Iraq Oil Report

on July 13, 2008

. 2 Comments

Mr. President, said Sen. Carl Levin, D-Mich., I am deeply concerned by the apparent lack of a clear and consistent U.S. policy on the entering into of oil deals in Iraq in the absence of Iraqi national hydrocarbon legislation. Unfortunately, that legislation, which would ensure equitable distribution of oil revenues among the Iraqi people and enable increased oil production and long-term foreign investment, remains stalled in the Iraqi Council of Representatives

In just a matter of weeks, much of the momentum behind Iraq’s push to revamp its oil industry has been weakened by political infighting, notes the Middle East Business Intelligence. Just when it seemed that real progress had been made through the signing of long-awaited technical service contracts with international oil companies (IOCs), rifts have again appeared.

Turkey and Iraq discussed joint energy projects in oil drilling and the transfer of oil and natural gas to Europe via new pipelines during Prime Minister Recep Tayyip Erdogan’s scheduled one-day visit to Baghdad, said Begum Gursoy for TurkishPress.com.

Alongside security and political matters, energy was one of the top issues during the meetings. After intense talks, Iraq allowed Turkish companies to receive oil drilling permits. Erdogan pressed Iraqi officials to concede privileges to Turkish companies. Turkish and Iraqi companies could also form consortiums to execute the projects.

Oil privatization is a red line for the unions in occupied Iraq, and a red rag to the workers on the front line, who have vowed to resist any privatisation of what they see as national assets, writes Ewa Jasiewicz for The Guardian.

The Bush administration’s top benchmark, the Iraqi oil law, remains off the statute books, five deadlines and two years since its first draft. Yet the Iraqi cabinet keeps threatening to pass it, despite the lack of a parliamentary majority backing it.

Major western oil companies are on the cusp of potentially determinative transitional agreements with the Iraqi oil ministry as the country seeks to bolster development and revenues. However, significant challenges loom, says Dominic Moran in Tel Aviv for ISN Security Watch.

Two foreign policy advisers ripped GOP candidate for U.S. Senator from Colorado Bob Schaffer Friday, saying an oil deal his company negotiated in a region of Iraq jeopardized the safety of American troops, said Lynn Bartels with the Rocky Mountain News.

Schaffer researched the country and political situation when he visited in 2006 while working as a senior vice president for Denver-based Aspect Energy. The oil deal was reached the following year.

“I think there is a serious question about who Bob Schaffer is,” said Rand Beers, former senior member of National Security Council staff who worked for every president since Ronald Reagan.

In a city with constant electricity shortages but no lack of sunshine, the new buzz is solar energy, says Alexandra Zavis with the Los Angeles Times.

Teams of engineers have appeared along major Baghdad roadways, bolting panels and bulbs to rows of towering steel poles to make solar-powered streetlights.

Iraqi oil ministry schedules major energy conference

Published

on July 10, 2008

. 1 Comment

Reuters reported that the Iraqi Oil Ministry said the country will hold a major oil and gas conference in October to allow foreign oil firms to get a better understanding of the country’s energy potential.

The Oct 17-19 energy conference and exhibition will be the first event of its type in Iraq since the U.S.-led invasion in 2003. More than 50 international oil companies would take part, Oil Ministry spokesman Asim Jihad told a news conference.

“It will be a great chance for the Oil Ministry to meet global oil companies and discuss their potential role in developing Iraq’s oil sector,” Jihad said.

Iraq’s Oil Ministry said that it is close to signing contracts to build two new oil refineries in southern Iraq, the Associated Press said.

The ministry is expected to sign one contract for a 300,000 barrel-per-day refinery in Nasiriyah province by the end of July or early August, a senior oil official said.

The official said the ministry was studying proposals presented by international companies to build another 150,000-barrel-per-day refinery in Karbala. The official, who declined to name the companies, spoke on condition of anonymity because he is not authorized to make statements.

Most analysts believe that the autonomous Iraqi Kurdistan region possesses far more oil than current forecasts hold — possibly as much as 45 billion barrels, which would put the Iraqi north alone on the level of petro-titans like Nigeria. Kurdistan’s “prospectivity is beyond doubt,” Micael Gulbenkian of the Canadian Heritage Oil Company, which does business in Kurdistan, said in a 2006 interview.

