IRAQ: Oil deal auction a "success", sees huge output

Record ID: 344078

  • Title: IRAQ: Oil deal auction a "success", sees huge output
  • Date: 13th December 2009
  • Summary: OIL MINISTER HUSSAIN AL-SHAHRISTANI WALKING TO PODIUM (SOUNDBITE) (Arabic) OIL MINISTER HUSSAIN AL-SHAHRISTANI, SAYING: "If we add the production capacity of the 10 oilfields of the first and the second rounds of oil bidding, Iraq's oil output capacity will reach 11 million barrels (per day) and if we add to it the production capacity of the remaining Iraqi oilfields operated by the oil companies of the Oil Ministry and which are large oilfields like that of Kirkuk, Bazerkan, Bai Hassan and others, which are currently producing about one million barrels (per day), then Iraq's output capacity will reach 12 million (per day) of crude oil in six years." OIL MINISTER AT NEWS CONFERENCE OIL MINISTER THANKING JOURNALISTS / LEAVING
  • Embargoed: 28th December 2009 12:00
  • Keywords:
  • Location: Iraq
  • Country: Iraq
  • Topics: Energy
  • Reuters ID: LVA2BUNF7VO5V7M1ZA10ECBLCGOR
  • Story Text: Iraq, emerging from the shadow of war, expects to boost its oil output to rival the level of top producer Saudi Arabia after awarding some of its most attractive oilfields to global oil companies this week.
    By the end of a two-day bidding round for 10 oil contracts on Saturday (December 12) -- the second auction since the 2003 U.S. invasion -- Iraq had received pledges from oil firms to boost its output by 4.765 million barrels per day, almost double its current output.
    If all deals from a first auction in June, the second this weekend and others being negotiated are added to national production, Iraq will have a capacity of 12 million barrels per day, overtaking Russia and challenging Saudi Arabia's 12.5 million bpd, Oil Minister Hussain al-Shahristani said.
    "If we add the production capacity of the 10 oilfields of the first and the second rounds of oil bidding, Iraq's oil output capacity will reach 11 million barrels (per day) and if we add to it the production capacity of the remaining Iraqi oilfields operated by the oil companies of the Oil Ministry and which are large oilfields like that of Kirkuk, Bazerkan, Bai Hassan and others, which are currently producing about one million barrels (per day), then Iraq's output capacity will reach 12 million (per day) of crude oil in six years," Shahristani told journalists at the end of the two-day oil auction.
    Some 30 international oil companies braved the threat of violence and attacks to come to Iraq, putting aside security concerns just days after car bombs killed 112 people in Baghdad.
    Oil majors from the United States appeared conspicuously uninterested in the fields on offer in the second round, confounding expectations that they might end up with the lion's share of Iraq's oil sector as a result of the U.S.-led war.
    Security may still be an issue. The series of car bombs 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.
    Thousands of Iraqi soldiers and police were deployed in the streets of the capital to protect the auction and army helicopters buzzed overhead. Oil executives travelled around town in convoys of armoured SUVs with armed guards.
    On the first day of the auction on Friday, the 12.6 billion barrel supergiant Majnoon field went to a partnership of Royal Dutch Shell and Malaysia's Petronas.
    Only two of the five fields on offer on Friday were initially awarded 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.
    The Qayara 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 dollars per barrel fee. Sonangol had wanted more than twice that.
    Amid fierce competition, a group led by Russian energy giant Lukoil won a deal to develop the West Qurna Phase Two oilfield, which with 12.9 billion barrels of reserves is one of the world's largest untapped "supergiant" fields.
    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.
    The smaller Gharaf field was won by Malaysia's Petronas and Japanese oil company Japex, with a fee of 1.49 U.S. dollars (USD) per barrel and plateau output target of 230,000 bpd.
    Other winners were a group led by Russia's Gazprom for a deal to develop the Badrah oilfield. The group agreed to a 5.50 USD per barrel fee and a production target of 170,000 bpd.
    Shahristani told companies that did not manage to grab an oilfield contract not to worry -- Iraq had "scores" of other fields, including supergiants, left to offer, he said.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register