Page 4 - MEOG Week 07 2022

MEOG COMMENTARY MEOG

Iraq refutes deal doubts,

maintains upstream push

Baghdad has refuted claims that its multi-billion-dollar deal with
TotalEnergies has stalled and continues to push for upstream development.

IRAQ IRAQ this week moved swiftly to deny Reuters and increase production,” it said. The ministry
reports that its broad $27bn deal with France’s anticipates that “advanced steps” will be achieved
TotalEnergies had stalled because of disputes at Artawi and the other projects by early 2023.
WHAT: over terms while providing updates on major
The Ministry of Oil E&P efforts elsewhere. Dhi Qar developments
responded angrily to Quoting various industry sources, the report Another INOC subsidiary, Dhi Qar Oil Co.
reports that its deal with said that the French firm had rejected the alloca- (DQOC) provided an update on field develop-
TotalEnergies may be tion of a 40% share in its four projects – covering ments in the south-eastern region of the same
under threat of being oil, gas, a seawater supply facility and solar – to name.
scuppered. the Iraqi National Oil Co. (INOC), noting that The company’s general manager Ali Khu-
the recently re-established company will not dair told the Iraqi News Agency (INA) that an
WHY: receive final clearance until a new administra- announcement on the commerciality of the
The contract covers a tion has been appointed in Baghdad. Eridu field in Block 10 should be expected in
group of projects that will The report added that with TotalEnergies’ either late February or March. He added that
play an important role in wider projects to be funded by oil sales from Russia’s Lukoil has drilled nine wells in Block 10
supporting the expansion the Artawi field following the company’s initial since agreeing a contract with the South oil Co.
of Iraq’s oil production $10bn investment, a group of Shi’ite politicians in 2012.
capacity. wrote to the Ministry of Oil (MoO) in January to Lukoil submitted its development plan for the
ask why the contract was signed without carry- field and applied in November to DQOC “for
WHAT NEXT: ing out a transparent tendering process. commerciality of reserves and filed a prelimi-
Work is ongoing at fields nary proposal on the development of the Eridu
throughout southern Iraq Rebuttal oilfield within Block 10,” according to the MoO.
while belated exploration The MoO responded quickly, denying the exist- Eridu was discovered in 2016 and is estimated
efforts are kicking off on- ence of any such stumbling block and expressed to contain 7bn-12bn barrels of oil. Lukoil is the
and offshore. its “astonishment” about the report’s inaccuracy. operator and holds 60% in the field’s technical
On February 15, it reported via its website services contract (TSC) in which it is partnered
that the “agreement includes four major con- by Japan’s Inpex Corp., which has the remainder.
tracts that include paragraphs and partial and The field development plan anticipates peak pro-
complex commitments, which require some duction of 250,000 bpd by 2027.
time to complete, and cannot be implemented Lukoil agreed preliminary terms with the
or resolved in tight timings.” MoO for Eridu’s development in July, targeting
It specified that INOC’s participation in the an initial rate of 30,000 bpd by 2024. The maxi-
project requires mutual agreement, adding that mum remuneration rate for Block 10, which was
while the two sides have discussed the methods awarded in the fourth licensing round, is $5.99
of participation and financing, “negotiations are per barrel of oil equivalent (boe), though these
now taking place in isolation from the prepa- terms are also understood to be subject to ongo-
rations for the contract”. Nine representatives ing amendment through discussions.
each from the MoO and TotalEnergies are said DQOC’s Khudair noted that “the negotiation
to be “holding continuous meetings” to reach an process is continuing, in addition to the presence
accord. of other requirements for the expansion of the
In relation to the Artawi asset, from which tenth block by the operator, for more than [the]
the project envisages output capacity will expand contracted area”.
from 85,000 barrels per day (bpd) to a peak pro- While Eridu talks progress, Khudair added
duction level of 210,000 bpd, the MoO said that that ongoing “negotiations with Chevron on
INOC subsidiary Basra Oil Co. (BOC) remains oil exploration in the north and south of Dhi
in charge. A six-month transition period is to Qar Governorate [have been] stopped until the
begin in early April “after the required admin- establishment of the new government.”
istrative structure has been prepared by the He also noted that progress has been made on
Basra Oil Company, while Total has prepared a contract signed by Baker Hughes in September
an ambitious budget to start development work to capture up to 200mn cubic feet (5.7mn cubic

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