,000 barrels of oil per day (bpd) currently to 230,000 bpd by the end of 2020.

S&P Global Platts quotes Japex director Michiro Yamashita as saying that the company has allocated capital expenditure of $460 million for the project in fiscal 2019-20 (April-March).

(Source: S&P Global Platts)

Turkish oil and gas services company Ergil has been awarded a design, engineering, fabrication, and testing contract by China Petroleum Engineering & Construction Corporation ( CPECC), for PetronasGarraf oil field.

The company says it has completed designing, manufacturing and supplying of 12 units 320-bar high-pressure pig receivers and launchers, 28 units pig signallers, 12 units manual pig jib crane and 8 units pig trolley.

The field is owned by Petronas (45%), Japex (30%) and the North Oil Company (25%).

(Source: Ergil)

By John Lee.

Baker Hughes has signed a contract to harness 200 MMcf/d of natural gas from Iraq’s Nassiriya and Gharraf oil fields.

The Nassiriya field is operated by the state-run Dhi Qar Oil Company (DQOC) and currently producing around 70,000 barrels per day of crude oil, with a target of 150,000 bpd.

Gharraf is operated by Petronas and is producing around 88,000 bpd with a plateau production target of 250,000 bpd.

(Sources: Minister of Oil, Platts)

By John Lee.

Janus Global Operations (JGO) has announced that it has been selected by “an integrated oil and gas multinational corporation based in Malaysia“, to provide security and risk management services for the company’s operations in central Iraq.

Some 600 JGO U.S. and foreign national employees will be responsible, during the two-year contract, for security and risk management for the Malaysian International Oil Company’s (IOC) oil exploration and development program in central Iraq, to include the company’s base camp, facilities, and also mobile security for company personnel.

Matt Kaye (pictured), JGO’s chief executive officer, said:

We’re proud that the Malaysian IOC has selected JGO for this security responsibility.

“JGO has worked in Iraq with commercial and government clients for more than 13 years on demining and unexploded remnants of war clearance, munitions management, security and risk management, and other tasks critical to clients’ operations.

The Malaysian IOC has a 10-year relationship with JGO, Kaye added.

Although not named in the announcement, Malaysia’s state-owned Petronas is the operator of the Garraf [Gharraf] oil field in Dhi Qar Governorate, in which it holds a 45-percent stake. The company also has interests in Iraq’s Majnoon, Halfaya and Badra fields.

(Source: JGO)

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Developing Border Oilields and Utilizing Associated Natural Gas: Important Projects, Dubious and Non-Transparent Contracts

Information from and about the Ministry of Oil has been published and circulated extensively, in the last few days,  concerning two important subjects or projects, each of which could have immense direct and effective impacts on the Iraqi economy and on the national interest.

The first concerns the development of border fields with Iran and Kuwait, and the second is related to utilizing associated natural gas from Nassiriyah and Gharraf oilfields in Thi Qar province.

After thorough reviewing all information from the mentioned sources and analyzing what relates to both projects, I made a few remarks, diagnosed some flaws, inaccuracies and inconsistencies, and then proposed some practical suggestions and alternatives that I hope will attract the attention of the Ministry; especially those related to the necessity of utilizing “National Efforts” in developing border fields.

The extent and implications of lacking competitiveness and transparency, which consequently lead to questioning the integrity of the contractual process, have also been clearly identified.

It should be recalled that the Iraqi Constitution emphasizes two basic principles directly related to these two projects: the first concerns achieving “the highest benefit for the Iraqi people” and the second “using the most advanced techniques of the market principles”. In the light of what was presented and analyzed below, it is clear that the Ministry did not comply with these Constitutional requirements and obligation.

The paper discusses the border fields/ blocks first then addresses the utilization of associated gas.

Please click here to download the full report.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

By John Lee.

Iraqi Oil Minister Jabar Ali al-Luaibi [Allibi] has officially launched the new Dhi Qar Oil Company (DQOC) [Thi-Qar Oil Company].

At a ceremony in Nasiriya, the Minister said he is working to develop the Nasiriya oil field and the other exploratory blocks and fields in the region, and called on international companies to invest in the new Nasiriya refinery project.

The DQOC was spun off from the South Oil Company (SOC) last year, and has responsibility for Garraf and Nasiriyah oil fields; following the transfer of assets to the DQOC, the SOC has become the Basra Oil Company (BOC).

The Iraqi Ministry of Finance approved a start-up capital of $42 million for the new company.

(Source: Ministry of Oil)

By John Lee.

A senior Iraqi oil official has told Reuters that international oil companies (IOCs) have warned of delays to projects to increase its crude oil output if the Iraqi government insists on drastic spending cuts this year.

Investments by IOCs are repaid with crude oil, which has become a problem since oil prices have fallen and Iraq has been struggling to find enough oil to repay the companies for their investments.

Due to budgetary pressures, Iraq has asked IOCs to cut their development budgets for a second year, but the two sides have failed so far to agree on spending levels.

BP has been asked to cut its 2016 budget for Rumaila to $2.48 billion, and to target output of 1.4-million barrels per day. (BP proposed a budget of $3.25 billion for 2015).

Lukoil is expected to cut spending to $1.26b illion and aim for a production of 400,000 bpd at West Qurna 2 project; it proposed a 2015 budget of $2.1 billion.

Eni should cut spending to $1.62 billion and aim for production of 351,000 bpd at Zubair.

ExxonMobil was asked to slash spending to $878 million and aim for output of 379,000 bpd at West Qurna 1. Last year, according to Reuters, it “insisted” on spending $1.8 billion.

Shell should cut spending to $855 million and aim for 200,000 bpd from Majnoon. Last year, it proposed a budget of $1.5 billion.

Petronas should reduce costs to $712 million and target production of 100,000 bpd at Garraf.

(Source: Reuters)