Kurdistan Oil & Gas Development

[alan131210]

It started late last year with ExxonMobil, then a month ago Chevron joined in, followed this week by Total and now Gazprom. That’s four of the world’s biggest international oil and gas giants that have defied Baghdad to sign up for concessions to drill for oil in the Kurdistan region of northern Iraq.

Baghdad has blacklisted the oil giants from future bidding rounds for southern fields, and has condemned the sweet deals that the Kurds have been offering as in violation of the Iraqi constitution.

“We will punish companies who sign deals without the approval of the central government and the oil ministry,” said an oil ministry spokesman, according to Reuters. “Unless Total reviews the deals, it will face severe consequences… Total will be blacklisted for violating Iraqi law.”

Big talk, but so far no details on punitive measures. Don’t think for a second that the oil companies are worried. “It’s a chess game, that’s how I read it,” an international oil tycoon with investments in Kurdistan told me recently. For Big Oil, these moves are part of a chess game, played with the intention of forcing Baghdad to rationalize the laws governing Iraq’s oil industry.

The companies would like the entire Iraqi oilpatch to be governed like Kurdistan. The Kurds’ production sharing contracts give the oil giants a big cut of the upside in finding new oil. That’s in contrast with the service contracts that Baghdad has forced in the south, with pay out a set fee of as low as $1.15 per barrel recovered. Even though contracts allow for reimbursement of capital costs, that’s too little to make money or justify the political risk.

Yet the majors bid for the projects anyways. Exxon is partnered with Shell in the West Qurna 1 project in southern Iraq, which calls for an expansion of output in that field to 2.3 million bpd. While Total is partnered with PetroChina and Petronas in the 500,000 bpd Halfaya project. The contract terms call for payment of $1.90 and $1.40 per barrel, respectively. Chevron doesn’t have any deals in the south, but says in a statement that it has been working with the Iraqis since 2003, and that “new opportunities must offer a competitive return measured by various metrics relative to perceived risks and as compared to other investment alternatives in our portfolio.”

The reason Chevron’s peers agreed to crazy contract terms in the south was simple, explains our oil tycoon: “We enter into the cake, and once we’re in we see slowly what we can do to change the model.”

But change isn’t coming. Baghdad still has not approved a national oil law, and some companies have gotten fed up. Norway’s Statoil recently sold its interest in the West Qurna 2 project (which pays $1.15 per bbl) back to its partner Lukoil. Thomas Adolff, analyst with Deutsche Bank, writes in one of his regular reports on Iraqi oil that Exxon “is in advanced discussions with Rosneft” to sell all or part of its concession.

“Total has very little to lose in the south,” writes Adolff. “There’s not much the government can do other than banning Total from future licensing rounds.”

But why couldn’t the government yank those southern concessions from Exxon and Total? They could, and in this chess game the companies are challenging Baghdad to do just that. “If Baghdad takes the risk of taking back the concession, you think Exxon will not react? They will immediately go to court,” says our tycoon. The issue would be sent to an international arbitration tribunal, where Exxon would make the point that there is no official oil law in place and that the Kurdish deals do not violate the Iraqi constitution. The debate is not over whether the Kurdish region has the right to offer the concessions–it does–but over the model of the contract itself.

“Do you think Baghdad wants to have an international court to say what the law is? I don’t think so. The government in Baghdad does not want to fall into the trap,” says the tycoon. This is why Exxon and Total have little to worry about. “Everybody is making gesticulations, but nobody has taken anything from Exxon. They cannot. They won’t take the risk.” Checkmate Big Oil.

The result is that it’s game on in Kurdistan. Both Total and Chevron have indicated that they want to expand their positions there. Statoil is looking at opportunities. They’ll have to compete with a crowd of companies already there, like Sinopec, Marathon, Hess, Heritage Oil, DNO, Maersk Oil, and Gulf Keystone (which has found an estimated 10 billion barrels so far). Not to mention a passel of billionaire-backed ventures such as Ross Perot, Jr.’s Hillwood International, Ray Lee Hunt’s Hunt Oil, Jean Claude Gandur’s Oryx Petroleum as well as Genel Energy, which was bankrolled by Nat Rothschild and is run by former BP Chief Executive Tony Hayward.

