Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
" pressure will mount in keeping all those hundreds of oil workers employed."
For a bit of fun I wondered what would Baldrick's cunning plan be in order to save these people. And after (tele-) bribing him with the biggest turnip I can find (his consultancy fees in modern days language), here it is:
The MNR agrees with MOO to sell and "truck" the Kurdish oil to the refineries in and around Baghdad at a discounted price (say Brent - 34) and use the proceeds to pay for past invoices.
A- MOO should be relieved that they don't have to pump 400 kbopd from Basrah to these refineries, but instead sell it to the world market.
B- The KRG is happy as they find a temporary market for their effectively 'stranded asset' and putting it to good use to reduce their liabilities.
C- The IOC's are happy because they are being paid
D- The jobs of hundreds of oil workers are saved.
PS. For those who don't know about Baldrick's cunning plans:
https://www.google.com/search?q=baldrick+cunning+plan&rlz=1C1GCEA_enGB770GB770&oq=baldrick&aqs=chrome.1.69i57j0i512l3j46i340i512j46i512j0i512l3.23083j1j7&sourceid=chrome&ie=UTF-8
Best Regards ValueS (Sorry, Blackadder:D)
"The MUCH bigger issue is the 4Q 22 and 1Q 23 receivables."
It is if GKP (and partner MOL) continue to invest in Shaikan. They must suspend any further investment right now until ALL receivables are paid. Meanwhile, just keep a skeleton structure with absolute minimum running costs until the matter is resolved
There is already a 3rd pipeline already! It is called the strategic pipeline and has a capacity of 800 kbopd. It runs from Basra in the South to Haditha in Western Anbar province according to the latest info I have:
https://www.gem.wiki/Iraq_Strategic_Pipeline
It currently feeds crude to the following refineries:
1- Nasiriya Refinery 30 kbopd
2- Samawa Refinery 30 kbopd
3- Shanafiya Refinery 20 kbopd
4- Najaf Refinery 30 kbopd
5- Karbala Refinery 140 kbopd - when completed.
6- Daura Refinery 140 kbopd https://www.offshore-technology.com/marketdata/daura-refinery-hydroskimming-iraq/
7- Siniya Refinery 20 kbopd
8- Haditha Refinery, Iraq's oldest refinery, 36 kbopd. Contract has already been signed with Honeywell UOP to build another 70 kbopd refinery in Haditha: https://www.dmsprojects.net/iraq/projects/ministry-of-oil-haditha-oil-refinery/PRJ00025820
Within the "vision" of the strategic pipeline is having Haditha as an oil Hub for Iraq where it could receive oil from either Basrah and/or Kirkuk and be able to export oil from Haditha through Jordan and/or Syria, as well as being able to export oil from the South to Ceyhan, Turkey or from the North to the Southern terminals.
However, the pipeline between Kirkuk and Haditha was very badly damaged during the Daesh war. From what I can gather there is a limited amount of oil (around 70 kbopd?) being transported via this pipeline and oil is being "trucked" from Haditha to Jordan at a small rate of ~ 30 kbopd.
Best Regards ValueS
"Iraq contracts are service contracts only on $ 2.5 a barrel !"
Not necessarily for one thing.
For example, GazpromNeft gets paid $5.50 a barrel for its development of the Badra oil field. While the lowest paying contract of $1.15 a barrel is with Lukoil for the development of the West Qurna 2 oil field. Which is what I gathered by reading the following article:
https://oilprice.com/Energy/Energy-General/Why-Russian-Oil-Giant-Lukoil-Wont-Give-Up-On-This-Huge-Oilfield.html
The other thing, IMO having the KRG (temporarily) agreeing to having SOMO as the selling agent of Kurdistan oil does not necessarily mean that the contracts with the IOCs will have to change. They may remain as they are for now.
Best Regards ValueS
I don't think they were maxed out. They had to cut southern production back in October22 when OPEC+ decided to cut production by 2m bopd and every OPEC producer had to comply with a lower quota. The IFG can now simply re-adjust to take into account the pipeline outage. Even if they can't fully compensate, the upcoming 211 kbopd quota reduction from 1st of May could simply be (largely) ignored if the outage continues. IMO Turkey can't play tough here as they would also lose badly needed revenue and not just Kurdistan's oil.
I think they are just desperate to get it operational again regardless of the specs. They have finished both Salahuddin1 and Salahuddin 2 plants (70 kbopd each). They also working to get the North plant with 150 kbopd operational and two lube plants with 5 kbopd each.
Sorry BB, I seem to have missed the Baiji refinery link (slap, slap naughty boy), but here it is::
http://www.xinhuanet.com/english/2021-01/11/c_139659155.htm
It is worth noting that Iraq has finally inaugurated the 140 kbopd Karbala oil refinery with modern technology:
https://www.enerdata.net/publications/daily-energy-news/iraq-inaugurates-140-kbd-karbala-oil-refinery.html
Iraq has also successfully doubled the run rate of the Baiji refinery during 2022 to 140 kbopd (from 70kbopd in 2021).
Also, worth noting that Kuwait's 615 kbopd Al-Zour refinery is nearing completion:
https://www.argusmedia.com/en/news/2426722-kuwait-brings-second-phase-of-alzour-refinery-online
This refinery is specifically designed to handle heavy crude .
