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Iraq Oil Exports Decrease to 2.62mn bpd in November

by admin ~ January 23rd, 2013

While several new oil contracts were struck between Iraq and various major oil companies looking to buy Iraqi dinar earlier this year – which subsequently led to improved oil production – reports released by the ministry indicate a minor decrease in the number of barrels exported per day.

Iraq’s oil exports dropped to 2.62 million bpd in November from the 2.622 million bpd of October. The average selling price for Iraqi crude oil for the month was $104.35 per barrel.

With roughly 76.8 million barrels exported for the month, revenues for November dropped to $8.2 billion, down from the $8.578 billion made during October, wherein the per unit price was tagged slightly higher at $105.51. This shortfall is likely to harm the treasury’s ability to buy Iraqi dinar.

According to oil ministry spokesman Asim Jihad, various oil fields were tapped in order to reach the daily output rate of November, wherein the biggest source was traced to the southern oil hub Basra, which rendered approximately 2.194 million bpd. Northern fields around Kirkuk contributed 426,000 bpd, which included 10,000 barrels trucked to Jordan.

As of today, this Arab nation is still recovering from the blows dealt by conflict, sour relations (which are in the process of healing) with other countries and staggering sanctions. Nevertheless, since Iraq’s economic future is highly dependent on its oil industry, the Middle Eastern country is looking to substantially boost its export productivity and sales as soon as possible.

Iraq is yet to tap its true potential in oil export productivity, as the nation boasts 143.1 billion barrels of oil and 3.2 trillion cubic meters of gas – both of which are amongst the biggest across the globe. Its current number of infrastructural developments, manpower, and investors pales in comparison to other nations with significantly smaller sources of oil and gas.

Within the next three years, Iraq is planning to double its oil production levels. So far, the country has managed to surpass the 3 million bpd production level for the first time in three decades, which technically makes it OPEC’s second largest oil producer.

Iraq to Produce 6.1M bpd over the next Seven Years

by admin ~ January 21st, 2013

The U.S. may be aiming to become the world’s largest oil producer by 2017, but several industry experts believe that the Land of Liberty could have a tough time doing so as Iraq – the best place to buy Dinar and the world’s third largest oil exporter and OPEC’s second biggest oil producer – could very well snag the top spot.

Recent reports made by the International Energy Administration (IEA) state that oil production within the Middle Eastern country is set to double to 6.1 million barrels per day (bpd) over the next seven years, making the country a very lucrative place to buy Dinar. These figures will comprise roughly 45 percent of the predicted growth for global oil output through 2020.

Despite the fact that U.S. troops have already been pulled out, massive opportunities presented by the significantly underdeveloped sector of Iraq are far too great for international oil and gas companies – including Chevron, Exxon, Lukoil and TPAO – to simply back off.

However, due to the giant profitability for Iraq and investors to gain from the production and exportation of this product, internal conflict amongst governing bodies has developed as well. “Iraq’s massive 143 billion barrels in oil reserves has sparked a power struggle between Baghdad and the semiautonomous Kurdistan Regional Government (KRG),” explained Matthew Carr, commodities specialist at Investment U, earlier this year.

“The central Iraq government and KRG are competing for companies to come in and develop resources. But there’s tension brewing as Baghdad doesn’t formally recognize contracts international oil companies ink with the KRG Ministry of Natural Resources.”

The central government at Baghdad has threatened various oil companies dealing in Kurdistan, saying that they’d bar them from participating in other oil deals outside of the region. Regardless, a handful of major industry players still chose to stick with the KRG, mainly because of the more lucrative contracts they were capable of offering.

While the central governing body pays foreign organizations a service fee for every barrel produced, the KRG gives these companies a percentage of the profits rendered from oil sold within Kurdistan.

After months of threatening, it seems that the central government has finally decided to put an end to their onslaught, stating that it’ll “start making payments to international oil companies hoping to buy Dinar in the northern Kurdish region.”

Smaller companies — like Genel Energy and DNO International — with big, or even the biggest, stakes with the KRG are now placed in a better position for profit. They can now either expand their territories in Kurdistan more freely, or sell it for killer prices to big players dealing with the central government.

Iraq’s Potential To Become The World’s Largest Oil Exporter

by admin ~ December 19th, 2012

There’s no doubting the Iraqi Dinar newsreports which tout Iraq’s oil reserves as one of the largest in the world today. Considering how this Middle Eastern country’s economy is almost entirely oil-based in its own right, people would expect that the Iraq has giant infrastructures and labor forces working on its oil fields round the clock to spin out massive supplies of oil.

