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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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    Iraq and its “ambitious” oil production growth plans.. Will it turn to China to meet them?

    Rocky
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    Iraq and its “ambitious” oil production growth plans.. Will it turn to China to meet them? Empty Iraq and its “ambitious” oil production growth plans.. Will it turn to China to meet them?

    Post by Rocky Sat 17 Feb 2024, 4:22 am

    [size=35][size=35]Iraq and its “ambitious” oil production growth plans.. Will it turn to China to meet them?[/size]
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    Economy

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    02-17-2024 | 03:40
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    Al-Sumaria News - Economy

    Iraq is heading east, especially to China, as it seeks to increase its oil production to 7 million barrels per day by 2027 from about 5.4 million barrels per day in mid-2023, after a wave of exits by some Western companies.


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    China Petroleum and Chemical Corp. is the largest Chinese investor in Iraq and owns shares in the Al-Ahdab, Halfaya, Rumaila, and West Qurna 1 fields. Together, Chinese companies also have direct shares in about 24 billion barrels of reserves and are responsible for producing about 3 million barrels per day of Iraqi oil, according to S&P Global Commodity Insights.



    Other Asian investors, including Indonesia's Pertamina, Japex and Japan's Itochu, also acquired stakes in Iraqi projects. China is also the largest buyer of Iraqi crude and imports an average of 1.18 million barrels per day, or 35% of Iraqi crude oil. Iraq was the third largest oil supplier to China in 2023, after Russia and Saudi Arabia.

    Recently, ExxonMobil exited Iraq, when it transferred its 22.7% stake in West Qurna 1 to the Iraqi Basra Oil Company. PetroChina is responsible for operating the project. ExxonMobil had previously sold a 32% stake in the Bashiqa license in Kurdistan in 2021. Shell also exited the Majnoon field in 2018. Despite this, BP manages the Rumaila oil field, and Eni manages it. Zubair field at the time.

    Sales by Western companies have increased China's control over the Iraqi oil sector, and its involvement so far has been met positively, with Chinese companies adhering to local regulations and operations at their projects running smoothly, S&P Global Commodity Insights said in a recent report.

    “Increasing production is possible from a geological perspective, but from a practical perspective it will be more difficult due to export capacity constraints,” said Sarah Hijaz, head of Middle East technical research at S&P Global Commodity Insights.

    Under the OPEC+ alliance agreement, Iraq produces 4 million barrels per day, although it raised production to 4.27 million barrels per day during January, according to the latest survey conducted by Platts for the alliance’s production.

    *Problems Facing Production
    Iraq's plans to increase its oil production face local problems, including limited export capacity due to old and deteriorating infrastructure, and access to water. Disagreements over control of production in the semi-autonomous Kurdistan region have also affected the country's crude oil production. The Kirkuk-Ceyhan pipeline was closed in March 2023, and Iraq has increased production in other fields to compensate for lost production in the north.

    Standard & Poor's Global expects that most production in the Kurdistan region could recover quickly if the dispute over the Ceyhan pipeline is resolved. Although there are sporadic reports of negotiations, little progress has been made.

    “It is unlikely that oil exports from Kurdish oil fields will resume soon unless the parties involved reach a compromise on their positions,” Shawan Zalal, director of Carducci Consulting, told S&P Global. “So far, none of them have made any significant action.” ". Foreign oil companies in the Kurdistan Region have cut costs and continued to sell crude oil to the local market at discounted prices while receiving advance payments directly from international oil companies to cover their operational costs.

    *Break-even oil price for Iraq
    Iraq will still need high oil prices as well as foreign investment to support production as well as the state budget over the next few years. Standard & Poor's Global estimates the financial break-even price of oil for Iraq at $101 per barrel in 2023, $97 per barrel in 2024, and $103 per barrel in 2025. The break-even price of oil is much higher than current levels, which are under pressure to decline due to global growth. Non-OPEC supplies and concerns about the global economy. Platts valued Iraq's main Basra Heavy crude at $77.97 per barrel on February 14.

    *Russian presence
    Despite the exit of some Western companies from the Iraqi oil sector, the Russian invasion of Ukraine did not affect the activity of Russian energy companies in Iraq, which includes the participation of “Gazprom” in Badra (central), and the operations of “Rosneft” in Kurdistan, in addition to the share of “Luke” Oil in “West Qurna 2” and the newly discovered “Eridu” field.

    Lukoil also recently signed an agreement with the state-owned Basra Oil Company in Iraq to extend the oil services contract for the “West Qurna 2” field for a period of 10 years until 2045 and to double oil production from the field to 800 thousand barrels per day.
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