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Iraq energy auction gets muted interest

Al Akhbar | May 31, 2012

Iraq on Thursday closed a landmark auction of energy exploration blocks with just three contracts awarded out of a potential 12, dampening hopes the sale would cement its role as a key global supplier.

The two-day sale, the first to invite international oil companies to explore Iraqi territory for energy deposits since the 2003 US-led invasion, concluded with eight blocks receiving no bids whatsoever, including two that were offered to foreign firms twice.

The bid round, the fourth public auction of Iraqi energy contracts since mid-2009, came amid progress in ramping up oil exports, which account for the vast majority of government income, and as Baghdad eyes higher gas production to increase woefully inadequate power supplies. […]

Thursday opened with a winning bid from Pakistan Petroleum for a 6,000 square kilometer (2,316 square mile) exploration block which is thought to contain gas covering Diyala and Wasit provinces in central Iraq, with the company agreeing to US$5.38 per barrel of oil-equivalent eventually extracted.

And shortly afterwards, a partnership between Russian energy giant Lukoil and Japan’s Inpex won a contract for a plot covering Muthanna and Dhi Qar provinces in the south, believed to hold oil, with an offer of US$5.99 per barrel of oil.

But six other blocks – including two that were initially offered a day earlier but received no bids – garnered no interest from foreign energy firms.

Of the three oil and three gas blocks offered on Wednesday, meanwhile, just two received bids, and only one – Block 9, an area near Iraq’s border with Iran that is thought to contain oil – was accepted by Baghdad.

A consortium led by Kuwait Energy that also includes Turkey’s TPAO and Dubai-based Dragon Oil won the 900 square kilometer (347 square mile) block in the southern province of Basra, for a service fee of US$6.24 per barrel of oil.

Another exploration block in south Iraq thought to contain oil received a single bid, but it did not meet the oil ministry’s asking price and so was not awarded.

As in previous auctions, Iraq required firms that agree to explore the blocks to work under fixed-price service contracts, rather than production-sharing agreements that are common elsewhere and more popular with major energy firms. … Full article

May 31, 2012 Posted by | Timeless or most popular, Wars for Israel | , | Leave a comment