US IOC, Occidental (Oxy) and Indonesia’s state-owned oil and gas company Pertamina are reported to be in talks about a potential farm-in to Iraq’s Qayarah and Najmah oilfields according to a Sonangol executive.
Angola’s NOC Sonangol was awarded  the same fields in a second licensing round last year.
“We are meeting with them next month to discuss [a possible tie-up],” Jose Luis, Sonangol’s Qayarah and Najmah asset manager, told Dow Jones on the sidelines of an oil symposium in the Iraqi capital, Baghdad.
Sonangol was the only bidder for the two oilfields located in the north of Iraq, close to its borders with the autonomous Iraqi Kurdistan region, both in areas suffering from very high degrees of insecurity and political instability. Najmah and Qayarah—with reserves of about 800 million and 807 million barrels, respectively—are supposed to be developed to production capacities of 110,000bpd and 120,000bpd within about six years, in exchange for respective remunerations fees of US$6/barrel and $5/barrel. Sonangol initially demanded $8.5/barrel to develop Najmah and $12.5/barrel to develop Qayarah, but returned to the Oil Ministry accepting its terms during the licensing round.
“Sonangol’s ability to develop the fields in the first place has always been questioned, given that the Angolan NOC has its hands full domestically and is seeing its finances being stretched, as well as lacking any significant international experience,” said Samuel Ciszuk, IHS Middle East Energy analyst.
“The two northern fields are also located in an area where security is a large problem and even when insurgents are pacified, they are located in border areas disputed by Iraqi Kurdistan and Iraq proper, making them a very high-risk project. Speculation ran high in the aftermath of Sonangol’s win that the company had acted on behalf of Chinese interests, which depending on the future of the area could see either companies now invested in Iraqi Kurdistan or Iraq proper taking over, although no such deal has been substantiated,” he said.
“On another note, Iraq’s Oil Ministry has previously signalled its unwillingness to see the awarded development constellations changing through farm-ins. Ironically it was Oxy who received the initial slap on the wrist late last year, as it attempted to farm strategic Abu Dhabi partner Mubadala into its share at the southern Eni-led Zubair field development.”
Â
