Page 17 - MEOG Week 44

MEOG NEWS IN BRIEF MEOG

Delek provides Ithaca amount.
COMPANIES be used for partial repayment of the loan
Lukoil chief discusses oil update and dividend news DELEK

cooperation with Iraqi PM Delek Group said that on November 3, 2020 OIL
Ithaca Energy Ltd announced a dividend
Iraqi Prime Minister Mustafa Al-Kadhimi distribution of $100mn to the subsidiary
has met with Lukoil CEO Vagit Alekperov of the Company that holds the entire share Iraq’s Somo to market third
in Baghdad to discuss the current state capital of Ithaca. This distribution is added
and prospects of cooperation projects, the to another distribution made in May 2020 of Basrah crude grade
Russian oil company said in a press release on $20mn.
Monday. In accordance with what was stated in Iraqi state-owned marketer Somo has
“Prime Minister of the Republic of section 1.8.18(b) of the Company’s Periodic informed customers that it plans to make
Iraq Mustafa Al-Kadhimi and Iraqi Oil Report as of December 31, 2019 concerning a third Basrah crude stream available from
Minister Ihsan Abdul Jabbar Ismail received the Reserves Based Lending facility (“RBL”) January, according to a document seen by
a delegation of PJSC LUKOIL headed by provided to Ithaca, Ithaca has informed the Argus.
its President Vagit Alekperov today in Company that it has completed the periodic As of next year, the company intends to
Baghdad. The meeting was also attended redetermination process (carried out twice offer a Basrah Light grade with a gravity of
by the Ambassador Extraordinary and a year) of the utilizable RBL facility with 33°API, a Basrah Medium crude with 29°API
Plenipotentiary of the Russian Federation to a consortium of international banks that and a Basrah Heavy grade with 24°API.
the Republic of Iraq Maxim Maximov. The provide it. As of the date of this report the Somo first floated the idea of a third
parties discussed the progress of the West balance of the facility drawn down is lower Basrah crude offering back in 2017. It marks
Qurna-2 project and Eridu field (Block-10), than $700mn (as compared with the drawn the second time that Iraq has split its Basrah
as well as prospects for cooperation in other down balance of $1,055mn as of December stream. Rising production from heavier oil
areas in Iraq,” the company said. 31, 2019 and the total available facility of fields and the country’s limited capacity to
According to the press release, Al- $1.1 billion). In the redetermination process blend crude to a set gravity and sulphur
Kadhimi suggested that the cooperation and the said dividend in the amount of $100mn content prompted Somo to separate Basrah
coordination between the Iraqi Oil Ministry was included, and after the distribution, the supplies into the existing Light and Heavy
and Lukoil be expanded. headroom as of today’s date amounts to over grades in mid-2015.
The West Qurna-2 oilfield in southern $275mn. As part of the redetermination The two grades have since been marketed
Iraq is one of the largest in the world with process it was determined that additional with on-paper gravities of 34°API and 26°API,
estimated recoverable reserves of 12.9 billion distribution in 2021 will be subject to an respectively. But Basrah exports have never
barrels. Lukoil owns 75% of the West Qurna-2 average price of at least $50 per Brent Barrel achieved their intended quality specifications,
oil field development project, with the over a period of 6 months. nor has Somo’s Kirkuk blend which is
remaining share of 25% owned by the Iraqi In accordance with the provisions of a loan marketed at 36°API. This has forced the firm
North Oil Company. agreement with a foreign bank that provided a to offer quality compensation to buyers,
The Eridu field was discovered by Lukoil loan to finance the acquisition of the Chevron depending on the gravity of the volumes they
in 2016, which became the biggest oil field assets to the subsidiary that holds the entire received at loading.
discovery for Iraq over the past two decades. share capital of Ithaca, the balance of which Argus tracking data estimate that
SPUTNIK as of this date is $137mn, this dividend will shipments of Basrah Light averaged 2.18mn
bpd over January-September this year,
accounting for 73% of total Basrah exports.
Basrah Heavy volumes averaged just under
800,000 bpd during the same period.
Somo said its latest marketing move is an
“intended segregation” of Basrah Light into
two grades. It has asked clients to submit their
annual requirements for the new Basrah Light
and Basrah Medium grades by 13 November.
The Iraqi company said it will provide the
full specifications of the revamped grades
“shortly”. Somo had initially asked buyers
to nominate their 2021 requirements by 15
October, but only listed Basrah Light, Basrah
Heavy and Kirkuk as options at the time.
It is not immediately clear whether and
how Somo will continue to offer its crude
quality reimbursements — one of two
subsidies the company offers. Somo also offers
freight compensation, intended to increase
Basrah’s appeal to European and US buyers.
At 29°API, the new Basrah Medium will

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