Iraq to award three oil production deals in August (15/07/04)

The interim Iraqi government (IIG) is expected to award the first three post-war oil production contracts by the end of August, according to industry insiders. Irish company Petrel has confirmed that it has put in bids for all three contracts on offer so far, making the final lists, according to reports.

However, the report said that Shell had declined to enter the tendering process for at least the first of the three; the larger corporations are said to be put off by the small size of the current deals. Jim Finn, company secretary at Petrel, said that the company had submitted its three tenders between March and mid-May. "We have tendered and we are fairly confident," he said.

The oil contracts are the first to be awarded post-conflict

Although Finn said that the current security situation in Iraq was not ideal, he said that Petrel continued to have both a Baghdad office and people on the ground in Iraq. The first three Iraqi oil projects up for grabs are for developing the Khurmala Dome field in the north of the country, the Suba-Luhais field in the south, and the smaller Hamrin field, again in the north. Shell said that it was initially interested in taking on Khurmala Dome, but turned it down because it was not happy with the terms of the offer.

"We obtained a copy of the tender but the scope and contract format are not compatible with our aspirations for long-term risk-reward contracts," said a Shell spokesman. A spokesman for BP said that it has not made a bid for any of the first three contracts.

The Khurmala project is thought to call for investment of $100 million, Suba-Luhais $150 million and Hamrin $80 million. Many other oilfield development projects are expected to be put out to tender in due course. Iraq has the world's second biggest oil reserves after neighbouring Saudi Arabia but development has been held back by years of sanctions.

The interim Iraqi government wants to increase current production levels of about 2.5 million barrels a day to more than the pre-war level of three million barrels. However, ongoing disruption in the country continues to hamper progress.

Source: BBC