ISIS Loses Oil Production
In the aftermath of last month’s U.S. air strikes that damaged the Islamic State’s (ISIS) captured oil field operations in Syria and Iraq, news outlets have reported that the attacks disrupted the group’s ability to make gasoline and diesel to power its military operations. More importantly, the damage to the field took away oil production it was using to fund its bloody takeover of portions of Syria and Iraq, a lengthy killing spree in which the group has publicized beheadings of men, women and children in its path.
“An Oct. 14 report from the International Energy Agency in Paris estimates the jihadis now control only about 20,000 barrels of daily oil production, down from about 70,000 in August. Most of that production is in Iraq,” Bloomberg reported. “In early August, Islamic State controlled seven oil fields and a refinery in Iraq and six oil fields in eastern Syria. The group could produce only half the potential output from the resources it controlled, but it had no problem tapping the region’s well-established oil smuggling network to sell what it did pump…almost entirely in cash, making transactions extremely difficult to track and shut down through the conventional methods of freezing terrorists’ funds in banks,” the report said.
Kurdish Iraq’s New E&P
Today Bloomberg reported that “Iraq’s semi-autonomous Kurdish government approved plans to create an oil exploration and production company separate from the central government and a sovereign wealth fund to take in all energy revenue.” The E&P would sell shares to the public.
Both draft laws were approved by the Kurdistan Regional Government and sent for approval to the KRG parliament.
A statement issued by the KRG said that the new E&P company “and in consultation and coordination with the Ministry of Natural Resources and the Council of Ministers for oil and gas will oversee all fields of oil and gas sector in the region, such as signing of exploration and extraction of oil as well as development and production of oil, exporting and marketing it in the region, Iraq and abroad and all business activities related to the oil and gas sector contracts.”
“The statement noted that the company will be within a certain period a joint-stock company and the citizens can buy shares, which will be organized later by a law,” according to Shafaq News, an Iraqi news outlet.
“The Kurdish region holds 45 billion barrels of oil reserves, while the rest of Iraq has 150 billion barrels, the world’s fifth-largest known deposits,” Bloomberg reported. “The Kurds were producing 320,000 barrels of oil a day in October, Sherko Jawdat, head of the natural resources committee in the Kurdish region’s parliament, said Oct. 2. The remainder of the country produced 3.3 million barrels a day last month.”
The Kurdish region in northern Iraq holds approximately one third of Iraq’s known petroleum resources. The EIA reported that Iraq was the world’s eighth largest producer of total petroleum liquids in 2012, holding the world’s fifth largest proven petroleum reserves after Saudi Arabia, Venezuela, Canada, and Iran. According to the EIA, “just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where much of its known hydrocarbon resources has not been fully exploited.”
Oryx Petroleum (ticker: OXC) is one company with established oil and gas operations in Iraq. Oryx Chief Financial Officer Craig Kelly spoke to Oil & Gas 360® about the company’s Iraq operations at EnerCom’s The Oil & Gas Conference® 19.
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