The trouble lies in getting the oil out of the ground, writes Spencer Ackerman with The Washington Independent.

Reuters said that Iraq’s fledgling navy of battered patrol boats is bulking up for a greater role in protecting the country’s economic heart, its offshore oil terminals.

Putting on muscle to protect the two terminals that account for 90 per cent of Iraq’s revenues, the tiny navy is aiming to boost manpower by about a third to 2,500 in two years and greatly expand its fleet, now centred on five Chinese-made Predator patrol boats.

More control over its wreck-ridden waters at the head of the Gulf is another sign of Iraq’s determination to secure its oil infrastructure and reserves, the world’s third largest.

The oil deals the Kurdish regional government and the central government in Baghdad are signing are illegal, according to a top Kurdish politician and legislator.

Mahmoud Othman, the head of the powerful Kurdish bloc in Iraqi parliament, described the signing of these deals as “a premature and out-of-lace move” in the absence of a national law organizing the exploitation of the country’s oil riches.

Othman is the first senior Kurdish officials to criticize the oil development deals the Kurdish regional government has signed, the Iraqi daily, Azzaman reported.

The Canadians are squeezing oil from sand. The Brazilians want to nurse it up through miles of seawater, sandstone and salt. But here in the far north of Iraq, oil is literally bubbling to the surface.

Oil executives lament that the age of “easy oil” is over. It isn’t over here. For companies that have stumbled into this corner of Iraq known as Kurdistan, it’s an era that has just begun, writes Neil King Jr. for The Wall Street Journal.

Chomsky speaks on Iraqi oil

Published

on July 8, 2008

. 14 Comments

The deal just taking shape between Iraq’s Oil Ministry and four Western oil companies raises critical questions about the nature of the US invasion and occupation of Iraq — questions that should certainly be addressed by presidential candidates and seriously discussed in the United States, and of course in occupied Iraq, where it appears that the population has little if any role in determining the future of their country, writes Noam Chomsky.

The Jerusalem-based intelligence-reporting agency, DEBKAfile said oil prices suddenly slumped Tuesday, July 8 under the impact of the secret American-Iranian talks embarked on last month to solve burning issues by diplomatic engagement.

These talks between the US and Iranian delegations, representing President George W. Bush and Iranian supreme ruler Ayatollah Ali Khamenei, have yielded ad hoc understandings on controversial issues. One is an agreement not to allow the price of oil to rocket past $150 the barrel.

The former Iraqi oil minister Ibrahim Bahr Al-Aloom declared that the infrastructure of the Iraqi oil sector is the worst ever among the oil producing countries and is not commensurate with the potential of Iraq’s oil.

He added: “we have not been able so far to begin the process of reconstruction in the required form, what makes us very cautious and concerned about the prospects for future development of the foundations would not allow the process capable of maintaining and developing the sector.” He called for a “sound basis of policies that oil be able to develop the infrastructure sector, to ensure the utilization of its revenue in the reconstruction of the country,” Iraq Directory reported.

Reuters reports that the Iraqi army has formed a new battalion that aims to cut the time taken to repair damaged oil pipelines by half.

Iraq’s hundreds of miles of oil pipelines have often come under attack by insurgents seeking to disrupt the flow of Iraq’s main export, and also by criminals siphoning off oil for sale on the black market.

The Engineer Infrastructure Battalion comprises engineers who will go to damaged pipelines, which carry oil to refineries for domestic use, to neighboring Turkey and also to the port city of Basra for export.

Even though Iraqis, enjoying a degree of civil safety these days after years of terror, still endure long gas lines in a country brimming with oil, hope is on the horizon. The government is opening six major oil fields and two natural gas fields to development by foreign firms. There’s talk of an achievable 60 percent increase from current production levels. That would mean more oil for the world and more revenue for the government, already set to take in $70 billion this year.

Americans can cheer that. A richer Iraq can be expected to pay more of its own way as it rebuilds. More oil on the world market — maybe even the prospect of it — helps to lower prices, The News & Observer of North Carolina writes.