Surprisingly, this isn’t the case, as observers of the Iraqi Dinarcurrency, who also habitually keep an eye out for oil-related activities, say that this nation is hardly even scratching the surface of its true potential. There aren’t enough developers, infrastructures, or a large enough workforce at present to drastically bump up production to the levels seen amongst top oil producers.

To put things in perspective, Iraq had an estimated 2000 wells spread throughout the country back in January of this year – a figure that hasn’t changed much over the past ten months. On the other hand, the state of Texas had more than a million oil wells – despite the fact that Texas’s oil reserves pales in comparison to that of Iraq — during the same period of time.

Of course, the Iraqi nation intends to significantly increase their productivity over the course of time, as the Ministry of Oil has made several announcements regarding plans to increase output to 12 million barrels per day (mbpd) on or before the year 2017. If so, the 300 percent increase could finally secure this country the number one spot for largest oil exporter, leaving the current reigning champion, Russia, in the dust.

On the other hand, the US Energy Information Administration (IEA) came up with a different prediction, saying that the country would most likely increase its output to 6.1 mbpd by 2020.

Whichever of the two predictions come true, one thing is for certain: massive expansion projects like the two described earlier will require extensive infrastructures to be created, as well as a significantly larger workforce, which could amount to over $200 billion (over 233 trillion when converted to Iraqi Dinarcurrency.)

However, according to Iraqi Dinar newsreports, oil companies have to do more than just come into the Middle Eastern country armed with billions of dollars. Since most of the U.S. troops have been pulled out, corporations have to be extra careful not to further the rift between the West and Iraqis.

Iraq’s Energy Sector To Undergo A Green Facelift

by admin ~ December 17th, 2012

Alternative energy sources have long been adopted by various developed countries over the past few decades. This in turn has helped these nations reduce annual expenditures on electricity, as well as significantly reduce pollutants released into the air from tradition power sources such as coal plants. That being said, Iraqi Dinar news reporters say that their Middle Eastern motherland may be adopting the same cleaner and greener approach first-world nations are currently integrating.

The ministry announced last month that it plans on spending $1.6 billion (roughly 1.9 trillion when converted to Iraqi Dinarcurrency) on solar and wind stations to be spread across the country. The project — which is expected to reach completion over a span of several years — will add approximately 400 megawatts of electricity to Iraq’s national grid.

The green facelift given to Iraq’s energy sector shall serve a two-fold purpose, wherein one is to deal with the issue of frequent blackouts inconveniencing locals and businesses across the nation; while the second is to bring forth improvements to environmental conditions.

A ministry official says that Iraq is an ideal candidate to adopt a solar and wind-based power system considering how there are an abundance of open deserts spread all over the entire country.

“We are confident that by entering into these agreements we will be able to provide more energy to meet the population’s needs as well as boost our interest in renewable energy as oil stocks are beginning to see shortfalls here and abroad,” said the ministry official in an interview with the media.

Observers, especially those living within the electricity-stricken country, say that plans to boost power supplies couldn’t have come at a better time. Iraq’s Dinarreporters say that ever since the 2003 American-led invasion of Iraq to oust Saddam Hussein, the nation has been struggling to keep up with the population’s demand for electricity, managing to generate a mere 8,800 MWs of the estimated 14,000 MWs required.

Laith al-Mamury, the ministry’s planning and studies department, says that Iraq has recently invited around twenty-five giant corporations to manufacture and install solar and wind projects throughout the nation.

According to Iraqi Dinar newsreports, the ministry believes that the substantial boost in alternative power sources will lead to additional energy for cheaper rates, in turn giving better shape to the energy sector’s investment nature, and ultimately stimulating its growth over the next several years.

Iraq and South Korea Strike Deal on Pipelines

by admin ~ November 29th, 2012

Baghdad has undertaken many projects to help develop its economy’s main source of income, oil exportation, along with the help of investors. According to the latest news reports, Iraq has recently signed a multi-million dollar deal with Korea Gas (KOGAS) which describes the construction of two giant gas pipelines within the country’s northern area.

South Korea’s KOGAS – the largest liquefied natural gas import company across the globe – will adhere to several terms stipulated within the contract worth $125.7 million, all of which revolve around the construction of two 110-kilometer pipelines. The new infrastructures shall link the oil-rich city of Kirkuk to the industrial city Beiji, wherein liquid and natural gases shall be transported.

