INFORMING, ENGAGING AND EMPOWERING STAKEHOLDERS IN IRAQ | JUNE/JULY 2019 INSIDE Q&A: Ihsan Ismaael, director 2 general of Basra Oil Company Deals in limbo as Oil Ministry 7 fights political headwinds Q&A: Bahaa Nima Abid, acting 9 director of the Siba gas field Q&A: Fatih Birol, head of the 10 International Energy Agency Q&A: Hossam Hussein Wali, 11 head of South Refineries Company Q&A: Zuhair al-Araji, mayor 12 of Mosul Q&A: Zardasht Shangali, 14 Cmdr. of the Sinjar Resistance Units Iraqi Drilling Company personnel drill a well at the West Qurna 1 field in Basra in May 2019. Federal Supreme Court oil lawsuit 15 awaits PM signature Rumaila's quest for water key to production increase Future growth at Iraq's largest oil field hinges on unresolved plans for Optimism swells over meeting the project's massive demand for new water supplies. giant Eridu discovery Iraq’s largest oil field, accounting for A mature field that has been producing nearly one-third of the country’s total pro- for more than six decades, Rumaila’s pro- Lukoil has upgraded an assessment duction, is poised to surpass 1.5 million duction naturally declines by 15 to 20 per- of its Block 10 exploration results barrels per day (bpd) - but its growth hing- cent each year, according to several people – the latest success stemming from es on a key resource: water. familiar with the project. As a result, just a 2012 contract auction that was “This is a water-management field,” to keep production from falling, ROO con- initially seen as lackluster. said Nick White, acting deputy general stantly needs to get the most out of exist- manager for the Rumaila Operating Or- ing wells while also drilling new formations. Russia’s Lukoil has presided over a ganization (ROO), an umbrella entity that “In 2019, we are still targeting an excess major discovery at Iraq’s exploration includes field operator BP, along with Pet- of 1.5 million [bpd],” White said - but such Block 10, raising new expectations of ul- roChina and the state-owned Basra Oil production levels are only possible with a timately producing over 300,000 barrels Company (BOC). sound water-management plan. per day (bpd) from the Eridu field. see WATER, page 5 see ERIDU, page 4 www.iraqoilreport.com Q&A: Ihsan Ismaael, director general of Basra Oil Company Iraq's largest state oil company is expanding production capacity and building new infrastructure as it waits out OPEC quota. Have all of the ExxonMobil staff re- turned, including the Americans? Is there a new agreement between BOC or the Oil Ministry and Exxon? ExxonMobil has started to gradually re- turn its employees to West Qurna 1 field. Employees are returning to work, from different types of nationalities including Americans. There are no new terms for their return to the field except the security coordination with Basra Operations Com- mand and the Ministry of Defense. What is the current production of the field? And what’s the plan for a produc- tion increase? The production of West Qurna 1 is cur- rently about 450,000 to 490,000 bpd. A new production unit was added with 100,000 bpd capacity. BOC has lots of capabilities through other fields to increase production, Ihsan Ismaael, director general of the Basra Oil Company, inspects a bridge keeping rising floodwa- but we are committed to OPEC’s agreement. ters out of the Majnoon oil field on April 9, 2019. There has been about 200,000 bpd ca- company [Toyo Engineering Corp.]. A con- southern crude to the northern network? pacity increase at the Zubair field. What sulting contract was previously signed and BOC is working to rehabilitate Bas- are the changes and developments that the final results will come out in three months ra’s strategic line, to export Basra crude helped to reach that increase? so we can make a real plan to build the Fao through the northern region to the Turkish Zubair field is one of the best oil fields in depot. Currently it is under SCOP [State Com- port of Ceyhan. There is a plan of action to terms of implementation of surface facili- pany for Oil Projects] supervision, which was rehabilitate PS2 and PS3, which has techni- ties, and it has the capacity to treat 500,000 assigned to jointly work with the Oil Ministry cal problems in Najaf province, and there is bpd via the new facilities and 200,000 bpd on the implementation. We hope there will guidance from the Oil Minister to SCOP that by the old ones. The plan is to reach pro- be a new development and implementation handles the project, to speed up the imple- duction capacity of 700,000 bpd by 2027. plan after the report of Toyo company. mentation, while BOC will be providing the Iraq’s OPEC-related cuts have