Kurdistan - Then and Now
Subsurface Global, as the name suggests, has always strived to work in multiple regions around the world and establish our self as a truly global company. With our head office in Abu Dhabi, the Middle East has always been one of the most important regions for us to do business and support the oil operators who work there. In 2012 we saw the opportunity to support the emerging Oil & Gas industry in the region of Kurdistan and we quickly established strong relationships with the operators working there and had large numbers of consultants mobilised in the region. The early business development that was carried out, culminated in Subsurface Global establishing a regional office in the city of Erbil in early 2014.
It has not always been plain sailing however and there have been many difficult challenges to working in the Kurdistan region of Iraq. This post is an opportunity to look back on the many successes Subsurface Global have had in Kurdistan along with the challenges and were we see continued opportunities in the future.
2012 – 2014 Early ventures into Kurdistan
Through our contacts in the UAE and across the Middle East, Subsurface Global was aware from around 2010 that the Kurdistan region of Iraq had the potential to become one of the most important Oil and Gas hubs in the world. The region offered opportunities for small independent operators and larger global majors to explore new asset blocks and it fit the profile for the type of venture that Subsurface Global like to invest in. We established contact with relevant oil companies and made the first of several business trips to the region in 2012. Our CEO and I made the short 3 hour trip from Abu Dhabi and settled in to a week of meetings in order to build the profile of Subsurface Global. Given its recent history and reading the various travel advice that was offered we were understandably apprehensive about the trip and booked a security detail for the week. While this eased our safety concerns we quickly found that we had essentially saddled ourselves with a highly conspicuous taxi service. Nevertheless we proceeded to travel the region working first across Erbil and the Empire business complex before travelling south, through the mountains, to Sulaymaniyah. Meeting with various Oil Companies and taking in the beautiful scenery coupled with the general optimism that appeared to radiate from the local people it was hard not to get enthusiastic and perhaps a little carried away with what Kurdistan could achieve. At the time they had relative peace and security, investment from large international companies and a burgeoning oil industry that could support the rest of the company similar to the UAE. Subsurface Global made several trips to Kurdistan over the next 3 years and each time built on our existing client base. By 2014 we had established our first regional office in Erbil and had consultants working across Drilling Supervision, Drilling HSE Management and Completions & Well Services.
At its height there were over 30 rigs active in Kurdistan. The latest information we received from Schlumberger this year had the total number of rigs operational totalled at 8. There are many complex reasons as to why the oil industry and oil companies are currently struggling to operate in the region. People will debate the importance of each but there is no doubting the impact of the drop in oil price, the delayed payments from the MNR to producing operators and the devastation caused by ISIS have had a catastrophic effect in Kurdistan.
In August last year, due to the advancement of ISIS, we were forced to evacuate our consultants that were working in country at that time. This led to widespread uncertainty and concern from the oil companies over the number of consultants needed for their projects and we instantly found it more difficult to supply experienced personnel for operations in Kurdistan. Later that year as the oil price dropped, there was talk from some of the mid-sized operators that their long term future in the region wasn’t assured and our consultants began expressing concern over the longevity of their contracts. As we worked to extend contracts where we could and diversify to support increased construction and civils projects there was a feeling that heading in to 2015 there would be serious changes to the landscape of the oil and gas industry in Kurdistan.
At the beginning of 2015 our consultant base was still relatively strong. We maintained contracts with several of the most active operators in the region and had received contract extensions for our most senior consultants. We had hoped to see out the year relatively unscathed with regard to Kurdistan but were prepared for the worst. By the end of Q2 this year the majority of oil operators had scaled back extensively so as to just have a skeleton crew remain in country and at the time of writing this blog there are reports of 2 further E&P operators preparing to pull out of Kurdistan before the end of the calendar year.
Given our investment in Kurdistan over the past 4 years it is sad to see the region struggle during very difficult times and circumstances. It was always enjoyable to spend a week working in Erbil and travelling when we could to Sulaymaniyah either through the mountains or via Kirkuk. I continue to keep in contact with as many of the Drilling and HSE managers as I can so we remain aware of what is happening on the ground. The hope is that as the oil price stabilises then some of the smaller E&P companies will look to invest again in a region that has so much promise. When things do pick up, Subsurface Global will look forward to getting our consultants back out working in Kurdistan again.
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