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After the Council of Ministers' decision... What is the story of the "settlement" with the Korean Kokaz regarding the Crutch gas field?
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Baghdad today - follow-up
On June 1, 2011, the Iraqi Ministry of Oil announced the signing of the initial contract for the development of the Crutch gas field with the Korean company Kukas.
The Minister of Oil at the time, Abd al-Karim Laibi, said in a press statement that, "The ministry signed, with the Korean Cogas Company, the initial contract for the development of the Crutch gas field in Anbar Governorate."
For his part, the Director General of the Contracts and Licensing Department in the ministry at the time, Abd al-Mahdi al-Amidi, said that "the signing of the contract took place without the presence of the Anbar Provincial Council, and the media."
The deputy head of the Anbar Council at the time, Saadoun Obaid Al-Shaalan, said in 2010 that "the council issued a unanimous decision stipulating that gas production and related manufacturing industries be within the province and to prevent its export as a raw material," adding that "the council reaffirmed its previous decision in The year 2009 stipulates that the export of gas from Anbar as crude oil to neighboring countries is not completely allowed.
Al-Shaalan explained that the Iraqi Oil Ministry included the Akkas field in the next licensing round - without the knowledge - or even consulting the governorate, considering that it "did not care about the desire expressed by a group of international companies to invest in the aforementioned field during the previous years."
Al-Shaalan explained that the Iraqi Oil Ministry included the Akkas field in the next licensing round - without the knowledge - or even consulting the governorate, considering that it "did not care about the desire expressed by a group of international companies to invest in the aforementioned field during the previous years."
And the Iraqi Oil Ministry announced that it would sign a contract to develop the Crutch gas field with a Korean company, after the Kazakh company, Kaz Monaya, withdrew due to disagreements with the Anbar Provincial Council.
The Kazakh company, Kazmunaya Gas, withdrew from the project to develop the Akkas field to extract natural gas in Anbar Province, due to differences that emerged during negotiations with the Iraqi government.
It is noteworthy that the Kazakh Kazmunaya Gas Company won a contract to develop the Crutch field west of Anbar with the Korean Cogas Company, as part of the third licensing round. The reserves of the Crutch gas field, which is located near the Iraqi border with Syria, are estimated at 5.6 trillion cubic feet.
And the former Iraqi Finance Minister, Ali_Allawi, in 2020, confirmed the “cancellation of the contract of the “Korean Cogas Company” for not resuming its work on the gas investment project in the Crutch field, in the Qaim district, west of Anbar Governorate, and the agreement with Saudi companies to implement investment projects to produce crutch gas early next year. ".
Today, Monday, March 20, 2023, the Council of Ministers approved the recommendation of the Energy Ministerial Council (8 of 2022) regarding a consensual settlement with the South Korean company (Kocaz), the operator of the Akkas gas field, according to the following:
1- Disbursement of the remainder of the consensual settlement amounts agreed upon between the Midland Oil Company and the South Korean Cogas Company; Required to be paid to the South Korean company (Kokaz); The amount is (49,000,000) dollars, only forty-nine million dollars, provided that it pays a type of crude oil (In-Kind) from the Oil Marketing Company SOMO, according to a settlement agreement that guarantees the rights of the Ministry of Oil, according to the decisions of the opinion committee in the ministry.
2- Developing a formula for a settlement agreement between the two parties, according to which the contract remains valid for one year after the date of its signing, and the South Korean company (Kokaz) undertakes, according to this agreement, to transfer all its rights and contractual obligations to a company or a consortium of international companies qualified in accordance with the standards of the Ministry of Oil; To replace it in the development of the field in accordance with the terms of the service contract, in addition to its commitment to provide support and technical backing for the project without any other financial or contractual obligations, or that the contract be terminated after the expiry of that period without obtaining a replacement operator.
The Iraqi Ministry of Oil presented the position of a number of gas projects in January 2022, foremost of which is the Mansouriya field, explaining that the aim of the project is to develop gas fields and invest them to secure the local need for gas, with the aim of supplying electric power stations operating with gas fuel, in addition to reducing imports from neighboring countries. Maximizing financial revenues, providing job opportunities, and revitalizing the economic movement in the province.
She indicated that the field was offered in the third licensing round of 2010, and in 2010 it was won by a consortium of companies, "Turkish TPAO, Kuwait Energy, and Korean Kokas". The companies were unable to start development operations, due to the security situation in the province in 2014.
And the Iraqi Ministry of Oil added: “Due to the importance of the field in the national strategy to increase natural gas production, and in particular, the expansion of electric power generation that runs on natural gas fuel, the Mansouriya gas field was put forward for competition based on Cabinet Resolution No. (270) of 2019 to develop the field.” Al Mansouria Al Ghazi, with the national effort, and with the participation of one of the qualified international companies (51% of the Midland Oil Company and 49% of the foreign company), and the adoption of the standard contract for the border fields round (the fifth round) according to the profit-sharing principle.