come What is the nature of the compro- support and the funds. mainly from state-operated fields. Is there mise deal between BOC and Leighton What’s the status of the common sea- any concern that the fields will be damaged company – the result you reached or will water supply project (CSSP), which has as a result of such severe curtailments? reach – and the timetable? been in negotiations or awarded recently? BOC is the most active company focused Leighton has abandoned all its rights Initially, the project was assigned to on protecting and maintaining the reservoirs. and previous demands made to BOC to Hyundai as a non-binding initial referral, Engineers are tasked to manage and head obtain all its confiscated proprieties that and the Oil Ministry is in the process of pre- the joint operating committees, and they do have been held in Dubai for more than five paring a financing plan to ensure the imple- what is continuously required to maintain years. Leighton exited the tender without mentation of the project. the reservoirs, as their maintenance and paying anything to BOC. BOC took its rights Will it be funded by the budget or is it protection is a nonnegotiable goal. and was five years late in carrying out the going to be an investment project? What are the plans to expand the ex- project, while the equipment was stuck in It will be discussed to clarify the financing port outlets? What about the delayed UAE ports, as they are needed to carry out whether by the government or investment. ♦ Fao depot? the contracted project. The Fao depot is currently under the su- What is the status of rebuilding the READ THE FULL INTERVIEW @ pervision and technical evaluation of Toyo strategic pipeline, which will connect www.iraqoilreport.com 2 Subscribing to Iraq Oil Report can make you more effective. e e ee ss ee e ese Get your access today. www.iraqoilreport.com/subscribe For multi-user, corporate, academic and NGO rates, contact [email protected]. www.iraqoilreport.com Optimism swells over giant Eridu discovery ERIDU, cont’d from page 1 to the Mishrif layer, at a depth of 1,900 IOCs as the Oil Ministry might have hoped. meters.” Out of 12 exploration blocks offered in Preliminary estimates suggest Eridu The consortium’s preliminary analysis 2012, only four were awarded, as compa- could hold between 7 and 10 billion bar- suggests the field holds relatively high- nies complained that the contract terms rels of reserves, which would make it one quality crude, with an API gravity of be- -- which largely resembled the techni- of the top seven largest fields in the coun- tween 25 and 29 and low sulfur content, cal service contracts (TSCs) that govern try, according to two senior officials at the according to the DQOC official. the development of already-discovered Dhi Qar Oil Company (DQOC), which is “Our labs on site are not very accurate, fields -- did not present adequate finan- Iraq’s state partner in the development of though,” the official added. cial incentives to offset the risks inherent Block 10. A third DQOC official compared the in exploration. “Expected production is 300,000 bpd, crude quality at Eridu to that of the Nas- Now, however, those projects that though these are just estimates, and well siriya field. were awarded are bearing fruit. drilling is ongoing,” said one of the DQOC The data gathered during the explora- The Fayha field, which was discovered officials. “The reservoir’s pressure is good, tion phase will inform the development in Block 9, in Basra province, is now pro- and we are optimistic.” plan, which will in turn dictate the construc- ducing just over 20,000 bpd from five Both DQOC officials and two other tion of other infrastructure. wells, according to an official at the field. industry officials confirmed that produc- “Surface facilities will be built, includ- By the end of this year, it’s expected to tion is expected to reach 300,000 bpd. ing separation stations, storage tanks, and reach 50,000 bpd. That figure is unlikely to be finalized -un pipelines,” the second senior DQOC official Block 9 was initially awarded to a con- til at least 2020, when the consortium is said. “All of this will be attached to the de- sortium led by Kuwait Energy, which was scheduled to set a development plan for velopment plan.” recently acquired by China’s United En- the field. As with many fields in southern Iraq, ergy Group (UEG). The two DQOC officials estimated that one challenge associated with develop- The consortium is currently connect- commercial production would begin by ing Eridu will be accessing enough wa- ing pipelines to a central processing facil- 2022, with an initial target of 50,000 bpd.