Iraq Oil Report

An oil refinery in the once restive and violent city of Haditha is working once again.

The reopening ceremony was attended by Oil Minister Hussein Shahristani who thanked the people of the Province of Anbar, of which Haditha is a major town, for their efforts to restore relative stability.

The refinery was shut due to mounting violence which had turned the whole of Anbar Province into a war zone, Azzaman reports.

Ramco Energy notes the recent share price movements and articles in the media surrounding its associate company Mesopotamia Petroleum Company Limited, in which Ramco holds a 32.66% interest, concerning the establishment of a joint venture with the Government-owned Iraqi Drilling Company.

Ramco confirms that MPC has been in talks concerning the establishment of a joint venture to provide oil services with IDC, under a mandate from the Iraq Ministry of Oil, for some considerable time and these have reached an advanced stage, OilVoice said.

UK’s Midmar Energy confirmed the deal, saying that its associate company, Mesopotamia Petroleum Company (MPC), is in the advanced stages of discussion regarding a joint venture with state-owned Iraq Drilling Company (IDC).

Midmar formed MPC in 2005, with its partners, as an oil and gas company established for the specific purpose of undertaking operations in Iraq. Midmar holds a 32.67% interest, Upstreamonline reported.

“We anticipate the formal ratification of our agreements in order to progress our work in Iraq,” said Midmar boss Thomas Redman in a statement.

A project to supply, process, and transport natural gas to Kurdistan Region for much-needed and more affordable electricity is rapidly progressing.

The United Arab Emirates’ Dana Gas and Crescent Petroleum are to start producing natural gas in the Iraqi Kurdistan Region as of next month, and they promise to put an end to the devastating power and fuel crisis.

The head of Dana Gas, Hamid Dhia Jaafar, announced that his company and Crescent Petroleum will start producing natural gas in Kurdistan Region on August 1, 2008, Aiyob Mawloodi with The Kurdish Globe reports.

Occidental Petroleum CEO Ray Irani said Iraq’s larger oil fields will likely draw formal participation from a consortium of large Western oil producers later this year, as the war-torn country moves to ramp up its economy. “There are some very large fields in Iraq which are going to become available,” Irani told Wall Street analysts on a conference call. “The huge ones will be run by…the oil majors and companies our size. No one company is going to get a field of 20 billion barrels or more, period.” Occidental also sees an opportunity to run smaller fields in Iraq on its own, Steve Gelsi for MarketWatch says.

At a time of high oil prices and supply shortages, the dispute over Iraq’s oil reserves, which could produce an additional 1.5m barrels a day with minimum investment, demands urgent resolution.

Iraq’s oilfields require immediate and expert maintenance, and the Iraqi people need the funds the oil can command on the global market. But negotiations on a draft national oil law are hopelessly stalled and controversy has erupted over proposed contracts with foreign oil companies. Iraq needs international support to negotiate fair and sustainable deals, Yahia Said writes for The Financial Times.

Iraq may be seeking to accelerate crude production, says Tamsin Carlisle for The National, but the outlook for concluding any agreements to develop the country’s oil and gas resources remains exceptionally murky.

Earlier this month, the oil ministry of Iraq asked international oil companies to revise proposals for short-term deals to raise output from Iraq’s six biggest producing oil fields, shortening the contracts to between 12 and 18 months from the two years previously stipulated. But there is no guarantee that Western oil companies involved in the negotiations will be amenable to the new terms.

Industry analysts and executives are skeptical a planned opening of the war-torn country’s oil industry to foreign investment will bring big profits for the Western Oil Majors, or boost output as much as hoped, Tom Bergin writes for Reuters.

While many have lined up to register to bid for Iraqi oil deals, actual bidders may be thinner on the ground and deals may take longer to conclude than the government plans.

“If the invasion was about oil, let the record show it has been more botched than even its toughest critics claim,” Raad Alkadiri, Senior Director in the Markets and Country Strategies practice, at industry consultants PFC Energy said in a note to clients.

Responding to a request by four Senate Democrats, the State Department’s inspector general

has announced an inquiry into the department’s policy on western oil company contracts in Iraq.

“I have initiated a review of the responses provided to Congress recently on issues surrounding oil contracts, oil field development and U.S. policy in Iraq,” Acting State Department Inspector General Harold Geisel wrote in a June 22 letter obtained by CongressDaily.

The letter to Senate Armed Services Committee Chairman Carl Levin, D-Mich., and Sens. Charles Schumer, D-N.Y., John Kerry, D-Mass., and Claire McCaskill, D-Mo., refers to material State gave the House Oversight and Government Reform Committee for its investigation into a deal involving Texas-based Hunt Oil Co., as well as other potential oil contracts.

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