By John Lee.

Russia’s Gazprom Neft has reportedly said it will not reduce investment in its projects in Iraqi Kurdistan, despite a request from the Kurdistan Regional Government (KRG) to do so.

Reuters reports that following a slump in oil prices, oil producers have been asked to reduce their investments, which governments often have to partially reimburse as part of their contractual arrangements.

Gazprom Neft holds a participating interest of 40 percent in the Garmian block and 80 percent in the Halabja and Shakal blocks. The Sarqala field is located within the Garmian block.

More here.

(Source: Ekurd, Reuters)

By John Lee.

The coronavirus pandemic has reportedly led to thousands of new jobs to truck drivers in the Kurdistan Region.

According to a report from Rudaw, while the Ibrahim Khalil border crossing between Turkey and Iraqi Kurdistan has been closed to tourists and truckers alike, freight is being transferred to local truck drivers to be delivered to destinations in the region.

More here.

(Source: Rudaw)

Newly trained women in Ninewa produce face masks to combat spread of COVID-19 in Iraq

In January 2020, UNDP and Kurdistan Human Rights Watch (KHRW) collaborated to train sixty women on sewing and tailoring in Ninewa over the course of a ten-day workshop.

At the time, these women could not have foreseen how their newly developed skills would contribute to combatting the deadly coronavirus disease (COVID-19) pandemic currently sweeping the globe.

As of 25 March 2020, the World Health Organization has tracked over 400, 000 cases of COVID-19 with over 18, 000 confirmed deaths. The pandemic has affected 197 countries, areas, and territories, including Iraq.

When a pharmaceutical company contracted by the Ninewa Department of Health was tasked with producing five million disposable face masks in response to the spread of COVID-19, thirty of the recently trained women were employed to use their skills to produce the masks.

After briefings on the health standards and nature of the environment required for mask production, the seamstresses began creating thousands of masks daily in controlled conditions.

Working swiftly to produce this vital personal protection equipment despite the curfew in Ninewa Governorate, these skilled women are directly contributing to the mitigation of COVID-19 in Iraq.

Aseel, 45, says:

“We have produced thousands of pieces and the major portion is delivered to the Ninewa Health Department. Some other organizations are also receiving face masks from us and they distribute those free of cost in communities and camps.”

 

 

Not only has the sewing and tailoring skills training empowered sixty women with new abilities, it has also instilled within them hope for their futures. Sustainable development projects such as these are at the forefront of UNDP Iraq’s priorities.

Nora, 37, says:

“I am working on developing myself in the sewing profession and in the future, I would like to create a workplace for sewing or a small factory.”

The organization and facilitation of skills development workshops with Kurdistan Human Rights Watch is part of a project spearheaded by UNDP Iraq under the Social Cohesion Programme, which aims to improve the enabling environment for peace and social cohesion in all areas of Iraq.

(Source: UNDP)

By John Lee.

IFC, a member of the World Bank Group, is investing over $26 million in a new 161-bed hospital in Erbil in the Kurdistan Region of Iraq.

The facility will increase the availability of quality healthcare services and help address gaps in the country’s healthcare infrastructure. The $92 million Seema Hospital project is expected to open its doors in 2021. In addition to providing core health services, it will be one of the city’s first private hospitals with oncology, radiotherapy, and burn units.

Treatment capacity in existing public and private healthcare facilities in Iraq is limited, with damages to the system estimated at $2.3 billion because of the conflict, according to a World Bank report. The hospital is owned by the Macrom Company for General Trading.

Yaseen Al Bazzaz, Chairman and Chief Executive Officer of Macrom Company for General Trading, said

“Since opening our first hospital in 2006, we have grown into a leading provider of specialized health care services … Hundreds of patients are traveling desperately to neighboring countries for their medical needs. This will change once Seema Hospital opens and provides top-notch healthcare solutions.”

IFC is also contributing technical expertise, advising on environmental and social best practices, and providing guidance on corporate governance. The project is part of the World Bank Group’s strategy in Iraq to develop social infrastructure. Seema Hospital also will be one of the first buildings in Iraq to be certified by IFC EDGE, a platform that helps to determine the most cost-effective options for designing green buildings.