Upon conclusion of this development, which is scheduled for completion by the year 2014, Iraq’s daily oil exportation is expected to increase notably. That being said, this isn’t the first project wherein the state-run oil company played a significant role in Iraq’s energy sector. According to reports, KOGAS is currently developing another western gas field within close proximity to the Syrian border.

In addition, it’s also teaming up with Turkish Petroleum Corporation (TPAO) — one of Turkey’s most important industrial countries — as well as Kuwait Energy to build another gas field within Iraq’s eastern region.

As of today, this Arab nation is currently producing roughly 3.4 million barrels a day, while its daily exports averaged at 2.6 million barrels last month. Much of these production and export statistics are attributed to the fact that Iraq has awarded 15 gas and oil contracts over the past four years. Leaders of this Middle Eastern country also plan on significantly raising their oil production levels to five or six million barrels daily by 2015, and nine to ten million barrels per day by 2020.

On the other end of the spectrum, rumors on Exxon Mobil Corp. say that the oil giant is planning to pull out from its West Qurna Phase 1 project proposed in Basra, which was expected to see the extraction of over 8.6 billion barrels.

Conversely, Deputy Oil Minister Ahmed al-Shamaa said that his ministry wasn’t informed regarding the speculated intentions of Exxon, nor has the oil corporation notified the government about these plans. While several news organizations sent reporters to verify the validity of these rumors, Exxon refused to comment on the matter when interviewed in regards to its speculated intent to leave West Qurna.

Reshaping the Global Energy Landscape with Iraq’s Oil Product

by admin ~ November 15th, 2012

Last week a major study was published with the International Energy Agency reconfirming what Washington has been suspecting all along:  Iraq is likely to reshape worldwide energy landscape in the coming years, thanks to the country’s vast oil reserves that remain untapped.  However it is unknown whether Baghdad will be able to capitalize this opportunity.  The stakes remain high – both for the future of the country and the worldwide economy.

Even with the decades-long bloodshed and turmoil, Iraq has become a major supplier of oil worldwide.  The country can produce about 3 million barrels of oil per day making it the third-largest oil exporter in the world.  Western-sanctioned Iran, on the other hand is only able to produce half the amount of what Iraq can produce, whose oil wells are able to put out twice as much as their 2003 record when the Iraq War broke out.

The IEA believes that Iraq may be able to double its latest output in 2030s and surpass Russia as second-largest exporter of oil worldwide.  This is not a fat-fetched prediction.  Iraq’s oil reserves remain as fifth largest worldwide and gas reserves remain as thirteenth largest.

Compared to other leading oil-producing countries, the territory of Iraq remains unchartered.  Little is known of the country’s geology and there is a possibility that most of it may hold significant amount of oil.  Before 1962, the area outside the Kurdistan region has already been explored.  With today’s excellent technology and increased oil prices, there is no doubt that a vast number of new reserves are waiting to be discovered soon.

Getting the oil to the market will be difficult, though.  There are several roadblocks that need to be removed.  First is the infrastructure.  There are inadequate export terminals and pipelines to transport the oil to the tankers situated offshore.  Improvements on the government should also be done like building the country’s legal processes and regulatory framework.  Logistics problems also need to be addressed like coordinating publicly-traded Western oil firms, state-owned companies, Iraqi bureaucrats, as well as various service providers.  Aside from these, security challenges are also evident.  Violence may have declined in the country in the last 5 years however vital infrastructures and energy personnel will still need protection.

The country would be able to achieve substantial economic profit from the energy boom.  As estimated by IEA, a cumulative amount of $5 trillion could be added to the country’s economy in the next two decades with Iraq’s oil exports and this is referred to as the transformative opportunity.  Iraq’s GDP would be 5x more if this projected growth materializes.  By 2035, Iraq’s economy per capita would be at par with the present Brazil.

Risks are present however.  Revenues from oil products can also pose more problems for the country than solutions.  Improper reinvestment of the black gold may feed militarism and corruption, make the country vulnerable to abrupt commodity prices fluctuations, or cause havoc on the nation’s economy.  A flourishing gas and oil industry is not enough for Iraq’s growing population, competitiveness must also be observed in other sectors.  Until these issues are addressed, the vast riches lying below the ground will take time to arrive.

American consumers can benefit from Iraq’s ramped up oil production.  The dramatic rise of the oil production in the US has contributed a lot to the global supplies however Iraq is likely to rise as the biggest source for new oil in the next couple of decades.  The Iraqi oil will play a crucial part in feeding the growing worldwide demand.

Iraq sits in its unique position, which can help loosen the serious pressure felt in the worldwide oil market.  Only time can tell if the country has the capacity to achieve its goals or not.