The Gulf Times says Crescent Petroleum, the United Arab Emirates-based oil and gas company, along with its affiliate Dana Gas, will start producing gas from northern Iraq’s Kurdistan fields in early August, a company executive has said.

“We will start producing 75mn cu ft of gas a day within weeks and will increase to 150mn cubic feet gradually, reaching 300mn cu ft by early 2009,” Crescent’s executive director Majid Jafar said.

Iraqi oil … on both sides of the pond

Published

on July 6, 2008

. 4 Comments

Here’s a thought experiment from The Wall Street Journal: Assume that Iraq’s democratic government declared it was nationalizing its oil industry, a la Venezuela or Saudi Arabia, while excluding American companies from the country. How do you think U.S. politicians would react? With angry cries of “ingratitude” and “this is what Americans died for”?

Of course they would, led no doubt by that critic for all reasons, Senator Chuck Schumer of New York. So it is passing strange that Mr. Schumer and other Senators are now assailing Iraq precisely because it is opening up to foreign oil companies, especially to U.S. majors like Exxon Mobil and Chevron.

Democratic lawmakers say the Bush administration knew more than it let on about a controversial oil deal between Dallas-based Hunt Oil and Kurdish regional officials in Iraq, a move that sparked condemnation for complicating the country’s ability to enact a nationwide oil law.

Hunt Oil, whose chief executive Ray L. Hunt is a member of the President’s Foreign Intelligence Advisory Board and a major contributor to Bush’s campaigns, signed a petroleum production-sharing contract in September with the Kurdistan Regional Government, the first since the semi-autonomous government unanimously adopted its own petroleum legislation in August, Derek Kravitz writes for The Washington Post.

Five years after the American occupation of Iraq, oil policy has finally started attracting significant attention from Iraqi policymakers. In fact, 2008 can be considered the year of big oil decisions at this stage of Iraq’s history. Currently, the ministry of oil is negotiating two types of contracts with international corporations, one for technical services and the other for development and production. The ministry needs the approval of the council of ministers for the former type whereas the latter needs to be presented in parliament once the oil law has been enacted. Since the ministry has received no approvals for either type, any talk about agreements with international corporations remains premature says Walid Khadduri for Al-Hayat.

The Production Sharing Agreements in Iraq resemble the kinds of arrangements that used to prevail in the Middle East when a handful of U.S. and British oil companies controlled the world’s oil through their cartel known as the Seven Sisters, Linda McQuaig writes for The Toronto Star.

Ironically, four of the companies returning to Iraq – ExxonMobil, BP, Shell and Total – were the original partners in a consortium called the Iraq Petroleum Company that for decades held the exclusive rights to develop oil in Iraq. They were kicked out in 1972 when Saddam nationalized the country’s oil industry.

Agence France Presse reports that Iraq said it would be guided by the principle of competition when awarding contracts to global energy companies hoping to cash in on the country’s vast oil and gas fields.

On Monday the oil ministry threw open six oilfields and two gas fields for international bidding by 41 companies, the contracts for which are expected to be signed in June next year.

Government spokesman Ali al-Dabbagh said Baghdad would award the service contracts only on the basis of competition.

“There is no intention of signing oil deals outside the law. The principle of competition will be applied. There is no preference to any company,” he said.

Power Machines, Russia’s biggest energy machinery producer, announced that it would build a 26.8-megawatt hydrostation in northern Iraq by July 2010, raising hopes for other Russian firms looking to re-enter the country, The Moscow Times reports.

Financial terms for the deal would not be disclosed, Power Machines said in a statement, although an analyst estimated that it was worth $16 million to $18 million. Originally signed in 2001, the contract was suspended shortly after U.S.-led troops toppled Saddam Hussein in 2003.

Iraq oil deals raise questions

Published

on July 3, 2008

. 3 Comments

Bush administration officials knew that a Texas oil company with close ties to President Bush was planning to sign an oil deal with the regional Kurdistan government that ran counter to American policy and undercut Iraq’s central government, a Congressional committee has

The conclusions were based on e-mail messages and other documents that the committee released Wednesday, James Glanz and Richard A. Oppel Jr. write for The New York Times.

