Hess, Taqa in Kurdistan retreat

Drilling halt: the rig Atrush 3

A Hess-led joint venture has decided to halt exploration work in Kurdistan, with Abu Dhabi-based Taqa also suspending activity, as Islamic State (IS) terrorists threaten oil and gas operations in the semi-autonomous region of northern Iraq.

Hess' Irish partner Petroceltic said in a statement on Monday “it has been decided as a precautionary measure to temporarily secure and suspend operations... and to evacuate non-essential personnel”.

As a result, drilling work on the Shireen-1 exploration well in the Dinarta licence is being halted, it stated.

Taqa, an offshoot of Abu Dhabi National Energy Company, has also decided to suspend operations on the Atrush block in the region and “significantly reduced staffing levels” as a precautionary measure due to the “escalating instability”, according to a statement.

“Taqa continues to closely monitor the security situation with its Atrush partners and the Kurdistan Regional Government (KRG). The safety and security of the company’s staff and contractors are of paramount importance,” Taqa stated.

It added though it “remains committed to development of the Atrush block and expects to start production in 2015”.

The Shireen-1 probe, spudded in June and expected to take five months, was the first to be sunk on the Dinarta tract and was targeting multiple reservoir layers in a Jurassic and Triassic dolomite formation.

The US independent’s local unit Hess Middle East New Ventures holds a 64% operating stake in both the Dinarta and Shakrok production sharing contracts, with Petroceltic on 16% and the KRG holding the remaining 20%.

The latest well follows drilling last year of the Shakrok-1 well on the eponymous licence that came up dry.

Petroceltic stated on its website that the partnership saw the opening of an independent pipeline from Kurdistan to the Turkish port of Ceyhan and a gas sales pact between the KRG and Turkey as reducing commercialistion risk for oil and gas discoveries in the region.

However, the insurgency by Islamic militants, who have seized a vast swathe of northern Iraq, is posing a renewed geopolitical risk for operators in Kurdistan.

The decisions by Hess and Taqa follow similar precautionary moves by other players operating in the region including Chevron, Genel Energy and Afren, while Canada’s Oryx Petroleum has also decided to shut in production.

The US carried out a series of aerial bombardments against IS positions at the weekend as the terrorists advanced towards Kurdish capital Erbil after President Barack Obama ordered airstrikes.

Kurdish Peshmerga troops were reported by the BBC to have retaken two towns, Gwer and Makhmur, after heavy fighting following air strikes on the Sunni militants in Nineveh province.

Meanwhile, reports were also emerging on Monday of a rift in the Iraqi federal government, with Prime Minister Nouri Maliki threatening to take legal action against President Fuad Masum over an alleged constitutional breach for failing to intervene when parliament failed to give him a third term as PM despite winning a majority in recent elections.

Maliki, a Shia muslim, is facing calls to stand down for pursuing sectarian policies while the US is backing Masum to form a more inclusive government.

Shia militiamen and security forces loyal to Maliki were reported by the BBC to have taken up key positions in Baghdad, though no violence was reported, as the PM said he would file an official complaint against the president on Monday.

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