Page 8 - MEOG Week 36

MEOG PerFormanCe MEOG
Iraq announces more drilling ahead of pledge to cut output
iraQ
IRAQ announced the somewhat contradictory news this week that a state firm plans to drill 80 newwellswhilethestateiscommittedtoreduc- ing oil production in line with OPEC cuts.
Iraq’s Ministry of Oil (MoO) disclosed that state-run Basrah Oil Co. (BOC) had signed a deal for work at the Majnoon oilfield. In a state- ment, the ministry said: “BOC signed a contract with China’s hilong Oil Service & Engineering Co. Ltd to prepare and complete 80 oil wells at a cost of $54mn.” BOC has also sealed a $255mn deal with the Iraqi drilling Co. (IdC) for another 43 wells at Majnoon.
Earlier this year, China National Offshore Oil Corp. (CNPC) pledged to increase output to at least 500,000 bpd by the end of May 2021.
Oil Minister Thamir al-Ghadhban was quoted as saying that the move was part of plans to increase output from “Majnoon to 400,000 barrels per day in 2022.”
Al-Ghadhban told local media on September 9 that after discussions with Prime Minister Adel Abdul Mahdi and other senior officials, Iraq was
committed to reducing oil production to cohere with the OPEC+ cuts designed to “restore bal- ancebetweensupplyanddemand”.
Total oil production from OPEC countries expanded in August, with increased output from Iraq and Nigeria the main reason for the rise.
This is not the first time Baghdad has com- mitted to cuts, then failed to deliver.
In March, Ghadhban said Iraq would reduce output by around 140,000 bpd from the 4.653mn bpd produced in October 2018 under the amended declaration of Co-operation signed by OPEC members and 10 non-OPEC countries in december.
The country had previously failed to fully comply with the agreement, as it continued to export an estimated 3.7mn bpd in december 2018, down to 3.6mn bpd in January and Febru- ary 2019, with the drop being the first reflection of the OPEC deal on the country’s output. With a current quota of 4.51mn bpd, Iraqi output is running at around 4.88mn bpd, which is 100,000 bpd more than in July, according to Platts.™
PoLiCy
Instex “won’t work” until goals are met
iran
EUROPE’S Instrument in Support of Trade Exchanges (Instex) trade mechanism devised to help European and Iranian trading parties do business without incurring US sanctions will not work until Tehran sets up a mirror company and meets international standards against mon- ey-laundering and terrorism financing, a French diplomatic source has reportedly said.
The long-delayed Instex channel is supposed when operational to initially enable the bartering of humanitarian and food goods that would not attract US sanctions, before possibly moving on to accept transactions that would trigger sanc- tions if not sufficiently shielded from Washing- ton’s prying eyes.
Both Iran and Russia – which has suggested it might join the scheme – have said the bar- tering should be allowed to include Iranian oil, but Europe has not given its consent to such a move given that it would certainly incite US offi- cials who are engaged in an effort to drive all oil exports from Iran off world markets.
Britain, France and Germany, parties to the 2015 nuclear deal with Iran along with the US, China and Russia, want to show they can com- pensate for last year’s unilateral US withdrawal from the accord and salvage substantial trade promised to Iran which the Iranians are enti- tled to for complying with measures aimed at keeping their nuclear development programme purely civilian in nature.
“The Iranian mirror structure is not opera- tional. The day they have signed the necessary FATF [Financial Action Task Force] conditions we’ll talk about it and the day that we are sure that the first transactions through Instex aren’t put under American sanctions, [then] we’ll talk about it again,” a diplomatic source was quoted by Reuters as saying on September 4.
France’s foreign minister said on September 3 the mirror company had not been set up.
Iran’s president, hassan Rouhani, on Septem- ber 5 gave Europe another two months to save the deal.
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w w w . N E W S B A S E . c o m Week 36 10•September•2019