First Published: 2012-05-31

 

Iraq announces new energy auction after lackluster sale

 

After conclusion of fourth round, Iraq's oil minister Abdelkarim al-Luaybi says that fifth energy auction is taking place.

 

Middle East Online

By W.G. Dunlop and Salam Faraj – BAGHDAD

‘More than 60 blocks that are ready to be presented’

Iraq on Thursday announced it will hold a fifth energy auction after a landmark sale of energy exploration blocks closed with just three out of a potential 12 awarded.

The two-day sale, the first to invite international oil companies to explore Iraqi territory for energy deposits since the 2003 US-led invasion, concluded with eight blocks receiving no bids whatsoever, including two that were offered to foreign firms twice.

The bid round, the fourth public auction of Iraqi energy contracts since mid-2009, came amid progress in ramping up oil exports, which account for the vast majority of government income, and as Baghdad eyes higher gas production to increase woefully inadequate power supplies.

But whereas previous auctions offered contracts to foreign energy firms to raise output at existing oil and gas fields, Iraq this time showcased areas earmarked for exploration.

After the conclusion of the fourth round, Iraq's oil minister said that a fifth energy auction was in the works.

"We are preparing for a fifth round because we have more than 60 blocks that are ready to be presented," Abdelkarim al-Luaybi told reporters.

Another top oil ministry official meanwhile insisted that the auction had met expectations.

"This is a success because 25 percent is a good result," said Abdel Mehdi al-Amidi, head of the oil ministry's petroleum contracting and licensing department, referring to the three out of 12 success rate.

"With the three contracts today, there are 18 contracts ongoing across the country -- this is a huge task for the country."

Analysts, however, disagreed with his assessment.

"It's very disappointing (for Iraq) because ... the priority was to award the gas blocks, because they need the gas urgently for power generation, for industries and so on," said Ruba Husari, editor of www.iraqoilforum.com.

"The lesson to draw from this is that the model that was offered is not suitable for exploration for gas."

Thursday opened with a winning bid from Pakistan Petroleum for a 6,000 square kilometre (2,316 square mile) exploration block which is thought to contain gas covering Diyala and Wasit provinces in central Iraq, with the company agreeing to $5.38 per barrel of oil-equivalent eventually extracted.

And shortly afterwards, a partnership between Russian energy giant Lukoil and Japan's Inpex won a contract for a 5,500 square kilometre (2,123 square mile) plot in Muthanna and Dhi Qar provinces in the south, believed to hold oil, with an offer of $5.99 per barrel of oil.

But six other blocks -- including two that were initially offered a day earlier but received no bids -- garnered no interest from foreign energy firms.

Of the three oil and three gas blocks offered on Wednesday, meanwhile, just two received bids, and only one -- Block 9, an area near Iraq's border with Iran that is thought to contain oil -- was accepted by Baghdad.

A consortium led by Kuwait Energy that also includes Turkey's TPAO and Dubai-based Dragon Oil won the 900 square kilometre (347 square mile) block in the southern province of Basra, for a service fee of $6.24 per barrel of oil.

Another exploration block in south Iraq thought to contain oil received a single bid, but it exceeded the amount the oil ministry was willing to pay and so was not awarded.

As in previous auctions, Iraq required firms that agree to explore blocks to work under fixed-price service contracts, rather than the production-sharing agreements that are common elsewhere and more popular with major energy firms.

Baghdad also for the first time demanded that firms that won contracts agree not to sign deals with the autonomous Kurdish region in northern Iraq, or any other sub-national authority, without the central government's approval.

Kurdistan has signed dozens of contracts with foreign energy firms, but Baghdad regards them as illegal because they were not approved by the federal oil ministry.

Iraq is looking to ramp up its exports from its current level of around 2.5 million barrels per day.

The country has proven reserves of 143.1 billion barrels of oil and 3.2 trillion cubic metres (111.9 trillion cubic feet) of gas, both of which are among the highest such deposits in the world.

 

Erdogan resumes Gulen arrests after referendum win

France says has proof that Syrian regime behind 'chemical attack'

Trump says Assad's future 'not a deal breaker' on Syria

Iraq holding hundreds of millions of Qatar’s ransom money

Global leaders call for ridding world 'forever' of chemical arms

Exiled Turkish journalist urges EU to confront Erdogan

Morocco seizes 420 tonnes of plastic bags in year since ban

Mass funeral for dozens slain in Syria bus attack

Qatar insists Baghdad had ‘full knowledge’ of hostage deal

UN eyes new Yemen peace talks

Turkey opposition heads to European court to challenge referendum

Turkey says informed US, Russia prior to Kurdish strikes

Iraqi forces liberate ancient city of Hatra from IS

Saudi fire stops explosives-laden boat from Yemen

50 Syria migrants stranded on Morocco-Algeria border

Libya asks EU for patrol boats to stem migrant wave

Bangladesh approves Saudi-funded mosque project

German Chancellor regrets Israel snub of foreign minister

UAE sentences Iranian to 10 years for sanctions breach

IS using weaponised drones in battle for key Syria dam

Saudi government shake-up strengthens position of king's son

Israel allows NGO director visa after 'bias' row

Kuwait suspect confesses to plotting IS attacks

Russia has thwarted IS attack on far east oil hub Sakhalin

Death toll in Turkish air raids on Syria Kurds rises to 28

Draft resolution to pressure Polisario to withdraw from Guerguerat

Baghdad condemns Turkish airstrikes on Kurdish forces

Iran, major powers to review adherence to nuclear deal

Turkish warplanes pound Kurdish forces in Iraq, Syria

IS executes Iraqi civilians in Mosul

Netanyahu cancels talks with German FM over NGO meetings

Qatar World Cup workers receive random health checks

Libyan government calls for foreign intervention as fighting spreads

Tunisia parliament votes to ease harsh drug law

Nostalgia dominates Iraqi Ba’ath conference in Spain

Young Iraqi innovator building home-made drones

Moroccans call on Le Pen voters to quit country

Turkey court rejects opposition challenge to referendum result

Spain arrests 4 for links to Belgium IS attacks

Iraq forces push towards UNESCO site in Hatra

Israel appoints country's first female sharia judge

Frontline clinic is window to hell of IS-held Mosul

Iraq forces retake west Mosul neighbourhood from IS

Iraqi Kurds lament ‘unacceptable’ Turkish air strikes

Khamenei urges Iran candidates to focus on home