Iraq is asking global oil firms for final proposals

 

gulf-times.com: Iraq is asking global oil firms for final proposals

Published: Sunday, 18 May, 2008, 01:43 AM Doha Time

AMMAN: Iraq has asked major international oil companies to submit their final contract proposals to boost production at the country’s largest oil fields after several rounds of talks in the Jordanian capital, Amman, since the beginning of this year, people close to the Iraqi Oil Ministry have said.

They said technical talks between Iraqi oil officials and senior executives from Royal Dutch Shell, BP, ExxonMobil Corp, Chevron Corp, France’s Total, Anadarko Petroleum Corp and BHP Billiton were concluded in Amman this month.

“The technical talks were concluded and the Iraqi negotiators asked companies to submit their final proposals on contracts to the (oil) ministry,” an Iraqi source familiar with these talks told Dow Jones Newswires. 

“I can confirm these technical talks were concluded,” an international oil company source said. 

Iraqi oil industry and oil company sources couldn’t confirm or rule out news reports that BP has already submitted its plan and could be the first oil major to sign an Iraqi technical support contract if its proposal is approved by the ministry. Reports also said ExxonMobil could be the second to submit its proposal to the Iraqi ministry.

Senior Iraqi officials, including the oil minister, would examine each company’s proposal and decide whether to sign the contract or not, another Iraqi oil source said. He didn’t rule out a few slight changes to be made to these contracts before signing them. 

Earlier, Iraqi oil sources said these technical services contracts, or TSCs, could be signed as early as June. Each would last two years and could be extended for another year. 

Iraq wants to increase production by 600,000 bpd in six producing oil fields in northern and southern Iraq. They are Kirkuk in the north, West Qurna 1, Zubair, Missan, Rumaila and Luhais in the south. Iraq is currently producing between 2.3mn bpd and 2.4mn bpd from its southern and northern oil fields. 

Iraqi oil officials have estimated the value of each contract to be around $500mn. 

Oil company sources said almost all issues were resolved in Amman except for how Iraq is going to pay back these companies. Iraq said it is ready to pay them back through compensating them with produced crude oil; such a method would need the approval of the UN committee that manages Iraqi oil revenues. 

“The remuneration issue isn’t a complicated one and can be solved,” a company source said. 

In February the oil majors and the Iraqi delegation discussed a template for TSCs for producing oil fields which need further development. 

Shell is eyeing the development of the Kirkuk oil field, discovered in 1927 by the Iraq Petroleum Co in which Shell was a shareholder. Shell and BHP will also explore development options for the Missan oil fields near Basra, the sources said. 

BP is discussing the development of Rumaila with the Iraqis, which it helped to discover and of which it recently conducted a technical study, they said. Rumaila has estimated reserves of 15.5bn barrels. 

ExxonMobil is eyeing the development of Zubair oil field in the south. Discovered in 1952, Zubair has estimated reserves of 6.1bn barrels, the sources said. 

Chevron has entered a joint venture with Total to develop the West Qurna 1 oil field in southern Iraq. 

Anadarko, leading a consortium consisting of Vitol Holding BV and United Arab Emirates’ Dome, is eyeing the development of Luhais oil field in southern Iraq, they said. 

The technical support contracts, or TSCs, would be signed under the framework of the country’s old hydrocarbon law as its new oil and gas law is still mired in debate. 

Iraq announced last month names of 35 international oil companies qualified to bid for future oil and gas contracts to develop one of the world’s largest oil fields. The companies negotiating the TSCs are among the qualified firms. – Dow Jones Newswires

 

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