- Title: IRAQ: Lukewarm response to energy auction upsets Iraqi expansion plans
- Date: 18th May 2012
- Summary: BAGHDAD, IRAQ (MAY 31, 2012) (REUTERS-ACCESS ALL): REPRESENTATIVES OF OIL AND GAS COMPANIES AND IRAQI OFFICIALS FROM OIL MINISTRY ATTENDING 4TH ROUND OF OIL AND GAS AUCTION AT HQ OD OIL MINISTRY IN BAGHDAD REPRESENTATIVE OF PAKISTAN PETROLEUM PUTTING BID OF COMPANY INSIDE BOX REPRESENTATIVES OF PAKISTAN PETROLEUM CO. SEATED AND PAN TO REPRESENTATIVES OF FOREIGN COMPANIES ATTENDING AUCTION (SOUNDBITE) (Arabic) ABDUL-MAHDY AL-AMEEDI, DIRECTOR OF THE MINISTRY'S CONTRACTS AND LICENSING DIRECTORATE, SAYING: "Pakistan Petroleum has submitted a lower wage ($5 and 38 cents) in return of $10 and 57 cents, so, the winner of contract 8 is Pakistan Petroleum." REPRESENTATIVE OF PAKISTAN PETROLEUM PUTTING BID INSIDE BOX CLOSE OF BID OF JAPEX (JAPAN PETROLEUM EXPLORATION CO. REPRESENTATIVE OF PETRO VIETNAM PUTTING BID INSIDE BOX ABDUL KAREEM LUAIBI, IRAQI MINISTER OF OIL AND REPORTERS GATHERING AROUND (SOUNDBITE) (Arabic) IRAQ'S MINISTER OF OIL, ABDUL KAREEM LUAIBI, SAYING: "God willing, We will start preparations in the next few months (QS: inaudible?) for sure it is in the same context, we aimed at boosting the production, gas production and promote our storage." LUAIBI AND REPORTERS
- Embargoed: 2nd June 2012 13:00
- Keywords:
- Location: Iraq
- Country: Iraq
- Topics: Business,Energy
- Reuters ID: LVA5C0VEEUEEA1S2OEARZMX3RYSW
- Story Text: International oil companies showed little appetite for the oil and gas exploration blocks that Baghdad put up for auction over two days (May 30-31) with only one gas contract and two oil blocks awarded out of a total 12 on offer.
The second day of bidding followed a sluggish start to the auction on Wednesday when only one block was taken by Kuwait Energy, four other blocks got no bids and another deal failed after companies rejected the government offer.
Iraq offered the 12 blocks over two days in sets of six, with what many believe is the jewel in the crown of the fourth licensing round, Block 9 in the oil-rich province of Basrah, going to a consortium of Kuwait Energy, Turkey's TPAO and the UAE's Dragon Oil.
Two other blocks that were not awarded on the first day were re-offered but again failed to draw any interest and were left on the shelf.
The disappointing outcome dashes Iraq's hopes of a rapid boost to its natural gas production to overcome severe shortages of gas for power generation, raise its gas reserve estimate and provide a potential source of future export revenues to supplement oil sales.
Director of Contracts and Licensing, Abdul-Mahdy al-Ameedi announced the winning bid for the sole gas exploration block 8 in Diyala and Wasit provinces in eastern Iraq.
"Pakistan Petroleum has submitted a lower wage ($5 and 38 cents) in return of $10 and 57 cents, so, the winner of contract 8 is Pakistan Petroleum," said a-Meedi.
Bidding at the auction was decided according to the remuneration fees offered, with the lowest bids winning blocks.
Iraq had hoped the auction would spur the expansion of its energy sector after years of war and sanctions, but despite the poor show, the oil ministry appeared undeterred with oil minister Abdul Karim al-Luaibi telling reporters that a fifth bidding round was being prepared.
"A fifth bidding round yes...and in the next few months we will prepare," Luaibi told reporters at the end of the awards ceremony.
The only other block to be awarded on the second day of bidding was to a consortium of Russian Lukoil and Japan's Inpex, which beat off competition from a consortium led by Petrovietnam and a partnership of Kuwait Energy and the UAE's Dragon Oil.
Baghdad had hoped to take a total of $235 million in non-recoverable signature bonuses from the licensing round, its fourth post-2003 war auction. The three contracts awarded will earn the government signing bonuses of $64 million.
Oil giants such as Exxon Mobil and BP have already signed major deals to develop oilfields in Iraq, which has the world's fourth-largest oil reserves and the tenth largest gas reserves. But Baghdad's tough service contract terms and a boom in natural gas and gas finds elsewhere crimped investor interest, especially from the oil majors, for the 4th bidding round.
Iraq is offering foreign companies less attractive service agreements - where they are paid a fee - rather than production-sharing deals that allow them to profit jointly from the output.
A boom in unconventional gas production in North America has boosted world supplies, while a surge in Australian exports, gas finds in east Africa, and China's own gas potential also combine to make trickier prospects such as Iraq less attractive. - Copyright Holder: REUTERS
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