Iraq Energy Sector-
Reality & Expectations
Presentation delivered before
Brussels Energy Club
11 Sept 2014
Ahmed Mousa Jiyad
Development Consultancy and Research
Norway
[email protected] Tel: (+47) 5659 5699
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Acknowledgment & Disclaimer
I am thankful to Brussels Energy Club, Dr. Marat Terterov
and BEC’ colleagues for the kind invitation and for
profoundly helping with the necessary logistics.
The contents of the presentation are my own responsibility
and thus do not represent the views and positions of any
entity referred to in the presentation and/ or involved
directly and indirectly in organizing this event.
This contribution is for public knowledge and thus it is not
intended to and should not be construed as legal
recommendation and/or advice.
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Focus & Agenda
Petroleum Sub-Sectors (O & G)
Exploration
Development & Production
Refining & Downstream
Export Outlets & Market Configuration
FDI: Participation, Promotion and Protection
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Existential Threats & Challenges IS/ISIS- ”Da’esh”
FG-KRG Politics
Logistics, Infrastructure and Human Resources
Exploration: Augments Petroleum Proven Reserves
Current Proven Reserves: 143/150 bbl; 66 oilfields;
65 %
28 %
7 %
Oil in Place Reserves Remaining Proven Reserves Accumulated prod., at 1/1/2010
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Iraq is the least explored major hydrocarbon
resource basin in the Middle East; has high success
rate over 70%
Exploration Program & Investment Allocation
in MoO Plan 2011-14
Exploration Program :
3 phases:
- Hold the BR4;
- Launch massive exploration operations throughout the country using national efforts and capacity;
- Drill 12 (10) exploration wells (in other areas) across the country
0
50
100
150
200
250
1 2 3 4
Plan's Year
Billio
n ID
s
18.6%
22.4%
26.8%
32.2%
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Block
No.
Governorate/ Province
Area (km2) Gas Oil
1
Nainawa
7300
2
Nainawa and Anbar
8000
3
Anbar
7000
4
Anbar
7000
5
Anbar
8000
6
Anbar and Najaf
9000
7
Anbar, Babil, Najaf, Muthanna, Wasit
6000
8
Diyala and Wasit
6000
9
Basrah
900
10
Muthanna and Thiqar
5500
11
Najaf and Muthanna
8000
12
Najaf and Muthanna
8000
Total (km2)
52300
28400
Percentage of areas’ grand total
65%
35%
Areas Grand Total (km2)
80700
B4: 12 Exploration Blocks
Reality of exploration sub-sector
There are no credible evidences that 2011-14 exploration program has been fully executed;
No new exploration program has been adopted and announced by MoO;
Only 4 (Blocks 8G; 9,10,12O) out of 12 exploration blocks offered in BR4 were concluded;
Block 8 (Pakistan Petroleum Limited): no activity observed
Block 9 (Kuwait Energy Corporation (70% and operator) and Dragon Oil (30%)): -
completed an environmental impact assessment and environmental baseline
studies; - de-mining began June 2014; - Drilling exploration well began July
2014.
Block 10 (LUKOIL Overseas (the Operator) – 60% and Japanese INPEX Corp. – 40%):
2D seismic survey began in April 2014.
Block12 (Bashnift Russian (JSOC) (70%) & Premier British (PREMIER OIL)(30%)):
Linear 2-D work and 850 km2 of 3-D seismic should have begun in July 2014.
Second exploration blocks bid round involving 10 blocks was announced in March 2013 but then
put on hold!
Current security situation prevents exploration activities in significant part of the country
Proven reserves could increase when the analysis of new data from the signed SCs of BR1 &BR2
are completed.