A spokesman for Kurdistan Natural Resources Minister Ashti Hawrami recently said that with the help of all this firepower the region expects to boost oil output from 300,000 bpd now to 1 million bpd by 2015 and 2 million bpd by 2019. That would put Iraqi Kurdistan in same oil exporting league as Venezuela.

If Baghdad is serious about building a world-class oil industry in the south they should stop dreaming of building a Saudi Aramco redux and decide to do it the Kurdish way.

forbes

[alan131210]

AP News - The Kurdistan Regional Government this week restarted oil exports through a pipeline controlled by Baghdad after halting them for months over a payment dispute. Some oil industry observers see it as a sign of goodwill by the Kurds. Given current oil prices, it's also a $9 million a day trial balloon to see how far they can press their luck.

"The Kurds are ... once again showing that they can use oil to pressure Baghdad," said Iraqi political analyst Hadi Jalo.

The Kurds plan to ship 100,000 barrels a day for now to test Baghdad's willingness to make good on what the Kurds say are ove7rdue payments related to a 2011 compromise deal. That tentative agreement calls for Baghdad to sell Kurdish-produced oil through the pipeline. Each side takes half the revenues.

The Kurds stopped shipments in April, claiming Baghdad failed to hand over their share of the sales. Baghdad in turn accused the Kurds of withholding billions of dollars in unreported oil payments and of smuggling oil out of the country.

If this week's gambit pays off, Kurdish Minister of Natural Resources Ashti Hawrami says export Uvolumes could be increased. But if Baghdad does not release back payments the Kurds demand, he is threatening to shut the taps again at the end of the month.

Iraqi Oil Ministry spokesman Assem Jihad said a government committee is working on ways out of the crisis. "We hope that all the problems will be resolved," he said.

Kurdish leaders have a reason to feel empowered. Four of the world's ten biggest international oil companies have now signed up to hunt for oil in their mountainous northern region.

The deals and dozens of others infuriate Baghdad, which deems them illegal. The central government believes the Kurds have no right to sign unilateral agreements with foreign oil companies and wants exports to travel through state-run pipelines. The Kurds say Iraq's constitution allows them to sign deals on their own.

Oil companies are willing to gamble on the Kurdish region, which holds up to 45 billion barrels in reserves, because the terms there are more generous than Baghdad's. Far better security and rapidly improving infrastructure are other draws.

Exxon was the first oil giant to defy Baghdad and sign on with the Kurds last year, joining several mostly small and mid-sized firms. Baghdad responded by banning it from Iraq's fourth post-war bidding round but did not touch the Irving, Texas-based company's prized stake in the country's 8.6-billion-barrel West Qurna-1 oil field.

Its competitors took that as a green light to pursue deals of their own. San Ramon, Calif.-based Chevron Corp., Total S.A. of France and Russia's Gazprom Neft have all forged Kurdish exploration deals since mid-July.

Gala Riani, head of Middle East analysis for the consulting firm Control Risks, said the oil majors' Kurdish debut "certainly strengthens the Kurds' hands."

"Each case sets a precedent showing that companies are willing to take on the risk of being penalized by Baghdad," she said.

Besides, it would be legally difficult to expel companies such as Exxon that are already working in Iraq's south, and any expulsion would create logistical headaches for the companies' remaining exploration partners, said Robin Mills, head of consulting at Manaar Energy Consulting & Project Management in Dubai.

"Interruptions to Exxon Mobil's West Qurna-1 in particular would be a severe blow to Baghdad's production growth plans," he added.

Still, Baghdad authorities for now have the upper hand so long as they control Kurdish exports, Mills believes.

That could change

The Kurds have reached out to their neighbor Turkey about setting up export pipelines that would bypass routes controlled by Baghdad. Last month they began exporting directly to Turkey, bartering oil and gas for refined fuel meant for local consumption.
A furious Baghdad responded by accusing Turkey of "participating in the smuggling of Iraqi oil." From its standpoint, Turkey's growing energy ties with Iraq's Kurds amount to yet another slight by Ankara.

Relations between the two countries turned particularly sour after Iraq's fugitive Sunni vice president, Tariq al-Hashemi, who is wanted on terrorism charges, first sought refuge in Kurdistan and then traveled onward to Turkey. Al-Hashemi calls the charges politically motivated.

