ShaMaran suspends production after explosion at HKN-operated site

An explosion at 07:00 at an HKN Energy facility forced ShaMaran Petroleum to shut the Sarsang field while an inquiry determines damage and the impact on regional exports.

Share:

The Canadian producer ShaMaran Petroleum Corp. confirmed that an explosion occurred at 07:00 local time at an oil facility operated by HKN Energy Ltd. in the Sarsang field, located in Iraq’s autonomous Kurdistan Region. All employees were evacuated unharmed, according to the statement issued on July 15. Security teams immediately isolated the affected unit and suspended all operations. No official figure for material damage is yet available, but production remains halted until further notice.

First technical findings

HKN Energy said a sudden pressure drop had been recorded a few seconds before the blast, according to a preliminary internal report seen by Bloomberg. Inspectors from the Iraqi regional authorities went to the site to check the installations’ compliance. The field had recently been producing 17 000 barrels per day, a volume now interrupted. No oil leak has been reported, but additional tests on groundwater are planned.

The partners triggered their business-interruption insurance policies to limit the effect on cash flows. Analysts at Wood Mackenzie estimate that a one-week shutdown could cut regional fiscal revenues by about $2 mn if Brent crude stays around $85. Local subcontractors have requested a full review of safety protocols before any restart. The federal Ministry of Oil has not commented on the situation.

Financial impact for ShaMaran

ShaMaran owns 18 % of the Sarsang block alongside operator HKN Energy. The field accounted for roughly 30 % of the company’s net cash flow in the first quarter, according to its report published in May. ShaMaran held $34 mn in cash at end-March, a cushion judged modest by BMO Capital Markets against a prolonged shutdown. Payments due from the Kurdistan Regional Government’s oil company remain subject to frequent delays, adding pressure on working capital.

ShaMaran’s stock fell 8 % in Toronto on July 15 and the yield on its five-year senior bond jumped 130 basis points, Refinitiv data show. “ShaMaran and HKN are committed to applying the highest safety standards and will release new information as soon as it is available,” the company said. Internal investigators must determine whether the affected equipment was part of the five-year maintenance programme launched this year. Preliminary findings are expected within 48 hours.

Next operational steps

Insurer Lloyd’s Register has appointed experts to inspect the relief valves, inert-gas injection system and main manifold to identify the exact cause of the incident. At the same time, HKN has moved non-essential staff to training centres in Erbil, thus reducing exposure to potential risks. Regional authorities demand a full environmental assessment before any restart. Production will resume only after conformity certificates are validated by the Iraqi Organisation for Standardisation and Quality Control.

Eight OPEC+ countries boost output by 547,000 barrels per day in September, completing their increase program twelve months early as Chinese demand plateaus.
New Delhi calls US sanctions unjustified and denounces double standard as Trump threatens to substantially increase tariffs.
BP posts a net profit of $1.63 bn in the second quarter 2025, driven by operational performance, an operating cash flow of $6.3 bn and a new $750 mn share buyback programme.
The Saudi oil giant posts solid results despite falling oil prices. The company pays $21.3 billion in dividends and advances its strategic projects.
Dangote Group appoints David Bird, former Shell executive, as head of its Refining and Petrochemicals division to accelerate regional growth and open up equity to Nigerian investors.
Faced with falling discounts on Russian oil, Indian Oil Corp is purchasing large volumes from the United States, Canada and Abu Dhabi for September, shifting its usual sourcing strategy.
Independent Chinese oil companies are intensifying their investments in Iraq, aiming to double their production to 500,000 barrels per day by 2030 and compete with the sector’s historic majors.
The eight voluntary OPEC+ members accelerate their market return in September despite weakened global demand and record production from the Americas.
BP has announced the discovery of an oil and natural gas field off the coast of Brazil, in the Santos Basin, marking its most significant find in a quarter of a century.
The dispute over the Corentyne block licence pits Frontera Energy and CGX Energy against the Guyanese government, amid major contractual and offshore investment stakes in the oil sector.
Chevron resumes the shipment of Venezuelan oil to the United States after a multi-year suspension due to sanctions, highlighting the persistence of oil flows between the two countries.
A fire broke out at a Sotchi oil depot after an attack by Ukrainian drones, causing no casualties but temporarily disrupting air traffic and mobilising significant emergency resources.
The consortium formed by ONGC (40%), Reliance (30%) and BP (30%) has signed a joint operating agreement for block GS-OSHP-2022/2, marking the first tripartite collaboration in Indian oil exploration.
Serbia has secured a new 30-day reprieve from the application of US sanctions targeting NIS, operator of the country’s only refinery, which is majority owned by Gazprom.
OMS Energy Technologies Inc. reports solid financial results for 2025, driven by marked revenue growth, improved gross margin and a reinforced cash position in a shifting market.
Five employees injured in an explosion at the Pascagoula refinery are suing Chevron for negligence, seeking significant compensation and alleging major breaches of safety regulations.
South Korea and Japan are reinforcing coordination on strategic stocks and oil logistics as growing dependence on Gulf imports and geopolitical tensions affect the Asian market.
Sonatrach continues to assess underexploited oil and gas areas with the support of Sinopec, following a gradual strategy to strengthen its position on the regional energy market.
Venezuelan oil group PDVSA is mobilising to restart export operations under conditions similar to previous US licences, as Washington prepares to again authorise its main partners to operate.
Two separate strikes in the Vaca Muerta region threaten to disrupt oil and gas production after historic records, with unions protesting layoffs and unpaid wages in a rapidly expanding sector.