Steven Mufson with the Washington Post writes that last fall the State Department said that it had tried to dissuade Hunt Oil from signing a contract with Kurdish regional authorities but that the company had proceeded “regardless of our advice.” Although Hunt Oil’s chief executive has been a major fundraiser for President Bush, the president said he knew nothing about the deal.

Yesterday, however, Henry A. Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, released documents and e-mails showing that for nearly four months, State and Commerce department officials knew about Hunt Oil’s negotiations with the KRG and had told company officials that there were no objections.

In Iraq this week, the giant oil fields were opened to foreign bidders. U.S. conglomerates such as Exxon Mobil are about to sign no-bid contracts to move in. Big Oil, already brimming with profits, will have a fine Fourth of July.

Azzaman notes that the central government and the Kurdish authorities have signed a secret deal under which the Kurds are to extend their political autonomy over their oil riches, a senior member of parliament said.

Jaber Khaleefa of the parliament’s Oil and Gas Committee said the secret deal has allowed both sides to proceed ahead with contracts with foreign firms despite the lack of constitutional backing.

Despite having the world’s third-largest proven oil reserves, Iraq’s production of 2.5 million barrels a day is only the 12th biggest. And although production has recently recovered to the levels seen before the 2003 US-led invasion, it is still about 1 million barrels a day below its peak in the late 1970s, the BBC’s Richard Thompson writes.

Total, one of the largest petroleum company in Europe, is “on the verge” of signing an oil-services contract with Iraq as companies from the U.S. and Europe seek to access supplies and increase production there, Anthony DiPaola writes for Bloomberg News

The French company will sign the contract as a partner of Chevron, the Total chief executive, Christophe de Margerie said Tuesday during a news conference at the World Petroleum Congress in Madrid.

Iraqi Oil Minister Hussain al-Shahristani has told lawmakers that short-term technical support contracts with oil majors worth around $3 billion may not get signed, two parliamentarians said.

The lawmakers, the two top officials on parliament’s oil and gas committee, told Reuters late on Wednesday that Shahristani was unhappy with delays in getting the contracts agreed. One sticking point was payment terms, Ahmed Rasheed reported for Reuters.

The new Baghdad deals will trigger more wrangling over the real motivation for the Iraq invasion. There was a time when it was mainly just conspiracy theorists and other assorted weedy types who claimed the aggression was chiefly about oil. But along came Alan Greenspan, the former chairman of the U.S. Federal Reserve Board, who wrote last year in his book The Age of Turbulence, “I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil.” This week’s entry of Big Oil in Iraq will only buttress this view, says the Globe and Mail’s Lawrence Martin.

The Iraqi parliament’s oil and gas committee must have the right to scrutinise any long-term oil contracts signed with foreign firms or it will try to block the deals, the committee’s head said on Tuesday.

The comments by Ali Hussain Balou came a day after the Oil Ministry opened Iraq’s giant oilfields to bids for long-term contracts by foreigners for the first time in decades, Ahmed Rasheed reported for Reuters

Balou also demanded an explanation from Oil Minister Hussain al-Shahristani on plans to offer a series of short-term technical support contracts worth $500 million each to a handful of Western oil majors without competitive bidding.

“The parliamentary oil and gas committee … should have access to every detail on all the contracts, otherwise we will block them in parliament,” Balou, a Kurd, told Reuters.

Perhaps Sen. Schumer would approve if the Saudis were to agree to pump the Iraq oil?A few weeks ago New York Sen. Schumer and aspiring global Petroleum Czar was threatening to block arms sales to Saudi Arabia if it didn’t produce more oil. Now, he’s outraged that the Iraqi government may give modest no-bid service contracts to Western oil companies as a first step toward more fully exploiting the country’s vast oil reserves, the editors of the National Review said.

Mohammed Abbas for ArabianBusiness.com writes that Iraq’s finance ministry wants to raise its 2008 budget by 44 percent to a record $70 billion, cashing in on record oil prices to rebuild shattered infrastructure, the government’s spokesman said on Wednesday.

The ministry’s submission of a supplementary budget of $21 billion - on top of February’s 2008 budget of $48 billion - comes as prices for Iraq’s main export oil hits record highs.