In addition, the recently opened Saudi Arabia's Jazan Refinery has reached full capacity::
https://www.mees.com/2023/3/17/refining-petrochemicals/aramco-ceo-jazan-refinery-throughputs-hit-400000-bd-capacity/3cd7df60-c4cb-11ed-84d6-09d9565b4125
So, in just 2 years, there has been an increase in refining capacity of sour heavy/medium crude in the Gulf region of 1.225 mbopd. Which undoubtedly would affect the supply of sour heavy crude to the market; and hence price.
Best Regards ValueS
"Ibrahim Kalin, Turkish presidential spokesperson, told the country’s state media on Wednesday that “the PKK has a very serious establishment in Sulaimani” and Ankara will not disregard this."
https://www.rudaw.net/english/kurdistan/08042023
2014 I think is the year when Maliki (the PM then) decided to stop budget payment to Kurdistan as the KRG continued to sell the oil independently of Baghdad. It is also the year when the big ISIS invasion occurred , and a third of Iraq's territory was captured. That caused a massive liquidity problem for the KRG which forced them to pre-sell the oil to trade housed such as Glencore, Vitol and Gasprom.
When PM Sudani said that the IOCs exploited the KRG in 2014, the first thing jumped to my mind was the trade houses oil deals with prepayment and not the operators of the Kurdish oil fields! I think Sudani is a pro-Kurdish PM, or at least not hostile to them. Besides, he heavily relies on their support in parliament to stay in his post. The fact that the ICC arbitration court ruling came out during his premiership isn't his fault, it is just a coincidence.
For GKP, there is also the additional layer of protection that it actually DISCOVERED the Shaikan oil field AFTER Kurdistan became a semi-autonomous region. There is a special legal treatment for this case.
Best Regards ValueS
Forgot to add that yesterday the 140 kbopd Karbala Refinery mentioned in oilprice.com was declared open By Iraq's PM. It is capable of handling Sulphur rich medium/heavy oils
https://youtu.be/iYA6XFlXF1k
"The banking collapses that have sapped confidence in oil markets and brought oil prices closer to the $70 per barrel mark have been followed with great interest across the Middle East. For the first time in many months, flat prices were close to fiscal breakeven level as countries like Bahrain, Algeria or even Oman are now asking themselves if balancing the budget is a manageable task."
https://oilprice.com/Energy/Oil-Prices/Will-Banking-Fears-Force-Middle-East-Producers-To-Cut-Prices.html
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Good prediction by oilprice.com just 6 days ago.
Best Regards ValueS
"what is the best case scenario here?"
To me, the best case scenario is:
1- SOMO to respect the sanctity of the PSC(s) especially regarding payment on time and only change any references of MNR/KRG to SOMO/ICG as the other side of the contract(s). The PSC(s) clearly state that payment of a month's production must be made no later than the 15th of the following month provided the contractor issues the invoice within the first few days (I think 3 days) and an up to date R-factor calculation.
2- Put a clear plan for a quick payment of the past 6 months invoices that the MNR failed to pay.
3- Pricing is Brent based (not KBT), hopefully with lesser discount :)
Well, I can dream can't I! :D
Best Regards ValueS
"Iraq's autonomous Kurdistan region is to resume oil exports though Turkey Monday but in the future they will be supervised by the federal government in Baghdad, officials from both sides said.
The outcome, thrashed out in talks between federal and regional officials, spells the end of independent oil exports by the Kurdish regional government and marks a clear limit to its autonomy.
Ankara had stopped handling Iraqi Kurdish oil last month after an international tribunal ruled in a nine-year-old dispute that Baghdad was right to insist on overseeing all Iraqi oil exports.
"Sales of Kurdistan crude will be managed from now on by the State Oil Marketing Organization," a federal government official told AFP on Saturday.
A "joint committee" formed by the federal and regional governments will supervise the export process, the official added."
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Just like expected, lets hope they'll do what they said they'll do. Turkey should also cooperate.
Best Regards ValueS
Iraq would like to send even more than 35MTA through its own pipeline to Ceyhan. Unfortunately, the Iraqi portion of the pipeline got blown up many times by terrorists (who were supported by Erdogan) even before Daesh. A bit like the way Nord Stream pipelines got blown up by a mysterious terrorist! While at the same time the Kurdish portion was built (with the blessing of Erdogan). Does that not count as Force Majeure condition?
Not only this saga is prolonging KRG financial pain, but IMO it also unintentionally benefiting the Federal Government. Because of the inevitable rise in oil price. This rise not only compensates the federal government for the loss of the revenue from the 75 kbopd exports to Ceyhan from the Kirkuk oil field, but also some extra cash on top. Iraq exports ~ 3.3 mbopd from the Sothern ports. In addition, the Federal Government can increase oil production in its southern fields without violating the OPEC+ quota; such increase can be justified by the cut of production in Kurdistan and Kirkuk. There is absolutely no gain for the KRG by being stubborn here while the federal government could stay firm for as long as it takes (as long as there are no internal/external pressures.) All IMO.
Best Regards ValueS