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

Energy Wars hit Mexico - EPR attacks Gas / Oil pipelines - serious economic damage

There has been little comment about 4 blasts which broke 36" (91cm) pipelines carrying natural gas, liquefied petroleum gas, crude oil and gasoline over the past week in Mexico. The Popular Revolutionary Army, or EPR, has claimed responsibility for the attacks to state monopoly Pemex's pipelines and said this was .."the beginning of a "national campaign of harassment against the interests of the oligarchy and this illegitimate government."

In its statement, the EPR linked the explosions to an ongoing political battle in the southern state of Oaxaca, where teachers and leftist activists have been demanding the resignation of Gov. Ulises Ruiz since last year.

The EPR said its campaign of "harassment" would continue until President Calderón and Gov.Ruiz delivered two named comrades "alive" following their disappearance May 25 in Oaxaca.

Victor Lopez head of industrial group Canacintra told Reuters "There are more than a thousand, nearly 1,200 companies, that have been greatly hurt because of the lack of (gas) supply," which has affected companies such as Honda Motor,(Guadalajara) Nissan Motor Co.(Aguascalientes) and General Motors. Mexico's major glass manufacturer, Vitro, said on Wednesday it had halted operations at two of its plants, meaning $800,000

It is the major industrial areas in central states like Aguascalientes, Guanajuato, Jalisco and Queretaro. ...and repairs are taking there time.

Pemex said on Thursday it had restored natural gas supply to the central city of Queretaro and hoped to restore supply in Jalisco and the city of Guadalajara by midnight.

"Workers at Petroleos Mexicanos connected a bypass to the Mexico-Guadalajara natural gas duct and began tests," the company said in a statement.

Mexico has deployed soldiers and federal police to protect Pemex's oil wells and pipelines from further attacks.

There was a massive explosion at 8.55 am on Friday July 30th 2004 at the Ghislengien Industrial Estate in Belgium, 16 people died immediately several suffered a lingering deatah by burns and over 200 people were injured. see THE BIG BANG THEORY – The Bigger the Bang, the Louder the Silence

Europe increasingly relies on natural gas - much of it from Russia (see previous story) , who have shown how they use it as a weapon , the Mexican guerillas have have taken a more direct way of affecting national governments.

Iraq - Electrical power running out - an allegory and an epitaph

As the US military effort concentrates on force protection and retreats into Baghdad and the Green Zone, externally supplied electricity is being denied as power lines and transmission towers, are destroyed, and even removed as scrap metal.

Karim Wahid Hasan, is the Iraqi electricity minister and tells the NYT "Now Baghdad is almost isolated, we almost don't have any power coming from outside."

He said of the nine lines feeding Baghdad , seven were out of action last week and that the capital's ageing power plants are struggling and the city is getting only 6-7 hours per day electricity mains supply, the rest of the country is said to be averaging some 9 hours per day.

Geostrategy - Direct claims that the Iranian-sponsored Mahdi army has grown over 2 years. Funded by millions of dollars as well as shipments of weapons from Iran it has grown from 10,000 to more than 300,000 fighters after a massive recruitment effort this year.

When Karim Wahid Hasan, visited Washington to meet U.S. Department of Energy Secretary Samuel W. Bodman after his visit to Baghdad in July, they both signed a Memorandum of Understanding (MOU) between the U.S. Department of Energy and the Iraqi Ministry of Electricity to formalise the increased bilateral cooperation between the two nations in the areas of energy analysis, science, technology, and energy awareness and education - great co-operation but no 'lecky for Sadr City. Pic. Iraqi Deputy Prime Minister Barham Saleh, left, discusses future energy plans for Iraq with U.S. Secretary of Energy Samuel W. Bodman in Baghdad July 19th.

