Page 4 - MEOG Week 27 2021

MEOG COMMENTARY MEOG

Flood gates open

as more IOCs look

to sell Iraq assets

Iraq’s Oil Minister this week said that more IOCs are looking
to sell their assets in the country as Exxon heads for the door.

IRAQ BAGHDAD’S efforts to bring about a signifi- Lukoil
cant increase in oil production suffered another Lukoil is understood to have grown frustrated by
major setback this week as the country’s oil min- OPEC+ quotas and the terms of its TSC, which
WHAT: ister said more IOCs are keen to reduce their provides the Russian company with the lowest
BP and Lukoil are exposure or withdraw from Iraq altogether. fees of any of the rates agreed during Iraq’s first
reported to be looking The news comes amid efforts by the federal four bid rounds between 2009 and 2012.
to withdraw from their government to study ways in which the terms With a maximum remuneration fee of $1.15
major Iraqi projects as of contracts with foreign developers may be per barrel, according to Wood Mackenzie,
issues come to a head. improved to make working in the country more Lukoil’s net profit from WQ-2 is just $0.56 per
attractive. barrel of oil equivalent when considering state
WHY: equity interest and tax, with this dropping to
Concerns about ESG, Heading for the exit $0.19 per boe after applying the performance
instability, corruption Speaking in a video addressed to MPs that was factor.
and contract terms are posted on Ministry of Oil (MoO) social media In late May, Lukoil began a three-well pilot oil
all understood to have page, Ihsan Abdul Jabbar said: “The existing production programme targeting the Yamama
played a part in the investment environment in Iraq is inappropri- formation at WQ-2 to produce 10,000 bpd per
decisions. ate to keep the major investors. All major inves- well over the next three months.
tors are either looking for another market or for WQ-2 has a current production capacity of
WHAT NEXT: another partner. We, as an investment environ- around 400,000 bpd from the Mishrif formation,
Iraq is undertaking a ment, are inappropriate for major partners.” though Lukoil reported recently that Q1 pro-
study of its contracts with He added that Lukoil had informed him of its duction averaged just 307,500 bpd on account of
international operators, intention to sell its 75% stake in the technical ser- compliance with OPEC+ output cuts.
but may not be able to vice contract (TSC) for the West Qurna-2 oilfield The company has plans to raise this by a fur-
make the amendments to Chinese companies and that BP intends to ther 350,000 bpd through its Phase 3 Yamama
required to bring about a withdraw from the Rumaila Operating Organ- expansion and another 50,000 bpd to be added
change in fortunes. isation (ROO). from the Mishrif, taking total output capacity to

P4 www. NEWSBASE .com Week 27 07•July•2021