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Extremist force Islamic State of Iraq & Syria or ISIS is making steady inroads into Iraq, and the exodus of multinational energy players continue unabated. The latest to jump on the bandwagon is integrated energy company Hess Corporation (HES - Analyst Report). The company has pulled back its oil drilling ventures in Iraqi Kurdistan and has evacuated all non-essential personnel from the facility.  

The company, along with Irish oil and gas explorer Petroceltic, owned stakes in the troubled Dinarta and Shakrok fields. Hess was the majority stakeholder while Petroceltic has a 16% stake and the Kurdistan regional government holds another 20%.

The exit comes close on the heels of significant reduction of Iraqi presence by other major players like Exxon Mobil Corp. (XOM - Analyst Report) and Chevron Corporation (CVX - Analyst Report). Other players also evacuating key personnel include upstream players like Canadian operator Oryx Petroleum Corporation Ltd and London-based Afren Plc London. Oryx, one of biggest players in the troubled area, led by ex ex-BP plc (BP - Analyst Report) boss Tony Hayward, however, still maintains its combined 230,000 barrel per day output from its Taq Taq and Tawke fields in Iraqi Kurdistan.

The Iraq situation is no doubt unsettling, with developments on the ground pointing toward a split in the country. But as we all know, Iraq is no ordinary Middle Eastern country; it has the 5th largest oil reserve in the world that it had only recently started tapping after years of war and sanctions. No doubt global oil prices have responded the way they have to the news flow out of that country.

West Texas Intermediate (WTI) crude futures were hovering around $97 per barrel. Going forward, we feel the fate of oil price for 2014 is tied to the global GDP growth outlook, which in turn is related to a mixture of better Europe and U.S. demand as well as a stable growth in China demand. In 2013, oil prices did not improve until we saw GDP growth improving in European countries and China. As of now, oil supply fundamentals are building up for 2014 and 2015 on North American production. However, Russian supply concerns have added to the Middle East (Iraq and Libya) worries.

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