“This enhanced budget that results from the stability in Iraq’s oil exports… will have tangible positive effects on the provision of basic services in the country,” government spokesman Ali Al-Dabbagh said in a statement.

Iraqi oil: Deal or no deal?

Published

on July 1, 2008

. 2 Comments

“The United States was not involved in any decisions to award contracts, to make determinations of what kinds of contracts would be offered, to provide advice over what kinds of contracts would be offered. These are technical experts that we have working in the Iraqi Oil Ministry, who are similar to the technical experts we have working in many ministries throughout the government. Saying that they are somehow responsible for this matter, would be equivalent to saying that the person who does your taxes is responsible for how much income you earned. It’s simply not true,” said U.S. State Department deputy spokesperson Tom Casey.

Frustrated Iraqis trying to tank up their cars faced miles-long gas lines on Tuesday — a stark reminder that a country with one of the world’s largest oil reserves still has major challenges delivering fuel to its people, writes Sebastian Abbot for the Associated Press.

The lines followed Iraq’s announcement Monday that it was opening six major oil fields and two natural gas fields to development by foreign firms, which could lead to the biggest outside stake in Iraq’s oil industry since it was nationalized more than 30 years ago.

Iraq said that it had failed to sign technical support deals with global oil majors hoping to cash in on boosting the war-torn country’s extensive but underexploited oilfields, Agence France Presse said.

Iraq is still negotiating with Shell, BP, ExxonMobil, Chevron and Total, and a consortium of other smaller oil companies, to develop six oil blocks and two gas fields, Oil Minister Hussein al-Shahristani told a press briefing.

“We did not finalise any agreement with them because they refused to offer consultancy based on fees as they wanted a share of the oil,” he said.

Iraq’s government invited foreign firms to help boost the production of the country’s major oil fields, beginning a global competition for access to the world’s third-largest reserves, Sudarsan Raghavan and Steven Mufson write for The Washington Post.

Iraqi Oil Minister Hussain al-Shahristani said the government would seek to tap Western technology and capital to increase Iraqi oil production by about 60 percent, or approximately 1.5 million barrels a day, swelling Iraqi oil revenue and potentially easing tight petroleum markets where prices have doubled in the past year.

Shahristani said 35 companies — including firms from the United States, Britain, France, Russia, China and India — had been selected to bid on long-term contracts to provide services, equipment, training and advice on the country’s biggest oil fields, which have suffered from age, technological neglect and mismanagement during years of war and economic sanctions.

“The six oil fields that have been announced today are the backbone of Iraq’s oil production, and some of them are getting old and production is declining,” Shahristani told reporters.

Norway’s DNO International, the first foreign firm to drill for oil in Iraq after the U.S.-led invasion in 2003, said on Tuesday it was not pursuing any of the oil projects offered by Baghdad, Reuters reports.

DNO, which is producing oil in Iraq’s Kurdish region in the north, was not on a list of pre-qualified bidders for projects in other areas of Iraq published on Monday.

On Tuesday, some Norwegian media suggested that may mean DNO was no longer welcome in Iraq, DNO said in a statement. Shares in DNO were down 5 percent at 10.10 crowns at 1106 GMT.

An epic struggle for access to the world’s third-largest oil reserves is under way in Iraq, underscoring, and at times exacerbating, the sectarian violence gripping much of the country.

At stake is the development of 115 billion barrels of proved oil reserves and 112 trillion cubic feet of gas, as well as access to numerous exploration prospects by international oil companies that increasingly are being shut out of the world’s most prospective hydrocarbon provinces amid a rising tide of resource nationalism, Tamsin Carlisle writes in The National.

The Iraqi government is to establish a new oil company with a proposed capital of more than $7.9 million and converting Maysan oil fields into a public company and disassociating it from the South Oil CompanySouth Oil Company

In a statement to KUNA, Iraqi Oil Minister Hussein Al-Shahrastani said that the cabinet approved the establishment of the oil company in the governorate of Maysan under the name (Maysan Oil Company).

“It would be tasked to develop the fields and production in the province,” Al-Shahrastani said, noting that the Oil MinistryOil Ministry Loading… had submitted a proposal to the cabinet on that regard, which received government blessing.

