Iraq to Hold New O&G Exploration Bid Round in 4Q
BAGHDAD (Dow Jones Newswires), Feb. 15, 2011
The Iraqi government plans to hold a new oil and gas licensing auction later this year as it seeks a major push to increase oil output and to capture natural gas for electricity generation, a senior Iraqi oil official said.
Iraq has held three bidding rounds in the last few years to auction off 15 of the country's most prized oil and gas fields. However, the oil-rich nation's proven reserves, estimated at 143 billion barrels, could fall sharply within a few years if the country doesn't get serious now about exploring for more oil, said Abdul Mahdy al-Ameedi, head of the country's petroleum contracts office, an oil ministry affiliate.
The Iraqi central government has begun "serious preparations" to hold a fourth bidding round in the final quarter of the year, Ameedi told Dow Jones Newswires in an exclusive interview late Monday in his office at the oil ministry in Baghdad.
Iraq also needs to boost its gas production and build more gas-fired power plants to increase its power output, currently at 6,500 megawatts, which is less than half the country's needs, he said.
Iraqi oil officials are optimistic that major international oil companies will meet their pledges to sharply increase the country's oil production. Officials said Iraq could increase oil output up to 8 million barrels a day in 2018, though oil analysts say that target would take longer to achieve.
Ameedi said oil output from three major oil fields being developed by some of the world's majors would increase output by nearly 500,000 barrels a day by the end of this year, bringing total output to 3 million barrels a day.
The U.K.'s BP has increased output at Iraq's Rumaila oil field to 1.275 million barrels a day from 1.06 million barrels a day and is expected to grow output further to 1.3 million barrels a day in 2011, he said. Italy-based Eni has boosted output at Zubair to 270,000 barrels a day from 148,000 barrels a day and has plans to reach 300,000 barrels a day this year. Exxon Mobil is expected to increase output at West Qurna-1 in April to 280,000 barrels a day from current output of 230,000 barrels a day, Ameedi said.
Ameedi, whose office engineered three bidding rounds in the last two years to auction 15 prized oil and gas fields, said the ministry wants to offer 12 exploration blocks in this latest auction. "The number could be more, or less," he said.
The ministry will also prequalify international firms that were unsuccessful in previous bidding rounds. "We will ask prequalified companies that didn't win contracts in the previous bidding rounds to update their legal and financial data," he said. Those companies would need to submit additional data, including programs on health and work hazards, as well as training.
Iraq prequalified some 48 international companies to take part in the three previous auctions, but less than half of them won deals in Iraq.
The exploration blocks will be covering areas in western, northern, and southern Iraq, Ameedi said. "We are gathering information about these blocks in order to include them in the data package that we will hand to interested companies."
Although international companies would prefer production-sharing contracts for exploration blocks, Ameedi said the deals would be based on a service contract. But it would be slightly different from the 20-year service contract offered in the previous three bidding rounds.
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