It seems that Baghdad and Erbil have reached a tacit agreement on how to divide the contested oil fields between the region and the rest of the country. Or that’s at least what seems to be happening in Khurmala Dome, one of three major domes making up the giant Kirkuk oil field.
Khurmala Dome, which has de-facto become the Khurmala oil field, is the least developed of the three domes though it had numerous wells drilled. The others are the Baba and Avanah domes which have been producing for very long decades. The last time the Iraqi oil ministry and North Oil Co (NOC), which has been operating the field so far, were involved in Khurmala was in 2004 when they tendered an engineering, procurement and supply contract aiming to bring output from Khurmala to 100,000 b/d. The contract was won at the time by Turkish company Avrasia and Kar Group of Erbil. The engineering was subcontracted to Dynamic Processing Solutions of the UK. Subsequently, Kar Construction & Engineering, a subsidiary of Kar Group, won a construction contract from the KRG to build flow lines and surface production facilities, and tie-in more than two dozen wells drilled in the northern and middle sections of the 20-km long Khurmala field to a central processing facility.
The rush by the KRG and its ministry of natural resources (MNR) to start production from Khurmala started in 2009. Old wells were rehabilitated and brought online and production from the middle gathering station started in July 2009 at a rate of 20,000 b/d. Khurmala crude, which has the same API gravity as the Kirkuk export crude, is the main feedstock to the Kalak refinery in Erbil, owned by Kar Group. Kar also operates the field, on a 25-year contract on behalf of the MNR, for a fee. The refinery’s capacity is set to increase to 40,000 b/d within weeks pushing the field’s output up at the same time, by bringing in the northern gathering station, completed last March, into play. A 24-inch and 47 km-long pipeline links the central processing facility to the refinery.
Next in line is the southern gathering station, which has been pumping crude intermittently to a degassing station at Avanah dome. The southern station with its 25 drilled wells is set to be connected to the central processing facility sometime this year. The ultimate plan is to eventually produce Khurmala field at 100,000 b/d, introducing water injection along the way. The whole project was executed by Iraqi manpower as Sheikh Baz Karim, the CEO of Kar Group, tells me proudly during a tour of the Kalak refinery in late July.
Seen on the ground, the integrated Khurmala project made up of the three gathering stations, the central processing facility and the Kalak refinery, is no doubt an impressive piece of work, implemented by veterans of the oil ministry and of NOC.
By Iraqi “oil politics” norms, and in the absence of the usual incendiary verbal exchanges between Baghdad and Erbil, one can’t help wondering whether Baghdad’s acquiescence is a matter of accepting a fait accompli or is it a matter of reconciling itself with the inevitable, i.e that Khurmala is geographically located within the KRG’s accepted boundaries.
Interestingly enough, the KRG’s Minister of Natural Resources, Ashti Hawrami, omitted mentioning Khurmala’s output as part of the KRG’s total oil production during an interview with him that preceded my visit to the Khurmala field.
Erbil, Aug 10, 2010 (Iraq Oil Forum)
By Ruba Husari,
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