Thread: Archive Latest News - Think Tank - 03/11/07 - 31/12/07

Baghdad pushing Moscow to write off Iraq's debt

Iraq's Oil Minister Hussein al-Shahristani is claiming that the Iraqi government no longer considers LUKoil's contract to develop the giant Western Qurna-2 oil deposit valid. But it looks as if this is only part of the bargaining between Moscow and Baghdad over the issue of Iraqi sovereign debt.

Earlier, too, Iraq had said the LUKoil contract was null and void and the Russian company, under a new law on oil, would have to take part in all tenders under the general regulations. But this law is not yet passed: the Iraqi parliament has been unable to reach a consensus for more than a year now, and Mr. al-Shahristani appears to be doing no more than expressing the stand of the law's drafters.

This year, both Russian and Iraqi officials have begun to say at an unofficial level that they link the issue of LUKoil's rights to Iraqi oil with a writing off of Baghdad's sovereign debt to Moscow totaling $13 billion.

Russia, like all Paris Club members, has undertaken to pardon 80% of the debt in one stroke and 20% by degrees, but things got stalled over documents not being available to fulfill the obligation.

The reason why Russian-Iraqi relations are floundering is that neither side risks taking the first step.

Moscow is afraid of pardoning the debt in case the situation changes and the LUKoil contract is canceled, with the company getting nothing.

Baghdad is refusing to honor the contract unless there are guarantees the debt will be written off; and its ministers, by their statements, are provoking Russia to take the first step.

LUKoil yesterday said in a statement that it had received no notice of a Western Qurna-2 contract termination.

Earlier, LUKoil had repeatedly said the contract was sound because its cancelation was only possible at the Geneva International Court, to which no one had appealed.

RIA Novosti - Opinion & analysis - What the Russian papers say

Update

KRG: Two more Iraq Oil Deals soon

Iraq’s Kurdistan Regional Government will announce two more oil deals in coming days as it develops its oil sector with state-owned and private oil firms.

There has been no response yet from Baghdad after the KRG’s announcement yesterday of another six production-sharing contracts it has signed. The KRG’s semiautonomous region in Iraq’s north has the geological makeup for major oil and natural gas deposits but has 0.5 percent of Iraq’s proven oil reserves.

Baghdad has called the KRG’s oil deals illegal, saying it needs to wait for a national oil law to be approved. That law is being held up for lack of agreement as to whether the federal government or regions and provinces have the authority to sign deals, among other reasons.

KRG Natural Resources Minister Ashti Hawrami told United Press International in a telephone interview two additional oil deals, including at least one with “a Western company,” will be announced “in just a few days, maybe a week.”

According to a KRG map of exploration blocks, it has 28 either open or pending contracts.

The KRG has signed deals with a number of smaller, more risk-taking firms, including Hunt Oil of Dallas. Larger firms fear blacklisting from Baghdad, which will likely have the say-so on the majority of Iraq’s oil deals.

But Tuesday’s announcement of deals by the KRG shows the applicants for its deals are getting weightier. A subsidiary of MOL Hungarian Oil and Gas was part of two production-sharing contracts. India’s largest private oil company, Reliance Energy, and Central Europe powerhouse OMV, an Austrian firm, each signed two production-sharing contracts.

The KRG also awarded four “strategic blocks” to the Kurdistan Exploration and Production Co. and gave the discovered by not developed Khurmala oil field to the Kurdistan National Oil Co. Both KEPCO -- which will concentrate on exploration and production -- and KNOC -- an operator of discovered fields -- were newly formed under the KRG’s oil law but would send revenues to Baghdad to redistribute.

Hawrami said the companies “answer to the Council of Ministers in Kurdistan and is monitored and regulated by the Ministry of Natural Resources in Kurdistan, and is recognized by the Parliament in Kurdistan.”

International Security - Energy - Briefing - UPI.com

Update

Reliance Iraq Oil signing bonus $15M

IRBIL, Iraq, Nov. 7 (UPI) -- Reliance Industries paid a signing bonus of between $15.5 million and $17.5 million for oil contracts to explore and develop two Iraqi Kurdish blocks.

The amounts, reported by The Times of India, represent the first time concrete numbers have been made public.

Iraq’s Kurdistan Regional Government has announced another round of production-sharing contracts, deals Baghdad calls illegal, claiming the KRG’s unilateral moves are unconstitutional.

Reliance was among the firms announced Tuesday. It signed deals for two exploration blocks in the KRG area, which has little of Iraq’s proven reserves, but experts believe the geological structures will turn up large deposits when fully explored.