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
SC
Signed
Jan
2013
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
O&G Development & Production
Bid
Round
Oil & Gas Fields
CPPT
(Mbd)
Proven
Reserves
(bbls)*
BR1
(6 OFs)
B-OFs: R, Z, WQ1 & Missan G: 3
OFs 7.335 33
BR2
(7 OFs)
G-OFs: Majnoon; WQ2; Halfaya;
Garraf; Badra; Qaiyara & Najma 4.765 33
Conver.. Al-Ahdab 0.2 1
Total 14 OFs:15 IOCs:12 Cs 12.3 67
BR3 (3 GFs) Green GF: Akkas; Siba; Mansuriya;
3 IOCs: 3 Cs
820 Mcfd 11.2 Tcf
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Contracts Renegotiation
Contracted
PPT
1mbd/C: $15 billion initial investment
WB/B&Co; IEA
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Negotiated Production Plateaus (Mbd)
Reduction in Production Plateaus of these fields by 3.87mbd (from 11.02 to
7.15mbd)would reduce Investment Requirements by $58 billion.
All contracted oilfields are on track, with some difficulty except
Qaiyara & Najma. Siba Gas field is on track while Mansuriya and
Akkas are not due to security conditions.
0
0,5
1
1,5
2
2,5
3
Zubair WQ1 Rumaila WQ2 Majnoon Halfaya
NPT OPT
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Oil Production: Sept 2008- July 2014 (kbd)
0
500
1000
1500
2000
2500
3000
3500
4000
NOC&Md SOC&Ms TOTAL
NOC!!
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Associated Gas Production & Utilization. Sept 2008- July 2014 (mmscfd)
BR1: BGC (HoA- Sept. 2008: BGC-May 2013)
BR2: Halfaya (Alkahla PS); LukOil (Proposes $4 billion petrochemical
complex to utilize associated gas from WQ2); Alahdab (AlZubaidia PS.)
Gas Flaring: “Iraq currently imports 500 metric tons to 1,000 tons of LPG a
day, while it flares 4,000 tons daily” 17 May 2013, Bouaziz/ Shell.
0
500
1000
1500
2000
2500
Prod Utilized
Flared Associated Gas-mmscfd
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Refining & Downstream MoO Plan: Refining capacity (kbd-input)
Four new major refineries
Nassiriya (300 kbd)- $8bn; Missan (150 kbd)- $5bn
Kirkuk (150kbd)-$5bn; Karbala (140 kbd)-ca$5bn
The legal frameworks are outlined in two laws: Investment Law (No. 13 of 2006)
through NIC and the Refinery Investment Law (No. 64 of 2007). Contractual
terms outlined in 17 January 2012 invitation offer from MoO, London Conf.,
May 2012???
In addition to these new capacities the others to be renovated are Baiji, Doura refinery in Baghdad , Basra refinery in the south and Najaff.
2011 2012 2013 2014
575 640 680 700 ?/
Export
2012
A possible fifth plant may process heavy, sour
crude from the Najma and Qaiyara field
Satarem!!
Athil Nejeify
?/
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Export Outlets, Capacity & Marketing
0
50
100
150
200
250
300
350
1,6
1,8
2,0
2,2
2,4
2,6
2,8
3,0
Export mbd-LHS
Rev$/d (mil)-RHS
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Oil Export to Major Markets (%)
20
25
30
35
40
45
50
55
60
2007 2008 2009 2010 2011 2012
% o
f To
tal O
il E
xp
ort
s
Asia America Europe
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
J & E!
CSSP
8.5 mbd StoCap
Expand & Diversify Export Capacities & Outlets
Reality of been semi-landlocked
Export outlets (mbd)
NAG: 8.5
(5SPMs, BoT (1.6mbd) &
KoT (max 350kbd))
Syria: 4.5
(Rehab1.25; new 1.25 L/m
crude; 1.5 Hc)+ gas pipeline
Turkey: 1.6 (Upgrade K-C)
+ new oil and gas pipelines!
Nabucco??
Jordan: 10-15 kbd (Trucks)+ 1mbd&250mcfd Zerga-Aqaba!
