June 20, 2012

Iraqi Kurdistan: More Oil Companies to Come

Two more major oil companies are moving to work in Iraq Kurdistan according to Natural Resources Minister Ashti Hawrami, targeting growth in output to reach 1 million bpd by 2014-2015.

Below is article published by Reuters:

Iraq's autonomous Kurdistan expects more oil majors to follow Exxon Mobil Corp in the next few months in striking deals in the region, where oil shipments will resume, its natural resources minister said, despite a dispute with Baghdad.

The U.S. company became the first oil major to move into the northern Kurdish region in mid-October when it signed a deal with the Kurdistan Regional Government (KRG).

"The market is very buoyant in Kurdistan. We have a lot of majors circling around looking at new PSCs (production-sharing contracts) and certainly mergers and acquisitions," Natural Resources Minister Ashti Hawrami told an energy conference in London on Tuesday [19 June 2012].

"So in the next few months, we expect to see another two or three major companies coming and working in Kurdistan."

French major Total is looking to secure a package of exploration blocks in Kurdistan, and Norway's Statoil is also looking closely at KRG exploration blocks, industry sources have said.

Exxon's deal, involving six blocks, angered the Iraqi central government in Baghdad, which holds that any oil contracts signed with Kurdistan are illegal. Arbil and Baghdad are locked in a long-running feud over oil and land.

Exxon is keeping a low profile in Kurdistan, but industry sources said the company has issued a tender for drilling rigs.

Exxon declined to comment.

The KRG halted oil exports in April due to a payment dispute with Baghdad. Before then, contractors in Kurdistan were producing and exporting about 200,000 barrels per day (bpd), said Hawrami, who was adamant shipments would resume.

"The oil will flow ... regardless of an agreement, and I infinitely prefer an agreement," he said.

"When you have 1 million barrels a day stranded, it will find its way to the market despite the political haggling."

About 60,000 bpd is still being supplied to the domestic market. Industry sources say Arbil is prepared to start sending crude by truck to Turkey soon, possibly as part of a crude-for-products swap.

Kurdistan holds an estimated 45 billion barrels of oil reserves, and 25 to 30 exploration wells are now being drilled by contractors, the minister said. By 2014 to 2015, output should grow to 1 million bpd, he said.

"This is guaranteed and doable. We can achieve it if we eliminate the political obstacles in front of it," Hawrami said.

"We expect more discoveries this year to bring us to our new target of 2 million barrels per day by 2019."

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