Bloomberg News

Iraq to Sign Initial Oil Field Contracts by Year-End

December 21, 2009

Iraq, holder of the world’s third- largest oil reserves, plans to sign preliminary service contracts by the end of the year for all seven crude projects awarded to international companies at an auction this month.

The Oil Ministry today signed an initial contract with Malaysia’s Petroliam Nasional Bhd., or Petronas, for development of the Garraf oil field, Abdul Mahdy al-Ameedi, deputy director general at the Petroleum Contracts and Licensing Directorate, said by telephone today.

Iraq, seeking foreign investment to rebuild infrastructure and boost crude sales, awarded this month service contracts to develop seven out of 10 oil projects on offer in its second bidding round this year. Iraq awarded another contract after a first round in June and later negotiated two more deals.

The signed contracts have to be forwarded to the Cabinet for final approval, al-Ameedi said. That may take place next year, since the Oil Ministry will take the rest of 2009 to make the preliminary agreements with the winning bidders, he said.

Petronas and Japan Petroleum Exploration Co. (1662), known as Japex, won bidding for development rights at the Garraf field. The Oil Ministry yesterday signed an initial accord with Royal Dutch Shell Plc (RDSA) and Petronas to develop the Majnoon oilfield.

The ministry plans to initial deals with China National Petroleum Corp., Petronas and Total SA (FP) for the Halfaya field tomorrow and with a group led by OAO Gazprom Neft, the crude oil arm of Russia’s gas export monopoly, for Badra on Dec. 24, al- Ameedi said.

Lukoil, Statoil

Russia’s OAO Lukoil and partner Statoil ASA (STL) of Norway are set to sign the preliminary contract to develop the second phase of Iraq’s West Qurna deposit on Dec. 29. Angola’s state-run oil company Sonangol SA, which lowered its initial bids for the Qaiyarah and Najmah crude deposits to meet Iraq’s conditions, is set to sign the initial contracts for those fields on Dec 30, al-Ameedi said.

Iraq is also working to complete accords to develop the first phase of West Qurna with a group led by Exxon Mobil Corp. (XOM:US) and to operate the Zubair deposit with a venture led by Eni SpA. (ENI) Agreements on the two fields were signed after the first bidding round.

The Oil Ministry is submitting the Eni contract to the Cabinet for approval after the group agreed to raise their goal for plateau production to 1.2 million barrels a day from the 1.125 million barrels a day proposed in the June auction, al- Ameedi said.

Once that is approved, the Cabinet will consider an Exxon agreement with some contractual and legal issues amended, al- Ameedi said, without giving additional details. The ministry will resume direct talks with a group led by Nippon Oil Corp. on developing the Nassiriyah field next year, he said.

To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net.


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