-Tony Hayward’s anglo-turkish oil firm Genel Energy today confirmed that drilling has now begun on its first well on the Chia Surkh exploration block in Iraqi Kurdistan.
The block spans 984 square kilometres in the southern part of the Kurdish region. It has an estimated 300 million barrels of prospective oil resources.
The Chia Surkh 10 well will be drilled to a total depth of 2,500 metres to test Lower Miocene to Palaeocene targets.
The well results are expected in the first quarter of next year.
Genel has a 60% interest in Chia Surkh. City broker Oriel Securities estimate that Chia Surkh is worth a ‘risked’ 38p per share at this stage.
The broker highlighted, in a note today, that Genel is hosting a capital markets day this week and it beleives the company is likely to update on the plans for the Miran gas development as well as its exploration programme – which now includes new licences in Malta, Morocco, Cote d’Ivoire and Somaliland.
Gazprom Neft, the oil arm of Russia’s top natural gas producer Gazprom, is still interested in Kurdistan’s oil, a Gazprom Neft source said, rebutting reports it had frozen projects in the Iraqi province.
In August, Gazprom Neft acquired interests in two blocks in Iraq’s Kurdistan region, after similar moves by international rivals angered the central Iraqi government in Baghdad.
The International Oil Daily cited Iraqi Oil Minister Abdul-Kareem Luaibi as saying Baghdad received a letter from Gazprom, in which the company said it had frozen the contract with Kurdistan.
“Gazprom Neft is still working on these projects. The company keeps its interest in Kurdistan,” a Gazprom Neft source told Reuters.
A company spokeswoman declined to comment.
Gazprom Neft already has a project in Iraq, near the Iranian border, where it expects to produce about 15,000 barrels per day from 2013.
Baghdad was angered by the plans of some international majors, including ExxonMobil, to tap oil and gas in the semi-autonomous region. The central government says the deals are illegal.
Later on Wednesday Iraqi Prime Minister Nuri al-Maliki is due to meet Russian President Vladimir Putin in Moscow where they may discuss energy issues.
Russia said on Tuesday it had signed $4.2 billion worth of arms deals with Iraq.
The Kurdistan Regional Government (KRG) is planning to build an oil pipeline to Turkey with a capacity of 1 million barrels a day, according to a report from Platts.
KRG natural resources minister Ashti Hawrami told an energy conference in Turkey on Thursday that plans were already in place for the construction of short spur lines from producing fields and that funding had been arranged for a main export line to carry crude from these fields to the border.
Plans are underway to launch a construction tender for the project, he added.
He said that initially the new line would connect with the existing Turkish section of the Kirkuk-Ceyhan oil line but that talks were underway with investors interested in building a new pipeline inside Turkey running from the border with northern Iraq to the Mediterranean port of Ceyhan.
“Any such pipeline will be an Iraqi pipeline…it will be for the benefit of all nations, all the Iraqi people and all the Turkish people,” Hawrami said.
“It is not designed to be anything else except supplying secure oil to the market,” he added in an apparent reference to recent talk that the KRG was planning its own oil export routes independent of the federal government in Baghdad.
Talk of building new pipelines through Turkey, which currently serves as an outlet for Iraqi crude oil produced in the north through the Mediterranean port of Ceyhan, has given rise to speculation that this might be a first step toward greater independence by the Kurdish province.
Hawrami stressed that the new pipeline would be Iraqi property on the Iraqi side of the border and Turkish on the Turkish and that the oil the line carried would remain the property of the Iraqi state.
“We believe that by 2015 we will safely reach 1 million bpd and by 2019, 2 million bpd,” Hawrami said.
Gulf Keystone, one of the biggest companies listed on London’s junior AIM stock market, is due to start the defence of its ownership of a huge oil field in Iraqi Kurdistan in a London court this week.
The company has long been touted as a potential acquisition target for an oil major looking for a foothold in Kurdistan, but the looming legal battle has been cited as a potential obstacle to any takeover deal.
