Chevron Suspends Drilling Activity in Kurdistan

Chevron has temporarily suspended oil and gas drilling activity in Iraqi Kurdistan, the company said on Thursday, in the latest setback to the region following recent unrest.

“Chevron has decided to temporarily suspend its operations,” a company spokeswoman said in a statement.

In September, Chevron drilled its first exploration well in Iraqi Kurdistan after a two-year break.

“We remain in regular contact with the Kurdistan Regional Government. We look forward to resuming our operations as soon as conditions permit.”

On the other hand, the Iraqi oil ministry reacted angrily on Thursday after Russian energy giant Rosneft signed a production sharing deal with the authorities in the autonomous Kurdish region without its approval.

The agreement came hot on the heels of Baghdad’s recapture from Kurdish forces of five oil fields in disputed territory outside the autonomous region in retaliation for an independence vote last month.

“This department and the Iraqi federal government are the only two bodies with whom agreements should be reached for the development and investments in the energy sector,” the ministry said in a statement, without mentioning Rosneft by name.

Oil Minister Jabbar al-Luaybi condemned the “irresponsible announcements coming from certain officials in Iraq or abroad, or from foreign companies about their intention to conclude deals with parties in Iraq without the federal government being aware.”

PIF Establishes New Energy Service Company ‘Super Esco’

Saudi Arabia’s Public Investment Fund (PIF) has announced the establishment of a new energy service company, Super Esco, designed to increase energy efficiency across government and public buildings and stimulate the growth of the Kingdom’s energy efficiency industry in line with the objectives of Vision 2030 to diversify the economy and drive environmental sustainability.

In partnership with the Ministry of Energy, Industry and Mineral Resources, the Ministry of Finance, and the Saudi Energy Efficiency Center, Super Esco will provide new investment opportunities by creating partnerships with the private sector to deliver projects.

Projects in the Kingdom of Saudi Arabia’s energy efficiency sector have an estimated value of SAR 42 billion, or around SAR 3 billion annually. Internationally, the sector is valued at SAR 130 billion, with projects in the US, Europe, and China accounting for 90 percent of the global market share.

Super Esco has been established with a capitalization of SAR 1.9 billion. The company will fund and manage the retrofit of government and public buildings, which represent over 70 percent of overall projects in the sector.

These projects will help reduce government spending on the electricity sector, which will in turn reduce natural resource consumption while rationalizing capital investments in expansion projects for the production, generation, transmission, and distribution of electricity.

Oil Edges Higher on Gains as Geopolitical Threats Intensify in Kirkuk, Iran

Oil

London – As a number of geopolitical problems unfold, oil prices maintained gains on Tuesday, while Goldman Sachs said oil production from Iraq’s Kurdistan region was likely to be jeopardized by the standoff with Iraq.

Despite the fears of the Kurdistan region referendum affecting oil output, the banking company said the conflict between the United States and Iran remains a bigger long-term threat to global supplies.

Brent crude futures LCOc1 gained 6 cents, or 0.1 percent, to settle at $57.88 per barrel, while US crude CLc1 gained 1 cent to settle at $51.88. Both contracts traded up nearly 1 percent and down over 1 percent during the day.

“In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of US secondary sanctions. If they are, we expect that several hundred thousand barrels of Iranian exports would be immediately at risk,” analysts at Goldman Sachs said in a research note published Tuesday.

“In the case of Kurdistan, the 500,000 barrel-per-day (bpd) Kirkuk oil field cluster is at risk with initial reports that 350,000 bpd has shut in, although this remains unclear,” Goldman analysts said.

On the other hand, Iraqi Oil Minister Jabar al-Luaibi announced plans to construct a new refinery in the oil-producing region of Kirkuk, which has become the scene of open conflict between Baghdad and the Kurdistan Regional Government.

The Iraqi government also plans to increase oil production from the region to more than a million barrels per day, with a foreign oil company to be contracted to implement the plan, according to the minister.

More so, Russia’s TASS news agency had cited Russian Energy Minister Alexander Novak on Tuesday as saying that Russian oil companies may continue working in Iraq despite continued tension there.

Iraq is second-largest oil producer at the Organization of the Petroleum Exporting Countries.

After a strong rally in the previous session, geopolitical tensions edged oil prices higher on Tuesday morning. Brent crude rose 0.6 percent to $58.16 a barrel while US oil futures hovered near the $52 level in lunchtime trade.