Tomasz Telma, IFC’s Senior Director for Manufacturing, Agribusiness, and Services, said:

“Iraq is a priority country for IFC, and we are committed to supporting its economic growth and health infrastructure … Investing in quality hospitals helps improve care, especially where there is often limited access to effective secondary and tertiary facilities, and introduce expertise, technology, and best practices to these markets.”  

IFC has increased its investments in Iraq during the last decade. Its committed portfolio stands at about $254 million, up from $20 million in 2010.

As Iraq and other countries battle COVID-19, the World Bank Group, in response to the crisis, has announced $14 billion package of financing to help support  countries to strengthen health systems and improve disease surveillance worldwide.

(Source: IFC)

Gulf Keystone Petroleum (GKP) has issued providing an operational and corporate update:

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:

 In these challenging times, we remain focused on the safety of our people and have adapted our operations to ensure their continued welfare.  With the associated economic backdrop compounded by a delay in payments, we are taking a prudent approach to running our business with a sharp focus on financial discipline and maintaining liquidity.  While we were on track to deliver the expansion to 55,000 bopd in Q3 2020, flexibility is the order of the day and as such, beyond our existing commitments, we have suspended further expansion activity until conditions improve. 

 “Underpinning the Company’s strong investment case is the quality and scale of the Shaikan Field, which continues to perform well with current production of c.38,000 bopd.  

“Given our strong balance sheet with cash of $154 million at 23 March 2020, no debt repayment until mid-2023, limited capital expenditure commitments and a low-cost structure, we are highly confident in our future ability to capture the significant value in Shaikan, for the benefit of all stakeholders.”   

Operational

  • Production from the field continues in line with expectations at c.38,000 bopd, currently unaffected by the impact of COVID-19.
  • GKP was on track to achieve 55,000 bopd in Q3 2020, prior to the previously announced suspension of expansion activity.  
  • The Company remains committed to the elimination of routine gas flaring. Its gas management plan now envisages the export of sweet gas instead of gas reinjection. This follows the results of the SH-9 well, which did not encounter a gas cap. The well has been completed as an oil producer and is in the process of being tied into PF-1.
  • A revised Field Development Plan (“FDP”) is currently expected to be submitted this year, reflecting the new gas management project. Upon FDP approval, planning will commence for FEED (“Front End Engineering and Design”).

Outlook

  • GKP will maintain a conservative financial position with a clear focus on cost control and cash preservation. At current production levels, the Company covers all operating, general and administrative costs and interest payments with a Brent price of c.$35 per barrel.
  • In the absence of further expansion activity, 2020 capital expenditures, including expenditures incurred to date and remaining firm commitments, are estimated to be between $50 million and $60 million (gross).
  • The delay of further investment into Shaikan is expected to impact prior gross 2020 production guidance of 43,000-48,000 bopd and achieving 55,000 bopd in Q3 2020.
  • Given the macro uncertainty, the Board is suspending guidance until such time as the outlook becomes clearer.
  • The Board recognises the importance of distributions to shareholders and intends to consider the appropriateness and timing of the ordinary dividend and any share buyback – upon resumption of payments and when it has a clearer view of the scale and duration of the impact of COVID-19 and the macro-economic effects on the business.

(Source: GKP)

Gulf Keystone Petroleum (GKP) has issued providing an operational and corporate update:

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:

 In these challenging times, we remain focused on the safety of our people and have adapted our operations to ensure their continued welfare.  With the associated economic backdrop compounded by a delay in payments, we are taking a prudent approach to running our business with a sharp focus on financial discipline and maintaining liquidity.  While we were on track to deliver the expansion to 55,000 bopd in Q3 2020, flexibility is the order of the day and as such, beyond our existing commitments, we have suspended further expansion activity until conditions improve. 

 “Underpinning the Company’s strong investment case is the quality and scale of the Shaikan Field, which continues to perform well with current production of c.38,000 bopd.  

“Given our strong balance sheet with cash of $154 million at 23 March 2020, no debt repayment until mid-2023, limited capital expenditure commitments and a low-cost structure, we are highly confident in our future ability to capture the significant value in Shaikan, for the benefit of all stakeholders.”   