Iraq and Its Aim to Raise Energy Output

by admin ~ November 12th, 2012

Iraq has plans of doubling its energy production in a couple of years.

The country hopes to increase its overall power plant capacity ranging from 9,000 megawatts to 20,000 megawatts by 2014 according to Iraq’s minister of electricity, Karim Al Jumaili with the first phase set to be accomplished next year.

Jumaili stated during a Dubai energy summit that the challenge when it comes to increasing energy in the country is the fuel and the time.

At present, the gap around 5,000MW between energy supply and demand causes the intermittent blackouts in the country especially during summer when the weather is hot.  Energy use for the air-conditioning units peaks during summer and poses a threat to restrain the country’s economic growth.

Upgrades for the country’s power plants have been put on hold since war broke out in Iraq in 1991.  According to Jumaili, the upgrades were initiated in 1991 but had to be stopped due to wars and several other things.  Currently, the country is trying to restart the upgrades.

Minister Jumaili refused to provide the total cost spent on the newly-built infrastructure however considers the infrastructure programme as vast.  The project includes plan for renewable-energy, which will cost the country US$1.6 billion or Dh5.87bn as estimated by some of Iraq’s electricity officials.  The plan will have the capacity of 400MW.

Several companies received invitations for the bidding of the first project, which is a solar plant of 50MW.  The construction of the plant will cost $200 million.  The project’s timeline will include construction by next year to be followed by a 150mw-plant the year after.

The core of the said programme however is the expansion of its gas-fired generator fleet, which will go along with the Iranian gas pipeline start-up that is projected to be finished the following year.

Jumaili stated that the construction of the pipeline between Iraq and Iran would probably be completed in the next 4 to 6 months.

The Royal Dutch Shell-led project worth $17bn is also expected to add to the country’s gas supply.

According to the minister, a 5,000MW increase will come from converting the older plants into combined cycle units.  The project will use waste heat in generating additional power.

Baghdad’s central government struggled to meet the oil demand while the country’s northern Kurdistan region races ahead.

Last year, the Kurdistan region was able to generate 20 hr/day of power compared to 4hr/day from the rest of the country.

Kurdistan made some plans to market the region’s electricity to nearby Iraqi provinces.

Sharjah’s Dana Gas, Abu Dhabi National Energy Company (Taga), and other foreign investors have plans to join the energy sector in southern Iraq.

Taga thought about building energy plants in 2008 to provide power supply to the local communities.  Currently, Taga hopes to construct power stations to offer major oil companies the needed electricity for their pumping and drilling operations.

According to Frank Perez, head of Taga’s water and power, working with major oil companies is a lot easier than building power projects since the companies have their own security protocols and are already in full operations.

The IEA’s Perspective On Refineries In Iraq

by admin ~ November 5th, 2012

During the late 1980’s, Iraq’s refining industry was one of the pioneers in the entire region, and played a significant role in contributing to the country’s economic and technological advancements. While things remained that way for the first phase of succeeding years, the Arab country was eventually subjected to years of war and sanction.

The unfortunate events eventually took its toll on the existing refineries’ ability to produce marketable products which match the constantly evolving specifications demanded in the worldwide market, as well as stunt the local industry’s potential for growth.

Based on a report released by the International Energy Agency (IEA), Iraq’s refining capacity as of today is 960 thousand barrels daily (kbd), yet is operating at 670 kbd since June 2012. Moreover, statistics indicate that all refineries are currently operating at less than 60 to 70 percent of their total capacity.

Although the IEA’s main interest is tied to the sheer volume of oil Iraq can deliver in the upcoming years, and their assessment may be less detailed in comparison to those within the upstream industry, the organization’s findings reveal undeniable truths about what’s really going on.

“The range of oil products produced by Iraq’s refineries falls well short of its domestic needs and of the possibilities afforded by modern, more complex refineries,” said an IEA representative. Experts believe that modernized, technologically-advanced units could have been achieved years ago if only ample maintenance was observed with the hydrocracking unit in Baiji refinery.

The efficiency of refinery processes would have drastically improved if developers stuck to their plans on including conversion units in the Baiji and Basra refineries nine years ago. Furthermore, it’d of also helped boost the production of light products – liquefied petroleum gas, gasoline, kerosene and diesel – at the expense of excess fuel oil, while simultaneously reducing crude oil requirements.

Unfortunately, these plans remained nothing more than paperwork on the desks of those in charge. Negligence to implement these strategies for improving refinery capabilities meant surplus fuel oil continued to mix with crude oil export streams, which in turn lowered its overall crude quality. And since proper control wasn’t observed during the mixing process, crude quality varied daily, which had negative impacts on its market price.

