Royal Dutch Shell Plc  .com Rotating Header Image

Lloyds List: Small players challenge multinationals in race for Iraqi oil

Range Oil ‘ Gas and DNO lead the charge in a Kurdish region which is relatively unaffected by security problems sweeping much of the country, writes James Brewer, Lloyds List

Published: May 01, 2007

GIANT oil companies could be overtaken by one or more junior operators in the struggle to open new frontiers in Iraq.

Range Oil ‘ Gas, a subsidiary of Range Metals recently listed on Canada’s new exchange for emerging companies and on the Frankfurt stock exchange, is targeting the extremely sweet oil grades in the Kurdish region of Iraq.

So far it has received very sweet news, as the first company to secure a licence for oil discovery and exploration with both the Kurdish semi-autonomous regional government and the Iraqi central government. Its target is a huge oilfield with the potential for around 1bn barrels.

Although Iraq as a whole constitutes a very high risk factor for oil operations, Kurdish areas have been very quiet in security terms in recent times.

Range Oil director and geologist Roger Bethell and his team have deployed what appears to be exclusive industry contacts to secure in northern Iraq a substantial proven field, named Chia Surkh, exploration blocs, and the rights to negotiate a licence to build an oil refinery to process between 20,000 and 50,000 barrels per day.

They are also keen to build a power plant that could use gas to produce electricity.

Everyone is aware of Iraq’s hydrocarbon potential, but attacks and disruptions have restricted the national oil output since the US invasion to 2m bpd. In the 1980s the figure was 3.2m bpd.

It is 80 years since the first well was drilled in Iraq, on the Kirkuk structure, a project followed up with 73 major fields, nine of which are termed super-giants and 22 of which are giants.

Ashti Hawrami, natural resources minister for the Kurdish region of Iraq, is aiming to achieve production of 1m bpd from the territory by 2012. Production sharing agreements are expected to be signed shortly, after which Range plans an extensive seismic programme, and to drill at least five wells in what are viewed as low risk areas.

Range has completed a fundraising to provide development capital for some of its target projects in the coming year. Right now, the focus is on Kurdistan, with its sizeable proven field.

Where exactly are the best prospects? No-one may know that better than Said Hmoud Dhiab Al-Ani, who was head of national oil and gas development for the whole of Iraq for some 30 years. Dr Said has just been appointed a consultant by Range.

Mr Bethell says that even according to old data, Kurdistan is estimated to have $45bn worth of oil in reserves.

When Saddam Hussein was eager to find more oil in the early 1970s, efforts were concentrated in the south.

The Kurdish region was examined briefly, but what could have been exploited readily appeared not to make economic sense at a time of low oil prices.

Range’s technicians and consultants say that reserves are at least four times greater than what was earlier estimated by others.

‘People earlier thought they had a couple of hundred million barrels of oil at Chia Surkh, but it could potentially contain a billion,’ Mr Bethell said.

Drilling depth often will be a modest 1,800 m. Range believes it can produce around 20,000 bpd within 12 to 18 months, rising to a maximum of 60,000 bpd. Cost per well is estimated at under $4m, with an operating cost of 50 to $1 per barrel.

There have been identified more than 500 geological structures believed to contain huge volumes of oil in Iraq, but most of these have yet to be drilled. At present almost all Iraq’s oil is produced from just 20 fields.

The majors could commit $20bn into rebuilding and developing Iraqi oil and gas fields but Shell, ExxonMobil, Total, BP, Chevron and others want a clearer legislative framework for any investments.

Other minor oil companies have been conducting wildcat exploration in the Kurdish region: Heritage Oil of Canada, Sterling Energy of the UK and DNO of Norway, which says it has made a commercial discovery close to the Turkish border and is ready to start producing.

DNO, which went ahead with exploration at its Tawke concessions in the understanding that it had no need for approval from Baghdad, has a production sharing contract with the Kurdish regional government

DNO is awaiting agreement between the Kurds and the central government on how profits are to be shared out from Tawke.

The Norwegian company is seeking from Baghdad an export licence which will enable it to hook up to the major northern export pipeline through northern Turkey.

royaldutchshellplc.com and its also non-profit sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Lloyds List: Small players challenge multinationals in race for Iraqi oil”

Leave a Comment

%d bloggers like this: