KRG Goes Fishing For New Investors, But Will They Bite?

Far from reaching its planned 1mn b/d end-16 target, KRG output has stalled at 600,000 b/d with gas export plans much delayed. 20 new blocks are on offer. But amid payment delays and geological complications will there be much interest?

Ashti Hawrami, head of the KRG’s Ministry of Natural Resources (MNR) announced plans to offer 20 exploration blocks to foreign firms during the CWC Kurdistan Iraq Oil Conference on 5 December. This marks a bold attempt to rejuvenate the KRG’s stalled hydrocarbon sector. But the MNR faces an uphill struggle to secure the requisite investor confidence.

Five years ago, Iraqi Kurdistan was one of the most hyped regions on the planet for oil investment. But it’s a different story now. More recently headlines have focused on geological downgrades, relinquishments and the KRG’s struggles to meet payment deadlines.

The KRG had targeted 1mn b/d crude output by end-2016. Prospects for achieving this long ago disappeared, but steady growth was achieved until this year when things went into reverse (see chart). After averaging 577,000 b/d last year, production this year will likely fall back to around 540,000 b/d, and even this is only possible due to strong performance from contentious fields around Kirkuk. However, November output is edging close to 600,000 b/d and may surpass this level next month for the first time since December 2015, as the KRG looks to end a disastrous year on a positive note (MEES, 18 November). (CONTINUED - 1478 WORDS)