Plus:
*Iraq-Big Oil negotiations on technical support deals stalled
*115 international oil firms register for Iraq’s oil deals
*Addax brings PSC in line with Kurds’ oil law
*Iran to send 200 megawatts to Iraq
The third official energy meeting involving Iraqi, Turkish and U.S. officials began Friday in Istanbul, and though a top State Department official doesn’t expect “huge breakthroughs,” he hopes to see progress in developing a gas pipeline that will eventually feed Europe’s demand after edging out Russia and excluding Iran.
“The overall goal is to figure out how best to attract investment to stimulate gas production in Iraq, so that there’s enough gas for Iraq’s domestic consumption and for export,” Deputy Assistant Secretary of State for European and Eurasian Affairs Matthew Bryza told United Press International’s Ben Lando before heading to Turkey. “We would hope that once there’s enough gas for Iraq’s domestic consumption that there will be a significant quantity that will be exported into Europe up via Turkey into the Nabucco and Turkey-Greece-Italy pipelines.” …
“We’re trying to develop options to help Europe diversify its supplies of natural gas away from their dependence right now on one company, which is Gazprom,” the Russian state firm that serves Europe 25 percent of its consumption, Bryza said. “Our goal is not to be anti-Gazprom. We want to increase competition so Gazprom is a leaner and meaner competitor that operates according to the rules in the market rather than what it is by law, which is a monopoly. “To do that we’ve got to get gas moving from alternative sources into Europe.” …
“We don’t want to do anything to help Iranian gas move into Europe,” Bryza said, “but the reason we’re in Iraq working on the gas equation is not directly related to Iran. It’s directly related to this broader strategy which is to move new supplies of natural gas, which are not Iranian, into Europe. So we’re not proceeding from a desire to isolate Iran. We’re proceeding from a much broader strategic perspective.” …
“I’d like to hear where that stands and I’d like to hear the thoughts of the governments of Iraq and Turkey on how to handle all the company interest up in the north now until the hydrocarbon law is in place,” Bryza said. “We do not favor the conclusion of formal business deals up in the north until the hydrocarbon law is in place.”
Read the entire story by Ben Lando for UPI. Click HERE.
Iraq Oil/Gas Talks With Foreign Firms Postponed
Talks between Baghdad and major international oil companies for Technical Service Agreements (TSAs) for the crucial first stage of Iraq’s oil and gas field expansion plans have been postponed, MEES reports in its latest issue.
The postponement of the talks with companies including Shell, ExxonMobil, BP and Chevron, comes amid political turmoil in Baghdad, with mounting pressure from Kurds and their allies for
a major cabinet reshuffle, including, among other proposed changes, the replacement of Iraqi Oil Minister Husain al-Shahristani, architect of the TSA strategy, MEES understands.
The talks have been postponed until mid-March at the earliest, Oil Ministry spokesman, Asim Jihad said. Now the ministry’s negotiating team is awaiting the green light from cabinet.
Sources differ on the gravity of the situation, with at least one firm involved in the talks considering it a minor hold-up. But the whole purpose of the TSA strategy was to avoid lengthy
delays caused by having to refer contracts to cabinet, as the ministry would have to do with any more extensive form of oilfield development agreement. At very least, the delay underlines the challenge of putting into place even a modest increase in
foreign participation in Iraq’s oil sector. And many fear deadlock.
Over the past weeks, a crescendo of criticism of Dr Shahristani has been heard from the Kurds and their allies. Deputy Prime Minister Barham Salih, a Kurd, and Finance Minister, Bayan Jabr,
from the Shi΄a Supreme Islamic Council of Iraq (SICI), have both attacked the minister for his policy against the Kurdistan Regional Government (KRG).
The KRG has signed around 20 contracts with international oil companies for the development of oil and gas fields in the Kurdish-controlled region of northern Iraq, in defiance of objections from the Baghdad government. Dr Shahristani has said the foreign firms involved are now ineligible for future contracts elsewhere in Iraq.
Dr Shahristani may not belong to any of the major political parties, but the former parliamentary speaker will be no pushover. He is well connected among MPs, and his stand against the Kurds
has made him popular among Iraqi nationalists of all hues, sources tell MEES. Most significantly, he has the support of Ayatollah ΄Ali al-Sistani, Iraq’s most senior Shi΄a cleric.
