Iraq: Chevron & To­tal ex­pand Kur­dish drilling

The Kurdish Globe - - NEWS - By —UPI

Iraq's Kurds have con­sol­i­dated their grow­ing en­ergy sec­tor with Chevron Corp se­cur­ing a third ex­plo­ration block in the semi-au­ton­o­mous north­ern re­gion and France's To­tal buy­ing a ma­jor­ity stake in another.

Th­ese moves in­ten­sify the Kurds' chal­lenge to Iraqi Prime Min­is­ter Nouri alMa­liki's prob­lem-plagued coali­tion in Bagh­dad, height­en­ing ten­sion be­tween gov­ern­ment forces and the Kur­dish pesh­merga fight­ers — those who face death — on Kur­dis­tan's south­ern bor­ders.

The rift be­tween the fed­eral gov­ern­ment and the Kur­dis­tan Re­gional Gov­ern­ment in Er­bil, the Kur­dish cap­i­tal, keeps widen­ing, and the lat­est deals with Chevron and To­tal make the prospect of a set­tle­ment even more dis­tant.

The Iraqi Kurds, part of a state­less peo­ple num­ber­ing some 25 mil­lion across the re­gion, have long dreamed of an in­de­pen­dent home­land and Bagh­dad fears that the KRG's oil wealth will re­sult in a uni­lat­eral break­away that could trig­ger the breakup of the fed­eral state.

The deep­en­ing dis­pute over who will con­trol the world's fifth largest oil re­serves, which could even­tu­ally ri­val Saudi Ara­bia's, is part of a long-run­ning blood feud be­tween the Kurds and Bagh­dad that may yet erupt into open war.

Such con­cerns have been height­ened by the tur­moil sweep­ing the en­tire Mid­dle East and have dis­mayed the United States.

Chevron said it has com­pleted ac­qui­si­tion of the Qara Dagh block, which cov­ers an area of 330 square miles south­east of Er­bil.

To­tal an­nounced that it has bought an 80 per­cent stake in the Baranan block, with the re­main­ing 20 per- cent held by the KRG. To­tal al­ready holds a 35 per­cent stake in the Harir and Safen ex­plo­ration zones.

The move by ma­jor oil com­pa­nies into Kur­dis­tan re­flects a gen­eral dis­en­chant­ment with Iraq's oil sec­tor by Western oil ma­jors who were look­ing ahead a few years ago to a post­war bo­nanza.

The move was led by Exxon Mo­bil in Oc­to­ber 2011 when it ac­quired six ex­plo­ration blocks in Kur­dis­tan, turn­ing its back on a ma- jor stake in the $50 bil­lion West Qurna 1 megafield in south­ern Iraq.

Rus­sia's Gazprom Neft has also ac­quired blocks in Kur­dis­tan in re­cent months.

Bagh­dad con­sid­ers th­ese deals in­volv­ing the KRG to be il­le­gal and re­fuses to pay the oil com­pa­nies op­er­at­ing in Kur­dis­tan their share of ex­port rev­enues.

The Kurds say they are owed more than $3.5 bil­lion by Bagh­dad, and stopped ex­port­ing through the state pipe­lines in De­cem­ber.

Exxon, and later To­tal, broke with Bagh­dad be­cause of frus­tra­tion at Bagh­dad's bu­reau­cratic snarls and end­less de­lays in vi­tal in­fra­struc­ture projects, a sen­ti­ment shared by most of the in­ter­na­tional oil com­pa­nies which have deal­ings with Bagh­dad.

Another rea­son was the fed­eral gov­ern­ment's nig­gardly pro­duc­tion-shar­ing terms. The KRG of­fered far more lu­cra­tive terms and less re­stric­tive op­er­at­ing con­di­tions.

Other com­pa­nies have found Iraq tough go­ing: Nor­way's Sta­toil pulled out al­to­gether in 2012.

Un­like Exxon and To­tal, which stand to lose their stakes in ma­jor south­ern fields con­trolled by Bagh­dad, Chevron does not have any com­mit­ments in south­ern or cen­tral Iraq.

The KRG sits on an es­ti­mated 45 bil­lion bar­rels of oil, about one-third of Iraq's proven re­serves, which are cur­rently pegged at 150 bil­lion bar­rels.

As th­ese oil ma­jors have moved into Kur­dis­tan, Tur­key has stepped in with plans for a pipe­line from the Kur­dish zone north­wards to ex­port ter­mi­nals on the Mediter­ranean, by­pass­ing Bagh­dad's net­work.

Tur­key, which has no en­ergy re­sources, is seek­ing to es­tab­lish it­self as a piv­otal East-West en­ergy hub as part of its drive to be­come the ma­jor power in the re­gion.

The Iraqi Kurds are cur­rently pro­duc­ing around 200,000 bar­rels per day and ex­port­ing around 65,000 bpd by truck to world mar­kets through Tur­key.

That's slot­ted to hit 250,000 bpd by year-end and 2 mil­lion bpd by 2019.

Bagh­dad last week un­veiled new pro­duc­tion tar­gets that were sig­nif­i­cantly re­duced from the blue­print it un­veiled sev­eral years ago, which were deemed wildly am­bi­tious by the global en­ergy in­dus­try at the time.

But equally sig­nif­i­cantly, the new pro­jec­tions do not in­clude pro­duc­tion from Kur­dis­tan, sug­gest­ing Bagh­dad may no low be­lieve a res­o­lu­tion of the oil dis­pute with the KRG to be im­pos­si­ble.

The in­creased out­put fore­seen by the Oil Min­istry — 4.5 mil­lion bpd by the end of 2014, 9 mil­lion bpd by 2020 — will come largely from new oil pro­duced by the south­ern Iraqi megafields.

Many in the in­dus­try say even that may be a stretch.

Newspapers in English

Newspapers from Iraq

© PressReader. All rights reserved.