Iraq Oil Hope

[Merlin]

This is interesting.

Iraq Oil: China Wants Iraqi Oil Fields - Even if They Lose Money

[EconomyWatch] Baghdad, Iraq, 5 July 2009. Iraq is in the process of holding auctions for energy contracts to develop its massive oil fields, the third largest reserves in the world. The first auction was just completed, and only one deal closed. The Chinese were part of every consortium that bid and want to win even if they lose money - which is handy, because the Iraqi's don't want anyone to make too big a profit.

The contract that was awarded, for the large fields at Rumaila, went to BP, whose consortium included China National Petroleum Corp (CNPET.UL). The bid had initially come in at $3.99 per barrel, but BP and CNPC eventually accepted $2 a barrel. This is one of the cheapest operating prices anywhere in the world. The Niger Delta currently costs $2 - $4, North Sea production costs $12- $14 and US costs $20.

Other oil majors have walked away rather than risk losing money on deals, but BP stayed in there - probably with incentives from the Chinese government, through CNPC. And that is just fine as far as the Iraqi's are concerned.

The political situation in Iraq around these deals is complex. Clearly, the Iraqi government needs the funds from increased oil production to help rebuild the war-torn nation. It relies on oil for most of its revenues and yet can do little without the oil majors to reduce its deficits, currently running in the billions per year. It is negotiating an IMF loan to help tide over this period. ....

[xinhui]

Merlin

A BP and CNPC alliance will go a long way to counter some of the political backlash PRC firms experienced when they venture out; it is nolonger us vs them, we are all in the "consortium" now.

[Merlin]

Merlin

A BP and CNPC alliance will go a long way to counter some of the political backlash PRC firms experienced when they venture out; it is nolonger us vs them, we are all in the "consortium" now.

I suppose CNPC understands this.

[Merlin]

Oil revenue is a most important issue for Iraq. It has not been handled well.

The fight for Iraqi oil will intensify

8 July [ForeignPolicy] The Iraqi government draws 95 percent of its revenue from oil production. Every plan its political leaders can imagine will depend on reliable access to oil profits, and every political faction knows that the country can't achieve lasting political stability until a durable agreement is reached on who owns the estimated 115 billion barrels of reserves and who holds the right to sell them. As tens of thousands of US troops withdraw from the country over the first eight months of 2010, competition for control of that oil will intensify.

After years of haggling, Iraq's political leaders have yet to reach agreement on a hydrocarbon law that determines how oil profits will be divided among the country's competing factions -- a plan that is necessary to revive an energy sector that has suffered from years of under-investment -- and a steep drop in oil prices from $147 per barrel last July to less than $65 today.

Plans to attract badly needed investment and technical expertise from international oil companies face serious political obstacles. Many Iraqis continue to believe that the United States invaded Iraq to grab control of its oil. As Iraq fell under foreign military occupation, its would-be political leaders discovered that pledges to protect Iraqi oil for Iraqis boosted their personal popularity. Support for opening the country's oil sector to Western companies won't win many votes in upcoming parliamentary elections, now scheduled for January.

Political competition for control of the country's oil will sharply intensify next year. The post-Saddam constitution stipulates that Iraq's natural resources belong to the Iraqi people. But different political factions read this idea in different ways. The document also provides that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields." Some interpret this clause to mean that the central government in Baghdad has the right to manage Iraq's oil. Provincial leaders argue that this stipulation gives local governments the right to exploit resources located on their territory, ...

This is the dispute that generates constant tensions between Baghdad and the Kurdistan Regional Government (KRG). Kurdish leaders, ever ready to assert the KRG's political and economic autonomy and much less resistant to doing business with Western companies, claim the right to formulate their own energy strategy and to award contracts to international oil firms. Baghdad insists these contracts are invalid and has "blacklisted" companies that invest in the Kurdish region. ...

And though the two sides managed to agree on an improvised revenue-sharing scheme that gives the KRG 17 percent of the profits from the oil exploited on its territory, the lack of an established energy law limits the inflows of investment that Iraq's rusting energy sector badly needs if it's going to maintain current levels of production -- let alone expand output.

The Iraqi government has now received its wake-up call. On June 30, Baghdad launched an international bid round to offer service contracts for field development. Iraqi officials calculated that access to some of the country's vast reserves would persuade reluctant firms to ignore the considerable political and security risks and jump into Iraq's oil sector. They gambled that the bid round would make for good television, broadcasting it across the country. They were wrong. Oil Minister Hussein al Shahristani now faces an uncertain political future.

As Iraq moves toward the next parliamentary elections scheduled for January 2010, oil will remain at the heart of every political debate. And as US troops begin to leave the country in large numbers, the Iraqi government will need steady flows of oil revenue to finance reconstruction of the country, further development of Iraq's army and police forces, and the social spending needed to provide Iraqis with basic services. Until Iraq's various political factions forge the political compromises necessary for equitable sharing of oil profits, and until large-scale outside investment in oil infrastructure expands production and export capacity, there will be plenty to fight over and no guarantee that Iraq can be rebuilt.

[Merlin]

These seem to be win-win MOUs for these previous arch-enemies.