The deteriorating security situation in Syria, which like Turkey has its own Kurdish minority, only complicates matters. Shiite-led Iraq has been reluctant to join predominantly Sunni Turkey in pushing for the removal of Syrian President Bashar Assad, a member of the minority Alawite sect, an offshoot of Shiite Islam.

But Kurds are increasingly throwing their support behind Turkey and its Sunni Gulf Arab allies in seeking Assad's ouster, according to analyst Jalo.

"The Kurds think that they should bet on the winning horse, which in this case is the Sunni alliance. This will worsen relations with Baghdad," he said.

The president of autonomous Kurdistan region, Massoud Barzani, "thinks that by siding with Turkey and the Gulf states, he might be rewarded by stretching his influence and power to the Kurdish areas in northern Syria," Jalo added.

[brendar]

DUHOK, Aug. 11 (AKnews) - A Yezidi activist and media commentator close to the Yezidi prince said Saturday that the prince demands giving Yezidi’s employment opportunities in the US oil companies operating in the Yezidi areas of the Kurdistan Region.

Luqman Suleiman said: "During the meeting between the prince of the Yezidis Tahsin Bek and US consul general in Erbil Powell Stephen in the Lalsih temple, the Bek called for employing Yezidi workers in the oil companies operating in the region.

"Most Yezidis live below the poverty line particularly in the areas of Sinjar, Shekhan and others. Many of them are forced to work in remote areas and far from their residence in the region or the rest of Iraq. They have the right to get job opportunities to improve their living conditions.

"The American consul considered that this request would benefit parties, the Yezidi community and US oil companies."

Some of the foreign oil companies implement investment projects in Sheikhan district, 50km southeast of Duhok, which is inhabited by Yezidi Kurdish majority.

http://www.aknews.com/en/aknews/3/321266/

[crazyhorse]

DUHOK, Aug. 11 (AKnews) - A Yezidi activist and media commentator close to the Yezidi prince said Saturday that the prince demands giving Yezidi’s employment opportunities in the US oil companies operating in the Yezidi areas of the Kurdistan Region.

Luqman Suleiman said: "During the meeting between the prince of the Yezidis Tahsin Bek and US consul general in Erbil Powell Stephen in the Lalsih temple, the Bek called for employing Yezidi workers in the oil companies operating in the region.

"Most Yezidis live below the poverty line particularly in the areas of Sinjar, Shekhan and others. Many of them are forced to work in remote areas and far from their residence in the region or the rest of Iraq. They have the right to get job opportunities to improve their living conditions.

"The American consul considered that this request would benefit parties, the Yezidi community and US oil companies."

Some of the foreign oil companies implement investment projects in Sheikhan district, 50km southeast of Duhok, which is inhabited by Yezidi Kurdish majority.

http://www.aknews.com/en/aknews/3/321266/

They are right. Only Kurds should be allowed to work for (foreign) oil companies.
Arabs/Americans etc. should not be allowed to work for the same company, since they're already making huge profits.
And the Kurds should be paid very good, just like the Western employees.

[brendar]

One interesting part of this video is that it says Iraq has 10.7% of world's oil reserve. Then it says that Kurdistan has 40% of Iraq oil reserves.

This means Kurdistan has 5.35% of world's oil reserves. WOW

Also, it says that Kurdistan will finish discovering 80% of its oil in 5 years time.

http://www.youtube.com/watch?v=x9AzQa66Hk0&hl=en&fs=1&rel=0&hd=1   

[hevalo27]

But why couldn’t the government yank those southern concessions from Exxon and Total? They could, and in this chess game the companies are challenging Baghdad to do just that. “If Baghdad takes the risk of taking back the concession, you think Exxon will not react? They will immediately go to court,” says our tycoon. The issue would be sent to an international arbitration tribunal, where Exxon would make the point that there is no official oil law in place and that the Kurdish deals do not violate the Iraqi constitution. The debate is not over whether the Kurdish region has the right to offer the concessions–it does–but over the model of the contract itself.

