26 December 2008
Iraq’s oil ministry decided Wednesday to launch its second postwar bid round for oil and gas field development with 14 oil fields and two gas fields spread over Iraq’s regions, ministry sources said Wednesday. The official announcement will be made by Iraqi Oil Minister Hussein al-Shahristani in Baghdad on Dec. 31.
Opinions in the ministry are divided over whether Iraq should launch a new bidding round before the first one has been concluded or has made significant progress. The first licensing round was announced at the end of June and so far the ministry has only published an initial tender protocol and a draft model contract, which were made available to international oil companies that have paid for data packages. The final tender protocol is not set to go out before the second quarter of next year, together with a final model contract. Eight oil and gas fields are on offer to 35 prequalified companies in the first bid round.
Al-Shahristani, who was elected to the Iraqi parliament in 2005 before joining the government of Prime Minister Nouri al-Maliki, wants to build a list of personal achievements as he eyes the next elections, slated for early 2010. He published a 10-year plan for Iraq’s oil sector that targets oil production of 4.1 million barrels per day by 2012 and 6 million b/d by 2017.
During discussions Wednesday at the ministry headquarters, oil officials from the licensing and contracting department acquiesced to al-Shahristani’s pressure to announce a new offering of oil and gas fields to international oil companies before the end of the year as he had promised on several occasions.
The list of fields finalized this week includes the two highly prized oil fields of Majnoon and West Qurna Phase 2, which each account for more than 12 billion barrels of reserves, as well as the small Siba gas field, all in the Basrah region, the Baghdad sources said.
France’s Total negotiated and initialed a production sharing contract (PSC) for Majnoon in the late 1990s, but stopped short of signing a definitive deal, as Iraq was still under international sanctions. The plan to offer West Qurna Phase 2 will disappoint Russia’s Lukoil, whose 1997 PSC was canceled by the previous regime in 2002.
Another giant field, Nahr Bin Umar, which was also negotiated by Total in the 1990s and has estimated reserves of over 6 billion bbl, has been omitted from this week’s list together with the Nassiriyah field — even though the two had been previously considered for this round, the sources said. The only other two big fields on offer this time are Halfaya in the southern Missan region and the geologically and technically challenging East Baghdad in the central Wasit region.
The other fields to be tendered next week are Gharraf in Thi Qar province; Kifl, West Kifl and Merjan in Najaf and Kerbala provinces; Badrah in Wasit; Qayara and Najmah in the northern Nineveh province; and Qamar, Gullabat, Naudoman and Khashm al-Ahmar in the northeastern Diyala province.
Once developed, Iraq’s major southern fields are expected to contribute the biggest chunks to Iraq’s long-term production target. Majnoon, where 24 wells were drilled in the 1980s, is one of Iraq’s few remaining undeveloped giants, with the potential to produce 600,000 b/d. West Qurna Phase 2 is also considered to have potential of 600,000 b/d. The two fields are currently producing a trickle from pilot production facilities.
Development of the producing fields on offer in the first round — Rumaila, Zubair, West Qurna Phase 1, Missan’s Buzurgan, Fauqa and Abu Ghirab, Kirkuk and Bai Hasan –is expected to lift output capacity to 4.5 million b/d within three years of contract awards. They are currently producing over 2 million b/d and contain more than 40 billion bbl of reserves.
The ministry will qualify additional companies to participate in Iraq’s second and third bid rounds following the initial list of companies invited to the first round. About 120 companies registered for the prequalification process at the beginning of the year.
Baghdad sources say the ministry will have to prepare a different technical service model contract than the one currently being finalized for the first round, which is tailored specifically for the development of producing fields.
By Ruba Husari, Dubai
Iraq‘s Second Licensing Round
| Oil Field |
Reserves |
| West Qurna-2 |
12.876 |
| Mainoon |
12.58 |
| East Baghdad |
8.108 |
| Halfaya |
4.098 |
| Gharraf |
0.863 |
| Najmah |
0.858 |
| Qayarah |
0.807 |
| Kifl |
0.209 |
| West Kifl |
0.182 |
| Merjan |
0.156 |
| Badra |
0.109 |
| Qamar |
0.073 |
| Gullabat |
0.098 |
| Naudoman |
0.104 |
| Khashm al-Ahmar* |
1.765 |
| Siba* |
3.05 |
* Gas Fields. Reserves in billion bbl./ Bcm for gas fields. Source: Iraq oil ministry.
(Published in International Oil Daily Dec. 26, 2008)