Kurdistan is emerging as an attractive oil province for big western oil companies. Exxon Mobil, Total and Gazprom have all taken acreage there over the last year, lured by the lucrative terms on offer in Iraq’s semi-autonomous northern region.
Gulf Keystone will contest claims made by Excalibur Ventures LLC at the English Commercial Court. The claimant, which commenced legal action in 2010, asserts it is entitled to an interest of up to 30 percent in all of Gulf Keystone’s blocks in Kurdistan.
Gulf Keystone’s prize asset in Kurdistan is the Shaikan field, which could hold up to 15 billion barrels of oil – a volume which would make it one of the biggest discoveries made anywhere in recent years.
Under legal orders, Excalibur has paid 6 million pounds ($9.6 million) to the court as security for Gulf Keystone’s legal costs, and 3.5 million as security for the costs of Texas Keystone, a U.S.-based company against which it has also made the claims.
Texas Keystone, a company founded by Gulf Keystone Chief Executive Todd Kozel and of which he is still a director, holds a small interest in the Shaikan field in trust for Gulf Keystone.
Kozel, whose expensive divorce attracted media coverage nine months ago, is one of Britain’s highest-paid executives, having earned around $20 million in 2011.
The court case, which is expected to take between 10 and 12 weeks, was scheduled to start on Wednesday but was delayed by the judge.
Shares in Gulf Keystone closed at 205.75 pence on Tuesday, down over 50 percent from an all-time high reached in February, and valuing the company at about 1.75 billion pounds.
U.S. secret mission sent to Jordan to control Syrian chemical weapons: report
The United States military has secretly sent a task force of more than 150 planners and other specialists to Jordan to help the armed forces there to prepare for the possibility that Syria could lose control of its chemical weapons and be positioned should the turmoil in Syria expand into a wider conflict, a report published by the New York Times on Wednesday said.
The secret mission, led by a senior American officer, will also help in handling the estimated 180,000 Syrian refugees who have crossed the border and are severely straining the country’s resources, the report said.
The task force is based at a Jordanian military training center built into an old rock quarry north of Amman.
According to the report, U.S. officials familiar with the operation said the mission includes drawing up plans to try to insulate Jordan, a strong U.S., from the upheaval in Syria and to avoid the kind of clashes now occurring along the border of Syria and Turkey.
“We have been working closely with our Jordanian partners on a variety of issues related to Syria for some time now,” George Little, the Pentagon press secretary, was quoted as saying by the New York Times. He added that a specific concern was the security of Syria’s stockpiles of chemical and biological weapons. “As we’ve said before, we have been planning for various contingencies, both unilaterally and with our regional partners.”
The Obama administration has declined to intervene in the Syrian conflict beyond providing communications equipment and other non-lethal assistance to the rebels. However, the outpost near Amman could play a broader role should U.S. policy change.
The New York Times mentioned that there were no comments on the U.S. military operation from neither the Pentagon nor the Jordanian Embassy in Washington.
Analysts have always said that the Syrian regime of President Bashar al-Assad might deliberately force the Syrian conflict to spill over beyond the Syrian borders in order to keep the world’s attention away from the violence committed against civilians inside Syrian.
Over the past week, Syria and Turkey have exchanged artillery and mortar fire across Syria’s northern border. In western Syria, intense fighting recently broke out in villages near the border crossing that leads to the Bekaa Valley in Lebanon. To the east, the Syrian government has lost control of some border crossings, including the one near al-Qaim in Iraq.
Recent scuffles have also broken out between the Syrian military and Jordanians guarding the country’s northern border, where many families have ties to Syria.
Jordan, which was one of the first Arab countries to call for Assad’s resignation, has become increasingly concerned that Islamic armed groups, coming to join the fight in Syria, could cross the porous border between the two countries.
Al Arabiya has recently revealed that Assad gave instructions for his agents to try to ignite unrest in Jordan. According to “classified intelligence documents” leaked to Al Arabiya, Assad gave orders to provide peaceful protesters, who call for reform in Jordan, with weapons.
