Iraq 4th Bidding Round: New Opportunities for IOCs

Thursday, May 12 2011 by
5
Iraq 4th Bidding Round New Opportunities for IOCs

Iraq is one of the few countries where a high volume of reserves remains yet resources have vastly been under exploited. Although Iraq ranks highly as an oil producer, major fields are yet to reach their expected peak production rates and only a few fields are in development.  In early 2011, the Iraq Oil Ministry announced a fourth licensing round. Included in the round are twelve licenses that were not previously on offer in the provinces of Najaf, Karbala, Samawa, Diwaniya and Anbar. The fourth license round is on track with the ministry’s plan to pursue unexploited reserves. Development of infrastructure will be needed in order for Iraq to achieve a target production capacity of almost 12 million b/d by 2017. 

The Iraq oil industry has of course been heavily hit by U.S sanctions, war and weak infrastructure. At the end of 2010, the United States voted to lift sanctions against Iraq opening the country up to foreign investment. The last few years have seen the Iraq Oil Ministry pursue an ambitious development program to develop fields and increase production. There have been three license rounds in Iraq since 2008 and twelve contracts were signed with International Companies (IOCs). A two phased development is being pursued in which current producing fields are being developed to maximize their potential, followed by the development of non-producing fields. 

Megaprojects 

Terms of the contracts on offer by the Iraq Oil Ministry are by no means favourable (service contracts in which companies earn a fee for each barrel of oil produced) but the appeal of high prospective reserves has so far held the interest of IOCs. The first phase to boost current production sees the involvement of various IOCs in three major fields. The table below shows a list of the fields awarded in June 2009, ownership, remaining reserves, current production, and the 2017 expected crude production capacity. 

Asset Name Operator Asset Ownership Reserves Crude/NGL - Remaining (mln bbls) -   Crude Oil Production (000 b/d) -   Estimated Capacity - Crude/NGL (000 b/d) -  
2009 2010 2017
Rumaila Rumaila Operating Organization BP 38%, CNPC 37%, SOMO (Iraqi State Oil Marketing) 25% 17,300.0 960.0 2,850
West Qurna Phase I ExxonMobil ExxonMobil 80%, Royal Dutch Shell 20% 8,600.0 270.0 1,500
Zubair ENI ENI 32.81%, Occidental 23.44%, KOGAS 18.75%, Missan (Iraq State Oil) 25% 7,810.0 201.0 730
Source: Evaluate Energy

The Rumalia, West Qurna Phase 1 and Zubair fields all contain a high level of reserves but are not yet being exploited to their full capacity. The Iraq Oil Ministry has enlisted IOCs to boost production at these major fields.  The second phase of Iraqi oil development aims to generate production from future major oil fields. Concessions were awarded for seven fields out of ten on offer in December 2009. A list of major fields with International Oil Companies involved is provided in the table below. 


Asset Name Operator Asset Ownership Onstream Date Reserves Crude/NGL - Remaining (mln bbls) -   Estimated Capacity - Crude/NGL (000 b/d) -  
2009 2017
Discovery Shaikan Gulf Keystone Gulf Keystone Petroleum (LON:GKP) 75%,  Kalegran (MOL) 20%, Texas Keystone 5% 2009 4900
-

Akkas KOGAS KazMunaiGas 37.5%, Korea Gas Corporation (KOGAS) 37.5%, Iraqi State 25% 2001 - -
Onstream Halfaya CNPC CNPC 37.5%, Petronas 18.75%, Total 18.75%, South Oil (Iraq) 25% 2008 4,940.0 535

Majnoon Shell Shell 45%, Petronas 20%, Misan Oil (Iraq State) 25% 2002 2,300.0 1,800

Qaiyarah Sonagol Sonagol 75%, Niveveh (iraq state) 25% 1936 1,520.0 120

Takwe DNO DNO 55%, Genel 25%, KRG 2009 230.0 90
Planned Ahdab CNPC CNPC, Zhenua Oil 2012 1,060.0 115

Badra Gazprom Neft Gazprom Neft 30%, Kogas 22.5%, Petronas 15%, TPAO 7.5%, Midland (Iraqi State) 25% 2014 760.0 170

Gharaf Petronas Petronas 45%, Japex 30%,  North Oil (Iraq state) 25% 2014 860.0 230

Najmah Sonagol Sonagol 75%, Niveveh (iraq state) 25% 2015 1,120.0 110

West Qurna Phase 2 Lukoil Lukoil 63.75%,  Statoil 11.25%, North Oil Company  25% 2012 12,880.0 1,800
Source: Evaluate Energy

The fourth bid round has on offer licenses over twelve exploration areas. Companies that can participate in the round are IOCs that qualified for the previous three rounds, whether a contract was signed or not. Companies that have not previously bid for Iraqi licenses will apply through a new prequalification process announced by the Ministry. The areas on offer have not previously been explored but are part of the Ministry’s plan to optimize Iraq’s resources. The blocks on offer are in the table below: 

