IRAQ: International companies bid for contracts at the start of a two day oilfield auction

Record ID: 343649

  • Title: IRAQ: International companies bid for contracts at the start of a two day oilfield auction
  • Date: 12th December 2009
  • Summary: (SOUNDBITE) (Arabic) HUSSAIN AL-SHAHRISTANI , IRAQ'S OIL MINISTER , SAYING: "The offer submitted by consortium of Shell and Petronas companies with capacity of output reaches 1.8 million barrels per day and a 1.39 U.S. dollars for a barrel got 10 scores. The second offer submitted by Total and CNPC with a capacity of output reaches 1.455 million barrels per day and a 1.75
  • Embargoed: 27th December 2009 12:00
  • Keywords:
  • Location: Iraq
  • Country: Iraq
  • Topics: International Relations,Energy
  • Reuters ID: LVAD5Z867XFR0KFY4QE4QTICA53
  • Story Text: Deal makers from the world's largest energy firms assembled amid tight security at Iraq's oil ministry to compete for deals to develop some of the country's most prized oilfields on Friday (December 11).
    Iraq offered three of the world's largest fields on the first day of its two-day auction, a rare opportunity for big oil firms to gain access to cheap Middle East oil reserves.
    The deals have the potential to boost Iraq's capacity millions of barrels per day and make it a rival to top oil producers Saudi Arabia and Russia.
    Iraqi Prime Minister Nouri al-Maliki ,who attended the inauguration ceremony of the second bidding round, promised the companies that would win in the bid that the security situation will be better than now and security forces will more prepared to maintain security in the country.
    "I would like to assure the companies that the security will be more stable , more qualified and better prepared to ensure the continuity of the companies work. I would like to thank you and I hope to witness today, today is a happy day for Iraqis and the companies because we are witnessing the second bidding round. God willing, we will witness the happiness of signing the contracts at the end of this auction." al-Maliki said.
    A series of car bombs killed 112 people in the capital on Tuesday, police said, a bloody reminder of the threat oil firms would face in deploying staff to remote fields across the country.
    Iraqi army helicopters buzzed overhead while convoys of armoured SUVs carrying oil executives hidden behind tinted windows raced through town.
    Iraqi police trucks and squads of police dressed in commando gear deployed at dawn to line the streets leading to the Oil Ministry, blocking off many side streets.
    Crowds of uniformed police and army personnel milled around at the Oil Ministry next to Iraq army Humvees and police pickup trucks. The auction, which will be held in a large auditorium, did not start on time.
    Executives from the world's largest oil companies have braved the security threat to bid in Baghdad. Forty-four companies have qualified to bid and were expected to send top-level representatives. They include Exxon Mobil <XOM.N>, Royal Dutch Shell <RDSa.L>, BP <BP.L>, Chevron <CVX.N> and Total <TOTF.PA>.
    For his part, Hussain al-Shahristani, Iraq's Oil Minister, said the country seeks strong ties with the global oil companies, anticipating difficulties they could they face in future.
    "Despite the fact that the competition round taking place today and tomorrow is considered the end of the second bidding round, it is the start, we look forward and we hope to have fruitful and long-term relations with these companies, although we may face difficulties in future, we hope to establish a solid base to the start of a new phase," He said Baghdad desperately needs the billions of dollars of revenue these and other deals would generate to rebuild after decades of war, international sanctions and years of neglect and sabotage.
    Competition was expected to be fierce as the second auction since the U.S.-led invasion offers the last of Iraq's supergiant fields - reservoirs holding 5 billion barrels or more. They are among the last untapped fields of their size in the world.
    Royal Dutch Shell and Malaysia's Petronas won the rights to develop one of the world's largest remaining untapped oilfields as Iraq staged its second auction of oil contracts since the 2003 U.S. invasion.
    The companies proposed a per barrel fee of just 1.39 U.S. dollars per barrel and pledged to increase output from the supergiant Majnoon field to 1.8 million barrels per day, more than double what Iraq had expected. The fee was lower than Iraq had been willing to pay.
    "The offer submitted by consortium of Shell and Petronas companies with capacity of output reaches 1.8 million barrels per day and a 1.39 U.S. dollars for a barrel got 10 scores. The second offer submitted by Total and CNPC with a capacity of output reaches 1.455 million barrels per day and a 1.75 U.S. dollars got 79 scores. Therefore, I would like to announce that the consortium of Shell and Petronas have won to develop Majnoon oilfield." Shahristani said.
    A consortium of CNPC, Petronas and Total also won to develop Halfaya fields in southern Iraq, which has around 4.1 billion barrels of reserves.
    "CNPC,Petronas and Total proposed 1.40 U.S. dollars per barrel fee with output capacity reaches to 535.000 barrels per day , this offer got 98 scores. Shtut oil and Lukoil companies proposed 1.53 U.S. dollars per barrel fee with output capacity reaches to 600.000 barrels per day, they got 93 scores. Oil India ,TPAO and O.NG.C proposed 1.76 U.S. dollars per barrel fee with output reaches to 550.000 barrels per day ,this offer got 82. Finally a consortium led by Nigerian oil company offered 12.90 U.S. dollars with output reaches to 400.000 barrels per day, this offer got 22 scores. Therefore, I announce the win to the consortium of CNPC, Total," Shahristani added.
    The auction is one of the largest ever held.
    The giant fields on offer on the first day of the auction were southern fields Majnoon and Halfaya and central field East Baghdad. Also on the block were a cluster known as the Eastern Fields and Qayara, a reservoir in the north.
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