More importantly Bodman of course also met the Iraqi Minister of Oil, al-Shahristani travelling with Karim Wahid Hasan and he took the opportunity to ;

" ...stress the importance of developing and implementing a national hydrocarbon law, which will allow much needed foreign investment in the oil and natural gas sector of their economy and ensure Iraq’s natural resources are used for the benefit of all the Iraqi people. In addition, at Minister al-Shahristani’s request, Secretary Bodman convened a meeting of oil sector leaders (nine major oil companies — including Shell, BP, Exxon Mobil, ChevronTexaco and ConocoPhillips) to discuss how the private sector can help Iraq develop its energy infrastructure and the role of a national hydrocarbon law in Iraq. During their meeting the business leaders discussed infrastructure rehabilitation and expansion opportunities, technology and technical capabilities, and the need for transparent and consistent laws and guidelines that will allow investment to flourish."

Which is US Department Of Energy speak for Maliki and pals to use the new, US inspired constitution of 2005, to guarantee a major role for foreign companies under the guise of Production Sharing Agreements (PSA's by which US oil majors have systematically raped countries throughout the world) to give US oilcos control over dozens of fields, including the fabled super-giant Majnoon field. (As planned in the State Department,"Oil and Energy Working Group" document of April 2002, policy-development initiative "The Future of Iraq".) Antonia Juhasz ( visiting scholar - Institute for Policy Studies, author of "The Bush Agenda: Invading the World, One Economy at a Time." )has a stunningly well argued piece in the LA Times 8/12/06 on how Baker's Rock Steady Crew argue for hastening up this policy - Recommendation - No 63

"the U.S. to assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise" and to "encourage investment in Iraq's oil sector by the international community and by international energy companies."

Recommendation No. 26 of the Rock Steady Crew calls for a review of the constitution to be "pursued on an urgent basis." Recommendation No. 28 calls for putting control of Iraq's oil revenues in the hands of the central government.

What really pisses off everyone (especially Bodman who is failing to deliver what the oilcos want) is that the (otherwise engaged) current Iraqi government has not passed a national oil law. Nor do Iraqis want them to and they want continued control by a national company. The powerful and determined oil workers union also resolutely oppose de-nationalization. (and the piratisation privatisation of their national assets).

Meanwhile everyone waits in the fitful dark for Mr Gates to visit in the wake of Our Dear Leader and prepare Plan "B" which has already picked up the military handle..."The Surge" - do we send 30 or 40,000 more troops ?

The horrible truth, slowly dawning in London on the casualists of Chatham House and the soft centred idealists now at the centre of Conservative affairs is thatBuh and his gang of shadowy, nasty, mercenary cheerleaders has got us all into a very dark place.

Their brutal agenda of commercial greed, have dealt a fateful legacy - peddled on the back of an illusion of the home grown myths of military excellence and endeavour, supported by compliant, spineless, media circus determined to ignore the stark reality on the ground and anxious to retreat into and fob off the children with a fantasy land that requires just one last final heave.

Maybe the whole despicable lie will be revealed in the ill lit streets of Baghdad and a hundred Iraqi towns and cities, as the oppressors and occupiers are turned on in a final earth shattering, murderous assault.

Perhaps a final Press Release from the Foreign Office will float to rest on the mess of bloodied corpses bearing, as epitaph, the thoughful words of (GMILF ?)Margaret Beckett...

"This paper is threadbare, insubstantial and just plain wrong. Chatham House has established a great reputation over the years, but this paper will do nothing to enhance it."

Pic(Reuters) shows the Shiite Mahdi Army parading (and tramping on US / Union jack flags) on the anniversary of the death of Mohammad Baqr al Sadar, the father of cleric Moqtada al Sadr, in Basra on Nov. 28 2006.

Kazakh oil / National Energy - Russia - China - India and territorial / economic dominance

The Kazkah government looked set to approve by the end of December the China International Trust & Investment Corp (CITIC) . bid to $1.9 billion to buy the Kazakhstan oil assets of Canada's Nations Energy Co., The deal is dependent upon several approvals including the waiver of pre-emptive rights of the Kazakh government, which last year amended laws to give it first option on the sale of mineral resources and possibly on corporate deals.