Iran, Iraq ink oil and energy cooperation MoUs

16 July TEHRAN (ISNA)-Iran and Iraq have signed two Memorandums of Understanding on energy and oil cooperation after three days of talks.

The MoUs were on management of the joint oil fields and bilateral energy cooperation.

Iran and Iraq plan to develop different oil and gas sections in a 10-year and 15-year period considering their rich energy reserves and potentialities, said Managing Director of National Iranian Oil Company Seifollah Jashnsaz.

There are 85 oil and gas fields in Iraq which should be developed in 10 years and sharing 2000 kilometers join borders has created a strategic opportunity for the two neighbors and they hope to fulfill the projects, he said. ...

Iran can provide Iraq with exploration, digging and some extra services including oil engineering, seismology and mined bombs explosion, he said.

[Swift Sword]

Looks like Iraq is going to be increasing it's dependency on Middle Eastern oil.

[Merlin]

Looks like Iraq is going to be increasing it's dependency on Middle Eastern oil.

Iraq has large oil reserve, one of the world largest. What they need is to develop the fields and get income from the export sales.

Notice what Iran Iraq signed are oil cooperation MOUs, not oil sales agreements.

[Swift Sword]

Iraq has large oil reserve, one of the world largest. What they need is to develop the fields and get income from the export sales.

Hello Merlin,

Within living memory, that has proven to be a flawed grand strategy in Iraq.

Notice what Iran Iraq signed are oil cooperation MOUs, not oil sales agreements.

I did notice that, but have also noticed that what Iran, Iraq...and Russia, for that matter...appear to require in their individual pursuits to become big time perto pimps and possible collective effort to form a new cartel are heaping helpings of Western capital and technical expertise

Regards,

William

[Merlin]

Political uncertainty delays foreign investments into the oil sector.

Shell gas deal seen delayed past Iraq elections

5 Sept BAGHDAD (Reuters) - Political opposition to a gas venture between the Iraqi government, Royal Dutch Shell (RDSa.L) and Mitsubishi (8058.T) may delay its finalization until after national elections in January, a senior oil official said on Saturday.

Deputy Oil Minister Ahmed al-Shamma, stressing he spoke for himself rather than the Iraqi Oil Ministry, said he expected the project in southern Iraq would be not be signed until after the January 16 elections in which Iraq will select a new parliament. ....

... The Iraqi government has been working to finalize the joint venture between its South Gas Company and the two foreign firms, which will capture flare gas released as a by-product of crude oil extraction around Iraq's southern oil hub of Basra.

The gas venture, once in place, will be at the forefront of Iraq's plans to modernize dilapidated oil and gas facilities, update technology and boost oil output that over six years after the 2003 ouster of Saddam Hussein hovers around pre-war levels.

Yet the deal, which would harness for export or domestic use huge amounts of gas Iraq currently burns off into the ether, faces opposition from lawmakers who criticize its terms and say it will be unconstitutional unless sent to them for approval.

They have threatened to revoke the deal and push Shell out of Iraq -- just one front in the bitter turf war between Iraq's executive and legislative branches over who has the authority to broker major energy deals in the absence of new energy laws long delayed by a feud between majority Arabs and minority Kurds. ....

[Merlin]

There're still a lot of political and teething problems for foreign oil investors.

Iraq may not pay for Kurdish oil for years -exec

ABERDEEN, Sept 8 (Reuters) - Western oil companies operating in Iraq's semi-autonomous Kurdish region may have to wait for years for the government to pay them for the oil they pump, the Chief Executive of one company exploring in the area said.

Talisman Energy (TLM.TO) CEO John Manzoni said on Tuesday that the impasse, whereby Norway's DNO International (DNO.OL), Turkey's Genel Energy and London-listed Addax Petroleum (AXC.L) were pumping tens of millions of dollars worth of oil each month and not being paid for it, was likely to persist. ....

The Baghdad government and the Kurdish authorities have been unable to agree how to share Iraq's oil revenues, blocking the payments.

DNO and Heritage Oil (HOIL.L), which is in the process of acquiring Genel, have told investors that a deal on payments is likely soon.

Last year, Talisman, Canada's third-largest independent oil and gas producer, bought stakes in two oil blocks in the Kurdish region, but since payments are seen to be years off, the company is in no hurry to start pumping yet. ....

"If we see movement in the politics then we might deepen investment," he said

Talisman is a major gas producer in the U.S., and Manzoni was not optimistic about the outlook for that business. ...

[Merlin]

The government still cannot agree on a debate.

Iraq delays vital oil law again

BAGHDAD, Oct. 7 (UPI) -- The Iraqi government has again postponed debate on a much-stalled hydrocarbons law until after parliamentary elections slated for Jan. 15, according to legislative sources, further complicating efforts to attract major oil companies to invest in Iraq's rundown oil industry.

That means the government's plans to ramp up oil production to bankroll reconstruction following the U.S.-led invasion of March 2003 have been suspended, a critical setback as the country faces political uncertainty and internal disorder as U.S. military forces withdraw.

