KURDISTAN REGION OF IRAQ 2014

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9781783020683

ISBN 978-1-78302-068-3

Resilient and resolvedNechirvan BARZANIPrime MinisterKURDISTAN REGIONAL GOVERNMENT

Build it betterDr. Ashti HAWRAMIMinister of Natural ResourcesKURDISTAN REGIONAL GOVERNMENT

Realm of possibilityDrew GOODBREADGeneral Manager Kurdistan Region of IraqEXXONMOBIL

ARTICLES | INTERVIEWS | VIEWPOINTS | MARKET ANALYSIS | RESOURCES | PROJECTS | MAPS | INVESTOR SPOTLIGHTS

THE OIL & GAS YEAR The Who’s Who of the Global Energy Industry

14 THE YEAR IN REVIEW

15 VIEWPOINT: Resilient and resolved. Nechirvan Barzani,Prime Minister of the Kurdistan Regional Government

16 VIEWPOINT: Resources for peace. Yousif Mohammed Sadiq, Parliamentary Speaker of the Kurdistan Regional Government

DATA CENTRE: Key numbers from the Region’s industry18 THE KURDISTAN REGION OF IRAQ AT A GLANCE19 INVESTORS INDEX20 THE YEAR IN ENERGY

24 DIPLOMACY & POLITICS

25 ARTICLE: Double up. A look at an eventful 201425 IN SURVEY: TOGY’s survey results at the 2013 CWC

Iraq- Kurdistan Oil & Gas Conference in Erbil28 INTERVIEW: Dr. Ashti Hawrami, Minister for Natural Resources28 IN PRODUCTION: Gross production in the Kurdistan

region of Iraq by selected operators, 2009-201331 VIEWPOINT: Maximum Potential. Qubad Talabani,

Deputy Prime Minister of the Kurdistan Region of Iraq32 VIEWPOINT: Good neighbours. Mehmet Akif İnam,

Turkish Consul General in Erbil33 VIEWPOINT: Benefits for both. Sinan Ülgen, Centre for

Economics and Foreign Policy Studies34 MARKET ANALYSIS: Mutual interest. Hugh Evans, Former

UK Consul General in Erbil35 INTERVIEW: William Patey, Control Risks36 VIEWPOINT: Unaltered assistance. Gary Kent, All-Party

Parliamentary Group on the Kurdistan Region of Iraq 37 VIEWPOINT: Market access. Sohbet Karbuz,

Mediterranean Energy Observatory

38 E&P: EARLY ENTRANTS

39 ARTICLE: Remarkable investment. The success of early developers39 IN PRODUCTION: Gross oil production in the Kurdistan

region, 2003-201342 PULLOUT MAP: The road to 1 million barrels per day43 COMPANY PROFILE: Genel Energy44 RESOURCE: Shaikan Production Facility45 COMPANY PROFILE: Gulf Keystone Petroleum46 OPERATIONS REPORT: Gains and objectives at DNO’s

licences. Daljit Gill, DNO Iraq AS

48 ARTICLE: A different direction. A look at horizontal drillingFOLDOUT MAPS: Kurdistan Region exploration activities,

discoveries and development, gas infrastructure, oil infrastructure

50 OPERATIONS REPORT: MOL’s phased development at Akri-Bijeel. Alexander Dodds, MOL

52 OPERATIONS REPORT: New wells at TTOPCO’s Taq Taq field. Zhang Yi, Addax Petroleum

53 RESOURCE: Taq Taq field development56 OPERATIONS REPORT: Talisman Energy’s 3D-seismic

survey and exploratory drilling at Kurdamir and Topkhana. Ross Deutscher, Talisman Energy

57 COMMENT: The fluid fix. How the fractured carbonate reservoirs of the region affect drilling

58 OPERATIONS REPORT: Oil Search’s Taza-2 complete, eyeing Taza-3. Julian Fowles, Oil Search

60 INTERVIEW: Steve Lowden, NewAge61 RESOURCE: Taza-263 OPERATIONS REPORT: WesternZagros’ transition to

production at the Kurdamir and Garmian blocks. Simon Hatfield, WesternZagros Resources