The contracts themselves have not been made public, but KRG Natural Resources Minister Ashti Hawrami said they fall in line with the model production-sharing contract it has made public via its Web site.

According to the “Kurdistan Region Risk/Reward Commercial Guidelines for Exploration,” signing bonuses are “required for all Blocks, Bidders to propose their best amounts.”

When asked in October, following the announcement of two additional production-sharing contracts, Hawrami told United Press International the amounts of the signing bonuses, paid to the KRG, are “variable, meaningful and important enough to ensure that the contractors are serious to deliver their responsibilities under the contract.”

When asked to clarify, Hawrami said it was “confidential ... but designed to get ongoing commitments of the contractors.”

International Security - Energy - Briefing - UPI.com

Iraq Awards 4.5 Million Bbl Kirkuk Oil In 6th Tender - SOMO

LONDON -(Dow Jones)- Iraq's State Oil Marketing Organization, or SOMO, Wednesday awarded its sixth Kirkuk crude oil tender to four companies, selling them 4.5 million barrels, a senior SOMO official said.

The four winning companies are Spain's Compania Espanola de Petroleos SA ( CEP.MC), or Cepsa, Royal Dutch Shell PLC (RDSA), Repsol YPF SA (REP) and ExxonMobil Corp. (XOM), the official said.

The official gave no details on prices.

Iraq Awards 4.5 Million Bbl Kirkuk Oil In 6th Tender - SOMO

THE RECORD ON CURVEBALL

Declassified Documents and Key Participants Show the Importance of Phony Intelligence in the Origins of the Iraq War

The Record on CURVEBALL

Update 2 - OMV

OMV subsidiary signs PSCs with Kurdistan

OMV Petroleum Exploration GMBH, a subsidiary of OMV AG, has signed on as operator under two production-sharing contracts for two exploration blocks with the Kurdistan regional government (KRG) of northern Iraq.

The blocks, Mala Omar and Shorish, cover 800 sq km nearby KRG capital city, Erbil. Both blocks are believed to offer significant potential for major oil discoveries, company officials said.

The company's entry into the Kurdistan region "strengthens our exploration and production core region [in the] Middle East," said Helmut Langanger, OMV executive board member responsible for E&P. Work on the awarded blocks will commence in 2008 with the acquisition of 2D seismic and will be followed by the drilling of an exploration well in each block over the next 3 years.

OMV has holdings in 20 countries structured around six core regions. Its production volume is 322,000 boe/d. Its reserves at the end of 2006 were 1.3 billion boe.

In October, Heritage Oil Corp. said it signed a PSC with KRG for an exploration license covering the Miran block in the southwest section of the Kurdistan region of Iraq. Heritage will begin geological work immediately and could start a high-impact exploration drilling program in 2008 (OGJ Online, Oct. 9, 2007).

Heritage's 1,015 sq km license area contains the very large Miran structure, which as expressed at surface, comprises an area of about 500 sq km and may have three separate culminations.

KRG, Hunt Oil Co. of the Kurdistan Region, and Impulse Energy Corp. recently signed a PSC covering the Duhok, Kurdistan, area of Iraq (OGJ, Oct. 1, 2007, p. 36). Hunt Oil came under pressure from the US government as a result. A US Embassy spokesman in Baghdad warned that Hunt and a handful of small "wildcat" companies that have signed similar deals could find themselves in a legal battle between the Iraqi federal government and the northern, semi-independent Kurdistan region.

"We think that these contracts have needlessly elevated tensions between the KRG and the government of Iraq, who both share a common interest in the passage of national legislation," the official said.

OMV subsidiary signs PSCs with Kurdistan - Oil & Gas Journal

Update 2 - MOL

Hungary MOL signs contract with Kurdistan on Akri-Bijeel exploration block

Hungarian fuels group MOL has announced on Wednesday that it has signed a Production Sharing Contract with the Kurdistan Regional Government of Iraq (KRG) on an exploration block in the Kurdistan Region. The Akri Bijeel Block - with area extent of 889 sqkm - is situated about 50 km north of Erbil, the Region's capital.

MOL has a 100% paying interest and an 80% participating share with a 20% Regional Government carried share in the block.

The planned work programme includes 200 km of high quality 2D seismic acquisition and the opportunity of drilling an optional exploration well. In case of successful exploration activity good quality oil production is expected.

“Iraq is one of the most prolific hydrocarbon regions of the world and MOL has been screening opportunities since the mid '90s. The Kurdistan Region of Iraq has well established and properly functioning government institutions, including its own army that guarantees law, order and security, and its own Parliament and Government (Kurdistan Regional Government, KRG) in full conformity with the Iraqi Constitution," MOL said in a statement on the website of the Budapest Stock Exchange (BSE).

