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To: Dennis Roth who wrote (169071)	5/30/2012 1:04:23 PM
From: Dennis Roth	1 Recommendation Read Replies (1) \| Respond to of 206099

Iraq Oil License Terms Forbid Deals With Kurdistan by Dow Jones Newswires Hassan Hafidh Tuesday, May 29, 2012 rigzone.com BAGHDAD - The terms for Iraq's latest energy licensing auction, scheduled for Wednesday and Thursday, will bar successful companies from signing contracts with the country's semiautonomous Kurdistan region, oil industry officials said Tuesday. The Oil Ministry has for the first time inserted a clause in the final contract model permitting the ministry to cancel contracts if the signatory signs an oil deal with the Kurdistan Regional Government, or any other local government, without obtaining prior approval. The move comes after Iraq earlier this year barred Exxon Mobil Corp. from taking part in the upcoming licensing round, at which 12 exploration blocks will be awarded, after the U.S. energy giant signed a deal with the KRG. Exxon was told to choose between its contract in southern Iraq and those it signed with Kurdistan. "We decided to include an obligation on the side of the companies...not to work in any area of Iraq--not just the Kurdistan region--without the approval of the federal government," Abdul Mahdy al-Ameedi, the head of the Ministry's petroleum contract and licensing directorate, told Iraq Oil Forum, a widely-read oil blog. In a bid to lure companies to take part in the new licensing auction, the fourth Iraq has held since 2003, Baghdad has dropped a clause that required foreign companies to be partners with a state oil firm. In previous deals, the state company took 25% in all projects. But a clause that gives the Ministry the right to postpone development of fields for up to seven years from the date of announcement of commercial discovery has been retained, despite being unpopular. Baghdad is set this week to auction 12 promising exploration blocks, seven of which are believed to contain natural gas, and five to contain crude. The new bid round is expected to add some 10 billion barrels of crude oil and some 29 trillion cubic feet of gas to Iraq's reserves. The Ministry is offering service contracts, which means winning companies will be paid a flat fee for their services rather than be given a share in the resources. Of the 47 prequalified companies, 39 had paid participation fees. Analysts, however, aren't expecting them all to bid and many think the round may attract smaller firms, while most existing participants in Iraq are expected to stay away. "The conditions and terms of the new auction aren't encouraging," said an executive from a big Western firm, which won't bid despite having prequalified and paid the participating fees. If all 12 exploration blocks are awarded and signed, Iraq would make some $235 million in signature bonuses, an oil official said. Signature bonuses would differ from one block to another, with crude fields different from gas fields.

To: Dennis Roth who wrote (169071)	6/25/2012 12:32:20 PM
From: Dennis Roth	2 Recommendations Read Replies (1) \| Respond to of 206099

Iraqi Kurdish Oil CS Comment Infrastructure plans clarified Event: Genel stated late last week that the KICE pipeline is no longer planned as it is superseded by a separate 1mbd pipeline to be built by August 2013 linking Iraqi Kurdish oil fields with exports markets in Turkey and beyond; a pipeline to be owned by the KRG and likely constructed by Turkish firms (eg Calik). This should not come as a surprise following the announcement by the KRG in late May regarding the bilateral agreement between the KRG/ Turkey. Progress above the ground: shares of Iraqi Kurdish oil companies have seen a rather muted reaction to what is, in our view, a significant event; previously largely unexpected for Turkey to pursue. Why is this progress? Firstly,Turkey has now moved strongly in support of the KRG and will pay for 'Iraqi Oil' directly to the KRG rather than SOMO. Secondly, infrastructure will now be built vs current reliance on (unreliability of) Iraqi infrastructure or limited trucking capacity. Thirdly, Iraqi leverage over IOCs is diminishing with IOCs moving out of the South and moving into the North (eg a/c to upstreamonline, XOM is now in discussions with Rosneft to farm-out part of WQ-1; Statoil exited the South and it and Total are mulling entry into the North). We also think the backing of Turkey should encourage more IOCs to enter Iraqi Kurdistan. Pipeline in detail: the first phase includes a pipeline from Taq Taq to Khurmula, which is progressing well and is expected to complete in October 2012. A 1mbd pipeline from Khurmula to Fishkabur (Turkish border) will then be build by late 2013 and will tie into the Kirkuk-Ceyhan pipeline, but with payments to be managed by the KRG, not SOMO. Meanwhile, Botas is refurbishing the second line of the Kirkuk-Ceyhan pipeline in Turkey for the anticipated ramp-up in export from Iraqi Kurdistan. It is important to highlight that it will be 'Iraqi oil' and therefore as per constitution (and thus a federal state) the central govt will received 83% of this revenue. There is also amongst other a separate pipeline (1mbd) planned directly from Iraqi Kurdistan to Turkey and with a completion date in January 2014, though details at this stage remain patchy. Interim payment: the national budget remains under the control of the central government. The KRG is entitled to 17% of Iraqi revenue generation (closer to 11% after some deductions) as per the constitution. This is material to the KRG and with that timely delivery of pipeline projects as well as field development is important. The central govt following the infrastructure announcement responded by halting deliveries of oil product to the KRG and it will most certainly monitor closely any territorial moves by the KRG into disputed areas, in our view. The KRG will now barter crude for oil products from Turkey, which is likely to increase domestic prices to >$80/bbl on ~$100/bbl Brent on a netback basis (with some discounts likely offered) from $60/bbl (we expect this to happen in August with trucking capacity at Taq Taq capped at 90kbd). This and the actual payment to oil companies will be an important event, in our view. Turkey's perspective: the bilateral agreement was not well received by the Iraqi central govt. Equally, Iran and Russia, which are the two key oil and gas suppliers to Turkey will be closely monitoring the situation, in our view. Turkey via Iraqi Kurdistan (for that matter Iraq) can diversify its energy needs, but this step is probably also taken from a security (PKK) and political (growing tension over Syria and Southern Iraq) perspective. This will also bring economic advantages with Iraqi Kurdistan already an important trading partner, but also making Turkey via the implementation of these bilateral agreements an increasingly important transit hub for oil and gas.