64 ARTICLE: Take aim. Greater investment in the upstream sector calls for more seismic programmes

65 INTERVIEW: Dave Scott, HKN Energy66 ARTICLE: The structural domains of the Kurdistan Region

of Iraq. The four zones of the region’s topography explained in more detail

68 COMMENT: Pipeline progress. Export options open up69 INVESTOR SPOTLIGHTS: KAR Group, ShaMaran

Petroluem, Hunt Oil Company, OMV

70 E&P: RECENT ENTRANTS

71 ARTICLE: Assembled output. Attention on the big stage71 IN DEPTH: Investors’ opinions on the region’s PSC regime73 INTERVIEW: Donnie MacDonald, Chevron Iraq74 INTERVIEW: Emmanuel De Guillebon, Total E&P Iraq76 PROJECT HIGHLIGHT: Atrush field development77 RESOURCE: Atrush field development78 INTERVIEW: Drew Goodbread, ExxonMobil79 COMPANY PROFILE: Marathon Oil80 INTERVIEW: Frank McKay, Hess82 INTERVIEW: Mikhail Kholodov, Gazprom Neft83 ARTICLE: Favourable conditions. More than 50

international companies have signed PSCs in the region

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The Who’s Who of the Global Energy Industry

KURDISTAN REGION OF IRAQ 2014 THE OIL & GAS YEAR

The Who’s Who of the Global Energy IndustryTHE OIL & GAS YEAR | KURDISTAN REGION OF IRAQ 2014

24Diplomacy & Politics

2014 has been an eventful and decisive yearfor the Kurdistan Region of Iraq. In res-ponse to the insurgency of the Islamic State,the Kurdistan Region has expanded its terri-tory. The Kirkuk field came under control oflocals. With the debut of independent oilexports and backed by revenue from theregion’s fields, full economic independenceis becoming ever more likely day by day.

38E&P: Early Entrants

Since 2002, when Genel Energy signed the firstproduction-sharing contract (PSC) in the re-gion, more than 100 wells have been spuddedand some of the world’s largest oil and gascompanies have signed PSCs with the KurdistanRegional Government. Since Genel’s entrance,$15 billion has been invested in the region’soil and gas industry. Confidence in the region’sPSC model has been the foundation of invest-ment, more of which is predicted in the future.

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70E&P: Recent Entrants

From the wildcatters of 2002, the Kurdistan Re-gion is seeing some of the largest oil and gascompanies in the world enter the local market.Chevron, ExxonMobil, Total and Gazprom Neftare among the big players that are drilling andacquiring seismic data across the region. Underproduction-sharing contracts, the activities ofthese super-majors are adding a new perspec-tive to the region’s hydrocarbons industry.

94CSR & Local Workforce Development

The rapid growth of the oil and gas industry inthe Kurdistan Region of Iraq is outpacing thedevelopment of a domestic skilled workforce.Efforts are underway to train a greater numberof local workers and the Ministry of Natural Re-sources hopes to achieve at least a threefoldincrease in local labour by the time the regionhits production of 1 million barrels of oil perday, targeted for year-end 2015 or early 2016.

116The Year’s Focus: A decadeof drilling and development

The development of the hydrocarbons indus-try in the Kurdistan Region has been extraor-dinary. From the first well spud in 2005 to aproduction rate of 400,000 barrels of oil perday in 2014, there is now a target of 1 millionbarrels of oil per day by the end of 2015 orearly 2016. Industry hopes are high for a re-gion with such a successful track record.

83 RESOURCE: How production-sharing contracts work84 COMPANY PROFILE: Repsol86 INTERVIEW: Esbern Hoch, Maersk Oil87 OPERATIONS REPORT: Oryx Petroleum’s exploration,

appraisal and early production at Hawler. Jean Claude Gandur, Oryx Petroleum

88 GEOLOGY REPORT: Nuances of the Kurdish thrust belt91 ARTICLE: Pad potential. A look at the benefits of pad drilling92 INVESTOR SPOTLIGHTS: Afren, Petroceltic92 COMMENT: Heavy lifting. The production of heavy oil93 ILLUSTRATION: Khurmala field