OPEC: Higher Demand Forecast for Oil, Points to Tighter Markets in 2018

The Organization of the Petroleum Exporting Countries predicted higher demand for its oil in 2018 on Wednesday and said its production-cutting deal with rival producers was getting rid of a glut, pointing to a tighter market that could move into a deficit next year.

In a monthly report, OPEC said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast.

“With the market moving into the winter season, distillate fuel supplies are notably tight, representing a change from the excess supplies seen in the last two years,” OPEC said.

“OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels.”
The report illustrates growing confidence among OPEC officials that its supply cut is working.

In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers are cutting half as much, until March 2018.

According to Reuters, the 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the 2018 demand forecast, even though production climbed by about 89,000 bpd to 32.75 million bpd.

In a further sign that the supply excess is easing, OPEC said inventories in developed economies declined by 24.7 million barrels in August to 2.996 billion barrels, 171 million barrels above the five-year average.

OPEC and its allies want to bring stocks down to the five-year average and are discussing extending their supply restraint.

Baghdad Pressures Kurdistan by Reopening Oil Pipeline

Baghdad- Baghdad announced on Tuesday its first practical steps to besiege the oil of the Kurdistan Region, as part of a move taken in collaboration with Turkey to retaliate against the Sept. 25 referendum which came in favor of independence.

Iraq’s Oil Ministry said on Tuesday that it decided to restore and reopen its export pipeline to Turkey’s Ceyhan port by passing through the two provinces of Salahuddin and Nineveh.

Iraqi Oil Minister Jabbar al-Luiebi instructed the North Oil Company [NOC], the State Company for Oil Projects [SCOP], and the Oil Pipelines Company to prepare an urgent plan to implement an urgent rehabilitation operation, according to an Oil Ministry statement Tuesday.

The move is a sign that Baghdad wants to prevent exporting its oil through the Kurdistan Region.

The instruction of the oil minister came as the Iraqi government officially asked Turkey and Iran last Monday to stop all their commercial dealings with Irbil, especially those related to the region’s oil.

The statement issued by the Iraqi oil ministry also mentioned that al-Luiebi met on Monday with the Turkish ambassador to Iraq, Fatih Yildiz, and discussed development of bilateral relations, particularly in the oil and energy fields.

“Yildiz told us that the Turkish government has decided to limit its oil business to the Iraqi government and that the Turkish petroleum company TPAO would soon resume activities at Mansuriya gas field in Diyala province,” the Iraqi oil ministry said in its statement.

In a related development, members of the Shi’ite National Alliance inside Iraq’s Parliament demanded that officials accused of smuggling oil be legally pursued.

Member of the Foreign Relations Committee in the Iraqi parliament Samira al-Moussawi said she was able to gather the signatures of 93 deputies to “ask the government to present a list of all officials involved in the operation of selling and smuggling oil,” in an allusion to some officials from the Kurdistan Region.

Moussawi also demanded the government to speak with Turkey, the US and other states to freeze the foreign bank accounts of officials from the region’s government and to transfer the money to the Iraqi state treasury.

Iraq Asks Neighboring Countries to Stop Oil Trade with Kurdistan

iRAQ

Baghdad — The Iraqi government escalated on Monday against the Kurdistan Region and placed more sanctions in retaliation to the Sept. 25 referendum on independence by officially asking Turkey and Iran to stop all their commercial dealings with Irbil, especially those related to the Region’s oil.

The council’s position, however, came contrary to the positions expressed by some Iraqi officials such as parliament speaker Salim al-Jabouri and both vice presidents Osama al-Nujaifi and Ayad Alawi who had showed softer stances regarding the Kurdistan Region referendum after their visit to Erbil last Sunday.

“My visit was intended to find opportunities for finding a solution to the crisis and initiating dialogue between the concerned parties,” al-Jabouri said at a session of parliament attended by Kurdish lawmakers.

However, chaired by Iraqi Prime Minister Haider al-Abadi, the Ministerial Council for National Security held a meeting on Monday and renewed its attachment to the unconstitutionality of the Kurdish referendum.

The government’s council said it would continue to implement the punitive measures previously adopted against the Kurdistan region in addition to taking new measures with the aim of reinstalling power in the Region and the disputed areas.

The council would also work on making the federal government control the Kurdistan-based mobile phone companies and to transfer their headquarters to Baghdad.

“The Ministerial Council for National Security issued a decision that all mobile phone networks must be under the federal control and should be moved to Baghdad,” the council said in a statement on Monday.

The council would also follow-up on launching a lawsuit to prosecute state employees in the Kurdistan Region who voted in the Sep. 25 referendum.

