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First oil from Kurdistan to be extracted
by the end of March this year
14.2.2007 |
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February 14, 2007
Kurdistan region (Iraq), -- Norwegian oil
company Den Norske Oljeslkep says that the first oil
from the company's Tawke well in Kurdistan is on
target to be extracted by the end of March this
year.
Major international oil companies have hesitated to
become involved in Kurdistan whose ultimate
relationship to Baghdad has yet to be resolved
leaving the ground to a few smaller concerns such as
DNO who are seizing opportunities such as Tawke that
is estimated to contain 100 million barrels of oil.
For its 55 per cent stake in the venture, the
Norwegian firm is undertaking to meet all costs of
its production sharing agreement including
installation of pipelines and central processing
facilities increased its investment.
The contract has yet to be endorsed in Baghdad, and
while the Kurdish north and central government argue
over oil licenses an even bigger issue is looming
with regard to Kirkuk and its adjoining major
oilfields. |
Oil fields in Kurdistan autonomous region (Iraq) |
Kurdish oil
The city, which is home to a majority Kurdish
population but also to Arabs and other ethnic
groups, is expected to hold a referendum sometime in
2007 on whether to be administered by a Kurdish
regional government.
This would mean virtual independence with the region
likely to be of much greater interest to the bigger
oil companies not just from Europe, Asia and the US
but also Iran and Turkey. Kirkuk currently produces
about 700,000 b/d valued at some $15 billion a year.
Baghdad is hoping to avoid a rift on the allocation
of oil resources with a petroleum council that would
allow regions to negotiate oilfield development
contracts with foreign companies but still give
central government the final decision with all
revenues deposited though into one national account
The new body would include a representative from
each region, the petroleum minister, central bank
governor and co-opted oil, financial and economic
experts not necessarily all Iraqis.
If a compromise does emerge a further dilemma will
be whether to go ahead with production sharing
agreements with foreign oil companies. While
maintaining a country's title to reserves these also
give a guaranteed long-term share of profits to
companies that invest the fields, pipelines and
refineries.
PSA formula
Neither Saudi Arabia nor Iran have countenanced such
arrangements and firmly retain state ownership of
their oil production.
However, given the present mayhem in Iraq some
believe Baghdad is not in a strong position to avoid
a PSA formula if it wants to ratchet up production
in the foreseeable future.
With 115 billion of oil reserves Iraq should be one
of the world's top three oil producers but its
ill-maintained oilfields have been struggling to
pump 2.5 million barrels-a-day in a good month. The
government has ambitions to raise production to more
than 4 million b/d in five years and longer term to
6 million b/d.
Some $20 billion is needed to repair the industry's
infrastructure in order to double current oil
output. But, expertise, as much as money is needed
and without huge security improvements it will be
difficult to lure foreign companies to Iraq other
than areas in the north.
ameinfo com
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