The formal signing Sunday of the final agreement for the development of the Majnoon oil field in southern Iraq by Royal Dutch Shell and its Malaysian partner Petronas, set the ball rolling for a series of signatures this week and next. By the end of January, all contracts awarded in the first and second bid rounds will become effective and operators will start the actual work on the ground. Southern Iraq, where most of the 10 oil fields awarded to foreign companies are located, will become a big construction site.
Most of the burden in organizing and managing the work on the ground lies with South Oil Co (SOC) which is currently in charge of six of the 10 oil fields. The most immediate task is appointing the heads and the Iraqi members of the joint management committees (JMC) for each field. All JMCs are expected to hold their first meetings within a month from signing the contracts.
Once a fourth regional company, Thi Qar Oil Co, is set up when the Iraqi council of ministers gives its approval, it will take up its share of responsibility in managing the operations for the Iraqi side together with SOC, Missan Oil Co (MOC) and North Oil Co (NOC). In total, Iraq would have four regional oil companies which in the future would work under the umbrella of Iraq National Oil Co (INOC).
The oil ministry has two final tasks to achieve before this phase is concluded. The first is to publish all 10 contracts signed with international oil companies, in line with a prerogative contained in the draft Oil and Gas Law. The second is to announce the yearly production plans for all 10 oil fields over the next few years based on all initial development plans presented by all contractors as required by the service contracts they signed. Those two steps would indeed bring the final the final curtain down on a transparent process that saw two historic bid rounds launched and concluded within 18 months.
Oil Minister Hussein al-Shahristani promised to carry out those two tasks once all final contracts are wrapped up. That would be a major achievement for Iraq and a huge step in setting up standards for the upstream oil industry, provided of course that this promise does not get derailed by elections and electioneering.
Signing Timeline
Jan. 17: Majnoon
Jan. 18: Gharraf
Jan. 22: Zubair
Jan. 25: West Qurna – phase 1
Jan. 26: Najmah
Jan. 26: Qayarah
Jan. 27: Halfaya
Jan. 28: Badra
Jan. 31: West Qurna – phase 2