Judgement of Solomon1 Mar 2025 14:41
The task of determining $/bbl to be returned to the oil contractors in the KRI is daunting.
Why?
Because, as you must be aware, these costs (both development- and production) vary from country to country, from region to region, from oilfield to oilfield and from geological formation to geological formation.
For example, you cannot compare SH costs with those of Saudi Arabia’s Ghawar Field, nor can you compare SH costs with those of the UK’s North Sea fields. Can DNO’s development costs for Tawke (look at their very low $/drilled well costs) be a valid comparator? Should expensive errors made in drilling decisions be considered (look at what the SH6 water well cost)? Should (management / technical?) errors made in field development be considered (look at what the discontinued development of Sheikh Adi and Ber Bahr cost)?
Likewise, you cannot compare the costs of developing and producing newer fields around Basrah (state actors involved in drilling-, infrastructure development-, production- and management costs) with SH (private, foreign Western contractors (albeit with some local labor) doing almost everything). Apples cannot be compared with Oranges.
The chosen external consultants will (should?) have data on all of the world’s oilfields – their development- and operating costs, their route-to-market costs, their management costs, etc. All of this must be considered with the requesting authority (Baghdad) and, IMO, any conclusions reached as fair $/bbl remuneration cannot just be put to Baghdad as a "that's it, thank you for the fat fee" but will have to be signed off / agreed by the IR gov.
Sisyphus comes to mind…
Sign In
Follow the stocks
