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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    An Iraqi oil agreement with Total heralds a new revenue-sharing formula

    Rocky
    Rocky
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    An Iraqi oil agreement with Total heralds a new revenue-sharing formula Empty An Iraqi oil agreement with Total heralds a new revenue-sharing formula

    Post by Rocky Wed 19 Jul 2023, 3:25 pm

    [size=30]An Iraqi oil agreement with Total heralds a new revenue-sharing formula
    [ltr]2023.07.19 - 22:43[/ltr]
    [/size]
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    Baghdad - Nas   
    Iraq reached a $27 billion oil agreement with France's Total (EPA: TTEF) Energize last week that achieves faster and less risky repayment by enhancing revenue sharing, a model that Iraq may repeat in the future to attract investors.  
      
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    Foreign investment fled Iraq's energy sector after a wave of deals that followed the US invasion more than a decade ago. Exxon Mobil, Shell and BP have scaled back operations in the past few years, contributing to stagnant oil production in the country.  
      
    Major oil companies complained that the terms of conventional oil service contracts in Iraq paid a fixed price for each barrel of oil produced after paying the cost, which means that they cannot benefit from high oil prices while they suffer a loss when the cost of production rises. Companies have turned to other countries offering better terms.  
      
    Two Iraqi oil officials said that the new agreement aims to allow Total to obtain part of the revenues from the Artawi oil field in the oil-rich Basra region and use them to help finance three other projects.  
      
    Total said the contract "differs from previous technical service agreements in terms of the amount of risk and resulting profit sharing between the state and investors".  
      
    In addition to increasing production at the Artawi field, the agreement includes a one-gigawatt solar power plant, a facility to process 600 million cubic feet of gas per day, and a seawater supply project that is pivotal to supporting oil production in southern Iraq.  
      
    This new type of agreement was initially signed in 2021, but faced a delay amid disagreements among Iraqi politicians over the terms and was finally finalized in April when Iraq agreed to get a share less than the 40 percent it had initially demanded.  
      
    Ultimately, Total got 45 percent, the state-owned Basra Oil Company 30 percent and Qatar Energy 25 percent. The statement said last week that the Saudi company ACWA Power will participate in the solar farm.  
      
    A senior oil official in Iraq said the revenues would be divided according to those quotas.  
      
    The so-called integrated energy project in Iraq aims to improve the electricity supply by recovering gas that is burned during oil extraction in three oil fields and using it in power plants, which also helps reduce the cost of Iraqi imports.  
      
    Total said it would invest in all four projects simultaneously, and the solar plant is expected to start operating at the end of 2025 and gas recovery to begin in 2027.  
      
    "The revenues from the Artawi field basically allow us to finance other projects," Total's statement said.  
      
    An Iraqi oil official and Total said the construction of the contract was based on a set of oil and gas licenses in Iraq in 2018 that for the first time gave potential contractors a share of the revenue rather than a flat fee per barrel.  
      
    In this mixed revenue-sharing model, the official said, the Iraqi state takes 25 percent of each barrel of oil produced and the remaining 75 percent goes to compensate shareholders for the cost of capital and production and is distributed as revenue.  
      
    Iraqi oil officials said the model could be replicated in the future, but this would be considered on a project-by-project basis.  
      
    Source: Reuters  
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