Chinese companies won most of the oil and gas deals in Iraq‘s energy bidding round launched on Saturday as the Opec member country seeks to strengthen reserves and revenue.
A total of 29 oil and gas projects are available in the latest energy bidding rounds, with the first of them awarded on Saturday.
Sixteen fields and exploration blocks were offered as an appendix to the fifth bidding round held in 2018. Then, 11 blocks and fields were offered, but only seven were awarded. The rest are being offered as the sixth bidding round.
Twenty-two energy companies have been pre-qualified to take part.
Out of the eight projects auctioned on Saturday, five were awarded to Chinese’s companies.
Zhongman Petroleum and Natural Gas Group (ZPEC) won rights to develop the Northern Extension of East Baghdad oil filed. It will be entitled to 6.67 per cent share of the profit.
The bid was less than the one submitted by Iraq KAR company of 12.22 per cent. The field is shared by Baghdad and Salahuddin provinces in central Iraq.
It also took the Middle Euphrates fields in central Iraq, offering 11.67 per cent share of net profit, which was higher than the 9.35 per cent share the oil ministry was willing to pay. Afterward, the company accepted the 9.35 per cent share offered by the ministry.
It is a cluster of three fields – Kifl, West Kifl and Merjan – shared by the provinces of Najaf and Karbala. The fields hold both oil and gas reserves.
China’s UEG was the only company interested in Fao block in the southern province of Basra. The oil ministry accepted its bid of 25.16 per cent of net profit. The block, which is located near the border with Iran and Kuwait, has oil potential.
Zhenhua won the deal to develop Qurnain block south of Iraq. It initially asked for 25 per cent of the net profit, but later accepted the oil ministry’s rate of 17.3 per cent. The filed is shared by the provinces of Najaf and Anbar in southern Iraq.
Geo-Jade won a bid to develop Zurbatiya block in Wasit province in central Iraq. It initially asked for 12.65 per cent of the net profit, but later accepted the Oil Ministry’s offer of 7.65 per cent. The block has oil potential.
Iraqi KAR company won the rights to develop Dimah oilfield in the southern province of Maysan. It will receive 6.2 per cent of the net profit and was one of seven companies that vied for this field.
Sasan and Alan fields in the northern province of Nineveh were also awarded as one project to Iraqi KAR company. It will be entitled to 17.25 per cent of the net profit. Both fields hold oil and gas reserves.
The Okashat block with gas potential received no bids. The block is located in Anbar province in western Iraq.
The oil minister said that companies have until Monday to submit their bids for Okashat block if there is any interest. The bidding rounds will last three days.
The sites are located in the provinces of Baghdad, Diyala, Anbar, Babil, Wasit, Karbala and Najaf in central Iraq, as well as Qadissiyah, Muthana, This Qar, Basra and Mayssan in the south, and Nineveh in the north, he added.
Iraq Prime Minister Mohammed Shia Al Sudani said his country is committed to “assuring a safe and stable working environment” and to remove “complicated routine and bureaucracy”.
He added that the recent contacts signed with international oil companies will help his country to stop burning natural gas in three to five years from now.
Separately, the country’s Oil Minister Hayan Abdel Ghani said the offered projects will boost the country’s oil and gas reserves.
Iraq will soon announce an increase in its proven oil reserves to more than 160 billion barrels from 145.02 billion barrels now, he added.
The objective of the current offering is the award of contracts to qualified companies or consortia of companies to carry out exploration, appraisal, development and production activities in accordance with the terms of the contracts applicable to each of the 29 contract areas.
Winning companies or consortia must enter into either an exploration, development and production contract (EDPC) or a development and production contract (DPC) to carry out such activities.
For certain costs categorised as supplementary costs, the contractor is entitled to recover such costs at an accelerated rate and with interest. Petroleum costs, supplementary costs and remuneration will be paid in export oil unless Iraq elects to pay in cash.
The terms of the contracts vary according to the level of exploration maturity.
The EDPC provides for an exploration period from five to nine years and a development period of 25 years.
The DPC has a development period of 20 years with the potential for a single five-year extension.
Iraq is committed to assuring a safe and stable working environment and to remove complicated routine and bureaucracy
Mohammed Shia Al Sudani, Iraq Prime Minister
Major deals
As the security situation improved in 2008, the following year, Iraq began to attract IOCs to develop its resources.
Top among major oil companies were the US‘s Exxon Mobil, Royal Dutch Shell, the UK’s BP, China’s CNPC and Russia’s Lukoil.
Since then, Iraq has awarded dozens of oil deals to develop major fields that hold more than half of its 145.02 billion barrels of proven reserves. Deals to tap natural gas resources were also awarded.
The country is now producing slightly more than 4 million barrels a day from Baghdad-controlled oilfields, up from nearly 2.4 million a day in 2009, and its daily exports averaged 3.6 million barrels a day in March, according to Oil Ministry figures.
Iraq is Opec’s largest producer behind Saudi Arabia. Oil revenue makes up nearly 95 per cent of the country’s budget.
In recent years, it started focusing on developing vast gas reserves to meet growing demand for electricity, especially during summer.
Iraq buys 1,200 megawatts of electricity and enough natural gas to generate 2,800MW from Iran, making up nearly one third of its needs.
![TotalEnergies CEO Patrick Pouyanne and Iraqi Oil Minister Hayan Abdel Ghan sign the mega $27-billion energy project.](https://thenational-the-national-prod.cdn.arcpublishing.com/resizer/v2/AGLD4S2OGJF6LHEBSABRQ2WUQI.jpg?smart=true&auth=1c4864522e32406c70175d6d80af386b8ee1b9c0a4447ae5ea35434c6e64b211&width=400&height=317)
Last year, it signed a deal with French company TotalEnergies to develop oil and gas and renewable energy projects worth $27 billion.
Iraq holds a 30 per cent stake in the joint venture, while 45 per cent is held by TotalEnergies and the remaining 25 per cent by QatarEnergy.
Updated: May 11, 2024, 9:26 PM