Iraq’s oil ministry has set the ball rolling for its fourth bid round in two years by inviting international oil companies to pre-qualify to bid in its licensing round to be launched later this year. What’s on offer this time is 12 blocks or so, spread across the country where companies will be exploring for, primarily gas, but also for oil.
Though Iraq does not need to develop any more oil finds at this stage, the goal of the exercise is to replenish reserves and raise the country’s profile and stature on the global oil reserves map. When it comes to gas, any finds will most definitely be brought on stream as soon as possible in order to respond to the country’s increasing needs for power generation. More importantly, developing non-associated gas reserves will isolate the country’s national gas grid from any future curtailment on oil output – and with it associated gas production – as a result of market restrictions, Opec quota obligations or even just incidental constraints on production or export infrastructure.
According to the invitation for pre-qualification launched today, all companies who have not been prequalified to bid in the previous three rounds or those who were qualified but did not win any contracts, can apply to bid in the fourth round. The requirements include the ability to demonstrate legal and financial strength according to predefined criteria and pay a non-refundable prequalification fee of some $15,000, by a May 19th deadline.
The response by the industry is expected to be overwhelming, notwithstanding the contractual terms to be offered. The experience of the previous rounds has shown that whatever is on offer, it’s better to be in rather than out. But if anything, this response would reflect another vote of confidence in Iraq’s ability to stand on its feet, whether US troops continue to offer a protective umbrella beyond December 2011 or not.