Newsletter – November 2021

We were very happy to participate as an exhibitor for the first time at this year’s Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), which took place in November. It was great to be amongst a select few Iraqi energy services companies to exhibit in the event. We had the opportunity to highlight our growing service offerings to the energy sector in Iraq

Al Majal had the pleasure of hosting an afternoon with Basra’s Children Orchestra at the Al Majal Business Park – Burjessia (AMBP). The event took place during part of our company team retreat, starting with an amazing performance by the Orchestra, and followed by a dinner at Al Majal Bean.

The country’s economy is gradually recovering from the double oil and CoVid-19 shocks of 2020. In H1 2021, Iraq’s GDP grew by 0.9% y-o-y. Iraq’s non-oil economy grew over 21% in H1 2021 following a solid performance in the services sectors along with the easing of containment measures, a pick-up in vaccination rollouts and a decline in infection rates. The non-oil economy recovery outpaced the slowdown in the oil sector, which was down by 10% in H1 2021 as the country attempted to meet its OPEC+ compliance obligations.

Federal Iraq and the semi-autonomous KRG have reached a notional agreement to implement a revenue-sharing deal that stalled since the ratification of the 2021 budget on March 31. So far, the Iraqi Finance Ministry sent two budget transfers of US$ 138 M on July and August to the KRG this year.

Iraq’s October oil production edges lower at 4.30 Mb/d, down from September’s 4.34 Mb/d according to Iraq Oil Report. Federal Iraq accounted for 3.86 Mb/d of total production, just below the 3.98 Mb/d average in September, while KRG fields produced 437 kb/d, declining in recent months.

Iraq’s nationwide oil exports fell slightly to 3.523 Mb/d in October, down 21 kb/d from September levels. In fact, federal exports increased to 3.12 Mb/d in October from 3.081 Mb/d in September, while KRG exports fell from 463 kb/d in September to 403 kb/d in October due to tanker loading timings.

Iraq appointed KPMG to audit financial movements surrounding a US$ 10 B oil-for-infrastructure deal signed between Iraq and China in 2019. The Sinosure framework agreement became effective in October 2020

On 9th November, Iraq’s Council of Ministers approved INOC to directly negotiate with US firm Chevron on the development of oilfields in the Dhi Qar province, potentially boosting capacity by 600 kb/d.

American investment firm Twelve Seas and UK’s Wood Group are joining US oil services giant Halliburton to bid for ExxonMobil’s stake in West Qurna-1. Twelve Seas will fully fund the acquisition and future proportional development of the field, which will be operationally managed by Halliburton.

Amid plans to limit reliance on Iranian energy imports, Iraq is in talks with Saudi Aramco for a multi-billion gas deal covering energy, power and petrochemical contracts.

The ministry of oil aims to stop gas flaring at its oilfields by 2027, as the country represents the second largest flaring country globally after Russia, with about 40% of production flared.

Shell is in talks with Iraq’s oil ministry to expand its gas capacity, taking Basrah Gas Company (BGC)’s capacity to 1.6 Bcf/d.

Iraq seeks to raise the share of clean energy to 33% by 2030 building on solid expansion in solar capacity, according to the country’s oil minister. The plan is to develop 12 GW of installed solar capacity by the end of the decade.

Though Iraq’s recent national parliamentary elections in October marked a hard-won success for the country, they instigated a fresh wave of violent demonstrations

The Ministry of Finance said it is working on preparing legislation for the 2022 budget, which was supposed to be approved the on the 1st of October.

Italy’s Eni made three oil and gas discoveries in Egypt’s Western Desert, with potential for up to 50 Mbbl of oil equivalent reserves.

The Kuwait Oil Co. (KOC) plans to invest more than US$ 6.1 B in exploration and production over the next five years, up to 4 Mb/d by 2040.

Middle East oil drilling has still not recovered from the sharp drop induced by the pandemic and the related OPEC+ production cuts. However, it is likely to start expanding as quotas increase and production growth plans in the UAE and Iraq get underway. Iraq added a further three rigs in October for cumulative gains of 16 since beginning-2021. All rigs are onshore targeting oil. This rebound comes as INOC and its subsidiaries signed a series of deals with international service companies.

Gas drilling is starting to show a moderate recovery, supported by the beginning of Qatar’s LNG expansion projects.

Note: Iraqi gas rigs are not reported by Baker Hughes, likely because Iraq reports gas rig figures clubbed with oil rigs and/or lack of response from contractors (drilling for non-associated gas is at minimal levels compared to oil, although it should pick up as Sinopec’s development of Mansuriyah and the Pearl Petroleum consortium’s expansion of Khor Mor move forward).

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