Iraq’s Oil Ministry has postponed its auction of three natural gas fields for a second time. Originally, the Akkas, Mansuriya, and Siba fields were to be auctioned on September 1, 2010, but that was delayed until October 1 to get more companies interested. That has now been pushed back again to October 20 because the Ministry claims that eight companies have asked to study the auction. The Ministry claims that 45 firms will partake in the October event, but that’s actually incorrect. Baghdad said that all the companies that bid in the two oil auctions in 2010 will be eligible to bid for the natural gas fields, but in reality, only 13 companies have actually paid participation fees. The last two to do so were Italy’s Eni and Japan’s Mitsubishi. Others include Italy’s Edison, France’s Total, South Korea’s KOGAS, and Russia’s TNK-BP.
The three fields have an estimated reserve of 11.23 trillion cubic feet of gas. Akkas is located in Anbar, Mansuriya is in Diyala, and Siba is in Basra. The first two were put up for auction in 2009, but only one company bid on Akkas, and that was rejected.
The Oil Ministry and energy companies have been concerned about this round of bidding because of the lack of natural gas infrastructure in the country. Baghdad is offering the foreign firms the right to export as an inducement. The problem is that there are no gas pipelines to other countries, plus Iraq lacks adequate storage facilities, roads, etc. within the country to support the industry.
Since a number of companies have taken the leap and agreed to Iraq’s terms over petroleum fields, the Oil Ministry may be more successful this time around with its natural gas fields. Iraq has an estimated 112 trillion cubic feet worth of natural gas, the 11th largest in the world, but the industry is completely underdeveloped. If the three fields did get winning bids, it would be the latest step in Iraq’s attempt to regain its standing in the world energy business after years of isolation.
SOURCES
Aswat al-Iraq, “45 companies to take part in gas field auction in October – spokesman,” 9/20/10
Rasheed, Ahmed, “Iraq delays gas auction, more firms join race,” Reuters, 9/19/10
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