Iraq said its decision to deepen the discount for January sales of its main crude to Asia provides no support for claims that producers are waging a price war. Pricing for next month’s shipments of the Basrah Light grade to Asia is “based on the market structure for both oil products and crude oil,” Iraq’s Oil Marketing Co. said. “The widened contango in crude oil prices in Asia was the major reason behind the cut.”
Not only is OPEC refraining from cutting oil output to stem the five-month plunge in prices, it’s adding to the supply glut. Just five days after the Organization of Petroleum Exporting Countries decided to maintain production levels, Iraq, the group’s second-biggest member, inked an export deal with the Kurds that may add about 300,000 barrels a day to world supplies. In a global market that neighboring Kuwait estimates is facing a daily oversupply of 1.8 million barrels, the accord stands to deepen crude’s 39% plunge since late June.
Marathon oil has made a discovery at its Harir Block in the Kurdistan region of Iraq. The company said it had hit oil and gas in its Jisik-1 exploration well. The site, 40 miles northeast of Erbil, was drilled to a total depth of 15,000 feet and oil and gas was noted in an extensive gross interval in both the Jurassic and Triassic reservoirs.
Iraq’s biggest oil refinery at Baiji is set to reopen after government troops forced Islamic State militants further from the facility, according to state-sponsored Iraqiya television. The army entered Baiji after clearing bombs and other equipment from around the plant, the station reported. It didn’t say when production would resume at the refinery that halted in mid-June. “Army troops achieve a victory and lift the siege on Baiji refinery,” Iraqiya reported in the banner headline. “Baiji refinery to reopen soon.”
Gulf Keystone Petroleum is on track to produce 40,000 barrels of oil per day (bopd) by the end of the year at its Shaikan facilities in the Kurdistan region of Iraq. The company said its production levels are stable, averaging 23,000 bopd from three wells at PF-1 and two wells at PF-2. Civil works are also ongoing to connect the Shaikan-7 and -8 wells to PF-1.
Iraq is now more violent than at any time since the bloody 2006-2007 insurgency period. The country experienced an average of almost 80 violent incidents a day between July and September. Hundreds, possibly even thousands of people are being killed every month and there are no signs that the conflict will rescind in the near future. As violence continues to rage, the energy sector remains concerned with developments affecting Kurdish Regional Government (KRG) territory, as well as oilfields in the south. International military assistance has bolstered the position of the Kurds and for now, this will act as a major safeguard for the region's interests.