- Title: IRAQ: Lukoil-led group wins Iraq's West Qurna oil deal
- Date: 13th December 2009
- Summary: BAGHDAD, IRAQ (DECEMBER 12, 2009) (REUTERS) OIL OFFICIALS AND REPRESENTATIVES OF WORLD'S OIL COMPANIES ATTENDING OIL AUCTION IRAQI OIL MINISTER HUSSAIN AL-SHAHRISTANI AND OIL OFFICIALS (SOUNDBITE) (Arabic) OIL MINISTER HUSSAIN AL-SHAHRISTANI, SAYING: "As regards Qayara oilfield in Nineveh province, we had received one offer from Sonangol and there was a difference in
- Embargoed: 28th December 2009 12:00
- Keywords:
- Location: Iraq
- Country: Iraq
- Topics: Energy
- Reuters ID: LVA7NRZOBGENAVKZS75W1XG140T
- Story Text: A group led by Russian energy giant Lukoil won a deal to develop one of Iraq's most attractive oilfields on Saturday (December 12), in the country's second auction of contracts that promise to thrust it into the ranks of the world's top producers.
The West Qurna Phase Two oilfield, with a massive 12.9 billion barrels of reserves, produced fierce competition among the 30-odd international oil companies that braved the threat of violence and attacks to come to Baghdad.
The Russian company's win of West Qurna is made sweeter by the fact it had lobbied unsuccessfully since the 2003 U.S. invasion to revive a Saddam Hussein-era contract for the field.
Lukoil is partnered by Norway's Statoil in the deal. Competition was also strong on Saturday for the smaller Gharaf oilfield, also in southern Iraq.
The Lukoil and Statoil partnership for West Qurna Phase Two proposed a fee per barrel of $1.15 and a plateau production level of 1.8 million bpd.
Two big oilfields, including the 12.6 billion barrel "supergiant" Majnoon, were awarded on Friday, as oil majors from Asia and the West put aside concerns over security just days after car bombs killed 112 people in the Iraqi capital.
Supergiants are fields with more than 5 billion barrels in reserves. Iraq has some of the largest untapped supergiants left on earth.
The 10 oilfields on offer in Iraq's second contract auction since the invasion, plus deals emerging from a first auction in June, have the potential to quadruple Iraqi crude output to 10 million barrels per day in six or seven years.
That capacity would match Russia's, and bring Iraq close to No. 1 producer Saudi Arabia's 12.5 million bpd capacity.
Only two of the five fields on offer on Friday were successfully bid for as oil firms steered clear of more dangerous or troublesome areas, including the supergiant East Baghdad oilfield that lies in part under Baghdad's Sadr City slum and fields in the north where violence is still rife.
One field in the north near the violent city of Mosul, which was not awarded on Friday, was won by Angolan state-oil firm Sonangol on Saturday after the company changed its mind about accepting the government's proposed 5 U.S dollars per barrel fee. Sonangol had wanted more than twice that.
But for other fields, the companies actually asked for less than the government was willing to pay.
Royal Dutch Shell and Malaysia's Petronas won the deal for Majnoon, proposing a fee of 1.39 U.S dollars per barrel and pledging to increase output to 1.8 million bpd, more than double what Iraq had expected.
They outbid Total, a favourite to take the field that it had sought to develop under Saddam.
Halfaya, with 4.1 billion barrels of reserves, was some consolation. CNPC, Total and Petronas won it with a fee of1.40 U.S dollars per barrel and a plateau production target of 535,000 bpd.
The smaller Gharaf field was won by Malaysia's Petronas and Japanese oil company Japex, with a fee of 1.49 U.S dollars per barrel and plateau output target of 230,000 bpd.
The country is beginning to emerge from the sectarian bloodshed unleashed after the U.S. invasion, but violence has continued to keep investors at bay.
The series of car bombs in the capital on Tuesday was the third major assault on government buildings in Baghdad in four months and a bloody reminder of the fragile security as Iraq heads into a general election in March.
The two-day oil auction in an auditorium of the Oil Ministry called the "Nationalisation Room" took place under intense security, with thousands of Iraqi police and troops deployed on the streets of Baghdad and army helicopters buzzing overhead. - Copyright Holder: REUTERS
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