Kirkuk oil field

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Oil Reserves 8.7 billion barrels[1]
Oil Production 280,000 bpd (2012)[2]
Discovered 1927
First Produced 1934
Location Kirkuk, North.

Kirkuk is an oil field at Baba Gurgur ("St. Blaze" in Kurdish), one of Iraq's oldest producing fields, is located in the governorate Kirkuk in northern Iraq. It was discovered in 1927 and brought into use by the Iraq Petroleum Company (IPC) in 1934. It was considered the largest oil field in the world for around 20 years until Saudi Arabia's Ghawar field came online in the 1950s[3], and forms the basis of northern Iraqi oil production with nearly 9 billion barrels of proven remaining oil reserves as of 2006.[4]

In the absence of deals concluded with international companies, as of December 2012 production at the field was being carried out by the North Oil Company on behalf of the Iraqi Ministry of Oil.[5]

Contents

Contract Negotiations

Following the invasion and occupation of Iraq in 2003, Kirkuk was among the eight fields on offer in Iraq's first post-war licensing round in 2009.[6] The government set a production plateau of 600,000 barrels per day (bpd). A consortium led by Shell offered a production plateau of 825,000 bpd, however their offer was declined because the Oil Ministry considered the suggested remuneration fee of $7.89 per barrel to be too high, compared to their own maximum fee of $2 per barrel. A senior Iraqi official reported in October 2009 that the Ministry would meet Shell to discuss terms further.[7] No deal is known to have resulted from these further contacts.

In 2012 Reuters reported that British major BP was considering a project aimed to revive declining production at Kirkuk. This would make BP the first foreign company to develop the Kirkuk deposit. However BP made no comment on the reports. Oil field service companies Schlumberger and Baker Hughes were also reported to be interested in the re-development project.[8]

Production and export

By 2012 production at the field had slumped to 280,000 bpd, from a level of 900,000 bpd in 2001 prior to the 2003 invasion. Iraqi officials in 2012 were looking to invite an international oil company to boost production at the field, in order to raise capacity to 600,000 bpd by 2017.[9]

Once oil is extracted from the ground at Kirkuk, it is sent via the Kirkuk-Ceyhan Oil Pipeline to the Turkish port city of Ceyhan, from where it is shipped around the world.[10]

Dispute over ownership

The Kirkuk field lies near the city of Kirkuk, a city long disputed between the central government in Baghdad and the Kurdish Regional Government (KRG) based in Erbil.

Historically, this area of Iraq was populated by Shiite Kurds, who originally occupied a large part of the Ottoman Empire. Since the fall of Saddam Hussein, many Kurds feel that Kirkuk should be returned to them. [11] In June 2008 there was a brief armed stand-off between the forces of the KRG and Iraq's central government over one of the areas of Kirkuk field, the Khurmala Dome. Oil Minister Hussein Shahristani said the Baghdad government secured the area after Kurdish peshmerga briefly stopped the Oil Ministry from producing out of the field, at the time yielding about 30,000 bpd.[12]

KRG officials claimed their right to manage the Khurmala Dome on the grounds that it falls within Erbil governorate, which is an undisputed part of the KRG. Iraq's central government bases its own claim on the fact that the 2005 Constitution grants the right to manage fields which are already in production to the federal level of government.[13]

Quality of crude at Kirkuk

Kirkuk normally produces crude with an API gravity of 35°, with 1.97% sulphur content. However both the API Gravity and sulphur content reportedly deteriorated sharply in the months just preceding the war in 2003. Kirkuk's gravity, for instance, declined to around 32°-33° API, while sulphur content rose above 2%.

Some analysts believe that poor reservoir management practices during the Saddam Hussein years (including reinjection of excess fuel oil, refinery residue and gas-stripped oil) may have seriously, even permanently, damaged Kirkuk. Among other problems, fuel oil reinjection has increased oil viscosity at Kirkuk, making it more difficult and expensive to get oil out of the ground.[14]

References

  1. "Iraq Oil Production Kirkuk Oil Field", Oil and Gas Articles, 21 March 2006
  2. "Iraq wants BP to revive northern Kirkuk oilfield", Reuters, 17 April 2012.
  3. "the Kurdish battle for Kirkuk International Resource Journal 2009
  4. "Iraq Oil Production Kirkuk Oil Field", Oil and Gas Articles, 21 March 2006.
  5. "Iraq - Extractive Industries", Revenue Watch, retrieved 14 December 2012.
  6. "Shell Renegotiates with Iraq for Kirkuk Field Rights, Rigzone 16 October 2009.
  7. "Iraq readies to meet Shell over Kirkuk", Zawya, 18 October 2009
  8. "Iraq wants BP to revive northern Kirkuk oilfield", Reuters, 17 April 2012.
  9. "Iraq wants BP to revive northern Kirkuk oilfield", Reuters, 17 April 2012.
  10. "Kirkuk Oil Field- A History of Conflict", Commodities Universe, 28 October 2011
  11. "Kirkuk Oil Field- A History of Conflict", Commodities Universe, 28 October 2011
  12. "Future of Kirkuk Field Unknown", Energy Daily, June 17, 2008
  13. "Future of Kirkuk Field Unknown", Energy Daily, June 17, 2008
  14. "Iraq Oil Production Kirkuk Oil Field", Oil and Gas Articles, 21 March 2006
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