It is further evidence of China's ruthless quest to hoover up oil supplies, to meet their massive growth in demand.

CITIC is reported to be planning a "medium-size'' oil refinery in the Mangistau Oblast region when they have found some strategic Kazakh partners.

CITIC quoted in Hong Kong rose 1% to HK$1.62 , their biggest gain in a year.
www.cnpc.com.cn/english/

However Russian news service Interfax reports (16th Nov) from (old) Kazakh capital Almaty (pic of Statue of Indpendence) that Energy and Natural Resources Minister Baktykozha Izmukhambetov told a committee of the Kazakh parliament that the proposed sale should be blocked and

"We should, or rather I should in the first place, take urgent measures to stop this agreement over Karazhanbasmunai,"

Karazhanbasmunai is the unit of Nations Energy that operates the Karazhanbas oilfield in western Kazakhstan.

Kazakh Channel 13 TV reports (BBC monitoring 16th Nov) that fear of Chinese expansion is today's political fashion. MPs who recently had an outburst of China phobia are setting the tone for xenophobia. Some MPs say that if China continues to buy out Kazakh oil, the republic would soon become merely raw materials appendage to Beijing.

China National Petroleum Corporation (CNPC) acquired Calgary based PetroKazakhstan Inc. in a US$ 4.18 Mn (HK$32.6 billion) deal on October 26th 2005 which bought them the Karazhanbasmunay bloc, the second biggest (known) production asset in Kazakhstan and co-operation with KazMunaiGaz to operate and manage the PK project. It was said at the time that oil hungry India's Oil & Natural Gas Corp was also in the bidding. (see connection to LUKoil below)

Part of the deal involved the development of the Darkhan field in the North caspian 60 Km south of Bautino in working waters of 3-5 metres which is said to have 480Mn Tons of fuel equivalent.

KazMunaiGaz produces about 16 % if Kazakh oil output. It controls 65 % of Kazakhstan's oil transport routes and 100 percent of gas transport pipelines and in 2005 produced
65 million barrels with revenues of t US$4.7 billion (Ђ3.8 billion), 31.4% up on 2004.

Overall Kazakh oil output , says the Oil Ministry, is planned to grow from the current 1.3 million barrels to 3 million barrels a day by 2015, according to the Oil Ministry.

CITIC , quoted in Hong Kong rose 1% to HK$1.62 , their biggest gain in a year.
http://postmanpatel.blogspot.com/search?q=Nursultan+Nazarbayev+embraces

Readers might remember Lord Patel posting about Kazakh President Nursultan Nazarbayev's ambitions on Thursday, April 6 2006
Nursultan Nazarbayev embraces Mother Russia ... and Putin

"Russian state-controlled media, including the RTR television channel and Radio Mayak, report Kazakhstan’s President Nursultan Nazarbayev’s recent three-day visit to Moscow as a potential turning point in Putin’s struggle for control of the Caspian Basin’s oil and gas reserves...."

or

Monday, March 27 2006
Hashim Djojohadikusumo sells Nations Energy to Vagit Alekperov

"Vagit Alekperov told me over the gaming tables in Northern Cyprus that he has his eyes on Nations Energy – a price tag of $2.5Bn is attached. Expect news any day he said."

Two lessons :
1. President Nursultan Nazarbayev plays a long game.
2. So does Hashim Djojohadikusumo and his Indonesian pals, owners of National Energy Ltd (until December)
3. Don't hang around gambling tables and expect to be told the truth, the whole truth .....

A 962-kilometer (598-mile) Atasu-Alashankou pipeline completed in December at a cost of $800 million transports crude to China National's refinery in Dushanzi, close to China's northwestern border with Kazakhstan. Russian state owned Transneft have announced the intention to export 7 million tons (51.3 mln bbl) in 2007, to China on this route. Only this week have Transneft announced the final part of the pipeline from Russia to China with the first leg from Taishet in East Siberia to Skovorodino near the Chinese border to be completed by the end of 2008 for which China will pay US$400 Mn.