It also reviewed special investigation reports of suspected Kurdish officials involved in transferring and depositing oil exports funds in their bank accounts.

Al-Abadi also reiterated his request that Turkey and Iran suspend all commercial transactions with the Kurdistan Region, especially those related to the export of oil.”

Meanwhile, in another sign of tension between Baghdad and Irbil, Rudaw website reported on Monday that al-Abadi did not attend a memorial service for Jalal Talabani, the Kurdish leader who was president of Iraq and secretary general of the Patriotic Union of Kurdistan (PUK), organized by the Iraqi presidency at Rashid Hotel in Baghdad on Monday.

It said Talabani’s son Bafel and several other family members were in Baghdad to attend the service, in addition to Iraqi President Fuad Masum and Vice President Nouri al-Maliki and all political figures, Arab and foreign ambassadors.

Aramco Inaugurates New Delhi Office to Support Saudi Oil Investments

Security personnel stand guard in front of the India Gate amidst the heavy smog in New Delhi

Dammam- Middle East oil giant Saudi Aramco announced its most dramatic expansion so far with the opening of Aramco Asia India’s new office in New Delhi. India is the world’s third-largest energy-consuming economy.

The State-run oil giant Aramco is in talks with several Indian refiners and hopes to land a joint venture deal by next year, the company’s chief executive told Reuters on Sunday.

“We are hoping to land on a JV sometime,” Aramco’s CEO Amin Nasser said at India Energy Forum by Cera Week in New Delhi.

Asked if a deal could be finalized next year, he said: “We hope so. We are in serious discussions.”

Aramco wants to buy a stake in the planned 1.2 million barrels per day (bpd) refinery in India’s west coast, India’s oil minister said in June.

The world’s biggest oil producer is investing in refineries abroad to help lock in demand for its crude and expand its market share ahead of its initial public offering next year.

Aramco plans to float up to 5 percent of its shares in 2018 in what could be the world’s largest IPO, raising as much as $100 billion.

Nasser said Aramco is interested in investing in India’s downstream sector – refining, petrochemicals and fuel retailing including lubricants.

Saudi Arabia is competing with Iraq to be India’s top oil supplier, with Iraq displacing it for the fifth month in a row in August, data compiled by Reuters showed.

Earlier this year Saudi Arabia pledged billions of dollars of investment in projects in Indonesia and Malaysia to ensure long-term oil supply deals.

The International Energy Agency estimates India’s refining capacity will lag fuel demand going forward, requiring investment in new plants.

Saudi Aramco earlier on Sunday launched a new office in New Delhi as it aims to expand its presence in India.

India’s oil minister Dharmendra Pradhan, who inaugurated Aramco’s India unit, said Aramco is interested in investing in refinery projects in the Asian country and “very soon they will come to India.”

Nasser said Aramco will increase its staff strength in India by four-fold compared to now. The company which had 14 employees has now raised staff numbers to around 30.

“India by itself is an important market. The size of India’s market is huge. The growth in India last year is 8 percent last year as compared to 1.5 percent globally in energy,” Nasser said.
“We need to be here.”

OPEC Oil Output Edges Higher in September

OPEC

London – OPEC oil output has risen this month by 50,000 barrels per day (bpd), a Reuters survey found, as Iraqi exports increased and production edged higher in Libya, one of the producers exempt from a supply-cutting deal.

OPEC’s adherence to its pledged supply curbs slipped to 86 percent from August’s 89 percent, the survey found. Top exporter Saudi Arabia continued to shoulder a larger portion of OPEC’s total cut by pumping below its target.

The gain in Iraqi supplies shows that political tension over the Kurdish region’s independence referendum has not affected its exports. Concern that these could be at risk has helped support oil, which this week reached almost $60 a barrel, the highest in more than two years.

“No rapid solution to the crisis can be expected, which should continue to lend support to the oil price,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

As part of a deal with Russia and other non-members, the Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million bpd from Jan. 1, 2017 until March next year.

The survey also found no sizeable further gain in output in Nigeria or Libya, which are exempt from the cut. Extra Libyan and Nigerian production had helped lift output to a 2017 high in July, adding to OPEC’s task in trying to curb excess supply.

Libya pumped an extra 50,000 bpd this month as the Sharara oilfield reopened after a pipeline blockade. But output remains volatile and, on average in September, below levels of more than 1 million bpd seen earlier this year.

