Tue, July 07, 2009
Business > Industries > Iraq oil auction

Iraqi PM dissatisfied with energy auction results

2009-07-01 21:07:12 GMT2009-07-02 05:07:12 (Beijing Time)  SINA.com

A worker adjusts the valve of an oil pipe in Tawke oil field near Dahuk, 400 km (249 miles) north of Baghdad, June 27, 2009. For the first time since the 2003 U.S. invasion to topple Saddam Hussein, global oil firms will have a run at Iraq's vast oil resources when Baghdad auctions off contracts in its biggest fields this month. Picture taken June 27, 2009.(Reuters)

Iraq's Prime Minister Nuri al-Maliki speaks during a tender in Baghdad June 30, 2009. Iraq auctioned contracts to run eight giant oil and gas fields on Tuesday as it sought to take charge of its own reconstruction after six years of war, but oil companies were reluctant to pay what it asked.(Reuters)

BAGDHAD (AP) -- The Iraqi prime minister said Thursday that his government was not satisfied with the meager results of the first international oil bidding round but insisted it would not stop future plans to develop Iraq's dilapidated energy industry.

On Tuesday, Iraq put six oil and two gas fields on offer to foreign firms in the country's first bidding process in over three decades. More than 30 international oil companies participated but only one contract was secured due to tough financial terms.

"This round didn't meet the government's desire," Nouri al-Maliki told reporters at a joint news conference with his visiting French counterpart, Francois Fillon. "There will be more rounds in the future," al-Maliki added.

The only winner in the daylong process were British giant BP and its Chinese consortium partner CNPC with its bid to develop the southern giant Rumaila field oil field with 17.8 billion barrels.

The BP-led consortium had bid $3.99 for per barrel produced but slashed their price to the $2 per barrel payment sought by the oil ministry. They were competing with a consortium led by U.S. giant Exxon Mobil, which refused to amend its offer of $4.80 per barrel.

Iraq's Cabinet approved the deal on Wednesday. A date for signing the final deal has not yet been determined.

In desperate need for cash to boost the country's cash-stripped economy, Iraqi Oil Ministry is planning to expedite its second oil bidding round to develop 11 oil and gas fields, its spokesman Assem Jihad said.

The process had been scheduled to be completed by end of this year, but Jihad said it would be held sooner although the exact date has yet to be determined.

Jihad told The Associated Press that a meeting will be held in August in Istanbul with representatives from nine pre-qualified oil companies to discuss the process.

He also said two gas fields and five oil fields will be left open for development once the Iraqi National Oil Co., which was dissolved by Saddam Hussein in the 1980s, is re-established.

The national oil company's revival depends on the passage of a hydrocarbon law that has been stalled in the parliament since 2007 due to disputes between the central government in Baghdad and the semiautonomous Kurdish region in the north.

The promise of access to about 43 billion of Iraq's 115 billion barrels of crude reserves was apparently not appetizing enough for foreign firms to overlook the inherit risks they faced in a country still emerging from decades of sanctions and the 2003 U.S.-led invasion.

Many lawmakers have opposed the bidding process from the start, saying the oil minister's push to have the contracts approved by the Cabinet instead of the parliament renders them illegal. Many ordinary Iraqis -- who still say the U.S.-led war was mainly for oil -- worry that giving foreign firms access to the country's key resource opens the door for economic occupation.

Iraq, which depends on oil revenues for more than 90 percent of its budget, had to cut its spending plan for this year from $79 billion to $58.6 billion.

It produces only slightly over 2.4 million barrels a day and exports about 1.9 million barrels a day due to decades of war, UN sanctions, insurgents attacks and lack of investment.

(Agencies)

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