Companies Face Stiff Competition for Iraq's Prized Oil Fields

Iraqi Oil and Gas Developments
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BAGHDAD (Dow Jones), Dec. 10, 2009

Competition is expected to be fierce between international companies for some of Iraq's 10 oil and gas fields at a licensing auction in Baghdad Friday and Saturday, Iraqi oil and company sources said Thursday.

International oil majors are being tightlipped about which Iraqi fields they are targeting in this the second bidding round for licenses.

Although nothing definitive can be said, France's Total SA, along with Chevron Corp of the U.S. is understood to be concentrating on Iraq's largest untapped oil field Majnoon in southern Iraq, with more than 12 billion barrel reserves. Total negotiated the field during the rule of Saddam Hussein but no deal was signed at that time.

Other rivals for the same field could be Royal Dutch Shell PLC, teaming up with Exxon Mobil Corp., China National Petroleum Corp, or China's Sinchem Corp.

Having lost West Qurna Phase 1 to Exxon Mobil and Shell in the first bidding round, Russia's Lukoil Holdings, with ConocoPhillips, will go all out for West Qurna Phase 2 for which it signed a deal under Saddam that later was annulled. The field has proven oil reserves of nearly 13 billion barrels.

Exxon and Shell, after signing West Qurna Phase 1, might want to build on that success and bid for West Qurna Phase 2. Sinchem which bid for West Qurana Phase 1 in the first bidding round in June could also pitch for the bigger West Qurna Phase 2. Japan Petroleum Exploration Co. Ltd, Japex, and Statoil could also bid for the field.

Shell is believed to be the main bidder for Halfaya oil field, the third largest listed in the second oil and gas contest with estimated proven reserves of more than 4 billion barrels.

A consortium comprising India's Oil & Natural Gas Corp., Oil India Ltd. and Turkish Petroleum Corp. is also likely to bid for Halfaya. Japex, CNPC and Statoil could be also runners.

Japex is also expected to be a strong runner for East Baghdad oil field, having studied the field before. The field, located outside the nation's capital, is with proven reserves estimated at 8 billion barrels. Rival companies such as China's CNPC could also submit bids. Not a lot of companies are interested in East Baghdad because of its heavy crude.

Italy's Edison SpA, teaming up with South Korea's state-run Korea Gas Corp., or Kogas, is believed to be interested in the Garraf oil field, which holds around 1 billion crude oil reserves. Japex could also submit a bid for the field in southern Iraq.

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

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