Iraq Delays Energy Bidding Round

AMMAN - Iraq has postponed by a month and a half its fourth oil-and-gas bidding round, to May 30 and 31, when it will auction 12 promising exploration blocks to international companies, a senior official at the Iraqi oil ministry said Monday.

The ministry had previously said that the fourth auction would be held April 11 and 12.

"The reason behind this new date is because we are still discussing with international companies a proposed model contract for the bid round," Sabah al-Saadi, deputy director of the oil ministry's Petroleum Contracts and Licensing Directorate, told Dow Jones Newswires.

Al-Saadi also said they want to give bidding companies more time to study the proposed model contract.

The licensing auction date has been changed four times. The first date was set in November 2011, then it was delayed to Jan. 25, then to March 7 and April 11.

Of the 46 firms pre-qualified to bid, some 37 companies, including some of the world's largest, have paid participation fees and bought data packages for the 12 blocks, al-Saadi said.

He said his office would make some slight changes to the model contract that "will be of interest for both the ministry and companies." He gave no further details.

Prequalified companies will compete based on fees that they will charge for exploring in these untouched blocks. One category will be allowed to bid as operators for the blocks; a second category will be allowed to participate in consortia led by operators.

Although international companies would prefer production-sharing contracts for exploration blocks, Iraqi oil officials said the deals would be based on a service contract, which means winning companies will be paid a flat fee for their services rather than be given a share in the resources. But it would be slightly different from the 20-year service contract offered in the previous three bidding rounds, they said.

Among those qualified for the auction are BP PLC, Royal Dutch Shell PLC, ExxonMobil Corp., Lukoil Holdings, Total SA, China National Petroleum Corp., or CNPC, Eni SpA, Occidental Petroleum Corp. and Chevron Corp.

Seven of the blocks are believed to contain natural gas, and five are believed to contain crude oil, and the blocks range in size from 5,500-9,000 square kilometers, officials said.

Iraq, holder the world's third-largest oil reserves, signed 11 oil field deals with international oil companies from two bidding rounds in 2009 and three gas contracts from a 2010 licensing auction.

Iraq's estimated gas reserves of 112.7 trillion cubic feet are the world's 10th largest, according to U.S. Department of Energy data.

Copyright (c) 2012 Dow Jones & Company, Inc.

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