Operational

  • Production from the field continues in line with expectations at c.38,000 bopd, currently unaffected by the impact of COVID-19.
  • GKP was on track to achieve 55,000 bopd in Q3 2020, prior to the previously announced suspension of expansion activity.  
  • The Company remains committed to the elimination of routine gas flaring. Its gas management plan now envisages the export of sweet gas instead of gas reinjection. This follows the results of the SH-9 well, which did not encounter a gas cap. The well has been completed as an oil producer and is in the process of being tied into PF-1.
  • A revised Field Development Plan (“FDP”) is currently expected to be submitted this year, reflecting the new gas management project. Upon FDP approval, planning will commence for FEED (“Front End Engineering and Design”).

Outlook

  • GKP will maintain a conservative financial position with a clear focus on cost control and cash preservation. At current production levels, the Company covers all operating, general and administrative costs and interest payments with a Brent price of c.$35 per barrel.
  • In the absence of further expansion activity, 2020 capital expenditures, including expenditures incurred to date and remaining firm commitments, are estimated to be between $50 million and $60 million (gross).
  • The delay of further investment into Shaikan is expected to impact prior gross 2020 production guidance of 43,000-48,000 bopd and achieving 55,000 bopd in Q3 2020.
  • Given the macro uncertainty, the Board is suspending guidance until such time as the outlook becomes clearer.
  • The Board recognises the importance of distributions to shareholders and intends to consider the appropriateness and timing of the ordinary dividend and any share buyback – upon resumption of payments and when it has a clearer view of the scale and duration of the impact of COVID-19 and the macro-economic effects on the business.

(Source: GKP)

Genel Energy plc has updated its oil reserves and resources across its portfolio.

Bill Higgs (pictured), Chief Executive of Genel, said:

Genel’s producing assets are profitable even at an oil price of $30/bbl and this, coupled with our robust balance sheet, supports investment in growth and the payment of a material dividend. The reduction of reserves at Tawke largely relates to production towards the end of the life of the field, and consequently our mid-term production outlook is materially unchanged and there is no reserves impact on our business plan.

“Our production funds an approved but flexible capital programme that, in the right market conditions, enables us to drill the wells necessary to evaluate the potential to convert the 2C oil resources in our portfolio, validated for the first time by ERCE, into reserves and production, boosting our cash generation potential.

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2018 99.3 154.9 219.3
Production (13.2) (13.2) (13.2)
Technical revisions (17.2) (17.8) (11.2)
31 December 2019 68.8 123.8 194.9

International petroleum consultants DeGolyer and MacNaughton assess that on a gross basis, at the Tawke licence in the Kurdistan Region of Iraq containing the Tawke and Peshkabir fields, year-end 2019 1P reserves stood at 228 MMbbls, compared to 348 MMbbls at year-end 2018, after adjusting for production of 45 MMbbls and a downward technical revision of 75 MMbbls. Tawke licence 2P reserves stood at 400 MMbbls (502 MMbbls in 2018) and 3P reserves at 641 MMbbls (697 MMbbls in 2018).

Broken down by field, Tawke field gross 1P reserves stood at 176 MMbbls (294 MMbbls in 2018), 2P reserves at 284 MMbbls (376 MMbbls in 2018) and 3P reserves at 421 MMbbls (477 MMbbls in 2018). Peshkabir field gross 1P reserves stood 51 MMbbls (54 MMbbls in 2018), 2P reserves at 116 MMbbls (126 MMbbls in 2018) and 3P reserves at 220 MMbbls (unchanged from 2018).

Genel continues to take a conservative view of the Enhanced Oil Recovery project at the Tawke PSC, and will look to book reserves in relation to the project, which has the potential to increase recovery over the life of field, once enhanced performance has been demonstrated at the field.DeGolyer and MacNaughton has included23MMbbls of 2P and 45 MMbbls of 3P gross reserves, working interest portions of which are not included in the table above.