**************
Egypt? IIS gas pipeline?
IPSA- oil pipeline?
ICOEE
FDI
Participation, Promotion and Protection
The Constitution;
Specific laws: Investment Law, Refinery Law
BIT/ Coms of economic and technical cooperation:
MIT:
Contracts: IA/ICC
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Existential Threats & Challenges
ISIS Direct Effects In Nineveh province, IS controls ten oil fields, only four of which were already
in production: Qayara (20 kbd), Sufiyah (8kbd), Ain Zalah (7kbd) and West
Batma (2kbd). In Salahuddin province, it controls the Ajil (25kbd) and Himrein
(10kbd) fields. It's not clear, though, how much, if any, oil is still being
produced;
It also controls the Qaiyara refinery, an asphalt plant that uses very heavy 16
°API oil, from the field, is high in hydrogen sulphide and difficult to process
even at the best of times;
Disrupts Akkaz (Anbar ) and Mansuriya (Dayala) gas fields;
The 310,000 b/d Baiji refinery remains shut and a key ISIS target; the refinery
provides more than one third of the country’s need ( mostly for Kirkuk, Ninewah
and KRG) for refined products and provide fuel for Baiji power plant;
12-15 Kbd export to Jordan stopped;
Iraq-Jordan oil & gas pipelines project;
IOCs in KR
UN SC Resolution 2170, 15 August 2014, MoO statement on SOMO exclusivity
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
The New Government, DPM Energy, Oil Portfolio and the
composition of Energy Committee in the Parliament !!?
FG-KRG Politics: Complex and acrimonious relations with
reciprocal symmetrical blames-game
Pre & Post 9/10 June!!: KRG: Secession referendum; Kirkuk
oilfield; Article 140 accomplished!!;
Pre & Post Sinjar Mountain!! 1st week August;
The Military operations and air stricks!!!
Logistics, Infrastructure and Human Resources
Storage Tanks at Fao Plans call for at least 24 tanks, 365kb each , total 8.8mb. As on April 2014 only four tanks are installed
and operational and another four require testing; the remaining 16 were in various stages of construction.
MoO envisions adding another eight tanks, bringing total storage capacity to 11.7mb
Fao is a huge project requires also 10 gas turbine turbo pumps, which have a multi-year lead time to
manufacture and take between six months and one year to install and test. It will take until 2017 to
complete stage by stage.
Water Injection Requirements Delays to CSSP, which aims to pump some 7 mbd of treated seawater to all the southern oil projects, are
causing reduction in oil production and forcing investors to seek alternative solutions.
A lack of water injection has already obliged Exxon Mobil to reduce WQ1 output from around 500 kbd
to under 300kbd; while Shell could be capped at 600kbd on its planned 1 mbd Majnoon project; Lukoil's
1.2 mbd in WQ2 -- currently producing just over 320kbd -- will struggle to raise output beyond 450kbd
without water injection.
One option is to develop independent water projects separate from CSSP that would tap the Third River
(drainage water). Eni's Zubair and Exxon's WQ1 are understood to have approval to build their own
250kbd plants around the Third River, and Lukoil is investigating a similar-sized project for WQ2.
Relief currently available: WQ1is already taking some 70-80kbd from the Third River and Zubair, which
currently produces 340kbd, recently had water supply from Qarmat Ali increased to around 180kbd.
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY
Rumaila is benefiting the most from Qarmat Ali's refurbishment, receiving 700kbd of
treated water in August, up from 500kbd in July. Rumaila's capacity has held steady
this year at around 1.3-1.4 mbd, but further production gains are unlikely in 2015,
sources say.
Human Resource and Institutional Capacity Gaps There are very critical systemic, knowledge and skills capacity gaps;
International cooperation opportunities- bilateral;
EUIEC.
© Copyrights 2014- Ahmed Mousa Jiyad, Iraq/Development Consultancy & Research, NORWAY