She explained that, accordingly, the Ministry of Oil started organizing a round to compete for the development of the Mansouriya gas field, and the fundamental measures were taken in this regard. Where the steps included selecting a number of qualified international companies and inviting them to participate in the development of the field, the number of which is 16 companies, 9 of which expressed their desire to participate in the development of the field; Most notably "Petrofac, Sinooc, Gazprom, Total, Sinopec, BBL Asia, Jera Energy Group".
And the Iraqi Ministry of Oil stated that on March 31, 2021, and according to the final tender document, April 20, 2021 was set as the date for the competition event. Where the contract requires the contracting company to achieve the first commercial production at a rate of not less than 100 million standard cubic feet of dry gas per day within 4 years from the date of entry into force of the contract and to achieve the target of peak production of 300 million standard cubic feet of dry gas within 7 years from the date of effectiveness of the contract Contract.
A committee was also formed under the chairmanship of the Minister of Oil and the membership of the Undersecretary for Extraction Affairs and the general managers of the departments (legal, petroleum contracts and licensing, internal control) in addition to the assistant general manager of the Midland Oil Company, where the competition event was carried out on April 20 in the Ministry of Oil building in the presence of the undersecretaries And the general managers of the ministry’s formations and representatives of foreign companies, and the competition process resulted in referral to the company that submitted the lowest bid, which is the Chinese company (Sinopec), which is shared by the Midland Oil Company by (51%) and Sinopec by (49%) according to the decision of the Council of Ministers.
The contract was initialed between the Oil Contracts and Licensing Department of the Iraqi National Oil Company and the Chinese company (Sinopec). China's Sinopec" in order to activate the contract and initiate development operations.
The Ministry of Oil stated that the contract for the Crutch gas field was presented and transferred within the third licensing round for gas fields in 2010 to the Korean company KOKAZ; Where the company started field development work and contracting for materials and gas refining equipment, and the company was unable to complete its work due to the terrorist acts of ISIS, and the negotiation group led to the company's withdrawal.
She added: Due to the importance of the Akkas thermal gas station and the Anbar thermal station in generating electricity, and meeting part of the local need, the ministry is communicating with several solid regional and international companies. To reach an agreement that achieves the planned objectives of developing the field and producing gas, and no agreement or contract has been reached with any of these companies so far.
The Iraqi Ministry of Oil indicated that the French company Total has worked for several years to provide high technical support to the Iraqi oil industry, and was the pioneer in providing studies for the development of giant oil fields in Iraq during the past 30 years.
In 2018, Total and Lukoil submitted studies to collect and refine the burnt gas in the southern region, and the project was not proceeded due to the country's political conditions. In 2020, Total submitted its proposals to build gas facilities in southern Iraq, which has been burning for decades, and work has been carried out in Several detailed workshops with the participation of the concerned ministry companies, the ministry’s center departments and a number of international advisors, and the subject was presented to the Council of Ministers, which issued its decision No. (244) for the year 2021 and stipulated that the Basra Oil Company and the South Gas Company contract with Total, for the purpose of implementing the integrated gas project (intended 4). projects) and obtaining his approval to complete the discussion rounds that resulted in the agreement with Total on a set of projects that would complete the oil industry and address the weaknesses that prevented Iraq from taking its role as one of the most important energy makers in the world.
The Iraqi Ministry of Oil indicated that the results of the final negotiations and all the details were presented to the Council of Ministers and its approval for the initial signature was obtained, after which the Council of Ministers Resolution No. (307) of 2021 was issued approving the taking over of the South Gas Company and Basra Oil with the French company Total for projects, and proceeding with the project for development results. The greatness of this project.
The agreement with the French company Total included 4 important contracts that contribute to achieving sustainable development, through gas investment contracts with a capacity of 600 million standard cubic feet, and seawater transportation and treatment with a capacity of 5 million barrels per day. To sustain and increase production from the oil fields, and to contract the generation of 1,000 megawatts of solar energy.
The ministry stated that the project to develop the Artawi field aims to increase production to more than 210,000 barrels per day, and the agreement, which came in the form of contracts for the fifth licensing round “profit sharing”, is one of the pioneering steps to develop the oil and gas industry in Iraq, in cooperation with one of the largest international companies. Sober, which will make huge financial investments in these projects, in addition to exchanging expertise and modern technology, in a way that contributes to the development of the oil industry, maximizing financial revenues, providing job opportunities for the people of Iraq, and working to stop burning gas and converting it into useful energy for power stations and petrochemical industries. And others, as well as reducing emissions and pollutants.
The Ministry confirmed that the National Oil Company obtained the approval of the Council of Ministers in accordance with Resolution (361) for the year 2021, with the contribution of the Ministry of Oil to the infrastructure development project, which was transferred to the custody of Total, at a rate of no less than 40%, provided that the amounts are recovered from the funds generated from the export of oil to contribute. 40% of Total's 100% stake; What maximizes the financial revenues of the national partner.
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