On 9 January, Russian energy company Gazprom Neft, operator of the Badra oilfield, Iraq, said its first volumes of oil were produced from the field near the eastern Iraqi border with Iran.
The oil arm of Russian energy company Gazprom said it moved one step closer to commercial production after recording a daily natural flow rate of 7,000 barrels of oil from the Badra field.
Fadel Gheit, a senior energy analyst at Oppenheimer in New York, told New Europe on 10 January that Russia, which traditionally has good relations with the Iraqi government, is likely to become a stronger player in the country’s energy sector. “For all practical purposes Exxon is on its way out, Chevron never got in, only BP and Shell are there and then the smaller US oil companies but Russia is definitely there and Russia could expand its position,” Gheit said.
He said oil could either be exported north through the Turkish pipeline or south through Basra and the Persian Gulf. He added that the gas is most likely going to be used internally to free up as much oil for export.
Gazprom Neft first deputy CEO Vadim Yakovlev said the company was now nearly finished with the infrastructure necessary for large-scale production at Badra. “With well testing completed we are one step closer to beginning commercial production at the Badra field. Since beginning development – practically from scratch – just three years ago, a Gazprom Neft-led consortium has completed a major project in establishing all the facilities necessary for large-scale production at Badra, and this will begin as early as this year,” he said.
Gazprom Neft under the terms of a 2009 agreement with the Iraqis will develop the Badra field in Wasit province for the next 20 years. Total capacity could reach 170,000 barrels per day. The company said apart from the commercial infrastructure, it planned six production wells in Badra for 2014.
Because of security concerns in Iraq, Gazprom Neft postponed Badra developments in November. Gheit said ExxonMobil wants to get out of Iraq. PetroChina has said it would buy 25% of Iraq’s West Quran 1 gas field from ExxonMobil. “They [ExxonMobil] still have a big presence in Iraq but you can tell that they want to reduce their profile in Iraq in favour of expanding their presence in Kurdistan. Kurdistan offers much better terms but also much better security. It’s an autonomous region and now we hear that Kurdistan reached a deal with Turkey to use Turkey to get access to the international market,” Gheit said.
The Oppenheimer analyst argued that Iraq is on the brink of a civil war “with the Sunnis wanting to separate from the Shiites because this guy [Iraqi Prime Minister Nouri] al-Maliki is so incompetent and is basically not running Iraq, he is running the Shiite part of Iraq”.
Regarding the Badra’s field proximity to Iran, Gheit said it was not a stability problem because Baghdad is now run by a Shiite government and Iran is a Shiite country. “This is the best situation that Iran had as a neighbour throughout history,” Gheit said.
Gazprom Neft has a 30% interest in the Badra project in Wasit Province. Partners include Iraqi Oil Exploration Co (25%), South Korea’s Kogas (22.5%), Malaysia’s Petronas (15%), and Turkey’s TPAO (7.5%).
follow on twitter @energyinsider