Nigerian output slipped by 30,000 bpd. Royal Dutch Shell’s Nigerian venture declared force majeure on exports of Bonny Light crude due to the shutdown of an export pipeline.

Iraqi production has risen by 40,000 bpd owing to higher exports from the autonomous Kurdish region, tanker data showed. Exports from the country’s southern terminals were largely flat, according to tanker data and industry sources.

Top exporter Saudi Arabia added 20,000 bpd to supply, with exports rising and crude use at domestic power plants declining seasonally, according to sources in the survey to Reuters.

Iran, allowed a small increase in the OPEC deal, also boosted supply by 20,000 bpd.

Among countries with lower output, Angola exported fewer cargoes than in August, as did Venezuela, the survey found.

OPEC last year announced a production target of 32.50 million bpd, based on low figures for Libya and Nigeria. The target includes Indonesia, which has since left OPEC, and does not include Equatorial Guinea, the latest country to join.

According to the survey, output in September has averaged 32.72 million bpd, about 970,000 bpd above the target adjusted to remove Indonesia and not including Equatorial Guinea.

With Equatorial Guinea added, production in September totaled 32.86 million bpd, up 50,000 bpd from August.

The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.

OPEC Daily Basket Price almost Hits $56 Per Barrel

The price of OPEC basket of fourteen crudes stood at US$55.59 a barrel on Thursday, compared with $56.07 the previous day, according to OPEC Secretariat calculations, WAM reported.

The OPEC Reference Basket of Crudes is made up of the following: Murban (UAE), Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), and Merey (Venezuela).

In an effort to prop up prices, OPEC started reducing output by about 1.2 million bpd on Jan. 1 in its first supply cut since 2008. Nigeria and Libya were exempted from the curbs.

A September survey published by Reuters indicated output from the 13 OPEC members originally part of the deal rose by 60,000 bpd from August. Supply from the 11 members with production targets under the
original accord increased by 40,000 bpd.

Compared with the levels from which they agreed to cut, in most cases their October 2016
production, the 11 members have reduced output by 998,000 bpd of the pledged 1.164 million bpd.
That equates to 86 percent compliance, down from 89 percent in August.

August’s total was revised down by 20,000 bpd after a change to the Libyan estimate.

Washington Concerned over Iranian Oil Refinery in Homs

Beirut- Iran plans to establish an oil refinery in regime-controlled areas near the Syrian city of Homs as General Joseph Dunford, the chairman of the US Joint Chiefs of Staff, expressed on Tuesday concern over the move and pointed out that “Iran is projecting malign influences across the Middle East and supporting terrorist organizations in Syria, Iraq and Yemen.”

Iranian news agency Fars quoted the head of downstream technologies at Iran’s Research Institute of the Petroleum Industry Akbar Zamanian as saying that Iran will build an oil refinery near Homs with a production capacity of 140,000 barrels per day.

“This refinery will be built as a consortium with the participation of Iran, Venezuela and Syria,” Zamanian said, according to Fars.

Damascus and Tehran had earlier signed a memorandum of understanding to build a power plant in the coastal province of Latakia with a capacity of 540 megawatts.

The Revolutionary Guards had also announced it provided Syrian forces with aircraft carrying guided missiles, in addition to sending around 70,000 Iranian, Iraqi, Pakistani and Afghan militias to fight alongside the regime.

Meanwhile, a Syrian Kurdish official described as “positive” the comments delivered by Syrian Foreign Minister Walid Moallem who said Damascus was ready to negotiate greater autonomy with the Syrian Kurds.
Saleh Muslim, head of the Kurdish Democratic Union Party told Asharq Al-Awsat that his party possesses a plan for democratic federalism. “We are ready to discuss it any time,” he said, adding that the federal project is not Kurdish but a plan for the entire Syria.

Muslim also said that Russia might play a role in any future talks conducted with the Syrian regime in this regard and would therefore act as a guarantor.

“In Syria, they [Kurds] want to proclaim autonomy in one form or another within the borders of the Syrian Arab Republic. Negotiations and a dialogue are possible on the matter,” Moallem told Russia Today website on Monday.

Separately, attempts to establish a joint local council in the city of Raqqa through annexing the councils of the Syrian Democratic Forces and the opposition’s temporary government, failed on Tuesday after the opposition rejected to participate in a US-sponsored conference that Italy had called for.

Saad Shuwish, head of a council linked to the temporary government, said the rejection came because the issue was related only to the city of Raqqa and not the entire province.

Layla Mustafa, the co-head of the Raqqa Civilian Council, refused to comment on the issue.