Iraq's cabinet has approved a deal with a Kuwait Energy-led group to explore for gas and oil at an exploration block in southern Iraq, an Iraqi cabinet spokesman said Wednesday.
The consortium includes only Kuwait Energy and the United Arab Emirates' Dragon Oil PLC, after the Iraqi government decided last year to exclude state-run Turkish Petroleum Corp. from the group due to a souring in political relations between Baghdad and Ankara.
Kuwait Energy and its partners Dragon Oil and TPAO had won the contract to explore for oil and gas in block 9 in the Basra governorate, southern Iraq, at an auction in May last year.
With the departure of TPAO, Kuwait Energy's stake is now 70% and Dragon owns the remaining 30%.
According to the contract, the consortium will have a five-year exploration phase to determine the oil prospects of block 9, which spans 900 square kilometers in Basra province. If the block is found to be commercially viable during this phase, the consortium may apply to the Iraqi government to continue developing the block over a 20-year period.
The deal with the Kuwait Energy-led consortium is one of four exploration contracts the Iraqi Oil Ministry awarded to international companies at a licensing auction in May last year.
Those deals will contribute to the already booming Iraqi petroleum industry that has seen Iraq become the second-largest oil exporter in the 12-member Organization of the Petroleum Exporting Countries.
Iraq, holder of the world's third-largest oil reserves, has signed over the last two-and-a-half years several oil deals with international companies that are expected to bring the country's output close to that of the world's largest oil exporter, Saudi Arabia.
The deal with Kuwait Energy is the third petroleum concession awarded to the company in Iraq. In a bidding round held in October 2010, Kuwait Energy was awarded two 20-year development contracts for the Siba and Mansuriya gas fields. Kuwait Energy is the operator of the Siba gas field with a 60% working interest, and holds a 30% working interest in the Mansuriya gas field, which is operated by TPAO.
Copyright (c) 2012 Dow Jones & Company, Inc.
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