 Special Offer: Invest like Buffett, Slater and Greenblatt. Click here for details »

Asset Name Resource Type
Block 1 (Ninawa) Gas The first exploratory area is located in the province of Nainawa and the area is estimated with 7300 km 2 with hydrocarbon prospects (gas).
Block 2 (Ninawa & Al-Anbar) Gas The second exploratory area is located in the province of Anbaar & Nainawa and the area is estimated with 8000 km 2 with hydrocarbon prospects (gas).
Block 3 (Al-Anbar) Gas The third exploratory area is located in the province of Anbaar and the area is estimated with 7000 km 2 with hydrocarbon prospects (gas).
Block 4 (Al-Anbar) Gas The fourth exploratory area is located within the borders of Anbar province and the area is estimated with 7000 km 2 with hydrocarbon prospects (gas).
Block 5 (Al-Anbar) Gas The fifth exploratory area is located in the province of Anbaar and the area is estimated with 8000 km 2 prospects with hydrocarbon prospects (gas).
Block 6 (Al-Anbar & An-Najaf) Gas The sixth exploratory area is located between the provinces of Najaf & Anbaar and the area is estimated up to 9000 km 2 with hydrocarbon prospects (gas).
Block 7 (Al-Qadisyah, Babil, An- Najaf, Al-Muthanna & Wasit) Oil The seventh area is in the provinces of Qadisia, Babel, Najaf and Muthanna and the area is estimated with 6000 km 2 with hydrocarbon prospects (oil).
Block 8 (Diyala & Wasit) Gas The eighth exploratory area is located in the province of Diala & Wasit and the area is estimated with 6000 km 2 with hydrocarbon prospects (gas).
Block 9 (Al-Basrah) Oil The ninth exploratory area is located in the province of Basra and the area is estimated with 900 km 2 with hydrocarbon prospects (oil).
Block 10 (Al-Muthanna & Thi Qar) Oil The tenth exploratory area is located in the province of Muthanna & Thiqar and the area is estimated with 5500 km 2 with hydrocarbon prospects (oil).
Block 11 (An-Najaf & Al-Muthanna) Oil The eleventh exploratory area is located in the province of Najaf & Muthanna the area is estimated up to 8000 km 2 with hydrocarbon prospects (oil).
Block 12  (An-Najaf & Al-Muthanna) Oil The twelfth exploratory area is located in the province of Najaf & Muthanna the area is estimated up to 8000 km 2 with hydrocarbon prospects (oil).
Source: Evaluate Energy

Iraq’s Oil Future 

A push by the Iraq Oil Ministry to promote oil production shows Iraq’s determination to become major oil producing nation. With a vast amount of resources, a push to exploit major oil fields and interest from international companies, Iraq is heading in the right direction to reaching its 2017 production target. But before Iraq can reach this success, many challenges lie ahead. A history of wars and violence has left the infrastructure weak and in need of modernization and investment. Estimations on the reconstruction of Iraq’s infrastructure are as high as $100 billion (Source: EIA). Furthermore, tensions within Iraq as well as with neighbouring countries mean that companies will have to invest in heavy security, a costly and logistical nightmare. Extensive repair work is also required on existing fields that have been damaged in conflict and through poor management.  

Companies that have invested so far in Iraq have shown that the rewards outweigh the risk. Even the unfavourable no-bid deals whereby companies are paid for their work rather than entering into a production agreement, are being signed as companies see this as a way of establishing themselves with the ministry.  Companies that have previously bid for contracts, pre-qualify for the fourth licensing round. The fourth licensing round will close on May 19th, 2011. Pre-qualified firms will be announced in June, with further details on the acreage to be provided to bidders in August (Source: Evaluate Energy). IOCs have once again shown a keen interest in Iraq with the fourth bid round. 

Evaluate Energy tracks all Licensing rounds worldwide at www.evaluateenergy.com


Filed Under: Energy, Oil & Gas Producers, Iraq,

About the Author's Company

EvaluateEnergy Profile Image Promotional
Evaluate Energy

It’s like having a team of experienced oil and gas analysts working for you day and night – but at a fraction of the cost. You will receive: Up-to-the-minute oil and gas company financial and operating data going back to 1989, including detailed upstream FAS69 data from the SEC, finding… ...read more or visit website »


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


Do you like this Post?
Yes
No
5 thumbs up
0 thumbs down
Share this post with friends



