Another Successful Oil And Gas Field Auction In Iraq

April 25, 2018 the Oil Ministry held its latest auction for oil and gas fields. 11 were up for bid and were located along the Iranian and Kuwait border with one in the Persian Gulf. 26 companies were pre-qualified for bids, and 14 took part.

6 of the fields got winning bids. The United Arab Emirates’ Crescent Petroleum got Gilabat-Qumar and Khashim Ahmer-Injana gas fields in Diyala and Khider al-Mai that crosses from Basra into Muthanna. China’s United Energy Group won the Sindibad oil field in Basra, while another Chinese firm Geo-Jade Petroleum was successful with Naft Khana in Diyala and Huwaiza in south Maysan. The companies are to sign with the Oil Ministry on May 10. Iraq is already OPEC’s second largest producer and wants to reach 6.5 million barrels a day by 2022, as well as boost its natural gas output. These new fields will all play a role in those plans. Another significant fact is that the Oil Ministry had black listed Crescent Petroleum previously for its work in Kurdistan. Now it apparently is no longer sanctioned.

The auction involved new contracts, and a rushed process. The Oil Ministry introduced new deals that linked remuneration fees to oil prices and included a royalty. The previous service deals were unpopular with many energy companies because they limited profits. The bids were originally scheduled for May 7, but were then moved up to April 15. That was then pushed back to April 25. That gave the firms little time to go over the contracts, and some in the industry thought that limited interest. Another criticism was that Oil Minister Jabar al-Luaibi is running in the May voting in Basra as part of Prime Minister Haidar Abadi’s Nasr list. Some believed he scheduled the auctions at an earlier date so he could claim success and help his election prospects. If the bidding was held at the original date some of the major energy companies that qualified might have participated.

SOURCES

Associated Press, “Iraq’s move to rush oil bidding could deter some firms,” 4/25/18

Ghaddar, Ahmad, Mohammed, Aref, “Exxon faces setback in Iraq as oil and water mix,” Reuters, 4/19/18

Kullab, Samya, “Discovered fields win the day in fifth bidding round,” Iraq Oil Report, 4/26/18

Kullab, Samya and Van Heuvelen, Ben, “IOCs scramble to analyze new contract model,” Iraq Oil Report, 3/29/18

Reuters, “Iraq to auction oil exploration contracts on Thursday,” 4/23/18

- “Iraq’s oil development contracts may draw 14 bidders,” 4/14/18

Salaheddin, Sinan, “Iraq awards UAE, China rights to develop oil in northeast,” Associated Press, 4/26/18

Sergie, Mohammed, Al Ansary, Khalid and Dipaola, Anthony, “Iraq Delays Oil Auction After Late Contract Tweaks,” Bloomberg, 4/12/18