Page 5 - MEOG Week 09 2022

MEOG COMMENTARY MEOG

formation following a three-well pilot pro- military regiment that will employ those with-
gramme that last year targeted 10,000 bpd from out qualifications.
each well for a period of three months. With the protesters having set a deadline to
WQ-2 forms the smaller of two development local authorities of February 28 to “fulfil” their
projects to tap the West Qurna deposit which has demands, DQOC is understood to have feared
estimated oil reserves of around 33bn barrels, an escalation, leading to the field’s closure.
with West Qurna-1 (WQ-1) to the south holding DQOC also oversees the development of the
the larger, 20bn barrel share. Subba field and has been in discussions with US
The field’s production plateau was previously major Chevron for oil exploration elsewhere
revised downwards first from 1.8mn bpd to in the governorate, though talks were paused
1.2mn bpd and then to 800,000 bpd, though the in February until a new government has been
timeline for the latest revision was also extended appointed in Baghdad.
from 2025 to 2030.
The full 350,000 bpd addition to current out- Revenues and exports
put levels will be achieved through the Yamama Also this week, the Ministry of Oil (MoO)
expansion. This will account for a major part announced that total February crude exports
(more than 10%) of the country’s plans to amounted 92.79mn barrels, marking a reduction
increase oil production capacity by 3mn bpd to of 6.5mn bpd compared to January, though the
8mn bpd by 2027. daily average was more than 100,000 bpd higher.
Lukoil holds a 75% stake in the WQ-2 TSC Oil Minister Ihsan Abdul Jabbar said recently
alongside the state-owned North Oil Co. This that a 20,000-30,000 bpd output reduction
accords the developers a maximum remunera- in January was caused by inclement weather
tion fee of just $1.15 per barrel, and according at southern export facilities, noting that he
to Wood Mackenzie, Lukoil’s net profit from expected output would meet the OPEC+ target
WQ-2 is just $0.56 per barrel of oil equivalent in February. January volumes were also reduced
when considering state equity interest and tax, after an explosion and fire on the Kirkuk-Cey-
with this dropping to $0.19 per boe after apply- han oil pipeline in Turkey’s south-eastern Kah-
ing the performance factor. ramnmaras Province caused a brief halt to flows
to the Mediterranean.
Nasiriyah concerns However, on March 3, Reuters reported that
To the west, the Nasiriyah oilfield was shut in on it had seen data from state oil marketer Somo
February 25 by fellow INOC subsidiary Dhi Qar which showed Iraqi production at 4.18mn bpd
Oil Co. (DQOC) after protestors blocked work- in February, just 13,000 bpd higher than January
ers’ access to the site. and 150,000 bpd below its OPEC+ quota.
Capacity at Nasiriyah is believed to stand at Exports averaged 3.2mn bpd in January and
around 70,000 bpd, also from the Mishrif for- rose to 3.31mn bpd in February with Baghdad
mation, though production over the last two benefiting from a nearly $9 per barrel increase
years has been hamstrung by Baghdad’s efforts in the realised price of crude over the month to
to comply with OPEC+ output restrictions. The $92.08.
field has estimated reserves of 4bn barrels. Despite US-led efforts to release 60mn bar-
In a statement, the company said that it was rels of oil from 30 countries’ strategic petroleum
closing production owing to safety concerns reserves (SPRs), a supply risk premium contin-
about its workforce amid reports of violent pro- ues to prop up prices amid ongoing conflict in
tests across Dhi Qar Governorate by university Ukraine. This is likely to continue with OPEC+
graduates demanding job opportunities. sticking to its planned easing of production
Members of the al-Bedor tribe have been curbs by 400,000 bpd in April following its
staging protests for almost three weeks at Nasiri- meeting this week, giving Iraq an April quota
yah’s gas isolation station at Kati’ah, demanding of 4.41mn bpd before the reference baseline
employment and the establishment of a new increases in May.™

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