Page 12 - MEOG Week 20 2022

MEOG NEWS IN BRIEF MEOG

POLICY government is still underway. co-operation between the two countries. Iran
An Iraqi oil ministry legal adviser, who has been critical in supporting a recovery
Iraq bids to control spoke on condition of anonymity, told Reuters in Venezuela’s crude production, which
according to Argus estimates rose to 700,000
that a joint government committee, including
Kurdistan oil revenue with representatives from the oil ministry b/d in January-April from 470,000 b/d in the
including the minister, Iraq’s National Oil
same period last year.
contract switch Company (INOC) as well as the Federal sending shipments of condensate to dilute
In a swap for Venezuelan crude, Iran is
Board of Supreme Audit (FBSA), will conduct
Iraq has made a fresh attempt to control a contractual review. and upgrade extra heavy oil supply from
revenue from the semi-autonomous region The aim is to eventually sign contracts with the Orinoco belt into an exportable crude
of Kurdistan by asking oil and gas firms the central government and not the KRG, the grade. Tracking data from oil analytics firm
operating there to sign new contracts with adviser added. Vortexa indicate Iran is now also shipping
state-owned marketer SOMO rather than the Foreign oil firms present in the Kurdistan Iranian Heavy crude to Caracas, with the
Kurdistan Regional Government (KRG). region including Genel Energy, Chevron and tanker Dino I discharging 370,000 bl of the
Oil minister Ihsan Ismael on May 7 said Gulf Keystone, and Cleary Gottlieb declined grade at Venezuela’s Jose Terminal on 7 May.
Iraq’s oil ministry would start implementing a to comment, while Iraq’s oil ministry and At 29.5°API, Iranian Heavy offers a lighter
February federal court ruling that deemed the oil and gas firm DNO did not immediately alternative to Venezuela’s 16.2°API Merey
legal foundations of the Kurdistan region’s oil respond to requests for comment. grade.
and gas sector unconstitutional. The oil ministry has yet to receive It is not clear whether Tehran will continue
A letter seen by Reuters shows that the responses from the companies concerned and such deliveries to Venezuela, but it may have
oil ministry appointed international law could take further legal measures in the case more Iranian Heavy available because of
firm Cleary Gottlieb Steen and Hamilton to of no response, one oil ministry official said, reduced demand from China in the wake
approach some oil and gas firms operating in without elaborating. of recent Covid lockdowns there. Chinese
the Kurdistan region to “initiate discussions to Foreign oil firms are unlikely to engage buyers, which are the main consumers of
bring their operations into line with applicable with Baghdad directly without coordination both Iranian and Venezuelan crude exports,
Iraqi law.” with the KRG, one oil firm representative told also have the option of importing heavily
Implementing the court decision “will Reuters. discounted supplies of Russian Urals crude,
require changes to the contractual regime” for REUTERS which Moscow is prepared to redirect from
the companies, the letter added. Other firms Europe if the EU goes ahead with its proposed
received a letter directly from the oil minister, Iran offers support to embargo on Russian oil imports.
one source said. Meanwhile, Venezuelan crude output
The KRG has repeatedly rejected the Venezuela’s oil sector could pick up further if PdV’s joint-venture
federal court ruling. partners, notably Chevron, resume operations
The letters, which were sent on May 8, Iran has stepped in to support the oil sector of that have been restricted by US sanctions
mark the first direct contact between the fellow sanctions-hit Venezuela, following an since 2019. The White House said this week
ministry and oil firms operating in the unannounced trip to Caracas by Iranian oil that it will give Chevron more leeway to
Kurdistan region. The move follows years of minister Javad Owji earlier this month. negotiate its future operations in Venezuela - a
attempts by the federal government to bring Owji and his Venezuelan counterpart, gesture of goodwill intended to incentivise
KRG revenues under its control, including Tarek el Aissami, signed an initial deal in early talks between President Nicolas Maduro
local court rulings and threats of international May for Tehran to supply refinery equipment and Juan Guaido’s opposition coalition - but
arbitration. to Venezuela and to help with repairs at state- without real progress in those talks, sanctions
The implications of the latest move are owned PdV’s 140,000 b/d El Palito refinery in relief is unlikely.
not fully clear as more than seven months Carabobo state, according to a source close to ARGUS
since elections in Iraq, the formation of a the matter. The agreement deepens existing

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