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BP, BG, Shell and BHP to bid for Iraq oil

Times Online: BP, BG, Shell and BHP to bid for Iraq oil

April 14, 2008
Robin Pagnamenta

British companies including BP, BG Group, Shell and BHP Billiton are among 35 international oil groups who were formally invited to bid for contracts to operate oil and gas fields in Iraq.

The country’s oil ministry today unveiled a list of companies which have qualified in the first round of bidding for potentially lucrative service contracts in the country.

China’s CNOOC as well as France’s Total and US giants Exxon Mobil and Chevron were also on the list.

Oil ministry spokesman Asim Jihad said: “The oil ministry is acting urgently to develop oil fields and increase crude production.”

At 115 billion barrels, Iraq’s oil reserves are the world’s third largest after Saudi Arabia and Iran. The country desperately needs billions of dollars of investment to boost output.

Iraq currently produces around 2.3 million barrels of oil per day but officials have said they want to lift this to 2.6 million by the end of this year and 2.8 million within two years.

Oil revenues are Iraq’s major source of income to pay for reconstruction efforts after years of war and sanctions.

The oil majors will be involved in a role as project managers of the fields, overseeing work by Iraqi operating companies.

Continuing security problems mean they are unlikely to send in more than a bare minimum of their own staff.

The qualifying companies are expected to be in pole position in the bidding for longer-term contracts on the fields. Another bidding round is expected to take place next year.

Fields from all over Iraq will be offered in the first round.

No details were offered today. However, among the projects thought to be under consideration is a contract to help develop the Rumaila field close to Basra in the country’s South, in which BP has expressed an interest.

Shell is believed to be looking at a gas project in Anbar province close to the border with Syria which would provide gas both for Iraq’s domestic power production and also possibly for export via Syria.

A total of 120 companies submitted bids to work in Iraq.

The companies that failed to qualify for the first round could still have the opportunity to qualify for later rounds, according to the ministry.

No companies which have been seeking to work alongside the Kurdistan regional government in Northern Iraq qualified for the list.

A long-running political dispute has delayed the introduction of a hydro-carbon law, which would direct how the funds raised would be used and whether they would go to central government in Baghdad or the regional administrations.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3746907.ece

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