The Kurdistan Regional Government of Iraq announced the publication of a fact-finding report by the internationally renowned expert on petroleum fiscal regimes, Dr Pedro van Meurs, which finds that the Production Sharing Contract model currently applied by the KRG (KRG-PSCs) is immensely better for Iraq’s national interests than the Risk Service Contracts (EDP-RSCs) that have been proposed by the Ministry of Oil (MOO) in Baghdad.

In his report ‘Comparative analysis of Ministry of Oil and Kurdistan fiscal terms as applied to the Kurdistan Region’, prepared for leading international law firm Clifford Chance at the request of the KRG, Dr. van Meurs warns, “If profitability to the investors is not aligned with the goals of the government, very significant losses can occur to the value of government revenues.”

Americans named participant in Iraq oil contracts with Big Oil

Published

on June 30, 2008

For more on the KRG deals, read “Wildcatters in Controversial Northern Iraq Deals Optimistic,” by UPI’s Ben Lando.

. 2 Comments

Plus:
*Iraq announces five long-term oil field/two gas field contracts up for bid
*Iraqi Kurdistan pans Baghdad’s moves
*Iraq Parliament Oil & Gas Committee demands oversight
*KRG explains oil deal breakdown

The U.S. advisers tasked to Iraq’s Oil Ministry were involved to some extent in the negotiated contracts between Iraq and the major international oil companies. U.S. advisers have been assigned to every ministry since 2003, but the oil sector was particularly shadowy and quiet.

Andrew E. Kramer of The New York Times reports a few of the U.S. advisers have told him of their involvement.

In their role as advisers to the Iraqi Oil Ministry, American government lawyers and private-sector consultants provided template contracts and detailed suggestions on drafting the contracts, advisers and a senior State Department official said.

It is unclear how much influence their work had on the ministry’s decisions.

Shell, BP, Chevron, Total, ExxonMobil, BHP Biliton, Dome and Vitol have all been negotiating technical support contracts with the Oil Ministry since late last year. The companies would get paid a set price for a set service: technology, equipment and training. Iraq’s oil sector needs of this, after decades of war, sanctions and Saddam Hussein ruined the once prominent domestic oil industry. And it needs help in making quality deals, as Iraqi experts were thrown out for political and religious affiliation or taken out by the violence.

The deals have not been made public, including their terms and price tag, and until that happens the quality of the return to Iraqis cannot be evaluated thoroughly. Even the details on the oil fields involved – Kirkuk, Rumaila, West Qurna, Zubair, Subba & Luhais and fields in Maysan province – are just now being released. Each field is to increase production by 100,000 barrels per day within the two year contract life, adding to the 2.5 million bpd produced in Iraq currently – a high since 2003.

The U.S. government has claimed it is not connected with negotiations, just offering advice when asked, and says the contracts are private sector matters.

USG policy since 2003, however, has been an advocate of free market and private sector leads in Iraq’s economy.

But Iraq has not concluded, if even conducted, the all important discussion as to what their oil industry should look like. Particularly, what the role of the international oil industry should be. Without that, any oil deals signed – be it by the Kurdistan Regional Government or Baghdad – will be controversial and face claims of illegitimacy, especially if the contracts are negotiated behind closed doors and not in a bidding process, and if the powerful oil unions don’t consent to the program.

Adding in the large oil companies who ran Iraq’s oil sector as their backyard playground in the first 40 years of Iraq’s oil life is another complication.

These deals, and those signed with the KRG, have not set well lately with members of Congress, Ben Lando reported last week for United Press International.

Iraq will offer seven oil and gas fields to international oil company development, Oil Minister Hussain al-Shahristani announced, to be awarded later this year or early next year.

These differ from the technical support contracts, which are limited in time and scope, and were not transparent, though the ministry claims the deals will be made public.

The bidding round, however, is supposedly going to be completely open, though the round of tenders has not been included in the Oil Ministry’s website, where oil sector tenders are usually cataloged.

The fields are Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and the Maysan fields. Maysan comprises three fields, Bazargan, Abu Gharab and Fakka, and the Oil Ministry said they are open to foreign firms for long-term development contracts, Ahmed Rasheed reports for Reuters. Two gas fields, Akkas and Mansuriyah, were also opened.