According to the New York Times report, the U.S. mission in Jordan quietly began this summer. In May, the U.S. organized a major training exercise, which was dubbed Eager Lion. About 12,000 troops from 19 countries, including Special Forces troops, participated in the exercise.
After it ended, the small American contingent stayed on and the task force was established at a Jordanian training center north of Amman. It includes communications specialists, logistics experts, planners, trainers and headquarters staff members, the report mentioned citing American officials.
Defense Secretary Leon E. Panetta met in Amman in August with King Abdullah II of Jordan. Panetta was then followed in September by Gen. James N. Mattis, the head of Central Command, who met with senior Jordanian officials in Amman.
Members of the American task force are spending the bulk of their time working with the Jordanian military on logistics — figuring out how to deploy tons of food, water and latrines to the border, for example, and training the Jordanian military to handle the refugees, the report said.
Jordan is currently hosting around 100,000 Syrians who have either registered or are awaiting registration, the United Nations said.
Royal Dutch Shell PLC (RDSA) has drilled more than 100 wells in Jordan in the two years since it a concession agreement to explore for oil from the country’s vast oil shale reserves, a person familiar with the project said.
Shell signed a production-sharing agreement with Jordan in May 2009 and pledged to spend some $500 million for exploration, assessment and designs on the project. The project aims at exploring for and, if successful, developing and producing oil from Jordan’s vast oil shale resources that are estimated at 40 billion metric tons. Many analysts now see oil shale–an unconventional form of oil contained in difficult-to-extract reservoirs–as a serious rival to crude.
Shell is mobilizing two rigs in the project that covers an area of 22,000 square kilometers from northern Jordan and west Safawi to Azraq in the middle and Sirhan and al-Jafer in the south. A third rig will be mobilized next year, the person told Dow Jones Newswires.
If the exploration proves successful Shell would invest billions of dollars and produce thousands of barrels of oil a day, the person said. Jordan signed similar agreements with companies such as U.K.-registered Jordan Energy & Mining Ltd., or JEML, and Estonian EESTi Energy.
Jordan, home to around 6 million people, imports some 100,000 barrels of oil a day, which constitutes around 98% of its energy needs.
BP last week began drilling the first well in its concession in the Risha natural gas field in eastern Jordan, near the border with Iraq, the British oil major said on Monday.
The drilling follows two years of preparation and a “very successful 5,000 square km seismic acquisition program in 2011”, BP said.
The well is expected to take three to four months to complete, and a number of international oil and gas service contractors as well as local firms are involved, it said.
Jordanian officials hope intensive exploration and drilling at Risha will lead to the discovery of extensive recoverable gas reserves, which will help cut dependence on oil imports to fuel Jordan’s power sector and industries.
Risha, which was discovered in 1987, has not delivered encouraging exploration results in the past.
In 2009, BP was given up to four years to spend at least $237 million to explore and evaluate the Risha block, which covers an area of 7,000 square km, Jordanian officials said.
If the exploration leads to the discovery of large commercially viable reserves of natural gas, officials said BP would enter a second phase to invest billions of dollars in developing the field.
BP said the seismic survey “was one of the largest ever acquired in the Middle East and one of the safest and highest-productivity surveys acquired in BP history.”
The government strategy calls for Risha to produce 330 million cubic feet of gas per day by 2015. The field has a current modest daily output of about 18 million cubic feet.
The kingdom, which imports most of its energy, is struggling to meet electricity demand, which is growing by more than 7 percent per year, due to fast growing population and rising industrial needs.
Zion Oil Executes Memorandum of Understanding Regarding Drilling Partnership
Dallas, Texas and Caesarea Israel – June 4, 2012 – Zion Oil & Gas, Inc. (“Zion Oil”) (NASDAQ GM: ZN) announced today that the Company recently signed a Memorandum of Understanding (MoU) with Lapidoth Israel Oil Prospectors Corp. Ltd. (“Lapidoth”), a forerunner of onshore oil prospecting in Israel. Lapidoth was incorporated in 1959 and its securities are traded on the Tel Aviv Stock Exchange.