To resolve the issues at hand, experts suggest that the Ministry of Oil should speed up its movement to expand and improve refineries as soon as possible. They also recommend the simultaneous construction of at least two large-scale complex refineries as well.

Oil Field Contracts Extended In Southern Iraq

by admin ~ November 2nd, 2012

Iraq’s oil industry continues to grow as several oil companies were granted extensions on their contracts to help the Middle Eastern country achieve its goal geared towards the rehabilitation of damaged oil infrastructures, as well as drastically improve this sector’s production and export efficiency within the succeeding years.

Amongst the various corporations involved with this plan, WorleyParsons – an Australian provider of numerous professional services rendered to resource, energy and complex process industries — was one company that was granted permission to continue working hand-in-hand with its partners within Southern Iraq.

“We are pleased to be able to continue our involvement in the reconstruction and development of Iraq’s oil and gas infrastructure. We understand the significance of the Rumaila development to the regeneration of the Iraqi economy, and we will work closely with the partners in the Rumaila development, BP, PetroChina and SOMO to create the maximum value over the life time of the field,” said WorleyParsons’ CEO Andrew Wood.

The contract extension was only recently awarded and is said to amount to $90 million. The agreement requires the company to continuously render procurement, engineering and management services, which in turn should boost production in the giant Rumaila oilfield situated within Southern Iraq.

This consortium of companies led by British Petroleum (BP) Iraq was materialized back in November of 2009, and encompasses State Oil Marketing Organization and PetroChina. The Technical Service Contract (TSC) – which was made between the consortium and South Oil Company of Iraq – requires the conglomerate to triple output from Rumaila to 2.85 million barrels per day over the span of six years.

At the moment, Rumaila, which was discovered back in 1953 by BP, stands as the fourth largest oilfield across the globe with an estimated 17 billion barrels of oil within its reach. Moreover, its vast supply of oil amounts to twelve percent of Iraq’s entire oil reserves.

It should also be known that the massive oilfield is located 32kms away from the border of Kuwait. Back in 1990, Iraq accused its neighbor of slant drilling, and was one of the many speculated reasons as to why Leaders of Iraq decided to send in its military forces to invade Kuwait.

Experts believe that once BP and its partners are done with the project, Rumaila will immediately become the world’s second largest oil producing field, making it accountable for 7% of OPEC production, 10% of Middle East production, and even 3% of global output.

Iraq Oil Exportation Need To Be Kept Realistic

by admin ~ October 23rd, 2012

Since Iraq’s economy is highly dependent on exporting oil from its massive reserves, seeing a bundle of new Iraqi Dinar news reports on oil companies expanding their operations to other regions of the country, or even new corporations joining the game, isn’t surprising at all.

When this Middle Eastern country engaged oil and gas licensing during 2009 to 2010, the criteria for awarding contracts included several elements, such as plateau production capacity for each field in line for development.

Due to this criterion, oil companies had to set the stated rate as the maximum possible, regardless of Iraq’s needs, current status of the international oil market, and most importantly, the overwhelming challenges groups would have to tackle in order to reach the capacities to begin with.

With the abundance of giant oil enterprises placing bids for almost every contract the Iraqi government put up for grabs, it was only natural for leaders to be overly excited with the hefty revenues to be generated from their business.

Distracted with the huge profits to be made, which could place its economy in a commendable condition, Iraq made a statement that it’d be producing more than 12 million barrels a day (mbd) by the year 2017.

Considering the magnitude of this daily targeted output, and how it’d entail a “wholesale” of 66% of all reserves to western oil companies, while depriving the roles played by local corporations, it wasn’t surprising that even Iraqi experts immediately became concerned, and urged leaders to revise their game  plans.

To reach an output rate this big by 2017, Iraq needs to build more than 6,000 wells, enormous surface facilities, innumerable pipelines, as well as 6,000 square kilometers of 2D and 3D seismic surveys. Keeping this in mind, and taking a look at Iraq’s current logistics and manpower, the task would be tremendously difficult to carry out.

Moreover, demand for oil in the world market today is only 89.5 mbd, and is predicted to only increase to 95 mbd by 2017. That’d mean an oversupply of merchandise, wherein most of these excess would only stay idle. In addition to this, the excess supplies would negatively impact the selling price per barrel, therefore, working against the interests of all oil companies.

Fortunately, Dinar news reports say that the Ministry of Oil in Iraq recently revised their target output to 9 mbd by 2020.

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