Taken together, the short-term and long-term contracts will open the door to major international involvement in the OPEC member’s oil sector for the first time in nearly four decades.

The Iraq Petroleum Co., a selection of the world’s largest oil companies from the 1920s through 1960s, had exclusive rights to explore and develop (or not develop, if they saw fit) Iraq, and had control over how much of the funds returned to the country.

The nationalization that began in the early 1960s and was completed a decade later is still considered a proud point in Iraq’s history, and international oil companies and their government supporters are viewed warily at best.

The Iraqi Parliament’s Oil & Gas Committee is demanding it reviews all oil contracts signed in Iraq.

Mustafa al-Hashemi reports for Azzaman the deputy of the committee, Abdul-Hadi al-Hasani, says that without a new oil law, the committee must vet oil deals.

Iraq is moving forward on developing the post-2003 oil sector using regulations remaining from before the war. Although the constitution called for new legislation for the hydrocarbons sector, that draft law has been stuck in political deadlock. The old law gave the Oil Ministry much sway, after Saddam Hussein shut down the Iraq National Oil Corp. in one of his political consolidation moves.

The Kurdistan Regional Government has also signed dozens of negotiated oil deals with international oil companies to explore for and develop oil in its three northern provinces, inluding a handful just last week,and Baghdad has demanded oversight in weak ebbs and flows of statements.

The KRG says the 2005 Constitution authorizes its moves, though Shahristani has called them illegal and the two sides have often butted heads over oil development rights.

Though the KRG has typically kept quiet on the Baghdad oil moves, it has now released a report it commissioned comparing its production sharing contracts with Shahristani’s six technical support deals.

The KRG report called the TSCs “disastrous,” according to a KRG statement.

For the full report by oil legal regime expert Dr Pedro van Meurs, click here for the PDF.

The study said Iraq would lose hundreds of billions of dollars over time due to the PSCs.

The contracts have not been published, but Ashti Hawrami, Iraq’s Kurdistan Regional Government natural resources minister, insists everything needed to know about what’s in the dozens of contracts signed between the KRG and international oil companies is in the public domain.

In a recent interview with United Press International’s Ben Lando from his office in Erbil, the capital of the KRG, Hawrami explained the breakdown of contract ownership by the companies and how much control the government has in the contract.

Spencer Swartz reports for Dow Jones Newswires that recent negotiations in Baghdad over the oil law didn’t make any progress.

Iraq oil deals in the north have wildcatters optimistic

Published

on June 25, 2008

. 0 Comments

Plus:
*Korea National Oil Corp. gets two new Iraq Kurd deals
*and made third parties to two existing deals
*Chinese and Turkish firms added to Baghdad deals named

It could be the new age for wildcatters, or just the new age of Iraqi oil development, but the monthly gathering of operators in Iraq’s Kurdistan region is an optimistic party despite above-ground challenges that eclipse those subsoil.

…Dozens of company officials sit around a horseshoe of tables and update each other on their projects’ progress. They exchange tips on the evolving dos and don’ts of operating in northern Iraq and coordinate the joint purchase of services.

At a recent meeting the group was courted by companies pitching oil industry charter flights, Internet services and a range of products directly and indirectly related to the oil sector, Ben Lando reports for United Press International.

Each assembly is hosted by a company on a rotating basis, which provides the post-business gathering happy hour and buffet dinner.

“Working conditions are both better and more complicated than in other regions of the world,” said Peter Seifert, general manager of PETEX, a subsidiary of Austria’s OMV. …

But if any of the post-February 2007 projects begin to flow, the federal government will act, Iraq Oil Minister Shahristani warned.

“That oil will be confiscated; they have no right to work in that part of the country,” he said. “We’ll use a number of measures to stop any violation of Iraq law. Those contracts have no standing with us, we don’t recognize them and they have no right to do that.” …

In Erbil the KRG is being accused of signing contracts for land in the disputed territories, with Hunt being the most prominent.

“They have no right to be there,” said Shahristani. …

Read the entire story. CLICK HERE.

