Reply Fri 20 Apr, 2007 11:47 am
iraq may still be a dangerous country ... but a canadian/japanese joint enterprise is planning to drill for oil in iraq . as the company pointed out : "we are NOT drilling in baghdad !" (i didn't think so) .
iraq's potential as a future oil-supplier (oil sands) seems enormous .

News from The Globe and Mail

Friedland's next frontier: Drilling for oil in Iraq
Ivanhoe Energy pursues project 'far from Baghdad'

00:00 EDT Friday, April 20, 2007

VANCOUVER -- In keeping with its co-founder's penchant for doing business in risky places, a junior oil and gas company in Robert Friedland's stable of resource plays has struck a deal to pursue a project in Iraq.

Vancouver-based Ivanhoe Energy Inc. yesterday said it had signed a memorandum of understanding with Japanese oil and gas firm Inpex Corp. to develop a heavy oil field in north central Iraq, close to Iraqi Kurdistan.

On a conference call yesterday, Ivanhoe executives described the deal as a milestone for the company's patented upgrading technology -- a key element of the agreement -- and played down security risks of doing business in the war-torn country. "We have looked at the site -- it's far from Baghdad and the more serious problems in Iraq," said deputy chairman Leon Daniel, adding that the company has experience working in risky environments and believes the site is "securable."

"It's not like securing Baghdad," Mr. Daniel said. "This is a work site, it's very remote, the visibility is good there and there is competent security forces and good competent workmen. So we think it's going to be a safe place to work."

Ivanhoe's shares gained 37 cents on the news to close at $2.99 on the Toronto Stock Exchange.

Under the terms of the agreement, Ivanhoe and Inpex have agreed to team up to consider bidding on a heavy oil field named Qaiyarah.

Bidding is expected to take place after Iraq ratifies a new oil law that will set guidelines for such negotiations.

"We'll move very quickly as the government allows us to, to get to the point of negotiating, bidding or whatever is required," said co-chairman David Martin.

Ivanhoe has been working on the field since late 2004, when it signed an agreement with the Iraqi Oil Ministry to evaluate the field, especially the potential for it to be developed using Ivanhoe's upgrading technology.

The technology upgrades heavy oil and bitumen by producing lighter, more valuable crude oil, along with energy that can be used to generate steam or electricity.

The technology was developed in the early 1980s in the forestry sector using wood waste and has been adapted for use in the petroleum sector.

Ivanhoe acquired the technology when it bought Ensyn Group Inc. last year.

In a statement, Inpex chairman Kunihiko Matsuo said Inpex is interested in supporting the development of Ivanhoe's upgrading technology, "which is expected to have the potential to improve the economics of heavy oil production the world over."

Ivanhoe Energy is part of a stable of resource companies overseen by globe-trotting mining mogul Mr. Friedland, whose Ivanhoe Mines Ltd. is developing the Oyu Tolgoi gold and copper project in Mongolia.

According to filings, Mr. Friedland owns 20.5 per cent of Ivanhoe Energy while the directors and managers as a whole own 25.7 per cent.

Ivanhoe will have a 55-per-cent interest in the Iraq project and be the operator while Impex will have 45 per cent. Inpex has agreed to make a $9-million (U.S.) payment within 30 days to Ivanhoe for previous field studies and other work.

Details of the project, including its size and other information, are protected under confidentiality agreements, the company said.Ivanhoe's upgrading technology, if proven on a large, commercial scale, could give the company a "little bit of a competitive advantage" over other players going after the same business, said Justin Bouchard, an analyst with Raymond James in Calgary.

That in turn could give the company an edge in the hyper-competitive oil sands sector, where a number of companies are pouring billions into upgrading facilities.

"The biggest opportunity for [the upgrading technology] is in the oil sands," Mr. Bouchard said.

Iraq's vast oil potential

116 billion Current crude oil estimates, barrels of proven and probable reserves.

216 billion IHS Inc. estimates, barrels of proven and potential reserves.

178 billion

Canada's crude reserves, in barrels.

2 million

Current Iraqi production, per day.

4 million

IHS estimate of Iraqi production, barrels per day, in five years.


Iraqi oil fields, 27 of which are in production.


Untouched fields


© The Globe and Mail


this is not the first drilling operation for ivanhoe in iraq . here is a report on a 2004 project :
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