Lukoil # 9 (October 2017)

Shell has decided to divest its Iraqi oil assets in a move to focus on the natural gas business. Shell’s current 45% stake in the Majnoon oil field will be relinquished in “due course”, official stated. The company also indicated that the Iraqi Ministry of Oil formally endorsed the proposal. According Shell exits Majnoon SOMO CHIEF REPLACED IN IRAQ OIL MINISTRY SHAKE-UP On September 23, LUKOIL President Vagit Alekperov joined Uzbekistan’s PrimeMinster Abdulla Aripov for the official launch of new facilities at the Gissar project in Dzharkuduk. In the biggest shake-up at Iraq's oil ministry since Jabbar al-Lueibi's appointment as minister last year, Falah Alamri has been replaced as head of state oil marketer SOMO after introducing some radical changes to the company's activities. A lamri, who held his position for more than 10 years and also served as Iraq's OPEC governor, has been made a special adviser to the minister for marketing strategies. Oil ministry sources say he is likely to remain the country's OPEC representative. He is replaced by Alaa al-Yassiri, who headed the ministry's economic and finance department. Al- Yassiri is not new to the company, having worked previously in SOMO's finance department. As SOMO’s director general, Alamri has in recent months overseen several marketing initiatives which were aimed at -- and have partially succeeded in -- capturing extra profits from Iraq's crude exports. In April, SOMO departed from its normal policy of selling all its crude through term contracts, as OPEC's other major Gulf producers do. It began auctioning cargoes of Basrah Light and Basrah Heavy on the Dubai Mercantile Exchange (DME), and selling 2 million barrels per month of state crude on the spot market through Dubai-based Lima, a joint venture formed with Litasco. Then, in August, the Iraqi f irm proposed switching the official pricing formula for crude exports from its southern Basrah terminal to Asia-Pacific -- by far the main destination for cargoes of Iraqi crude -- to the DME's Oman futures benchmark. The change, if it happens, would take effect in January and mark a historic shift in long- established Mideast pricing policy. The reasons for Alamri's departure and what will become of his initiatives, especially the planned changes to the pricing benchmark of Iraqi crude, remain unclear. Either way, it forms part of Al- Lueibi's efforts to implement wholesale changes at the ministry and affiliated state companies, where many senior officials have been in their posts for more than a decade. The changes at SOMO follow the switch in positions last week of Ihasan Ismael, ex- director general of the South Gas Co., and Hayan Abdulzahra, who formerly headed the Basra Oil Co.. Abdulzahra is seen as one of Al-Lueibi's protégés and someone able to push forward the development of southern Iraq's gas, more than 50% of which is currently flared. In June, the head of the oil ministry's exploration department, KarimHattab, was appointed deputy oil minister for upstream affairs. He filled a post left vacant by the departure of Fayadh Hassan Nama, who was put in charge of Iraq's refining sector last November. According to analysts, Iraq's oil ministry is looking at ways of attracting more foreign investment to boost production capacity at its super giant oil fields in the south, including through complex revisions to the technical service contract under which the fields are currently operated. UP, UP AND AWAY! À s Oil Journal reported in its September issue (Stepping on the Gas!), Gissar’s launch has allowed the company to increase annual gas production inUzbekistan by 5 billion cubic meters of gas. “This production sharing agreement constitutes a separate law that gives the investor confidence that, in the long term, no changes to the tax and legal base of the project will be made,” Alekperov said in an interview to journalists. “LUKOIL has guaranteed buyers for the produced gas in external markets, including Russia”. *LVVDU?V ODXQFK KDV DOORZHG WKH FRPSDQ\ WR LQFUHDVH DQQXDO JDV SURGXFWLRQ LQ 8]EHNLVWDQ E\ ELOOLRQ FXELF PHWHUV RI JDV to Shell, the divestment will take not less than one year. Iraqi officials already indicated that Shell Iraq will now focus mainly on the Basra Gas Company and the Nebras Petrochemicals Project. Sources put productionatMajnoonat235kbpdwiththe target of 400 kbpd by 2020. 3 News