The proposed law, which would regulate the all-important oil sector and define foreign participation in what has been a nationalized industry since 1973, has been repeatedly held up for three years.

The main reason has been intense feuding between Iraq's majority Shiites and the minority Sunnis and Kurds over who controls the country's energy riches and how oil revenue should be divvied up.

Two-thirds of the country's known oil reserves -- and probably vast new deposits as yet unexplored -- lie in the Shiite-dominated south. ....

[Merlin]

This oil deal is ok and being signed.

BP and CNPC sign first major oil deal with Iraq in almost 40 years

8 Oct [TheNational] Iraq’s oil ministry has signed a deal with Britain’s BP and the China National Petroleum Corporation (CNPC) for work that will almost triple output from the country’s biggest oilfield.

The formal ratification of the 20-year service agreement – the first major deal between Iraq and Big Oil in almost 40 years – is being hailed as a milestone in the country’s efforts to refurbish its dilapidated oil sector.

The contract to develop the Rumaila oilfield, worth an estimated US$14 billion (Dh51.42bn) to $20bn, was also the only deal to emerge from the ministry’s first post-war auction of oil and gas licences, held in late June. That meant the government lacked a fallback position if the deal fell through. ....

[Merlin]

After the teething problems with getting the first oil deal with BP and CNPC last month, things are beginning to move this month with other oil deals with other Western oil majors ENI, Exxon-Mobil and Shell.

Although there are clearer oil law and election law, there is a major risk involving fields at the north near Kirkuk, see further below.

Iraq cabinet to approve oilfield deals next week

BAGHDAD, Nov 10 (Reuters) - Iraq's cabinet plans next week to approve oil agreements struck with Western oil majors to develop the giant West Qurna and Zubair oilfields, the government said on Tuesday.

Iraq is notching up deals with foreign oil majors to revive its battered oil sector and eventually become the world's No. 3 oil producer. The deals -- which are contested by Iraqi lawmakers -- need cabinet approval before they can be finalised.

The cabinet will give its blessing on Nov. 17 to an initial deal with a group led by Italian oil major Eni for the Zubair field .....

Approval of a deal for the West Qurna oilfield, inked last week with an Exxon Mobil ( XOM - news - people )-led group that includes Royal Dutch Shell ( RDSA - news - people ), has also been delayed to next week ....

Investors seen positive on Iraq law, eye Kirkuk row

BAGHDAD, Nov 9 (Reuters) - Investor sentiment will be bolstered by the Iraqi parliament's passage of a long-delayed election law, but the failure to resolve a row over the disputed city of Kirkuk may cause massive headaches in the long run.

A divided political scene and a stubborn insurgency continue to raise risks for investors in the world's 11th largest oil producer which is trying to kickstart its economy and energy sector after years of neglect.

Iraq's politics are mired in sectarian disputes and a row over power and land between the Arab-led government in Baghdad and Kurds in a semi-autonomous northern region. U.S. officials fear Kurd-Arab tensions may sow the seeds of a new war. ....

Weeks of deadlock in parliament had threatened to delay the election past January. The poll law was passed in a tumultuous session on Sunday, but it avoided tough decisions on Kirkuk, whose fields have about 13 percent of Iraq's proven reserves.

The area is vulnerable to fallout from tensions between the government and Kurds, who view the city and surrounding province as their ancestral home and want them included in their enclave.

Iraq's oil ministry and Kurdish authorities argue over who is allowed to authorise oil deals in Kurdistan, and Kurdish officials also say they must be involved in any deals in Kirkuk.

Kirkuk, with 8.5 billion barrels of reserves and another northern field, Bai Hassan, which holds 2.29 billion barrels, both failed to close deals at a June auction. Royal Dutch Shell (RDSa.L) is in talks with Iraq to develop Kirkuk's oilfields. ...

[Merlin]

Iraq tries to catch up fast. It is going to be a majoy oil exporter and may even evertake Saudi Arabia's.

Iraq To Ink Seven Oil Field Deals This Month - Official

17 Jan [WSJ] AMMAN (Dow Jones)--The Iraqi oil ministry will finalize by the end of this month seven deals for oil fields won in Iraq's second round of bidding held in December as all winning companies have agreed to new amendments, a senior oil ministry official said Sunday.

Lukoil Holdings (LUKOY), China National Petroleum Corp. and Gazprom (GAZP.RS) led consortiums were the latest foreign companies to agree to new changes made by the Iraqi oil ministry to these deals, Abdul Mahdy al-Ameedi, head of the oil ministry's Petroleum Contracts and Licensing Directorate told Dow Jones Newswires by telephone from Baghdad. ....

Earlier this month, the Iraqi cabinet ratified four oil field deals, including the supergiant Majnoon oil field. .....

The signing sessions for the seven oil fields will start Sunday and continues until the end of the month. ....

Iraq aims from all these deals to bring its oil production to 11 million barrels a day in six to seven years from now, nearly five times what it produces now and could even exceeds its fellow OPEC's largest oil exporter, Saudi Arabia.

[bigross86]

Summon the kittens!!!

Mwa-ha-ha-ha-ha-ha-ha!!!!!