Iraq's oil fields open to bidders

Production could increase by 1.5 million barrels per day; Senators warn lack of plan to share oil riches among Iraqis would 'add more fuel to Iraq's civil war.'

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Likely holders of short-term, no-bid Iraqi oil contracts
Exxon Mobil, USA
Chevron Iraq Ltd., USA
Royal Dutch Shell, Netherlands
Total SA, France
BP, UK
Source:CNN
iraq_map_flag.03.jpg
If I lost my job today, I would have enough savings for:
  • 3-6 months
  • 6-12 months
  • At least one year
  • I don't have any savings

BAGHDAD, Iraq (CNN) -- Iraq's oil minister Monday opened international bidding on six oil fields that could increase the country's oil production by 1.5 million barrels per day.

But the oil ministry continues to negotiate short-term no-bid contracts with several U.S. and European oil companies -- a step recently criticized by two U.S. lawmakers.

Oil Minister Hussein Shahrastani announced Monday that 35 international oil companies can bid on long-term contracts for redeveloping the six oil fields, as well as two natural gas fields.

"It is a unique event and a significant feature in the new Iraq that we declare the first bidding course for developing the Iraq oil fields publicly and fully in a transparent way," the minister said at Monday's news conference.

It marks the first time in more than 35 years that Iraq has allowed foreign oil companies to do business inside its borders.

Shahrastani said the fee-based contracts will not give the winning companies a share in the revenue from oil sales "because this wealth belongs to Iraq only and thus we will not allow anyone to share the Iraqis' oil."

Iraq's current oil production is 2.25 million barrels a day, according to the U.S. Energy Information Administration. That is close to its status before the U.S.-led war that toppled Saddam Hussein in 2003, but below levels prior to the first Persian Gulf War in 1991.

Iraq has among the largest oil reserves in the world, with an estimated 115 billion barrels -- tying Iran for the No. 2 status behind Saudi Arabia's 264 billion barrels, according to estimates from the Energy Information Administration.

The six oil fields that will be open to development are in the Kirkuk oil fields and the neighboring Bai Hassan fields in northern Iraq, Shahrastani said. They are al-Rumeila, al-Zubair, al-Qurna West, and three fields in the Maysan oil fields -- Bazirqan, Abu Gharab and Fakah.

The two gas fields are Akas and Mansouriya gas fields in western Iraq.

The fields have already been explored and are producing oil and gas, but the equipment is old and outdated, Shahrastani said. He hopes that the new infrastructure provided by the international oil companies will mean "the production can be increased in less cost and less time."

Iraq's oil minister said the ministry will invite the 35 qualified international companies --- which includes BP, Exxon Mobil (XOM, Fortune 500), Royal Dutch Shell and Chevron (CVX, Fortune 500) -- to prepare their bids over the next two weeks. The contracts could go into effect by next year, but Shahrastani said it will take several more years before oil production is increased.

"We hope in 2013 through this first bidding course to increase production in these fields by 1.5 million barrels per day, in addition to our daily average production rate during the last five years," he said.

Meanwhile, Iraq hopes to wrap up its talks regarding short-term, no-bid contracts that would allow the U.S. and European oil companies -- including Exxon Mobil, Royal Dutch Shell, Total SA, Chevron, and BP -- to service those oil fields as soon as possible.

Last week, Sen. Charles Schumer, D-New York, and Sen. John Kerry, D-Massachusetts, sent a letter to Secretary of State Condoleezza Rice expressing concerns about those no-bid contracts.

The senators, who released the letter, said they are worried that unfair distribution of oil revenue could inflame the violence between the warring religious and political groups of Iraq.

"We urge you to persuade the (government of Iraq) to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq," read the letter from Schumer and Kerry.

"At this time, the (government of Iraq) currently does not have in place a revenue-sharing law that could fairly allocate any revenue gained from Iraq's lucrative hydrocarbon fields between the three major ethnic groups in Iraq," read the letter. "We fear that any such agreements signed by Iraq's Hydrocarbon Ministry without an equitable revenue-sharing agreement in place would simply add more fuel to Iraq's civil war."

In their letter, the senators said that Iraq's oil revenue during 2007 and 2008 will total $100 billion, "most of which will not be spent on reconstruction due to bureaucratic incompetence."

The oil ministry said Monday that the negotiations over the no-bid "technical support agreements" are ongoing. Under those short-term agreements the companies would be paid a fee for extracting the oil, but would not get a share of the revenue from oil sales.

The companies that will be allowed to compete in the open bidding for long-term contracts, which would be under a similar revenue format, are:

1. Anadarko Iraq Company, USA

2. BG International, UK

3. BHP Billiton Petroleum Pty Ltd., Australia

4. B.P., UK

5. Chevron Iraq Ltd., USA

6. CNOOC China Ltd, China

7. CNPC, China

8. Conoco Phillips, USA

9. Edison International SPA, Italy

10. ENI, Italy

11. Exxonmobil, USA

12. Hess Corporation, USA

13. Inpex Holding, Japan

14. Japex, Japan

15. JSC Gazprom Neft, Russia

16. Kogas, Korea

17. Lukoil, Russia

18. Maersk, Denmark

19. Marthon International Petroleum Limited, USA

20. Mitsubishi Corporation, Japan

21. Nexen Inc. (International Oil & Gas Nexen Inc.), Canada

22. Nippon Oil, Japan

23. Occidental Petroleum, USA

24. ONGC, India

25. Petronas, Malaysia

26. Pertamina, Indonesia

27. Premier, UK

28. Repsol, Spain

29. Shell Iraq, Netherlands

30. Sinochem, China

31. Sinopic Group, China

32. Statoil Hydro, Norway

33. Total, France

34. Wintershall Basf Group, Germany

35. Woodside, Australia To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Sponsors

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.