The Kurdistan Oil and Gas Law (passed unanimously by the Kurdistan Parliament on 6 August 2007) and model PSC facilitate international oil companies to conduct transparent negotiations with the KRG under a clear legal framework.

“The Middle East is one of the main focus areas of MOL's international upstream activity. The geological features of the Kurdistan Region are under-explored, for previous political reasons," said Zoltán Áldott, Executive Vice-President of the Exploration and Production Division.

“The Kurdistan Region therefore provides a unique opportunity for MOL to further increase its Middle East portfolio with an attractive exploration portfolio element. MOL is proud that in ****e of the harsh competition it was able to secure its position in the region."

portfolio.hu - Online Financial Journal

Iraq Invites Bids To Sell 300,000 B/D Kirkuk Oil - Official

Iraq has invited 16 European and U.S. oil companies to bid for 3-month term contracts to lift crude from its Kirkuk oil fields in the north via the Turkish Ceyhan terminal, a senior Iraqi oil official said Thursday.
Companies are expected to submit bids to SOMO by Friday, he said. SOMO is hoping to allocate around 300,000 barrels a day in term contracts, he said.

The official also said Iraq's State Oil Marketing Organization, or SOMO, is about to conclude a three month term contract with Turkey's refiner Tupras. He didn't say how much Tupras would lift.

Earlier Oil Minister Hussein al-Shahristani said SOMO would allocate for Tupras only limited quantities.

Acts of sabotage had prevented Iraq from exporting its crude oil from northern oil fields since the U.S.-led war against Iraq in 2003 barring few days. But the past two months have seen more reliable supplies, allowing Iraq to sell some 20.1 million barrels of Kirkuk crude in competitive auctions.

SOMO would continue selling Kirkuk crude through tenders until term contracts are signed, the official said.

Nasdaq 100 Flash Quotes

Former UN weapons inspector fears secret US plan to stay in Iraq

Former chief United Nations weapons inspector Hans Blix said Wednesday he feared the United States had a secret plan to keep troops in Iraq for an extended period.

Blix, who led a fruitless search for weapons of mass destruction in Iraq and argued against the 2003 US-led invasion, said it was possible that Washington wanted to stay in Iraq to ensure the safety of oil supplies.

"One fear I would have is that the US has a hidden thought to remain in Iraq," Blix told national radio.

"One reason why they wanted in was that they felt they must leave Saudi Arabia. After the Gulf War in 1991, they left their troops in Saudi Arabia to protect pipelines," he explained.

"And when they felt they could no longer stay in Saudi Arabia, Iraq was the next best place because it was more secularized than Saudi Arabia and had the second biggest oil reserves in the region."

Blix said that by staying in Iraq, the US military would also be able to keep a close eye on neighboring Iran - a country he said was treated differently to another state with nuclear ambitions, North Korea.

"North Korea is promised diplomatic relations with the US and Japan if they abandon [their] nuclear program and they're also promised a guarantee against attacks ... Iran has nothing of that," he said.

Blix, who is in Australia to receive the Sydney Peace Prize, was also critical of Australia's military role in Iraq.

In an interview with The Australian newspaper, Blix said the war was a "disaster" and the only positive was the elimination of Saddam Hussein.

"The aims of the war were, first of all, to eliminate weapons of mass destruction that did not exist; secondly, to establish a democracy - and what they ended up with was anarchy; and thirdly, they wanted to weed out Al-Qaeda, which were not there but which came there."

"What it goes to show is that although tyranny is horrible, anarchy can be even worse than tyranny," he added.

Former UN weapons inspector fears secret US plan to stay in Iraq | Iraq Updates

President Talabani Receives U.S. Ambassador Ryan Crocker

President Jalal Talabani received yesterday the American Ambassador to Iraq Ryan Crocker, accompanied by Ambassador David Satterfield and Mr. Bred McCork. They discussed in the meeting the political process and the recent challenges and the best steps for solving the problems.

They stressed the necessity of activating the articles of the five point statement on the cooperation between the Presidency Council and the Prime Minister to achieve the national reconciliation and reforming its government for issuing the basic and important laws.

They also discussed the tensions on the Iraqi-Turkish borders and the ways of solving this issue to achieve stabilization and development in the area.

President Talabani and the American delegation stressed improving the bilateral relations between the two countries.

PUKmedia :: English - President Talabani Receives U.S. Ambassador Ryan Crocker