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Islamic State militants targeting wells in the Ajil oilfield

A witness and military source said Islamic State fighters ignited oil wells in the Ajil oil field northeast of the city of Tikrit. The fires were started in the hopes that they would shield the ISIS fighters from attack by Iraqi military helicopters, reports Reuters.

Shi’ite militiamen and Iraqi soldiers have mounted their largest offensive yet in an effort to push ISIS out of Tikrit and surrounding towns.. The witness who was accompanying the Iraqi militia and soldiers said black smoke could be seen rising from the oil field Wednesday afternoon.

Before ISIS took control of Ajil last June, the field produced 25 MBOPD that were shipped to the Kirkuk refinery to the north-east, as well as 150 MMcf/d piped to the government-controlled Kirkuk power station. The field has 500 MMBO in reserves, according to a report authored by Kamil al-Mehaidi, a petroleum adviser.

Last July, an engineer at the site was reported as saying that ISIS fighters were pumping lower volumes of oil from Ajil, fearing that their lack of experience and primitive extraction techniques could ignite the gas.

Record production in 2014

Despite its supply disruptions and security threats, Iraq was the second-leading contributor to global oil growth in 2014, behind the United States. Iraq accounted for almost 60% of production growth among OPEC members last year. The country’s crude oil production, which averaged almost 3,400 MBOPD in 2014, was 330 MBOPD above 2013 levels, despite heightened security threats from ISIS fighters.

Iraq

ISIS attacks in northern Iraq in early June 2014 reduced regional production and refinery operations, not including the Iraqi Kurdistan Region. These attacks did not affect southern production and exports, which accounted for 95% of Iraq’s total crude oil exports in 2014.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.