At Taq Taq, there is a minor technical downward revision of 2.1 MMbbls of gross 2P reserves associated with the unsuccessful TT-33 well, and these now total 44 MMbbls, with gross 1P reserves increasing by 3.3 MMbbls to 20.1 MMbbls, illustrating the continued strong underlying performance of the asset. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel’s gross 2P reserves estimate relating to Phase 1A of the Sarta development remains 34.3 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2018 36.8 73.7 121.3
Technical revisions 29.7 78.3 224.5
31 December 2019 66.5 152 345.8

Following completion of the acquisition in 2019, Genel estimated gross resources at Sarta to be c.500 MMbbls. This potential has now been validated through an external audit conducted by ERCE, who has estimated a mid-case total recoverable oil resource of 593 MMbbls, of which 264 MMbbls is classified as 2C resource. Production performance in 2020, and the results of the upcoming three well campaign in 2021, will set out a roadmap for the conversion of these resources into reserves.

The Bina Bawi oil development has been certified by ERCE as 17.1 MMbbls of 2C resources, 13.6 MMbbls of which are expected to be converted into 2P reserves should a commercial agreement be reached and FID be taken on the first phase of the oil project.

At Qara Dagh the QD-2 well will test the crestal portion of the prospect which, based on a rigorous re-mapping exercise, has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel estimates that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel)

DNO ASA, the Norwegian oil and gas operator, today announced a 30 percent or USD 300 million reduction in its 2020 budget to shore up its balance sheet in the face of unprecedented market convulsions and plunging oil prices triggered by the coronavirus pandemic.

Steps have already been taken to suspend most discretionary drilling and capital projects across the Company’s portfolio and to focus instead on key projects in its core operating area in the Kurdistan region of Iraq.

The Company has also initiated staff reductions, cancelled the first half 2020 dividend, discussed modalities for cost reductions with its suppliers and contractors and frozen new ventures.

“We demonstrated our resilience and nimbleness during the regional geopolitical pandemonium triggered by ISIS some five years ago and can ramp up operations quickly once the coronavirus is put back in the bottle,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman.

Meanwhile, among the Company’s priorities is completion of testing of the Baeshiqa-2 exploration well in Kurdistan starting late March. The Company previously reported that the well flowed light oil and sour gas to surface and that testing of remaining reservoirs would resume following a well workover program, now completed, to assess commerciality.

DNO also remains committed to complete its USD 100 million Peshkabir-to-Tawke gas capture, transport and reinjection project in Kurdistan to reduce CO2 emissions at the Peshkabir field and boost oil recovery at the Tawke field. Gas reinjection will commence in early April.

But the Company’s exploration, appraisal and development drilling campaign, historically the most active among the international oil companies in Kurdistan, has been scaled back, as both DNO and contractor staff movements and rotations have been impacted by border closings, quarantines and other coronavirus travel restrictions.

By the end of March, the number of active drilling rigs deployed by DNO in Kurdistan will drop to two (including one workover rig) from six (two workover rigs) at the beginning of the year. Production at the Tawke and Peshkabir fields has already started to slide to below 115,000 barrels of oil per day.

DNO’s ability to maintain its level of spending has also been strained by interruptions and delays to monthly payments for its oil exports from Kurdistan; the last payment received in January covered September 2019 exports.

“We have every confidence that payments will be forthcoming from Kurdistan, as they always have, but timing and regularity will drive our ability, and that of other companies, to plan and execute investments necessary to grow, even maintain, oil production,” Mr. Mossavar-Rahmani said.

The Company will suspend guidance, including on production, until it has more visibility on the course of the pandemic and the direct and indirect impact on DNO’s operations and financial position.

The Board of Directors, in light of oil market turmoil and uncertainty, has decided not to make use of the authorization granted at the 2019 Annual General Meeting to pay dividends for first half 2020 but remains committed to the program and at the next shareholder meeting will request authorization to resume dividend distributions once circumstances permit.

The Company today also released its 2019 Annual Report and Accounts and 2019 Annual Statement of Reserves and Resources.

DNO had a record year in 2019 with annual revenues of USD 971 million, up 17 percent from year earlier levels, Company Working Interest (CWI) production up 28 percent year-on-year to a record 104,800 barrels of oil equivalent per day (boepd) and the largest drilling program in the Company’s 48-year history. Notwithstanding strong underlying performance, 2019 results were impacted by non-recurring items as well as lower oil prices and increased exploration expenses resulting in operating profit of USD 76 million.