The KRG has signed two production contracts with the Korea National Oil Corp. According to the government statement, KNOC was also granted a minority stake in contracts controlled by TNK-BP affiliate Norbest and Sterling Energy.

Iraq’s Oil Ministry has expanded the list of companies pre-qualified to bid on upcoming oil deals. Turkey’s Turkiye Petrolleri Anonim Ortakligi (Turkish Petroleum Corporation–TPAO) is one, The Jamestown Foundation’s Eurasia Daily Monitor reports. The China National Petroleum Corp., China Petrochemical Corp., China National Offshore Oil Corp. and Sinochem Corp. also qualified, China Daily reports.

U.S. Congress calls on Bush to block or cancel Iraq oil deals

Published

on June 24, 2008

CLICK HERE for the entire must read article.

. 4 Comments

*Big Oil deals with Baghdad are the target
*As are Hunt Oil and other KRG deals signed with U.S. firms
*Plus, Iraq to establish Maysan oil company
*And, Alive in Baghdad

U.S. congressional leaders are pressing the Bush administration to block deals to be signed between the Iraqi federal government and the world’s largest oil companies and to cancel deals between the Iraqi Kurdish region and smaller U.S. oil firms.

Sens. Charles Schumer, D-N.Y., John Kerry, D-Mass., and Claire McCaskill, D-Mo., want the United States to dam negotiations on contracts the senators claim will, in part, further sectarian fighting.

United Press International’s Ben Lando has also obtained a letter from Senate Committee on Armed Services Chairman Carl Levin, D-Mich., to President Bush’s national security adviser Stephen Hadley, asking the administration to press Hunt Oil and other U.S. companies to cancel their oil deals with the Kurdistan Regional Government of Iraq.

The Iraqi Oil Ministry is negotiating two-year, technical support contracts — also being called technical service contracts — with Shell, BP, ExxonMobil, Chevron, Total, BHP Billiton and a consortium led by Anadarko. The deals, the scope and price of which have not been made public, are presumed to be worth $500 million each and provide technology, training and equipment to six key oil fields in Iraq, according to past ministry statements.

Each field would increase production by 100,000 barrels per day. The companies would likely not send any workers to Iraq. Shell, BP, Exxon and Total were part of the Iraq Petroleum Co., which controlled Iraq’s oil sector for decades before being kicked out in the 1960s and 1970s.

“We can confirm that negotiations between Shell and representatives of the Ministry of Oil regarding technical service agreements are ongoing. However, we regard further details as confidential,” said Shell spokesman Adam Newton, adding the company has no comment on the senators’ demands.

“If the Iraqi government decides it wants international oil companies to partner with them in developing their resources, ExxonMobil would be interested in participating,” said Exxon Manager of Upstream Media Relations L.A. D’Eramo. “Consistent with our long-standing global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate. With that noted, at this time it would be premature to discuss specifics about any potential opportunity with Iraq.”

“We have a memorandum of understanding with the Iraqi government whereby we have provided free technical advice,” said Anadarko Manager of External Communications John Christiansen. “However, we do not intend to pursue additional interests at this time.”

The other companies couldn’t be reached or couldn’t provide comments before the article was published.

From other media:

“Iraq is a sovereign country, and it can make decisions based on how it feels that it wants to move forward in its development of its oil resources,” said White House spokeswoman Dana Perino, Anne Flaherty reports for The Associated Press. “And if that means that our companies here in the United States can compete and win business, then that’s for them and the Iraqis to decide,” Perino added. “But I don’t think the federal government of the United States needs to get involved.”

Iraq’s oil ministry has finished negotiations with oil majors on six short-term oil service contracts and hopes to sign the deals during the next month, Ahmed Rasheed reports for Reuters.

Iraq’s Cabinet has decided to establish a new oil state-owned company to manage and develop massive oil and gas resources in the southern oil-rich province of Maysan, the oil minister said Tuesday, AP reports. The announcement was made as government forces are cracking down on Shiite militias in the Maysan capital of Amarah, promising to boost the quality of life there now that the gunmen no longer rule the streets. Oil Minister Hussain al-Shahristani said the Maysan Oil and Gas Commission would be split off from the Basra-based Southern Oil Company and reorganized as an independent company.

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Published

on June 23, 2008