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Oil field bidding fiasco shows up Iraqs unrealistic expectations
 Iraq failed to award most contracts it offered yesterday in a bidding round aimed at attracting foreign partners and their cash, leaving the country seeking new ways to develop the worlds third-largest oil reserves.The Organisation of Petroleum Exporting Countries producer fell short of its aim to assign development rights for six oil fields and two natural gas fields . A service agreement for the Rumaila oil field won by a BP-led group was the only contract awarded. The Middle Eastern country hoped to increase production more than 60% from the fields on offer, potentially raising 1,7-trillion in profit over 20 years , Oil Minister Hussain al-Shahristani said in a speech televised at the start of the round on Tuesday. What a fiasco, said Rochdi Younsi, an analyst at Eurasia Group in Washington. It shows the discrepancy between Iraqs expectations and what companies were willing to offer. Companies, including Exxon Mobil and Royal Dutch Shell, failed to meet Iraqi terms as the government asked bidders to cut their fees during a bidding ceremony, parts of which were shown on state television. The cabinet met yesterday to be briefed on the licensing round by al-Shahristani, and to decide how to attract investors, government spokesman Ali al-Dabbagh said by telephone from Baghdad on Tuesday. BP and China National Petroleum won the contract for Rumaila, the largest of the eight fields in Tuesdays round Iraqs first international tender in more than 30 years. Of the 35 companies Iraq prequalified, 22 companies made 15 bids for 16bn for technical service contracts. Iraq invited international oil companies to return after kicking them out in 1972, when the party of late dictator Saddam Hussein nationalised concessions. Iraq failed to agree with companies for six sites, including the Kirkuk and West Qurna oil fields, and received no bids for the Mansuriya natural gas field, the second it offered. Iraq wanted to squeeze the margins as much as possible for investors, and they squeezed too much, said Samuel Ciszuk, an analyst at IHS Global Insight in London. Were satisfied with Rumaila, Asim Jihad, a spokesman for the oil ministry, said by telephone after the close of bidding. Its a big field and we gave the contract on our terms. The BP group agreed to boost output at Rumaila, which now produces 956000 barrels per day, to a plateau of 2,85-million barrels of oil a day. BPs initial bid for the remuneration fee was 3,99 a barrel. Iraq is struggling to raise output and revenue from crude sales after six years of conflict and sanctions had destroyed the economy and infrastructure. The government aims to boost oil output to 4-million barrels a day within five years, from about 2,4- million barrels now. On Tuesday , groups led by Italys Eni and China National dropped their proposals for Zubair oil field in southern Iraq. Posted by: ryuge 2009-07-02 |
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