Calgary companies pursue Kurdistan oil
Ashok Dutta, CanWest News Service; Calgary Herald
Published: Friday, March 09, 2007
CALGARY - Two Calgary-based oil companies have made progress with upstream development plans for oil and gas concessions in the northern Iraqi region of Kurdistan.
Braving high security risks and tension in the Shia-Sunni divided Iraq, Addax Petroleum Corp. and Western Oil Sands Inc. are the flag bearers of Western oil companies doing business in Iraq. Addax Petroleum and Western Oil Sands aim to produce at least 200,000 barrels per day by 2009.
"(Availability of) opportunity is a key factor for Calgarian oil companies to go into Kurdistan," said Martin Molyneaux, senior analyst with Calgary's FirstEnergy Capital. "There are not many areas in the Middle East that allow upstream access to foreign companies."
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Font: ****Barring Qatar, United Arab Emirates, Oman and Yemen, no other Persian Gulf state signs PSAs with international companies for their oil sector.
Addax Petroleum is more advanced - it announced in early March test flows of 26,550 bpd of light oil from TT-05, the second appraisal well drilled at its Taq Taq licence area. The 680-square-kilometre onshore concession is located 60 kilometres northeast of the giant Kirkuk, which by itself has a production capacity of nearly 1 million bpd.
Addax has formed a 45:55 joint venture with Genel Energie of Turkey to implement a 25-year production sharing agreement (PSA) it signed with the Kurdistan Regional Government in early 2004. Called Taq Taq Operating Company (TTOPCO), it will be the first international firm to produce crude oil in Kurdistan.
Iraqi Kurdistan is home to 25,000 million barrels of proven reserves and another 20,000 million barrels of probable reserves.
The Kurdistan Regional Government is seeking assistance of international oil companies to attain production capacity of 1million bpd by 2010/12.
"We aim to complete drilling a third well by late March," Les Blair, general manager of TTOPCO said Thursday from Turkey. "Evaluation of test flows in under way. Under the full-field development program, we are looking at a start-up production capacity of 200,000 bpd in 24 months."
In early March, Western Oil Sands announced that the KRG government had ratified an exploration and production sharing agreement (EPSA) it signed in May 2006.
Under the deal, WesternZagros Ltd - a 100 per cent-owned subsidiary of Western Oil Sands - will carry out an exploration program over a sizeable block, which lies in the Zagros fold belt. The next stage will involve geological studies and exploratory drilling.
"The final EPSA area encompasses 2,120 square kilometres and holds a number of potential prospects," a Western Oil Sands statement said.
Last year, it had stated a minimum contractual commitment of $45 million over the first four years.
"Should exploration prove successful, additional expenditures are anticipated," Western Oil Sands said.
The two Calgary companies are followed closely by DNO, which in 2004 signed two PSAs for the Tawke and Khanke concessions along the border with Turkey.
The Norwegian company is expected to start pumping crude by the summer at an initial rate of 15,000 bpd. It has also finalized development plans with the KRG, including the construction of an export pipeline and a central oil processing facility.
adutta@theherald.canwest.com
Calgary Herald