94 CSR & LOCAL WORKFORCE DEVELOPMENT

95 ARTICLE: Local jobs for local growth. Efforts to grow local labour to keep pace with the expanding oil industry

96 IN EMPLOYMENT: Local employment by international oil company, 2014

96 IN STAFF: Proportion of local and expatriate staff according to skill level, 2014

97 INTERVIEW: Ian McIntosh, Ministry of Natural Resources98 RESOURCE: Piramagrun mountain99 VIEWPOINT: Heal old wounds. S.H. Salih, Ministry of

Natural Resources100 CSR SPOTLIGHTS: A round up of initiatives spearheaded by oil

and gas companies active in the Kurdistan Region of Iraq102 ARTICLE: Positive collaboration. CSR efforts to boost skills103 VIEWPOINT: Development without destruction. Azzam

Alwash, Nature Iraq104 INTERVIEW: Hallo Askari, Ministry of Natural Resources105 RESOURCE: Zab River Basin

106 BANKING & FINANCE

107 ARTICLE: On the verge. A lack of loans and regional instability is hindering further oil and gas developments

109 INTERVIEW: Tom Robinson, Deutsche Bank110 COMPANY PROFILE: İş Bank111 ARTICLE: Law and progress. Foreign direct investment112 VIEWPOINT: Insurance at home. Jamal Asfour, Asia

Insurance113 MARKET ANALYSIS: KRG needs a fair forum. Richard

Devine, Baker Botts114 INTERVIEW: Shwan Ibrahim Taha, Rabee Securities

115 ARTICLE: Anticipated exchange. Iraq’s Stock Exchange can help the growing Erbil Stock Exchange

115 IN VOLUME: ISX total monthly trading volume and foreigners’ share in total trading volume

116 THE YEAR’S FOCUS: A decade of drilling and development

117 ARTICLE: Streamlined development. The region has gone from a high-risk gamble to a global exploration powerhouse

117 IN EXPORTS: Oil exports by the KRG, 2008-2013119 MAP: Pipelines in the Kurdistan Region of Iraq120 VIEWPOINT: Turnaround time. Mehmet Sepil,

Genel Energy121 PROJECT HIGHLIGHT: The Kurdistan Crude pipeline122 VIEWPOINT: A transformative decade. Hiwa Talabani,

Kelkan Contracting

124 OILFIELD SERVICES

125 ARTICLE: Smooth transition. The services sector is being increasingly dominated by local companies

126 IN NUMBER: Rig count and the number of wells drilled127 MARKET ANALYSIS: Proximate amenities. Imran Khan,

Falcon Oil & Gas128 MARKET ANALYSIS: Benefits of the big four. Omar

Moussa, Schlumberger130 INTERVIEW: Jaz Dulay, Energy Logistics132 VIEWPOINT: Step right up. Dana Dougramachi,

Federal Group134 MARKET ANALYSIS: Seismic advance. Mick Lambert,

Wireless Seismic136 INVESTOR SPOTLIGHTS: NPS, Terraseis, Halliburton,

Black Lake

138 DRILLING CONTRACTORS

139 ARTICLE: Time to drill. The expansion of the drilling sector140 MAP: Drilling activity in the Kurdistan Region of Iraq141 RESOURCE: Drilling rig locations in the Kurdistan

Region of Iraq, beginning of 2014142 INTERVIEW: John Bushell, Ensign International

Energy Services144 COMPANY PROFILE: Güney Yıldızı Petrol

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KURDISTAN REGION OF IRAQ 2014

The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | KURDISTAN REGION OF IRAQ 2014www.theoilandgasyear.com

The Oil & Gas Year is audited by BPA Worldwide

FOLDOUT TIMELINE: A decade of drilling and development146 INTERVIEW: Ben Babineau, Nabors Drilling International147 COMPANY PROFILE: EDC Romfor149 INVESTOR SPOTLIGHTS: Weatherford International,

Viking Services, Rotary Drilling, KS Drilling

150 ENGINEERING & CONSTRUCTION

151 ARTICLE: Blocks to build. A successful sector151 IN SURVEY: Opinions on equipment import, availability

of services and workforce development153 COMPANY PROFILE: ILF Consulting Engineers154 INTERVIEW: Larissa Urban, Qualitas International154 IN TOTAL: Local staff in the region’s oil and gas industry155 COMPANY PROFILE: Havatek156 COMMENT: Engineer Taq Taq. Construction is underway157 PROJECT HIGHLIGHT: Ceyhan Oil Storage Terminal

expansion project

158 DOWNSTREAM & POWER GENERATION

159 ARTICLE: Sound groundwork. Local companies are forecasting growth in the region’s downstream sector

159 IN INPUT: Oil processed in the region’s main refineries160 IN OUTPUT: Net main refining output, 2009-2013161 VIEWPOINT: A step forwards. Hadi Nezir, UB Holding162 COMPANY PROFILE: KAR Group163 PROJECT HIGHLIGHT: Bazian refinery expansion

