• About us
• |
• Doing business
• |
• Resources
• |
• News & Events
• |
• Careers
• |
• Contact us

Petroleum Services

First Iraqi Petroleum Licensing Round

On 7 January 2008 the Iraqi Oil Ministry (www.oil.gov.iq) announced the highly anticipated First Iraqi Petroleum Licensing Round (www.pcld-iraq.com), more than 30 years after Saddam Hussain nationalised the oil industry within Iraq. The bid round encompasses six oil fields, Rumaila, West Qurna, Zubair, Missan, Kirkuk and Bai Hassan, and two gas fields, Akkas and Mansuriya situated in the highly productive sedimentary basins. The round was officially announced on 30 June 2008, after 35 companies had been pre-approved for the contracts. The pre-approved companies were a mix of supermajors, national oil companies and majors, all eager to produce some of the 115 billion barrels of reserves in Iraq. The submission of bids had to be completed by 15 June 2009, with the actual bidding and award of the contracts taking place on 29 June 2009.

The long term technical contracts were to be assigned with a focus to improving the field's infrastructure and at first maintaining the current field production and then improving this production to a pre-assigned plateau level. Different signature bonuses and remuneration fees for the production would be assigned depending on the size of the field and the amount produced.

The bid round itself commenced on 30 June 2009, after it was delayed by 24 hours due to poor weather, with the deals being announced live on television. A total of 31 companies bid for the eight fields on offer, including Shell, ExxonMobil, BP and CNPC.

Only one licence was awarded, the 17 billion barrel Rumaila Field, to a consortium of BP and CNPC. BP and CNPC had set a remuneration fee of 3.99 USD/bbl, however this was above the 2.00 USD/bbl set by the Ministry of Oil. The consortium, along with a rival bid by ExxonMobil and Petronas, were given the option to renegotiate the remuneration fee down to the 2.00 USD/bbl set by the Ministry Of Oil. While ExxonMobil and Petronas were not prepared to do this, BP and CNPC were prepared to lower their remuneration fee and set a plateau production target of 2.85 mmbbls/d. The signature bonus for this field is USD500 million to be paid back over five years, starting in 2011, and a minimum expenditure of USD300 million to develop the field.

Top

Among the other seven contracts that were not awarded, there were no bids for the Mansuriya Gas Field. The other contracts only developed limited interest, with many companies not willing to meet the remuneration payments set by the Oil Ministry. The Akkas and Mansuriya fields are to now be developed by the Iraq Oil Ministry in conjunction with the State Company for Oil Projects.

Top

The Iraqi Government is set to continue with the Second Iraqi Petroleum Licensing Round, which includes 10 oil fields and one gas field, among them the super-giant West Qurna and East Baghdad Fields.

Although the First Petroleum Licensing Round was a disappointment it is widely believed that some middle ground will be met. The oil companies cannot let such an unrivalled opportunity to go uncaptured, while the Iraqi Ministry needs the foreign investment to increase its production and aid in the rebuilding of its infrastructure.

Top