This is a demo store. Any orders placed through this store will not be honored or fulfilled.

< Back to Iraqi Dinar in the News August 25th, 2009

Iraq to Hold Second Oil Bid-Round by Mid-December

By Firat Kayakiran and Ayesha Daya

Aug. 25 (Bloomberg) -- Iraq, which pre-qualified about 45 companies to bid on oil projects, plans to award contracts for the six partly developed and four undeveloped fields offered in its second licensing round by mid-December.

Contracts can then be signed by early January, before the country goes to the polls and if this deadline isn’t met a new cabinet will approve them, Iraq’s Oil Minister said.

“The orders we receive from the government is to proceed as quickly as we can,” Hussain al-Shahristani told reporters in Istanbul today, where Iraqi officials are sharing field data with international oil companies. “We don’t expect a new government to have a different policy to develop these fields.”

Iraq, holder of the world’s third-largest crude reserves, is offering 10 projects covering more than a dozen fields for development in the second licensing round since the 2003 U.S.- led invasion as it seeks oil revenue to help rebuild its war- ravaged economy.

International companies vying for the deposits, including Majnoon, Iraq’s largest undeveloped field, want higher returns for working in a country lacking security and an oil law. Iraq awarded only one contract in its first bid round in June because of disagreements on fees.

London-based BP Plc, Europe’s second-largest oil company, and China National Petroleum Corp. won work on the Rumaila field, agreeing to cut their fees after development costs to $2 a barrel from $3.99. The contract will be ready for cabinet approval “soon,” the minister said today.

Remaining Bidders

Remaining bidders in the first round refused to lower their initial proposals to meet the maximum fee Iraq was willing to pay. The second oil round centers on green-field projects rather than extensions to older fields.

“We expect a better match between our expectations and what the companies will bid in the second round,” Shahristani said, declining to comment on the possible fee rate. Big companies are interested in the largest fields, while mid-sized companies seek smaller-sized reserves, he said.

Companies on the bidding list, including BP and Exxon Mobil Corp., must hold at least 10 percent of any consortium and can participate in as many as four bids, Abdul Mahdy al-Ameedi, deputy director general at the Petroleum Contracts and Licensing Directorate, said today. Iraq expects to get $1.2 billion in signature bonuses from the second licensing round, he said.

Iraq will take a 25 percent stake in licenses awarded in the second round, Shahristani said.

Chevron, Gazprom

Other pre-qualified companies include Anadarko Petroleum Corp., BG Group Plc, BHP Billiton Ltd., Chevron Corp., OAO Gazprom, Eni SpA, OAO Lukoil, Nexen Inc., Total SA and Turkish state energy company Turkiye Petrolleri AO. All bids must come directly from, or in partnership with, pre-qualified bidders, al-Ameedi said.

Iraq is investigating whether China Petroleum & Chemical Corp. breached Iraqi law after the parent of the Chinese company, known as Sinopec, last week bought Addax Petroleum Corp. which is involved in oil field development in the semi- autonomous Kurdistan region that isn’t sanctioned by Iraq’s central government.

Asia’s biggest refiner is undecided on whether to bid for new Iraqi oil fields or buy Addax Petroleum Corp. from its parent company, if forced to choose between the two options, Fan Shengli, vice president of Sinopec International Petroleum Exploration and Production Corporation Middle East, said today.

To contact the reporter on this story: Ayesha Daya in Dubai Firat Kayakiran in Istanbul at

Last Updated: August 25, 2009 10:46 EDT