Yearend 2019 CWI proven and probable (2P) reserves stood at 345 million barrels of oil equivalent (MMboe) down from 376 MMboe at yearend 2018 after adjusting for production during the year and technical revisions, offset partly by reserves added through the acquisition of Faroe Petroleum plc in 2019.  Proven (1P) reserves stood at 206 MMboe and proven, probable and possible (3P) reserves at 540 MMboe.

On a gross basis, at the Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, yearend 2019 2P reserves stood at 400 million barrels (MMbls) (502 MMbbls in 2018), of which 1P reserves represented 228 MMbbls. Gross 3P reserves stood at 641 MMbbls.

Broken down by field, Tawke field gross 2P reserves at the Tawke field stood at 284 MMbbls (376 MMbbls in 2018) after adjusting for 2019 production of 25 MMbbls and a downward technical revision of 67 MMbbls; of the total remaining 2P reserves, gross 1P reserves represented 176 MMbbls.  Gross 3P reserves at yearend 2019 stood at 421 MMbbls. At the Peshkabir field, gross 2P reserves stood at 116 MMbbls at yearend 2019 (126 MMbbls in 2018) of which gross 1P reserves represented 51 MMbbls.  Gross 3P reserves stood at 220 MMbbls.

Across its North Sea portfolio at yearend 2019 (87 licenses in Norway and 12 in the United Kingdom), on a CWI basis, DNO’s 2P reserves stood at 70 MMboe (1P reserves of 49 MMboe, 3P reserves of 102 MMboe and 2C resources of 149 MMboe).

The 2019 Annual Report and Accounts, the 2019 Country-by-Country Report  and the 2019 Annual Statement of Reserves and Resources are attached and also available on the Company’s website www.dno.no.

(Source: DNO)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading down 9.6 percent on Monday, compared to a broader market fall of 7.4 percent, as the company announced that expansion plans will be delayed due to coronavirus (COVID-19).

In a statement to the markets, the company said:

The Company has been closely monitoring the Coronavirus (COVID-19) situation in the Kurdistan Region of Iraq.  Gulf Keystone’s priority is the welfare of its staff, contractors and the communities close to its operations. We remain committed to deliver safe operations, protection of the asset and the underlying business.

In an attempt to limit the spread of Coronavirus (COVID-19), the Kurdistan Regional Government, in line with many other jurisdictions, has put in place a series of tight controls on the movement of personnel into and around the region.  With these controls, along with the increasing global restrictions on movement, it has become difficult to ensure Gulf Keystone has the appropriate drilling personnel and equipment on site in order to continue safe drilling operations.

Therefore, with the SH-13 well – the current well in the campaign – at a safe stage, the decision has been taken to suspend drilling activities until conditions improve to ensure safe operations.

Production rates from the field are at c.38,000 bopd and production currently continues unaffected by the impact of Coronavirus (COVID-19).  However, as a precaution, the Company has restricted the access to its production facilities.  As a result, certain construction activities related to the expansion to 55,000 bopd have also been suspended until circumstances improve.

The current situation is extraordinary and we believe that our actions protect the long-term value of the asset.  The planned production increase to 55,000 bopd, scheduled for Q3 2020, and average production guidance for 43,000 – 48,000 bopd remain priorities.

However, the suspension of drilling and certain expansion operations may impact Gulf Keystone’s ability to meet these targets in the timeframes currently in place.  Gulf Keystone will continue to closely monitor this fast-moving situation and will provide updates, as appropriate. As previously announced, the Company will release its Full Year results on 26 March 2020.

Notwithstanding the above, the Company remains in a strong financial position to manage through these turbulent times with a cash balance of $159 million, as at 13 March 2020.

Jón Ferrier, CEO, commented:

As a Company we place the welfare of our people and those we work with and near as our absolute priority.  We also have to be confident of having the right people on site to continue safe operations.  Whilst we are not aware of any employees or contractors having been infected, we believe it is prudent to suspend drilling and certain production facility expansion operations during this time. 

“We are watching the situation closely and will keep all of our stakeholders informed of developments.  Meanwhile, the Shaikan Field itself is performing well.

(Source: GKP)

By John Lee.

Harekar Company for Security Services LLC has won a contract with the United Nations Office for Project Services (UNOPS) to supply Vehicle Rental Services for the United Nations Mine Action Service (UNMAS) Iraq Programme in Erbil.

The contract is worth $119,700.

(Source: UNGM)