23 July 2008
State Iraq Drilling Co. (IDC), one of 14 oil firms under oil ministry supervision, is setting up a joint venture with UK-based Mesopotamia Petroleum Co. (MPC) to carry out drilling services in Iraq, Iraqi officials told International Oil Daily in Baghdad last week. IDC is meanwhile upgrading its rig fleet, buying 19 new rigs that should start arriving in September, the officials said.
Oil Minister Hussein al-Shahristani said the ministry is encouraging the establishment of joint ventures, whether for oil-field services such as drilling or to participate in upstream bid rounds.
“We have established a joint venture with MPC and it will start work soon,” al-Shahristani told International Oil Daily in Baghdad.
IDC Director-General Idriss al-Yasseri said separately that the joint-venture agreement is being finalized but has yet to be ratified.
“We completed the negotiations with MPC in Istanbul two weeks ago and we are waiting for the documents. Once we get the draft agreement we will send it to the relevant authorities for ratification,” al-Yasseri said.
MPC is itself a joint venture set up in 2006 by UK firms Ramco Energy and Midmar Energy specifically to win work in Iraq.
According to a note to shareholders issued last year, Ramco said it intended to “bid on both oil service contracts and exploration and production opportunities in Iraq.”
It further said that Ramco and Firstdrill, introduced as “a sister company” of co-investor Midmar, have extensive experience in the oil services sector and that “notwithstanding the continued volatility in Iraq, there are near-term opportunities arising in the provision of oil services to the Iraqi Ministry of Oil and its operating entities.”
Al-Shahristani and al-Yasseri said IDC recently awarded a contract to supply the 19 new rigs to another UK company. Delivery of the first rig should start in mid-September, with the last arriving by mid-2009. The rigs range from 500 to 2,000 horsepower, while two will be used to drill water wells.
“Our 2008 budget includes funds for the purchase of nine more rigs. We have already tendered them and expect to award a contract soon,” al-Yasseri said.
This will be the first time Iraq has bought new rigs since international sanctions were imposed on the country in 1991 following its invasion of Kuwait. In the 1980s, IDC had 36 drilling rigs, some of which were damaged during the 1991 war. By 2000, Iraq had just 20 working rigs and was trying to repair others that were old or damaged. Two rigs were approved during the 12 years of sanctions, but they were still being assembled by a Romanian company on the eve of the 2003 US invasion.
According to al-Yasseri, 10 old rigs are currently being refurbished locally.
In 2003, it was estimated that Iraq needed to drill between 1,000 and 2,000 wells over a period of five to 10 years to maintain oil output at major producing fields and increase production, in addition to appraising discovered fields. US oil services company Weatherford has been awarded drilling contracts in southern Iraq in the past two years. The rigs were shipped to Iraq via Kuwait.
By Ruba Husari, Baghdad
(Published in International Oil Daily July 23, 2008)