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Iraq Starts New Oil Contract Review 10 YEARS OF INFORMING, ENGAGING AND EMPOWERING STAKEHOLDERS IN IRAQ | MAY/JUNE 2017 INTERVIEWS Deputy Oil Minister Hamid 3 Younis Salih Deputy Minister for National 13 Security Affairs Akeel al-Saffar South Gas Company DG 15 Ihsan Ismaael Dhi Qar Oil Company hits political turbulence Employees of Iraq's newest state oil firm say its creation was driven by political timetables and marred by insufficient planning. Oil Minister Jabbar al-Luiebi leads a ceremony to mark the creation of the Dhi Qar Oil Company on March 30, 2017. (HUSSEIN AL-AMIL/Iraq Oil Report) When Iraq created a new state oil company in Dhi Qar, it was a sign that the province was proudly emerging from the Iraq starts new oil contract review shadow of its southern neighbor, the oil The Oil Ministry plans to develop a new contract model for future projects capital of Basra. and has contracted Iraqi-Norwegian consultant Farouk al-Kasim as it explores But progress has also unleashed adjustments to existing TSCs. problems. In its first weeks of existence after being spun off from South Oil Iraq is reviewing its oil contracts in “The future contracts, we will have Company (SOC), the Dhi Qar Oil Company an effort to better align the interests of different models,” Luiebi told Iraq Oil (DQOC) has experienced growing pains the government and international oil Report. caused by a range of political conflicts and companies. The Oil Ministry is also working with bureaucratic dilemmas. Oil Minister Jabbar al-Luiebi said that, a consultant – Farouk al-Kasim, an Iraqi Some employees have criticized the Oil as the ministry solicits investment in new geologist who helped Norway develop Ministry for naming Ali Khudair al-Abodi as upstream projects, it is likely to move away a strategy for its oil sector in the 1970s – DQOC’s new director general, questioning from the technical service contracts (TSC) to suggest changes to the existing TSCs, his experience and suggesting he was that have structured Iraq’s relationship according to two senior Oil Ministry officials. elevated for political reasons. with oil companies since 2009. see CONTRACT REVIEW, page 6 see DHI QAR, page 8 II I I ENEGYNATAL ESOCES: BEAKING NES: ISIS and Iraq’s Oil Liberating Qayarah “These tenacious reporters are to be “This package stands out for a credited for turning a swirl of successful blend of breaking news on conflicting facts in a war zone into the advance of Iraqi forces against the well-sourced, actionable reports. Islamic State with the human side of the Displaying an impressive grasp of story painted in memorable images such industry and politics, the writers as the kids growing up covered in soot. showed how developments in the Excellent sourcing combined with energy sector would affect the daily lives strong storytelling and concise writing of those in the region as well as the war left a lasting impression on the judges. In against Islamic State. Without the many instances, this small organization writers’ courage, determination, and did a better job than its larger insight, this important story might counterparts in its reporting on this otherwise never have come to light in so major economic and political story.” intelligible a manner.” Get your access today. www.iraqoilreport.com/subscribe For multi-user, corporate, academic and NGO rates, contact [email protected]. www.iraqoilreport.com Q&A: Deputy Oil Minister Hamid Younis Salih Iraq's top natural gas official outlines new plans, beyond the scope of Basra Gas Company, to capture associated gas and reduce flaring in southern Iraq. You said there are three “gas hubs” and Suba - we agreed within the Ministry What is the capacity of those hubs? being prioritized by the ministry. of Oil a strategy of putting in place one The capacity is 500 million cubic meters Specifically, where will they be located hub to do the processing of gas for those ENEGYNATAL ESOCES: BEAKING NES: per hub. Altogether, 1.5 billion cubic and technically how will they operate? fields. This will be done in agreement with meters. ’ companies. ISIS and Iraq s Oil Liberating Qayarah The first one will be in Basra, the second in You want investors to make a proposal Nassiriya, and the third will be in Missan. So for West Qurna 2 we will deal with and include in their investment “These tenacious reporters are to be “This package stands out for a The first hub, in Basra, will be for gas Lukoil to set up one unified hub where the proposal how they will be compensated. credited for turning a swirl of successful blend of breaking news on investment at Nahr Bin Umar, West Qurna use of gas will be possible. This is the first 2 and Ratawi. hub. Yes. We will ask for management of the conflicting facts in a war zone into the advance of Iraqi forces against the project for a specific period of time, Gas from those