The MoU, effective June 4, 2012, outlines plans to establish a company, tentatively named “Zion-Lapidoth Drilling”, which is to locate and purchase a drilling rig suitable for drilling wells to a depth of up to 25,000 feet. The MoU contemplates that Zion-Lapidoth Drilling will be 50% owned by Zion Oil and 50% by Lapidoth. The anticipated cost of the drilling rig is up to US$ 15 million and each party will share equally in the financing of Zion-Lapidoth Drilling.
The MoU provides that Zion Oil will retain Zion-Lapidoth Drilling for its drilling program and when not required by Zion Oil, Zion-Lapidoth Drilling may lease the drilling rig to third party oil and gas drilling entities.
The MoU is subject to certain standard conditions, including the execution of definitive purchase agreements, obtaining required approvals and the completion of acceptable due diligence by the parties. Additionally, the implementation of the MoU is subject to Zion raising at least US$ 10 million within the next 12 months.
The MoU provides that for the next 12 months Lapidoth will have a right of first refusal to drill wells, as needed, in accordance with Zion Oil’s work program.
Zion’s Founder and Chairman, John Brown, said today, “The signing of this MoU marks a significant milestone in the life of Zion Oil & Gas. We are looking forward to the future expectantly and the partnership with Lapidoth Israel Oil Prospectors Corp. Ltd helps solidify our commitment to drill our prospective exploratory wells.”
Zion’s Chief Executive Officer, Richard Rinberg, noted, “The partnership with Lapidoth helps to alleviate a longstanding concern about our ability to continue to drill exploratory wells in Israel without dependence on an outside third party. Zion will also benefit from Lapidoth’s significant experience in operating drilling projects in Israel. We believe that the ultimate establishment of Zion-Lapidoth Drilling will take Zion Oil, as a business, to a completely new level.
We remain excited about the possibility of recovering hydrocarbons on our license areas, onshore Israel, especially due to the U.S. Geological Survey report, published in April 2010, containing their assessment that there may be 1.7 billion barrels of recoverable undiscovered oil and 122 trillion cubic feet of recoverable gas in the Levant Basin, as all of Zion’s exploration rights fall within the area of the Levant Basin.”
Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW, ZNWAZ and ZNWAL”.
Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Haifa and Tel Aviv. It currently holds three petroleum exploration licenses, the Joseph License (on approximately 83,272 acres) and the Asher-Menashe License (on approximately 78,824 acres) between Netanya, in the south, and Haifa, in the north and the Jordan Valley License (on approximately 55,845 acres), just south of the Sea of Galilee. The total license area amounts to approximately 217,941 acres.
FORWARD LOOKING STATEMENTS: Statements in this communication that are not historical fact, including statements regarding Zion’s planned operations, geophysical and geological data and interpretation, the successful establishment of the drilling subsidiary and the negotiation and execution of definitive agreements with Lapidoth with respect thereto, the presence or recoverability of hydrocarbons, sufficiency of cash reserves, ability to raise additional capital and timing and potential results thereof and plans contingent thereon are forward-looking statements as defined in the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on assumptions that are subject to significant known and unknown risks, uncertainties and other unpredictable factors, many of which are described in Zion’s periodic reports filed with the SEC and are beyond Zion’s control. These risks could cause Zion’s actual performance to differ materially from the results predicted by these forward-looking statements. Zion can give no assurance that the expectations reflected in these statements will prove to be correct and assumes no responsibility to update these statements.
- Deputy PM: Iraq to cut ties with America and other foreign oil firms over Kurdish deals (thesantosrepublic.com)
- Genel Energy, Gulf Keystone Gain on Kurdistan-Iraq Revenue Deal – Bloomberg (bloomberg.com)
- Baghdad and Erbil Battle for Iraq (nationalinterest.org)
- Insight: Oil’s big players raise the stakes in Iraqi Kurdistan (conservativeread.com)