Companies Ease Demands on Iraqi Oil Field Rights


Oil Minister Hussein al-Shahristani
(Click to Enlarge)

BAGHDAD (THE WALL STREET JOURNAL via Dow Jones), Oct. 14, 2009

Several oil companies that rejected tough terms in the country's first auction for oil-field rights this summer have dropped their demands for higher payouts, said Oil Minister Hussein al-Shahristani at a news conference Tuesday.

The reversal has revitalized talks over a handful of oil-development deals between Iraq and international oil companies. The June auction was seen as a disappointment because just one international consortium agreed to the tough terms set out by the ministry.

Mr. Shahristani said that companies such as Exxon Mobil Corp., Russia's OAO Lukoil and Eni SpA of Italy have withdrawn their earlier resistance to what the industry saw as unreasonably low payments for helping Iraq develop some of its existing oil fields.

Translating negotiations into actual deals is critical for Iraq, which relies on oil sales for 90% of government revenue.

International oil companies have been clamoring to get a foot into Iraq, where developing costs are low. But they balked at the low fees Iraq proposed to pay them during the June 30 auctions.

Mr. Shahristani said that the ministry has been continuing discussions with some of the companies, and that Baghdad is now closing in on deals after some companies relented on terms. In the proposed contracts, the oil ministry would pay companies for developing new production at some of Iraq's large, existing fields.

Exxon and Lukoil had been eyeing Iraq's large West Qurna oil field in the June bidding. Exxon had initially proposed a payment of $4-a-barrel for new production. Lukoil, bidding in partnership with ConocoPhillips, had offered $6.49 a barrel.

Exxon and the Lukoil-Conoco consortium have now accepted the $1.90-a-barrel fee that Iraq initially proposed for that field, Mr. Shahristani told reporters.

A Lukoil spokesman confirmed the agreement on fees. An Exxon spokesman declined to comment on its negotiations, saying only "we continue to assess business opportunities in Iraq."

Mr. Shahristani also said a consortium led by Eni has accepted the Iraqi oil ministry's proposed $2-a-barrel payment for the Zubair field. Eni had originally proposed a $4.80-a-barrel fee for the field.

An Eni spokeswoman declined to comment on discussions over the field in detail, but she said the company accepted the $2-a-barrel fee because some other conditions had changed, making the lower price more acceptable. The original 20-year contract, which includes Eni's consortium partners Occidental Petroleum Corp. and Korea Gas Corp., could be extended to 25 years, according to an Eni statement.

Mr. Shahristani said terms of the deals offered to international oil companies hadn't changed.

Both the Zubair and West Qurna fields were initially part of the historic June 30 auction, Iraq's first opening to foreign oil firms in some 30 years. In that auction, a consortium made up of BP PLC and China National Petroleum Co. won the giant Rumaila field after cutting its proposed fees by half, to just $2 per each additional barrel of production beyond current levels.

Iraq will host a second bid round for 10 unexplored oil and natural-gas fields in the first half of December, Mr. Shahristani said.  

Copyright (c) 2009 Dow Jones & Company, Inc.

Related Companies
 Company: Exxon Mobil Corporationmore info


 - ExxonMobil's $5.6B Acquisition Validates Permian as Core Operator Strategy (Jan 17)
 - Petrovietnam, Exxon Mobil Sign Deal On Gas Generation (Jan 13)
 - ExxonMobil Strikes More Oil Offshore Guyana (Jan 12)
 Company: Lukoilmore info


 - Lukoil: CEO, VP Sell $34 Million Worth Of Shares (Dec 30)
 - Sources: Russia's Lukoil Appoints New VP For Sales And Supplies (Dec 27)
 - Russia's Lukoil Says Ready To Take Part In Oil Output Cuts (Dec 9)
 Company: ConocoPhillipsmore info


 - Startup Of Malikai Oil Field To Boost Malaysia's Kimanis Exports (Dec 13)
 - US Shale Firms Go Back To Work Buoyed By OPEC Deal, Trump Victory (Nov 14)
 - ConocoPhillips Aims To Sell Up To $8 Billion In Gas Assets (Nov 10)
 Company: ENImore info


 - Oil, Gas Firms Make Global 100 Most Sustainable Corporations List (Jan 19)
 - Norway Awards 56 Oil And Gas Licences In Mature Areas (Jan 17)
 - Eni: Oil, Gas Discovery in Norwegian Sea (Jan 17)
 Company: Occidental Petroleummore info


 - U.S. Shale Firms Go Back To Work Buoyed By OPEC Deal, Trump Victory (Nov 14)
 - Occidental Petroleum Loss Misses Street Forecast As Output Drops (Nov 1)
 - US Frackers Surprise Themselves As Tweaks Keep Adding Barrels (Aug 3)
 Company: Korea Gas Co.more info
 - KOGAS Says Its CEO To Tender His Resignation On Monday (Jan 11)
 - KNOC Seeking to Invest in US Shale Gas (Jul 11)
 - Korea Gas to Invest $3B in AU LNG Projects (Jun 18)
 Company: Iraq Ministry of Oilmore info
 - Exxon Spearheads Iraqi Water-Injection Project (Apr 19)
 - Iraq to Alter Signature Bonuses on 2 Oil Field Deals (Apr 15)
 - Iraq Plans New Licensing Auction for 3 Gas Fields (Apr 14)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Attorney I
Expertise: Contracts Administration|Legal
Location: Houston, 
 
US Houston: Sr. EDI Logistics Specialist (Electronic Data Interchange)
Expertise: Logistics Management
Location: Houston, TX
 
Community Relations Manager Job
Expertise: Legal|PR / Corporate Communications|Project Management
Location: Red Wing, MN
 
search for more jobs

Brent Crude Oil : $55.49/BBL 2.45%
Light Crude Oil : $52.42/BBL 2.04%
Natural Gas : $3.2/MMBtu 5.04%
Updated in last 24 hours