fields will be collected The second hub is in Nassiriya. There will providing among other things free dry gas well-sourced, actionable reports. Islamic State with the human side of the together. be processing of Nassiriya and Garraf oil and exporting the condensates with the fields. We know that Garraf is developed Displaying an impressive grasp of story painted in memorable images such Yes. This hub will deal with gas from specific rate that will be suitable for the by Petronas, but there will be processing the production phase. Separating from Iraqi government. of gas at this hub because setting up the industry and politics, the writers as the kids growing up covered in soot. oil, degassing station, gathering and hub processing is the responsibility of the The Iraqi side is looking forward to processing and transportation for use. showed how developments in the Excellent sourcing combined with companies that are developing the fields. participating and contributing with foreign Consumption will depend on the type of But the delays that have been registered companies in this regard. And, to reassure energy sector would affect the daily lives strong storytelling and concise writing gas involved in the process. prompt us to have some centralized hubs you, even the World Bank is promoting of those in the region as well as the war left a lasting impression on the judges. In and is keen on providing cash in order to against Islamic State. Without the many instances, this small organization reduce the amount of flared gas. writers’ courage, determination, and did a better job than its larger What is the deadline for companies to make a proposal and when will you insight, this important story might counterparts in its reporting on this make a decision on these projects? otherwise never have come to light in so major economic and political story.” The funding mechanisms and timeframes intelligible a manner.” are the two specific components that should be included and abided by in the proposals. The timeframe is extremely important. The shorter the timeframe is, the better it is. So what do you do if a company has Get your access today. worked in Kurdistan, without approval of the central government, and it asks www.iraqoilreport.com/subscribe to invest in one of your gas projects? Deputy Oil Minister for Gas Affairs Hamid Younis Salih (center right) stands with senior GE executive There is a law for investment of the oil Rami Qasim (center left) and Deputy Oil Minister Fayadh Nema (center) at a signing ceremony in Baghdad on April 24, 2016. wealth in Iraq. There are rules. They are set in place and they are clear. We just First, there will be a gathering of gas, after to speed up the process. So Nassiriya and want companies to be in compliance with that there will be processing of the gas, then Garraf will deal with the gas at the national the constitution and that law. We are not after transportation of dry gas to power network level. against any company, we just don’t want stations and after that the condensates, any violation of that law. ♦ Likewise, for the third hub, located in LPG and so on will be exported. Missan, the same thing - with one hub READ THE FULL INTERVIEW @ These fields, the national efforts - Nahr Bin for everything in the province. This is a www.iraqoilreport.com Umar, West Qurna, Ratawi, Tuba, Luhais priority. For multi-user, corporate, academic and NGO rates, contact [email protected]. 3 Budget influencers. Operators and managers. Corporate and government leaders engaged in Iraq. or tre clients are reaing tis avertiseent Reach your target audience today. www.iraqoilreport.com/advertise For details on discounts, contact us at [email protected]. www.iraqoilreport.com Iraq starts new oil contract review CONTRACT REVIEW, cont’d from page 1 to invest, they want to know where the solicited from IOCs in 2015. One of the ministry is headed.” senior Oil Ministry officials said the “There will be no drastic change in the Another senior IOC official working in ministry still retains a relationship with model” for existing contracts, Luiebi said. Iraq said their company is attempting to Gaffney, Cline, though it is not clear what “Some modifications... to look at some schedule meetings with ministry officials role, if any, they are playing in the new clauses of the contracts, not all of them.” and their consultants to determine “what contract review. Luiebi said that specific terms might be acceptable to Iraq,” though recommendations have not been made, no formal negotiations have been slated. Structural flaws and predicted that the ministry’s proposed “[Iraq] will want to find a way to have a less Gati al-Jebouri, Vice President of Lukoil, changes would be the starting point for immediate payment burden,” the official put much of the blame on the way the negotiations with IOCs.
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