11 September 2008
Iraqi Oil Minister Hussein al-Shahristani has named Ali Muarij, a petroleum engineer from southern Iraq, director-general of Missan Oil Co. (MOC), the first regional operating company to be set up since Iraq National Oil Co. was dismantled in 1987, Iraqi sources told International Oil Daily from Baghdad Wednesday.
The cabinet in June approved the creation of MOC to operate all oil fields in Missan province in southern Iraq, until now overseen by South Oil Co. (SOC). Al-Shahristani told International Oil Daily in July that he intended to set up a second regional company in the Nasiriyah area of southern Iraq to cover Thi Qar governorate, home to oil fields such as Nasiriyah, Gharraf and Rafidain.
Muarij, a Baghdad University graduate who has spent the past 17 years working for SOC, told International Oil Daily Wednesday by telephone from southern Iraq that the MOC board is expected to be appointed soon. “There are ongoing discussions. It hasn’t been finalized yet,” he said.
MOC’s corporate structure is similar to SOC’s, with seven directorates for fields, projects, operations, engineering, transport, materials and equipment, and administrative, financial and legal affairs. Muarij said the ministry will give MOC its own budget from 2009.
The company will control about a dozen small fields, including Buzurgan, Fauqa and Abu Ghirab, which are all being offered to international oil companies for development as part of Iraq’s first postwar bid round. Royal Dutch Shell, with Australia’s BHP Billiton, has since 2004 had a cooperation agreement with the oil ministry to offer free support and training for staff in the area. Shell is targeting a 20-year service contract to develop the three fields, which currently produce about 100,000 barrels per day.
According to Muarij, MOC’s oil fields hold an estimated 30 billion barrels of reserves. They include Amara, Halfaya, Huwaiza, Noor, Rifaee, Dijaila, Kumait and East Rafidain. The area is also home to one structure, Qalaat Saleh, that has yet to be explored. Pilot production has started in Amara and Halfaya, which are together producing some 7,000 b/d.
“Our plan is to raise production capacity from the Missan area by about 80,000 b/d by drilling 50 wells in the five producing fields. The drilling contract has been tendered and we hope to achieve our target within two years of awarding it,” Muarij said.
He said another ongoing project is the construction of a degassing station in the Noor field, where two wells have already been drilled. The new facilities could process some 6,000 b/d from the two wells.
Iraqi officials said establishing a separate operating company for the Missan fields was a natural step, since the fields were operated independently in the 1970s.
The Buzurgan, Fauqa and Abu Ghirab fields were discovered by France’s Elf-Erap — the predecessor of Elf Aquitaine, which merged with Total in 2000 — under a service contract signed in 1968. A separate company, Elf-Iraq, was established in 1976 to operate the fields once they started producing. When that contract was terminated, a Missan oil fields directorate was set up within SOC.
Plans by the oil ministry to reestablish a separate entity to manage the Missan fields date back to the mid-1990s.
Furthermore, the draft oil and gas law approved by the cabinet in February 2007 — but which has still to be endorsed by parliament — provided for the establishment of regional oil operating companies in any province producing at least 100,000 b/d. The companies will be represented on the federal oil and gas council to be established under the oil law.
By Ruba Husari, Dubai
(Published in International Oil Daily Sept. 11, 2008)