Oil Search, an Australian oil and gas explorer part-owned by Abu Dhabi, is the latest energy company to be affected by the security crisis in northern Iraq, even though Iraqi government forces have made gains against the Islamist State insurgents.
Oil Search, announcing half-year results today, said that it had suspended drilling on its Taza 2 oil well, located in southwestern Kurdish Iraq. However, the company said it would keep other Iraq operations running. While reporting promising results on Taza 2, the company added: "Due to the recent increase in regional tensions, our ability to deploy key skilled technicians, equipment and materials to the Taza 2 well site has been interrupted. Consequently, in consultation with the Kurdistan's ministry for natural resources, we have decided to temporarily suspend the well. As the security situation at Taza is presently stable, our other operations [there] are ongoing."
In the past month, a number of companies announced suspension of operations or evacuation of staff as the insurgents advanced, including Abu Dhabi National Energy Company (Taqa), whose Artrush development is in the north of the Kurdish region, Hess, Genel, Petro-celtic, Afren and Chevron.
This week, Kurdish forces supported by US airstrikes regained the Mosul dam, a key source of electricity and water, from the insurgents and were making other advances, although the security situation in the region remained precarious. Oil Search and other oil companies have said that they will monitor the situation and resume suspended operations when security improves.
Oil Search is Australia's third-largest oil and gas explorer and the largest operating in Papua New Guinea (PNG). In spring this year, the Abu Dhabi wealth fund Ipic gained a 17.6 per cent share in the company from the PNG government when it converted bondholdings it owned.
Oil Search reported a 68 per cent surge in production in the first six months of the year, to 5.4 million barrels of oil equivalent, the main factor being the start of shipments of liquefied natural gas from a big new plant in PNG.
The company said revenue rose 34 per cent to US$510 million, driven by the first sales from the PNG LNG Project, strong oil production and slightly higher oil prices. Net profit for the period was also up 34 per cent, at $152.5 million.
In its guidance for the full year 2014, Oil Search said it expects further gains in PNG to feed through to revenue and profits, forecasting total production of between 18 million and 20 million barrels of oil equivalent. It also said that despite the disruption in Kurdish Iraq, the appraisal results so far on the Taza field indicate it is a "potentially very large oil field".
amcauley@thenational.ae
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Oil Search suspends drilling at Kurdish oil well, but profits surge
Abu Dhabi part-owned company temporarily suspended work on one of its wells in Iraqi Kurdistan, but said it sees security improving.
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