Iraq's Third Licensing Round (2010)

From Oil4All
Jump to: navigation, search

Iraq held its third bid round on 20 October 2010[1] for three gas fields: Akkas, containing an estimated 158 billion cubic meters (bcm) of natural gas; Mansuriya, containing approximately 130 bcm; and Siba, containing about 31 bcm.[2]

The Akkas and Mansuriya fields had been included in the first round of licensing, but Mansuriya received no bids and Akkas received only one bid that failed. Siba had originally been included in the second bid round, but was removed from the list before bidding began. Subsequently, the government had indicated that all three fields would be developed by national efforts, but then decided to offer the fields for auction in the third round after all.[3]

Process

The contracts awarded in the third licensing round eliminated signature bonuses, a significant departure from the first two rounds. Additionally, the required annual commitment to the Training, Technology and Scholarship Fund,[4] by which contractors facilitate on-the-job training in petroleum operations for Iraqi nationals and promote research in oil and gas technology,[5] was reduced from $5 million to $1 million.[6]

The conversion factor for converting natural gas volume deliveries into barrels of oil equivalent (boe) was also reduced from about 225 cubic meters to about 170, allowing companies to register larger volumes of gas production.[7]

Results

As a result of the third round, contracts were awarded to Korea's Kogas, Turkey's TPAO and Kuwait Energy Company. The table below shows the make-up of the consortia, along with agreed per-barrel remuneration fees and the agreed level of plateau production they should reach:

Field Company Home country Company type Share in field Service fee per barrel ($) Production increase (millions of standard cubic feet per day)
Akkas Kogas South Korea State 100% 5.50 400
Mansuriya TPAO Turkey State 50% 7 320
Kuwait Energy Company Kuwait Public 50% 7 320
Majnoon Kogas South Korea State 20% 7 320
Siba Kuwait Energy Company Kuwait Public 60% 7.50 100
Siba TPAO Turkey State 40% 7.50 100

Unlike the first two rounds, the third round was dominated by regional companies, with major international oil companies absent. Of the IOCs favoured by the Oil Ministry, only Total submitted bids. They may have been repelled by tough payment terms and an uncertain security situation in Iraq, according to the Cyprus-based Middle East Economic Survey (MEES). Another suggested reason for the absence of some majors was their relative lack of exposure in Iraq and their reluctance to overstretch their involvement under current circumstances.[8]

MEES also suggested that the regional and geographical proximity of the above firms, specifically TPAO and Kuwait Energy, played a role in their winning of the contracts. With its stake in the Siba and Mansuriya fields, TPAO strengthened its foothold in the Iraqi upstream sector since it already has minority stakes in Badra and in the Misan group of oilfields. Kuwait Energy's involvement in Iraq, meanwhile, could help revive the export of Iraqi gas to Kuwait. According to MEES, there has been talk of reactivating a pipeline from Rumaila to Kuwait that was operational in the mid 1980s.[9]

References

  1. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey, 27 December 2010.
  2. "Iraq inks final deal SKorea's KOGAS", Yahoo! News, 13 October 2011.
  3. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey 27 December 2010.
  4. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey 27 December 2010.
  5. "Model Service Development and Production Contract", North Oil Company, 23 April 2009.
  6. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey, 27 December 2010.
  7. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey 27 December 2010.
  8. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey, 27 December 2010.
  9. "Gas Fields Bid Round In Iraq: Success With Risk", Middle East Economic Survey, 27 December 2010.