Oil and gas drilling dominates weekend round-up

Dominating the news this weekend in the oil and gas sector is the news officials from Iran and Iraq have begun talks on the future of drilling. Elsewhere in the news, Nabucco Gas Pipeline International has launched the pre - qualification process as a starting phase for the procurement of long lead items needed for the pipeline construction. While Shell says the Middle East needs to look at its supply shortages.

Drilling talks for Iran and Iraq

Iran's official IRNA news agency has reported that officials from Iran and Iraq have begun talks over possible future oil and gas drilling in Iraq.

"We are currently involved in negotiations with Iraqi officials in regard to beginning oil drilling operation in Iraq and we are trying to set up an office in Iraq," IRNA quoted Heidar Bahmani, an official of the state-owned National Iranian Drilling Company (NIOC), as saying in a report late on Sunday, Arabian Business reports.

"We are awaiting the Iraqi government's positive response," he added.

Relations between the neighbours were strained when a small contingent of Iranian troops moved into an oilfield inside Iraqi territory in December, raising the Iranian flag over an inactive oil well. The dispute, which Tehran called a "misunderstanding", ended in January when troops withdrew after talks between the two countries' foreign ministers.

Pre-qualification process for Nabucco

Nabucco Gas Pipeline International has launched the pre-qualification process as a starting phase for the procurement of long lead items needed for the pipeline construction.

The value of the entire package is around €3.5 billion and the deadline for companies to participate in the pre-qualification is 17 May.

"Long lead items - like pipes and valves - are the cornerstone for pipeline construction, and account for a considerable part of the overall investment costs. Thepre-qualification process will identify the most eligible companies and is the basis for a successful procurement process," Nabucco managing director Reinhard Mitschek stated to Arabian Oil and Gas.

The pre-qualification process will provide the Nabucco consortium with the opportunity to assess the supplier market on a worldwide basis. After the pre-qualification process is completed, Nabucco intends to launch the respective tender.

Why does the Middle East suffer gas shortages?

The Middle East sits on 40 percent of the world's gas reserves, yet suffers supply shortages. A senior executive from Royal Dutch Shell has said it needs to access the conundrum.

Natural gas demand in the region was growing at such a rate that by 2015, total consumption in the Middle East would be close to that in major European economies, Malcolm Brinded, Shell's executive director for international upstream said.

Middle East gas demand was rising at around five percent per year, a similar rate to growth in China, he said, Reuters reports

"Domestic demand is growing, fuelled by economic growth, low gas prices and a gradual switch from oil to gas for power generation. As a result, some Middle East countries face natural gas shortages,"Brinded said.

The region could explore using new technology and investing in LNG infrastructure as it looked to meet gas demand, Brinded said.

In February, OPEC-member Kuwait signed a five-year service contract with Shell to develop pure gas fields in the country's north. The Gulf Arab state plans to increase output from the gas fields to one billion cubic feet per day (cfd) from around 140 million cfd.

Shell signed a deal in June 2009 to supply Kuwait, one of the world's highest per capita consumers of electricity, with gas to feed its power generation stations during the summer.

 

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