“Do you think Baghdad wants to have an international court to say what the law is? I don’t think so. The government in Baghdad does not want to fall into the trap,” says the tycoon. This is why Exxon and Total have little to worry about. “Everybody is making gesticulations, but nobody has taken anything from Exxon. They cannot. They won’t take the risk.” Checkmate Big Oil.

very interresting, this part

[alan131210]

One interesting part of this video is that it says Iraq has 10.7% of world's oil reserve. Then it says that Kurdistan has 40% of Iraq oil reserves.

This means Kurdistan has 5.35% of world's oil reserves. WOW

Also, it says that Kurdistan will finish discovering 80% of its oil in 5 years time.

http://www.youtube.com/watch?v=x9AzQa66Hk0&hl=en&fs=1&rel=0&hd=1   

also at 3:29

it shows the constitution articles which speaks of oil handled by central and regional governments

* article 111: the oil and gas is the property of the people of iraq in all provinces and regions.
* article 112 (a): the central government is responsible and in control of the "existing" oil and gas fields in iraq.
* article 112 (b): both the central and regional governments take care of oil operations.
* in 2007 Erbil and Baghdad signed a deal, which is : "if by nov 2007 iraq does not pass a new oil and gas law, both sides have the ability to control their oil fields and sign oil deals until a new law is passed" signed by nouri al milky and Kak Massod.

so as it is clear, i-raq is violating its own constitution bcoz it does not "suit" them in baghdad so they love to keep the current baathie era oil law and refuse to put the above mentioned into a new law which will give Kurdistan the power it has anyway but it will be official then, and they signed that deal which now they cant back out on if they want to say oh that is not constitutional then why did you sign it? sorry it dont work that way you have signed and we will show it to the international companies coming it, the international oil companies are fully aware of these and have studied them before coming to Kurdistan, if iraq moved a muscle , they will go to court with full proof that they have not violated the iraqi constitution and iraq will come out as a loser. so they dont want to look like losers what they do is just "bark bark bark" , but that period of time has expired and the world has changed but the iraqi minds stay the same since 1921, which is deny kurds and kurdistan of any control of their own land and its properties which by the way was attached to this so called iraq, invade kurdish lands if its strategic for them iraqis and threaten them with military means, which they have failed at in all of mentioned above, they lost the oil game, they lost at trying to invade kurdish areas in ninevah which is under kurdish control but not part of KRG officially yet, they failed at creating disunity amongst kurds , and they will continue to fail till the day they realize kurdistan divorced them and took the areas it controls official and unofficial. iraq which is a french and british project is starting to fail as a country after 90+ years since it was created against the will of kurdish people and god is number one with reversing these kind of unfairness , it will reach all occupied kurdish lands one by one.

[burnsss]

Bagdad lost the game, the question is when they will admit it and act accordingly. Of course Shahristani the old communist an Milky the shoe salesman dont want to lose face. They will try re-package this failure as an victory for the domestic consumption.

[alan131210]

http://rudaw.net/kurdish/index.php/news/16424.html

here is a summarized highlight of the article:

* One of the oil deals that was signed in the past with the help of nawshirwan, gorran leader has been modified.
* Gorran instead of welcoming the efforts of our work, of this national achievement in oil sector we have gained, they show a hostel attitude towards us, their attacks has reached past the limits of criticism, gorran and its media outlets have not once criticized the the iraqi oil department and shahrsistani, who has been depriving kurdish people of oil supplies for years now worth billions.
* I was very upset when i found out that gorran had asked iraqi oil department satellite images of border gates that supposedly kurdistan oil been sending oil out thru across the border.
* Bcoz of the supermajors pouring into kurdistan, our nation is getting an international attention, this was the dream of our martyrs the dream of our loyal people.
* These companies work with great work ethics and professionalism, which gives a whole new level of trust and confidence to the oil process in KRG.
* We have to look at our oil sector with an essential milestone, not seek help from those who try to undermine and cause obstacles to its process so that the kurdish people can not become the true owners of their own production and its politics.
* Our work and efforts has granted an international guarantee for our people and has made Kurdistan appear on the international energy map.

[alan131210]

Shahristani's hostility prompt him to punish oil companies operating in Kurdistan, says parliamentary committee


didn't know iran let him drink alcohol!

