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Oil giants flock to Iraqi auction

Times Online
The Sunday Times
September 14, 2008

Oil giants flock to Iraqi auction

THE world’s largest oil companies will converge on London next month for a chance to re-enter Iraq for the first time in more than three decades.

In all, 34 oil companies, including BP, Royal Dutch Shell, BG, Exxonmobil, Gazprom and Sinopec, are expected to attend a roadshow held by Iraq’s oil minister Hussein al-Shahristani when he officially kicks off the bidding for so-called technical-service agreements.

These will govern exploitation of eight of the country’s largest fields.

At the event, scheduled for October 13, bidders will be given technical data on the sites in question — six giant oilfields including Kirkuk and West Qurna and two gasfields — bidding parameters and remuneration terms.

The opening of Iraq, which sits on the world’s third-largest oil reserves after Saudi Arabia and Iran, has been eagerly awaited by the industry but has been repeatedly delayed by security concerns and political infighting that has held back a crucial hydrocarbons law.

But recent deals struck by the country’s oil ministry with Shell and China National Petroleum, despite the continuing political limbo of the hydrocarbons law, have raised expectations that oil companies will be welcomed back en masse for the first time since the industry was nationalised in 1972.

The oil ministry called off talks on no-bid short-term advisory contracts this summer in place of the longer deals that feature in the new plan.

The oil ministry is not expected to award contracts for at least another six months, pushing back a previously annoucned plan to increase production by 500,000 barrels per day to 3m barrels by the end of this year.

The Kurdistan regional administration in northern Iraq has been signing contracts with foreign oil companies for more than two years, but has been unable to attract the largest firms who feared angering the federal government and getting shut out of auctions for the giant fields in the south.

Contracts will be fee-based rather than the industry’s preferred revenue-sharing model.

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