Chinese (CNPC) sign services contract for Al Ahdan oilfield, Ahdab, Wasit province, Iraq for 20 years.

It wasn't only the invasion of Georgia that happened while the Olympics diverted attention - the US oilco's have been sidelined again on sigining contracts for Iraqi oilfields - this time by the Chinese.

A Chinese company has a contract to supply a new electricity power station in al-Zubaidiya in Wasit province, Iraq. This week it has been reported (WSJ and NYT) that China National Petroleum Corp (CNPC)has been awarded , and the US$3 Bn. contract signed off, for the nearby Al Ahdan oil field, which is expected to start first crude oil production in 2009, (which will feed the power station) according to Assem Jihad , an Iraqi oil ministry spokesman who spoke to Dow Jones Newswires by telephone from Baghdad yesterday.

Jihad said the oil field would produce up to 25,000 barrels a day once the first stage has been completed after a year and , "The field would reach a production capacity of 125,000 barrels a day in later stages"

The Al Ahdan field is located at Ahdab in the Shiite dominated Wasit province, about 160 kilometers southeast of Baghdad. (See pic - River Tigris snakes E-W)

The 20-year oil service contract contract was signed in Beijing yesterday during a visit to China by Iraqi oil minister Hussain al-Shahristani. The Al Ahdab field in Wasit province, has a proven oil reserve of 1 billion barrels.

The signing makes China National Petroleum Corp. the first foreign oil firm to enter an agreement with the central Iraqi government to invest in the domestic oil industry since the 2003 U.S.-led invasion. This contract replaces a a production-sharing agreement made with Saddam Hussein's regime to develop the Al Ahdab field, giving it a 23-year stake in profits. It is the first Saddam-era oil deal to be honored by the new Iraqi government.

Before 2003, Iraq had oil agreements with China, Russia (which LUkoil are trying to re-negotiate) , Indonesia, India and Vietnam, three of them production sharing.

The new service contract specifies that China will receive fees for work carried out on the field but Iraq will keep the profits, the oil ministry said in a statement last week.



South Korea signs MOU with Iraq on Oil Field Development

There is no more news since of the Memorandum of Understanding (MOU) signed by Oil ministers from Iraq and Korea on April 12th 2007 that could help South Korean companies secure a bigger stake in oil and gas fields in Iraq. Iraq currently supplies 15.4 million barrels of crude per year to South Korea, which is less than 2% of South Korea’s total crude imports.

Iraqi Prime Minister Nuri Kamal Al-Maliki was at the time in Seoul on a 3 day visit. The South Korean government said earlier that the two governments will seek ways to enhance cooperation in the fields of natural resources, energy and construction in Iraq during Al-Maliki's visit. South Korea is the world's 10th largest energy consumer and imports 96% of their energy needs.

The MOU was signed by Kim Young-ju, South Korea's minister of commerce, industry and energy, and Hussain al-Shahristani, Iraqi oil minister.Under the MOU, the two countries will establish a committee for cooperation of resource development and hold high-level working group meeting in Baghdad or other countries to "discuss bilateral cooperation in energy sector". The two sides also agreed to increase investment in oil development in Iraq.

The South Korean government expressed their strong willing of developing the Halfaya oil field in southern Iraq during the ministerial meeting. The Halfaya oil field is estimated to contain up to 3.8 billion barrels of oil.

South Korea imported 15 million barrels of crude oil from Iraq last year, making up for 2 percent of South Korea's annual needs.

At the time about 2,300 South Korean troops are stationed in northern Iraqi city of Irbil.


However only last month a South Korean consortium has agreed to participate in oil projects with Iraq's Kurdish regional government to secure an estimated 1.9 billion barrels of oil, according to group leader Korea National Oil Corp (KNOC).

The consortium signed a memorandum of understanding on June 25th 2008 , with the regional government to participate in eight oil reserve projects estimated to have reserves of 7.2 Bn. barrels of oil.

The group, which includes builders such as Hyundai Engineering & Construction Kolon Construction and Doosan Construction , also agreed to participate in the construction of infrastructure worth $2.1 billion.

Disputes over the federal oil law between the largely autonomous northern region of Kurdistan and Baghdad have stalled international investment in Iraq.

Baghdad controls Iraq's export pipelines, and until the Kurdish region reaches an agreement with the federal government it will remain (in theory) unable to produce more oil although there are some small "widlcat drillers" at work.Norwegian wildcatter Det Norske Oljeselskap ASA, or DNO (They are also the second-largest operating company on the Norwegian Continental Shelf with 24 operatorships and interests in a total of 46 licenses.) has in fact hired Great Wall Drilling Co., a unit of Beijing-based China National Petroleum Corp., to drill for oil.

In March 2008, DNO signed revised agreements with the Kurdish Regional Government
(KRG), amending the production sharing contract (PSC) for the Dohuk and Erbil license areas.
The Dohuk area was divided into two license areas, one for the Tawke oil field and one for the
remaining Dohuk area. The purpose of the amendments has been to bring the PSCs into
conformity with the Oil and Gas Law of the Kurdistan Region of Iraq and the standard
commercial terms published by the KRG last year, including royalty, cost recovery and profit
sharing components. DNO s working interest share in the Tawke PSC is 55 %. Tawke PSC is considered to have 231 Mn barrels of oil.

Other drillers are : Canada's Western Oil Sands Inc. and Heritage Oil Corp.; Switzerland-based Addax Petroleum Corp.; Genel Enerji, a unit of Turkey's Cukurova Holding AS; and the U.K.'s Sterling Energy Plc are all exploring the region(See Bloomberg lengthy article on the wildcat scene July 1st 2007)

See posts - Saturday, March 01, 2008 Stop the War , Iraqi Oil Union Leader Hasan Juma and Ibrahim Mousawi - resistance personified and Sunday, July 09, 2006 Perfidious Albion cosies up to Kurdistan