BAGHDAD, Aug. 14 (AKnews) - The head of the oil and energy committee in the Iraqi Council of Representatives stated Tuesday that the hostility of Deputy Prime Minister Hussein al-Shahristani and a number of officials in the federal government of the Kurdistan Region prompt him to punish foreign oil companies contracting with the region.

The federal Oil Ministry yesterday cancelled its contract with French oil giant Total after the company contracted with the Kurdistan Region. The ministry gave Total a period of time to sell its share and assets.

Qassim Mohammed said: "Putting foreign oil companies that contract with the Kurdistan Region on the black list by the federal government is a personal issue and there is no law or paragraph that allows this."

Baghdad has granted 15 oil and gas contracts to international energy companies since 2008 and they represent major investments in the country's energy industry after more than three decades of war.

The Iraqi Council of Representatives approved the oil and gas law in 2007 but faced Kurdish objections that relate to the differences between Erbil and Baghdad on oil revenue sharing and control on some fields in northern Iraq and the Kurdistan Region, according to Kurdish observers.

The law will determine the party that controls the vast oil reserves. The law also aims to attract foreign investors.

[alan131210]

wait did we lose the oil war?
did he cancell all the contracts krg made?

no we lost no war specially the oil war with milky.
who cancelled the contracts !?

please be more specific azizm

[alan131210]

Oh nevermind i just read the article again they cancelled their own contract because it looked like as if the DPM cancelled all oil-contracts.
you are the expert of oil so i just wanted to know for sure thanks

ok no problem my dear.

But if they cancell their contract won't the french comapny go back to iraq since there is 20% more oil there?

no, they wont go back, they said "it seems that iraq does not want us but in kurdistan we feel like we are welcomed and wanted"

the reason is our oil deals are more lucrative, bcoz of the geopolitics of kurdistan (no access to sea) we have to do this and also iraq left us with no choice but to offer these kind of deals to get the supermajors in, they have to blame themselves , they cornered us into this situation thus "our loss" of % in profits made from these oil fields.

i also read on Ekurd that iraq wants more oil from Kurdistan.
http://www.ekurd.net/mismas/articles/mi ... vt2058.htm

it seems now they are forced to offer more lucrative contracts, it still wont be as high as our offers but it will be prob enuff to keep BP and Shell operating in iraq before they too sell their shares and head to kurdistan, lol the ssc were so proud thier deals were less lucrative , now they have to knee in, all bcoz of their stupid policy towards kurdistan in the first place , now they pay for their own stupid mistakes, da bxon dardtan bet

[alan131210]

Ministry of Natural Resources in the Kurdistan region accuses the Change Movement



The Ministry of Natural Resources in the Kurdistan Regional Government, on Wednesday, accused the Change Movement of suspicious campaign against the policy of the oil of the region , and while confirming that this policy prevented the occurrence of any effect of the blockade imposed by Baghdad on the Kurdistan Region, called them to criticize the practices of the Federal Government which its harmful to the children of the region rather criticism of the ministry and the Government of the Region .


The Minister of Natural Resources in the Kurdistan Regional Government, (Ashti Hawrami) in a statement issued today, "Alsumaria News"received a copy of it, said that "the media reported that the Change Movement waged since the days of the campaign suspicious against the oil policy of the territory," noting that "the aim is the distortion facts and sabotage confidence".

kurdiu

[burnsss]

It really annoys me when anti-kurds use Gorran as their anti-krg front pets. Yesterday i saw an article on presstv involving Gorran blasting our government. Some years ago( and now) the anti-krg arabic channels used Gorran and their spokesmen as usefull idiots making fun of KRG while the presenters looked happily and gave them extra time to bash krg.

Why dont Gorran critize Iraqi government after they cut almost all supply of refine oil? Sure they have the right to critice krg but dont forget the Iraqi government and all the good things KRG archived despite Iraqi hostility and their attempts of undermining KRG.

[alan131210]

their aim in bashing KRG's oil policy is really stupid and baseless, and gorran leaders will do all they can to spread false news to anger the public .

anyways it did not work we have 4 supermajors in that is it, let gorran leadership and spokesmen spread false news , everyone knows they are only "noises" and propaganda to get popular and more support , but rest assured that is as good as it will get, even some of them gorran guys know this, i have seem then admit it on fb.