Prep Works Launched to Restart Production at Iraqi Oil Field

Iraq's Gharraf Oil Field has started preparatory works for restarting output, following the suspension of production in mid-March as part of measures to contain the coronavirus pandemic, a Japan Petroleum Exploration spokesman told S&P Global Platts July 20. The move for restarting production at the Gharraf oil field follows the dispatch of personnel in mid-June by Malaysia's Petronas, the operator of the field in southern Iraq, after action plans that included the transporting of personnel took shape with the Iraqi government, the Japex spokesman said. The exact timing of the Gharraf oil field restart remains unclear, the spokesman added.

News of the preparatory works to resume the Gharraf oil field came to light just days after OPEC+ members on July 15 pared back their production cut commitment. The 23-country OPEC+ coalition enacted a 9.7 million b/d output cut accord in May in response to the coronavirus crisis and will roll the deal back to 7.7 million b/d in August through to the end of the year, maintaining the terms of the agreement laid out in April. Japex did not expect to lift any of its Iraqi equity crude until December as part of its May 14 income forecast as it remained unclear when the Gharraf oil field production would be restarted.

SUSPENDED OUTPUT

Production at the Gharraf oil field was suspended on March 16 after Baghdad closed all airports as part of its measures against the coronavirus pandemic. But Japex loaded 1 million barrels of Basrah Light crude at the end of March after having previously loaded 2 million barrels of Basrah Light crude last December 18. Production at the Gharraf oil field had dipped to an average of around 93,000 b/d in January due to delays in drilling work, but stakeholders remained committed to raising the output to 230,000 b/d by the end of 2020, Japex officials said February 10.

The field produced an average of 75,000 b/d over January-March, the Japex spokesman said July 20. The Gharraf field started production in August 2013 under a technical service contract with Iraq's South Oil Co. The consortium consists of Petronas with a 45% stake, Japex Garraf with 30% and North Oil Co. with 25%. Japex holds a 55% stake in Japex Garraf with state-owned Japan Oil, Gas and Metals National Corp. holding 35% and Mitsubishi 10%.