But Dr Shahristani has put a lot of his authority on the line in pushing his TSA plan and any further delays or problems would weaken his position further. The minister’s TSA plan involves the award of two-year contracts to oil majors. These would
work to add 100,000 barrels a day of capacity on each of five major fields in a year. Firms negotiating include Shell for Kirkuk and Misan province fields, ExxonMobil for Zubair, BP for Rumaila and Chevron for West Qurna Phase 1.
Dr Shahristani has gone on record as saying the contracts should be awarded by March. But most involved see both the March target for signing and the accelerated timetable to reach the 100,000 b/d capacity addition, as unrealistic. Baghdad’s chief negotiator, Natiq al-Bayati, is highly rated, but the fact that there is only one ministry team to manage five very complex contract negotiations is slowing down the process, MEES understands.
This article was printed with permission from the MEES — the Middle East Economic Survey.
Reuters is reporting, meanwhile, Shahristani says talks are in the final stages.
More than 100 firms including foreign majors are vying for deals to tap Iraq’s vast oilfields but a vital oil law is stalled by tension involving the Kurdish region, Baghdad’s oil minister said, Mariam Karouny reports for Reuters. Oil Minister Hussain al-Shahristani told Reuters in an interview on Friday that 115 firms had registered to compete for oil extraction and service contracts to help develop Iraq’s oil reserves, the world’s third largest.
Of these, ten were American, with companies also from Japan, Russia, Britain, Canada and South Korea.
He also told Reuters the draft oil law reserves remains stalled in parliament with no sign of movement, Oil Minister Hussain al-Shahristani said on Friday.
Addax Petroleum has worked out a change to its production sharing contract with the KRG to bring it in line with the region’s oil law, a company statement said. It, with partner Genel Enerji, hold the license for the Taq Taq field.
The most significant changes … the synchronization of the government back-in rights at up to 20 per cent … a reduction in the maximum Cost Oil recoverable in a given year… the introduction of a “R factor” in the Profit Oil calculation, which adjusts the financial returns to the Contractor and Government based on relative level of cumulative capital spending and cumulative revenue.
The Iranian energy minister Parviz Fattah has said that Iran is set to export electricity to Iraq with a capacity of 200 megawatts, Press TV reports. The electricity will be transferred from Iran’s port city of Abadan to Basra in southern Iraq next week, IRNA quoted Fattah as saying.
The Los Angeles Times’ Iraq blog details a bloody brawl between Iraq Electricity Ministry bodyguards and Iraqi police.
Presidency of the Republic has ratified the third phase of the Japanese loan agreement, amounting to 57 billion and 716 million yens for the development of water in Basrah and electricity in Kurdistan, Iraq Directory reports.
The Center for Global Energy Studies’ new Iraq report, which Ben Lando wrote about for UPI in his recap of Iraq oil issues, can be found and purchased here. And for the analysis by Fouad al-Amir in Al Ghad, click here.
For a good explanation of current and contextual issues between Turkey and Northern Iraq, Gareth Jenkins for The Jamestown Foundation has written “Turkey and Northern Iraq: An Overview.”
President Bush’s leading nemesis in the Middle East, Iranian President Mahmoud Ahmadinejad, begins a two-day state visit to Iraq on Sunday, attempting to highlight Iran’s role as the region’s major power and upstage Bush and the U.S. military presence, Leila Fadel reports for McClatchy Newspapers. Unlike Bush, who’s traveled to Iraq twice unannounced and on his last visit never left an American base in Anbar province, Ahmadinejad not only announced his trip in advance but also is planning to visit two major Shiite Muslim holy sites, Karbala and Najaf, at the end of a mammoth Shiite pilgrimage that was marred by a suicide bombing.
(Hat tip to Leila, Baghdad Bureau Chief for McClatchy, the winner of the George Polk Award for Foreign Reporting. And here’s a great bio in Editor & Publisher.
New plant diseases, attacks by occupation forces and escalating fuel prices are strangling farmers in Diyala province, Ahmed Ali and Dahr Jamail report for Inter Press Service.
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