Royal Dutch Shell plc (Shell) is an independent oil and gas company, based in the United Kingdom. It operates in three segments: Upstream, Downstream and Corporate. Upstream combines the operating segments Upstream International and Upstream Americas, which are engaged in searching for and recovering crude oil and natural gas, the liquefaction and transportation of gas, the extraction of bitumen from oil sands and converting it into synthetic crude oil, and wind energy. Downstream segment is engaged in manufacturing, distribution and marketing activities for oil products and chemicals, alternative energy (excluding wind), and carbon dioxide (CO2) management. Corporate segment represents the key support functions, such as Shell’s holdings, treasury and self-insurance organization. In January 2014, Royal Dutch Shell plc completed the acquisition of Repsol S.A.'s liquefied natural gas (LNG) portfolio outside North America. In June 2014, Shell sold 19% in Woodside Petroleum Limited. more »

Share Price (LSE)
2179p
Change
-84.5  -3.7%
P/E (fwd)
9.8
Yield (fwd)
5.6
Mkt Cap (£m)
143,100

BP p.l.c. (BP) is an integrated oil and gas company. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. The Company operates in two business segments: Exploration and Production, and Refining and Marketing. Its Exploration and Production segment is responsible for its activities in oil and natural gas exploration, field development and production; midstream transportation, storage and processing, and the marketing and trading of natural gas, including liquefied natural gas, together with power and natural gas liquids. Its Refining and Marketing segment is responsible for the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers. In July 2014, Rubis SCA acquired BP Plc's LPG business in Portugal. more »

Share Price (Full)
426.2p
Change
-11.7  -2.7%
P/E (fwd)
9.8
Yield (fwd)
5.9
Mkt Cap (£m)
79,861

Gulf Keystone Petroleum Limited (Gulf Keystone) is a holding company. Gulf Keystone is an independent oil and gas exploration and production company with operations in the Kurdistan Region of Iraq. The Company operates in three regional business units: Algeria, Kurdistan and the United Kingdom. The Kurdistan segment consists of the Shaikan, Akri-Bijeel, Sheikh Adi and Ber Bahr blocks and the Erbil office which provides support to the operations in Kurdistan. The United Kingdom segment provides geological, geophysical and engineering services to the Gulf Keystone Group. The Algerian segment consists of the Algiers office and the Group’s operations in Algeria. Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four exploration blocks in Kurdistan, including the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks. more »

Share Price (Full)
71p
Change
-2.5  -3.4%
P/E (fwd)
16.2
Yield (fwd)
n/a
Mkt Cap (£m)
653.4



  Is Royal Dutch Shell fundamentally strong or weak? Find out More »


5 Comments on this Article show/hide all

lowersharpnose 13th May '11 1 of 5
2

Where did you get 10.8 Bbbls for Shaikan?

Gulf Keystone used a P10 figure of 10.8 B bbls for Oil In Place at Shaikan in their last relevant RNS.

Did you use this figure by mistake or are we due some monster news?

 

lsn

 

| Link | Share
EvaluateEnergy 16th May '11 2 of 5
2

The figure in the table was meant to have a cell note attached which did not appear on the blog. The figure pulled by the analyst was the updated P10 oil-in-place value as stated in an April 14 press release (http://www.rigzone.com/news/article.asp?a_id=106144). As you mentioned the field is in early stages of appraisal so we have put in the resource estimate as an indication of where reserves could stand when a full reserves evaluation is complete. I have updated our blog to show a value of 4900 mln bbl which is the estimated P90 value as stated in the press release with an explanation of the resources estimates.

Company: Evaluate Energy
| Link | Share | 1 reply
lowersharpnose 16th May '11 3 of 5
1

Again, the 4.9 Bbbls is a P90 Oil In Place, not reserves (which is the column heading in your table)..

Presumably you are counting on a lot more oil being found at Shaikan.

| Link | Share
ManSiarad 16th May '11 4 of 5
1

I must confess that it seems rather odd to me that an article on 'New opportunities for IOCs' in Iraq doesn't mention Kurdistan once (apart from saying that the 'KRG' has a stake in one field.

Nor is there any mention of the difficulties arising out of the dispute between Baghdad/Ministry of Oil and the KRG on validity of contracts signed by the KRG.

Or a complete list of agreements in Kurdistan. The Dana Gas consortium is producing (gas), of course.

Since the focus is on the new licencing round (in iraq excluding Kurdistan), why include GKP and DNO, anyway?

All a bit of a muddle, IMO

| Link | Share
abbey8 30th Oct '11 5 of 5

In reply to EvaluateEnergy, post #2

Iraq is a target for a bright future to the oil companies , but NOT north of iraq , risky in term of permission from central iraqi goverment.

| Link | Share

What's your view on this article? to Comment Now

 
 
You are feeling neutral

Use the £ sign in front of a ticker to turn £VOD into Vodafone PLC

You can track all @StockoChat comments via Twitter


About EvaluateEnergy

Evaluate Energy is a provider of up to date and accurate oil and gas analysis for industry professionals. 



Stock Picking Tutorial Centre



Stock Picking Simplified

Stockopedia takes your stock picking to the next level with cutting edge Stock Reports & Screening tools.


Get started
or Take a Tour to find out more.