Gazprom Neft has received its second allocation of oil from the Iraqi State Organisation for Marketing of Oil (SOMO) in compensation for costs incurred in developing the Badra oilfield. The allocation — one million barrels of Basrah Heavy (around 140,000 tonnes), supplied FOB* — was despatched by a ship chartered by the purchaser (the ultimate recipient of the oil, who appears to be one of Europe’s most important oil refiners) from the Iraqi terminal at Basra, in the Persian Gulf.
The first consignment of oil to Gazprom Neft (500,000 barrels or 70,000 tonnes) was received in April 2015.
A key condition of fulfilment of the development contract — delivery of a minimum 15,000 barrels per day into the main trunk pipeline over the course of 90 days — was met at the end of November 2014, compliance with which allowed investors to start receiving compensation for costs incurred. The crude oil is transferred to consortium participants quarterly, with each company arranging its subsequent sale independently.
Commercial oil shipments from Badra commenced in August 2014 — all necessary infrastructure for crude production and transportation having been installed over three years prior to this. Five wells are currently in operation at Badra, with drilling being undertaken for a further three. Production at the field currently stands at 35,000 barrels per day.
*FOB: “free on board”, a trade term requiring the seller to deliver goods on board a vessel designated by the buyer.
NOTES FOR EDITORS
The Badra oilfield is located in the Wasit Province, Eastern Iraq. Preliminary estimates indicate total oil in place at the Badra field to be in the order of three billion barrels. The project is expected to run for 20 years, with potential for extension by a further five. The contract on the project was signed in January 2010, on behalf of a consortium comprising Gazprom Neft (operator), KOGAS (Korea), PETRONAS (Malaysia), and TPAO (Turkey). Gazprom Neft’s interest in the project is 30 percent, with KOGAS, PETRONAS and TPAO holding 22.5 percent, 15 percent, and 7.5 percent, respectively. The Iraqi government’s holding is represented by the Iraqi Oil Exploration Company (OEC), which holds 25 percent.
Field development is being undertaken by Gazprom Neft Badra, and marketing of Iraqi oil on the international market by Gazprom Neft Trading GmbH — both companies being subsidiaries of Gazprom Neft.