CERAWeek ‘17: Iraq to reach 5 MMbopd in 2017, additional farm-outs for PEMEX
HOUSTON -- Iraq achieved production of 4 MMbopd in mid-2016, but the country plans to reach 5 MMbopd by the second half of 2017, said Jabbar Ali Al-Luiebi, Minister of Oil for the Republic of Iraq, during a ministerial address Tuesday at the 2017 CERAWeek conference.
The expected increase comes on the heels of OPEC’s December agreement to reduce total production by 1.8 MMbopd. “Iraq is serious in keeping unified with OPEC, and for OPEC to be unified with the interests of all (members),” he said. “We had some differences here and there, but we ultimately reached a good agreement that showed a positive result on the global oil market and the oil prices.” OPEC is meeting on May 25 to consider whether the production cut should be extended.
The lion’s share of Iraq’s production growth is occurring in fields in southern Iraq, safe from areas that ISIS has been battling for in northern Iraq, he said. “In general, the security situation can be regarded as satisfactory,” Al-Luiebi said. “The working conditions are good, and the IOCs are happy with this environment and the work.”
He said he is hopeful that areas in northern Iraq will begin to become available for oil and gas activity, as forces continue to push ISIS out. “Iraq is fighting on behalf of lots of countries in the world to fight terrorism. Iraq has succeeded in beating some of the most vicious groups, and we are still on the road to defeat them.”
Mexico. Pemex CEO José Antonio González Anaya said during Tuesday’s afternoon plenary session that the company will work with IOCs on new farm-outs for the Comisión Nacional de Hidrocarburo’s (CNH) second wave of bidding rounds.
The new farm-outs will include “strategically large farm-outs,” and smaller farm-outs of clustered fields. “We’re also putting out a new generation of contracts, in which we are going to transfer risk,” Anaya said. “We want to allow for these companies to have part of the upside and not just concentrate necessarily on getting the return on their costs.”
The company recently agreed to its first farm-out during CNH’s round 1.4 in December. The agreement with BHP Billiton is for development of the deepwater Trión field. Before Mexico’s Energy Reform enabled Pemex to partner with IOCs on Mexican oil and gas developments, the deepwater development wouldn’t have been possible for the company, Anaya said. He remarked that the field’s $11 billion cost requirements equal Mexico’s average annual foreign direct investment from the 1990s.
“This is a new way of doing business for us,” Anaya said. “For 80 years, we were the only players in town. We didn’t do joint ventures, we didn’t transfer risk, and we had to do everything ourselves.” The company also will work with a consortium consisting of Pemex, Chevron and Inpex, for development of a block in the Perdido Fold Belt from round 1.4.
