The Ahdab Venture.

The value of the TSA for al-Ahdab is $3.5 bn. CNPC has 75% in this, with the Oil Ministry's North Oil Co. (NOC) holding the remainder. The field was found in 1979 but kept undeveloped. CNPC holds the 75% in partnership with Zhenhua Oil, another Chinese firm. The CNPC/ Zhenhua partnership is called al-Waha Chinese Co. (Waha).

Under the TSA, this JV will earn a service fee of $6/b in the first phase of crude oil production which should occur within three years, i.e., to late 2011, and this should fall to $3/b in the second and phase, starting from 2012 or before, according to Oil Ministry officials. Phase-I's period, during which the JV's crude oil output should average 25,000 b/d, will depend on the speed of the operator's work. The same applies to the date when Phase-II, to produce 115,000 b/d as an average, should begin. CNPC hopes Phase-II would begin before mid-2011.

Waset Governor Latif Hamed al-Tarfa was on Jan. 5, 2009, quoted as saying of Waha: "The company is there at the site and has already taken the first steps". He was referring to the firm's engineers. It is not yet clear what role NOC will play in this JV and whether or not it will provide some of its own staff for this venture.

Output from the field will mostly be exported but some will be used to fuel power stations nearby to ease electricity shortages in Iraq. (China's demand for oil has increased sharply in recent years, as its economy has grown at double-digit pace and its population of over 1.3 bn people has grown richer. But since the late autumn of 2008, China has been badly affected by the global recession and credit crunch. China's oil demand in 2009 is expected to rise by a mere 90,000 b/d, down from a projection of almost 500,000 b/d for 2008 made early last year).

According to information published on the website of President Talabani's Patriotic Union of Kurdistan (PUK), al-Ahdab contains about 225m barrels of proven recoverable reserves. The APS source in Baghdad on Feb. 7 put the oil in place there at more than 450m barrels.

The PUK website said the development would help Iraq's al-Zubaidiya power station supply much-needed electricity to half of the country's provinces.

Shahristani on Nov. 10 signed the TSA with CNPC President Jiang Jiemin in a ceremony held at his ministry. Shahristani then said: "This is an important participation from the Chinese side to develop the Iraqi oilfields, and we are looking forward for more participation in rebuilding Iraq". Zhi Yulin, board chairman of Waha told the Chinese news agency Xinhua he hoped the project would help facilitate post-war reconstruction, create job opportunities and contribute to social stability. While underlining that security was the biggest challenge the company would face, Zhi promised that Waha will do its best to guarantee its staff's safety.

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