Iraq's Giant Majnoon Oil Field to Top Friday's Auction

AMMAN (Dow Jones), Dec. 7, 2009

Iraq's super-giant Majnoon will be the first in the 10 groups of oil and gas fields the country is offering to international oil companies in its second post-war licensing auction due to be held in Baghdad Friday and Saturday, Iraqi oil ministry officials said Monday.

The nearly 13 billion reserve field is expected to attract big players, the officials said.

Friday there will be four more groups of oil fields on offer to around 44 international companies eligible to take part in the auction. They are East Baghdad near the capital, the giant Halfaya in the south, Eastern fields, and Qaiyarah field near Mosul in the north, they added.

The second super-giant oil field West Qurna Phase 2 which holds reserves of 12.9 billion barrels will be at the top of the list of oil and gas fields Saturday's bidding round. The other smaller ones are Garraf, Badra (gas field), Middle Furat, and Najmah.

The auction will start 0900 local time (0600 GMT) and ends at 1600 hours each of the two bidding days, the ministry said.

Officials expect tough competition among oil majors for the supergiant oil fields of Majnoon and West Qurna Phase 2, both in southern Iraq.

French major Total SA negotiated alone Majnoon oil field in southern Iraq during the rule of Iraqi leader Saddam Hussein but it didn't sign a contract at that time because of the then United Nations-imposed trade sanctions. Total, now teamed up with Chevron Corp., is expected to put up a fight for the field that could produce well above 2 million barrels a day. Baghdad has set a minimum plateau target of 700,000 barrels a day for the field.

China National Petroleum Corp., or CNPC, Royal Dutch Shell PLC, Exxon Mobil Corp., Sinochem Corp. and Petronas could also challenge Total for Majnoon.

Iraqi officials also expected a tough fight for the supergiant West Qurna Phase 2 oil field in southern Iraq, near the border with Iran.

Russian oil major Lukoil Holdings clinched a production-sharing contract to develop the field during Saddam's rule but the former leader annulled it a year before the U.S.-led invasion in 2003.

Lukoil -- now with its strategic partner ConocoPhillips -- is expected to make sure that it doesn't lose the field as happened in the first bidding round. Then it was pipped to West Qurna-1 by ExxonMobil and Shell in early November despite offering the highest output plateau target -- 2.35 million barrels a day -- during bilateral talks.

The oil ministry has set the minimum plateau for West Qurna Phase 2 at 750,000 barrels a day, but the field with these huge oil reserves could produce between 2.5 million and 3 million barrels a day, the officials said.

ExxonMobil and Shell which won West Qurna-1 in November, could also build on their success and challenge Lukoil for West Qurna Phase 2, they said. China's CNPC could also submit a bid for the field, they added.

Baghdad aims to clinch 20-year service contracts for these oil fields, which mean that winning companies would receive remuneration in kind for each produced barrel as well as cost fees. Big oil companies, however, prefer deals that give them a share of profits and allow them to book reserves.  

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

Company: Exxon Mobil Corporation more info
Operates 13 Offshore Rigs
 - ExxonMobil May Add Gulf Coast Polypropylene Capacity (Mar 20)
 - Traders: ExxonMobil Buys LNG To Chill Quake-Hit Papua New Guinea Project (Mar 19)
 - Oil, Gas Leaders Warn Trump He Risks Harming Their Industry (Mar 16)
Company: Lukoil more info
 - Romania Closes One Case Against Russia's Lukoil, Related Trial Still On (Nov 17)
 - Transneft: Oil Supplies to Lukoil's Norsi Refinery Suspended Due to Fire (Oct 05)
 - Russia's Lukoil Eyes Decade Of Oil Output Growth (Sep 20)
Company: Shell more info
Operates 31 Offshore Rigs
 - Oil's Heavy Hitters Line Up to Dive Into Mexico's Deep Waters (Jan 26)
 - UK Firm Intertek Says Employee Involved in Shell Oil Theft Case (Jan 17)
 - Shell Looks Beyond Road Fuels to Secure Future of Refining (Nov 06)
Company: Total S.A. more info
 - Eni Promises Richer Returns After Exploration Success (Mar 16)
 - Exxon, Total, Repsol Among Bidders For Oil Exploration Off Greece (Mar 05)
 - Total, Edison Get Greek Go-Ahead For Oil And Gas Exploration (Feb 28)
Company: ConocoPhillips more info
Operates 12 Offshore Rigs
 - Shale Producers Urge FERC To Deny White Cliffs Oil Pipeline's Fee Request (Feb 23)
 - Why Canada Is The Next Frontier For Shale Oil (Jan 29)
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
Company: Chevron Corporation more info
 - Oil, Gas Leaders Warn Trump He Risks Harming Their Industry (Mar 16)
 - Chevron Backs 2018 Production Rise, Eyes Share Buybacks (Mar 06)
 - Chevron Expects LNG Supply Shortage By 2025 (Mar 06)
Company: PETRONAS more info
Operates 7 Offshore Rigs
 - You Don't Need Asia To Get $12 For Your Liquefied Natural Gas (Feb 27)
 - Oil's Heavy Hitters Line Up to Dive Into Mexico's Deep Waters (Jan 26)
 - Malaysia's Petronas Offers New Bergading Condensate For March (Jan 25)
Company: CNPC more info
 - China's Domestic LNG Plants Reopen After Shutdowns As Heating Crisis Eases (Feb 28)
 - With CNPC Deal, Cheniere's Train 3 at Corpus Christi Becomes More Likely (Feb 09)
 - Petrobras CEO Says To Discuss Refining Partnership With CNPC CEO (Nov 15)
Company: Sinochem more info
 - China's Sinochem Ties Up With Private Chemical Group In Oil Trading (Jan 10)
 - Sinochem Names Zhang Wei As General Manager (Nov 07)
 - Statoil Awards Wood Group Contracts for Brazil's Offshore Peregrino Project (Sep 22)
Company: Iraq Ministry of Oil more 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)