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Iraqi Kurdistan government announce seven new oil
deals to foreign firms
7.11.2007
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Seven new petroleum contracts for the Kurdistan
Region announced by Ministry of Natural Resources;
five existing contracts reviewed
November 7, 2007
Erbil-Hewler, Kurdistan region 'Iraq',
-- Iraq's Kurdistan region has signed seven new
oil and gas contracts with international firms,
awarded four more to a new state-owned company and
revised the terms of old deals, the Kurdistan
government said on its Web site.
It aims to boost oil output to a million barrels per
day in about five years.
- Following the unanimous decision of the Regional
Oil and Gas Council ("the Council") of the Kurdistan
Regional Government (KRG) at its third meeting on
Sunday 4 November, the KRG Minister of Natural
Resources Dr. Ashti Hawrami on Tuesday announced
that seven new production sharing contracts (PSCs)
have been signed by the KRG. |
Seven new petroleum contracts for the Kurdistan
Region announced by Ministry of Natural Resources |
"There has been great interest in Kurdistan's
exploration acreage," said Dr. Hawrami. "We are
pleased to be able to meet that demand."
Pursuant to the Iraq Constitution, the KRG Oil and
Gas Law of August 2007 is the supreme law governing
oil and gas activities in the Region. All revenues
from petroleum activities in the Kurdistan Region
will be shared proportionately throughout Iraq
pursuant to the Constitution.
New production sharing contracts
The Prime Minister of the Kurdistan Region,
Nechirvan Barzani, executed the seven new PSCs on
behalf of the Council, together with Minister
Hawrami.
Award of two PSCs, for the Mala Omar and Shorish
Blocks (of 285 and 526 square kilometres
respectively) in Erbil Governorate, to OMV Petroleum
Exploration GMBH, a wholly-owned subsidiary of OMV
Aktiengesellschaft, the largest oil and gas company
in Central Europe. The blocks are considered to be
low to medium exploration risk areas.
Award of the Akre-Bijeel Block (889 square
kilometres) in the Dihok Governorate to Kalegran
Limited, a wholly-owned subsidiary of MOL Hungarian
Oil and Gas PLC, and Gulf Keystone Petroleum
International Limited, a wholly-owned subsidiary of
UK-listed Gulf Keystone Petroleum Limited. The
Akre-Bijeel Block is a medium exploration risk area.
Award of the Shaikan Block (283 square kilometres)
in the Dihok Governorate to Gulf Keystone Petroleum
International Limited, Texas Keystone Inc., and
Kalegran Limited. The Shaikan Block is a low
exploration risk area.
Award of the Rovi and Sarta Blocks (517 and 607
square kilometres respectively) to Reliance Energy
Ltd. These PSCs had been negotiated prior to the
entry into force of the Kurdistan Oil and Gas Law,
and had been awaiting the passage of the Law and the
approval of the Council.
Award of another block (1226 square kilometres) also
in the Dihok Governorate to a western company, with
details to be announced in coming days. The block is
considered to be a medium exploration risk area.
If commercial discoveries are made, these seven PSCs
will provide an estimated aggregate return/profit of
over 85% to Iraq and around 15% to the contractors.
The commercial terms of these contracts conform to
the term guidelines published by the KRG on its
website on 29 June and provide similar returns to
Iraq.
All contracts issued by the KRG are in the form of
the Model PSC, also published on 29 June. Under the
seven PSCs, the KRG has the right to a participation
interest of between 20% and 25%, and it has retained
the right to assign third party participation
interests of between 15% and 25% to qualified Iraqi
and international companies to further stimulate the
local economy.
Updated map and commercial guidelines
A map of Kurdistan Region contract areas that remain
open for negotiation can be downloaded here.
Corrected and updated guidelines of commercial terms
can also be downloaded here. These guidelines now
include a new category, "frontier blocks", along the
Iraq-Iran border.
Review of old contracts
At its Sunday meeting the Council also reviewed the
PSCs of the companies whose contracts predate the
Kurdistan Region Oil and Gas Law to bring them into
conformity with the Law and Model PSC. Those PSCs
are held by DNO, Genel Enerji/Addax Petroleum,
WesternZagros, Hawler Energy/A&T Petroleum and
Shakal/Trilax/Petoil.
The results of the review, including commercial
terms, have now been communicated to the PSC
holders.
KEPCO / KNOC contracts
On Sunday the Council also approved the award of
four strategic blocks in the Sulaimaniyah-Erbil area
to the Kurdistan Exploration and Production Company
(KEPCO), a government-owned oil exploration and
development company established by the Kurdistan Oil
and Gas Law.
KEPCO was awarded PSCs for the blocks on terms that
will be identical to those applicable to
international oil companies (IOCs), and will contain
a condition that KEPCO bring into their contract
areas as a partner a suitable large IOC, to be
approved by the Ministry of Natural Resources and
the Council. The IOC will provide technical and
financial support to KEPCO in the execution of its
responsibilities under the PSC.
The Council also approved the award of an integrated
project to the Kurdistan National Oil Company (KNOC),
a government-owned development company, for a
refinery by developing the Khurmala field discovery.
The associated natural gas and fuel oil from the
refinery will be processed and supplied to the
Kurdistan Region Ministry of Electricity for power
generation purposes.
The project will be in the form of a service
contract which, when it is executed, will provide
for a 30 month development phase for the
construction of a new 50,000 barrels per day
refinery. KNOC will be entitled to bring in third
parties, including reputable local or international
companies, to provide financial and
technical/management support on all aspects of the
project. The engagement of third party contractors
shall be subject to the approval of the Ministry of
Natural Resources and the Council.
Production from the Khurmala field will start
gradually from existing appraisal wells, and more
wells will be drilled to boost production to a peak
rate of 250,000 barrels per day. Excess oil not used
for the refinery will be exported to boost petroleum
revenues for all Iraqi people.
Twenty IOCs now working in Kurdistan
Having made these announcements, Dr. Hawrami said:
"I am very pleased at the rapid pace of progress in
the Region. With these new PSCs executed today, we
now have 20 experienced international oil companies
working in Kurdistan.
Twenty companies and rising
fast. Five additional blocks are reserved pending
the finalisation of ongoing negotiations. A further
24 blocks in the Region are the subject of intense
interest from international companies. There will be
more announcements soon."
www.ekurd.net
Dr. Hawrami added: "These contracts are a major step
towards the Kurdistan Region's goal of increasing
oil production from the Region to one million
barrels per day. This new level of exploration and
production activity in the Kurdistan Region will
also galvanise investment interest for the rest of
Iraq once a transparent, investor-friendly and
unambiguously constitutional oil and gas law for
Iraq is in place."
Pursuant to revenue sharing principles agreed with
the Federal Government, only a 17% share of
government revenues from petroleum operations in the
Kurdistan Region will stay in Kurdistan.
Eighty-three percent of the revenues will, under the
Constitution's revenue sharing principles, be for
the benefit of Iraqis outside Kurdistan.
Industry and media inquiries: spokesman(at)krg.org
krg org
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