Page 5 - MEOG Week 24 2021

MEOG COMMENTARY MEOG

He said that discussions are focusing on “tim-
ing and all other details”, adding: “We are work-
ing to increase production gradually.”

Downturn
In response to the outbreak of the coronavirus
(COVID-19) pandemic, Baghdad called on
IOCs to cut capital expenditures and reduce
output from certain southern fields by 350,000
bpd, while BOC, which is responsible for the
southern region, was expected to reduce output
by 300,000 bpd in order to help Iraq comply with
OPEC+ reduction targets.
Elyaseri told Platts: “Rumaila Operating
Organisation (ROO) and BP have responded to
the ministry’s request to reduce capex by 30%,
coupled obviously with the OPEC cuts and the
low oil price, and this impacts activity sets.”
He added that “aside from the reduction in
capex, some activities have been postponed
(for example the produced water re-injection
project), while restricted access to the field and
global travel due to COVID-19 have impacted bidding rounds feature per barrel fees ranging
the movement of people and materials.” from $1.15 (Lukoil at West Qurna 2) to $5.50
Rumaila managed to produce around 25% of (GazpromNeft at Badra).
its oil in place (OIP) before water injection was However, Elyaseri told Platts that he was not
required. “aware of any discussions taking place around
Its Qarmat Ali water treatment plant pro- the terms of the technical service contract”.
vides around 500,000 bpd of water and the
capacity could be doubled to avoid reliance on Renegotiations
the long-delayed Common Seawater Supply In early June, though, Iraq’s Cabinet announced
Facility (CSSF). With water-flooding planned to plans to conduct a study to review the country’s
boost output, though, estimates have suggested oil and gas exploration and transport contracts
that the field’s water requirements could reach with foreign companies following calls from
8mn bpd. MPs to amend terms.
Average per barrel extraction fees in southern In a statement provided to the official Iraq
Iraq, which is home to the majority of the coun- News Agency (INA), the Cabinet said it would
try’s most productive assets, are around $1-2 conduct an “appropriate” study of the contracts,
per barrel excluding capex and $4-6 per barrel which are widely seen to be too heavily weighted
including capex. This puts the region on a par in the government’s favour and have thus stunted
with Saudi Arabia, and among the cheapest in the sector’s capacity for expansion.
the world. In May last year, Prime Minister Mustafa
Meanwhile, the average remuneration fee al-Kadhimi announced plans to form a delega-
per barrel of non-heavy oil produced over an tion to negotiate amendments to TSCs, though
initial threshold level is less than $6 per barrel. the IOCs are understood to still be waiting, with
The LTSCs awarded to IOCs during the first two many clearly having run out of patience.™

Week 24 16•June•2021 www. NEWSBASE .com P5