164 ARTICLE: Rapid progression. A build-own-operate model165 COMPANY PROFILE: Mass Global166 PROJECT HIGHLIGHT: Dohuk combined-cycle power plant167 PROJECT HIGHLIGHT: Khurmala power plant

168 ASSOCIATED SERVICES

169 ARTICLE: Hold strong. Oil and gas is feeding the wider economy169 IN OPINION: Opinions on business efficiency, legal and

fiscal investment framework and security in the region170 VIEWPOINT: Critical mass. Brad Camp, Darb Global171 INTERVIEW: Charlie Mayne, VSC Security172 COMMENT: Continued stability in the Kurdistan Region

of Iraq. A look at security in the region from the 2013 bombs in Erbil to the present day Islamic State threat

174 INTERVIEW: Haller Dleir Miran, Mselect176 ARTICLE: Point of entry. The possibility of more entry points

along the Turkish border to ease present import export problems177 INVESTOR SPOTLIGHTS: Enertech International

Kurdistan, MineTech, Stirling Group178 INTERVIEW: Mike Gilbert, United Safety

180 EXECUTIVE GUIDE

181 ACCOMMODATION185 EVENTS186 ACKNOWLEDGMENTS187 ADVERTISERS INDEX

Publisher: Emmanuelle Berthemet Editor-in-Chief: Gilles Valentin Chief Operating Officer: Aslı Konyalı Country Director: Eric Gay Country Co-ordinator: Aslı Üçer Managing

Editor: Simon Johns Production Manager: Alex Mazonowicz Chief Sub-Editor: Amanda Towle Deputy Chief Sub-Editor: Suzanne Carlson News Editor: Nick Augusteijn

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Contributors: Ian Ackerman, Nick Ashdown, Jeylan Erman, Max Harwood, Helena Oh, Daniel Rosinksy-Larsson, Joel Sam, Alex Segall, Reuben Silverman, Dominic Whiting,

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Exploring knowledge

Extracting intelligence

Refining communicationINTERNATIONAL

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KURDISTAN REGION OF IRAQ 2014The Who’s Who of the Global Energy Industry

THE OIL & GAS YEAR

The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | KURDISTAN REGION OF IRAQ 2014

138Drilling Contractors

The Kurdistan Region of Iraq’s drilling sectorhas expanded eightfold since 2003 and theoutlook for the future is positive, with new rigsin the market and techniques from managedpressure drilling and directional drilling facili-tating new discoveries and rapid field devel-opment. However, there are still challenges toovercome including a lack of skilled domesticemployees and a lengthy tendering process.

150Engineering & Construction

Greater electricity generation in the Kurdistan Re-gion of Iraq is one example of the area’s rapideconomic growth and engineering and construc-tion success. In 2007, electricity capacity in theKurdistan Region was 484 MW. This grew to 2.7GW in 2012 and the target is to double that withinthree years. Engineering and construction proj-ects across the upstream and midstream sectors,including processing facilities and pipelines arealso providing opportunities for sector growth.

124Oilfield Services

The oilfield services sector in the Kurdistan Re-gion is progressing steadily from a sector staffedwith mostly expatriate employees to one sup-ported by an expanding domestic workforce.This is largely thanks to the establishment ofmore machine shops in the region, allowing forequipment and repairs to be accessed domes-tically rather than relying on lengthy and costlyimports. However, obstacles remain to be over-come, such as growing the pool of local talent.

www.theoilandgasyear.com

15 Resilient and resolved Nechirvan Barzani

Prime Minister of the Kurdistan Regional Government

16 Resources for peaceYousif Mohammed SADIQ

Speaker

KURDISTAN PARLIAMENT

20 The Year in Energy

THE YEAR IN REVIEWp

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