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QUOTE O’ THE DAY
"You either fixed what broke or did without. It was excellent training for the future.”
Page added on May 31, 2012
Iraq failed to attract partners for most of the 12 oil and natural-gas exploration licenses offered in a two-day auction at which Asian and Russian bidders were more active than Western companies.
Three of the 12 blocks were awarded, two for oil and one for gas. Russia’s OAO Lukoil and Inpex Corp. of Japan won a joint bid to explore for crude in southern Iraq, the head of the Oil Ministry’s licensing department, Abdul Mahdy Al-Ameedi, said in Baghdad today, the final day of the auction. Pakistan Petroleum Ltd. won rights to an eastern gas block, he said.
The licensing comes amid an energy-industry revival that has boosted Iraq into third place among the 12 members of the Organization of Petroleum Exporting Countries, nine years after the U.S.-led invasion that toppled Saddam Hussein. In its three previous bid rounds since 2003, Iraq auctioned rights to produce at oil fields already discovered or in operation, whereas this week’s was for new exploration.
“Of course, we will prepare for a fifth round, and we have more than 60 blocks ready for bidding,” Oil Minister Abdul Kareem al-Luaibi told reporters after today’s auction. “We will start, God willing, during the next months to prepare the data packages,” he said.
Iraq offered five areas to be searched for oil and seven for gas during this week’s auction, in which 47 companies from 25 countries were qualified to participate. The ministry is seeking to develop gas deposits as fuel for power plants, which meet less than half of the nation’s electricity needs.
Kuwait Energy Co., Dragon Oil Plc (DGO) and Turkiye Petrolleri AO won the single license granted yesterday, to explore for crude in a plot along the Iranian border.
Al-Ameedi, director general of the licensing department, said it was “unfortunate” that the three exploration blocks in western Anbar province did not attract any bids.
In an earlier round in June 2009, the ministry awarded only one of eight areas on offer for redevelopment, assigning rights to the Rumaila field, the country’s largest, to BP Plc. It negotiated contracts later for the seven unawarded fields.
“Expectations were low going into this as the terms were so fundamentally unsuitable, but I am slightly surprised by how bad the turnout was,” Samuel Ciszuk, a consultant at KBC Energy Economics in Walton-on-Thames, U.K., said yesterday.
International companies proved reluctant to commit to costly exploration projects in return for a per-barrel fee they would receive under the service contracts on offer. Iraq holds the world’s fifth-largest crude reserves, according to data from BP Plc (BP/) that include Canadian oil sands.
Iraq is exporting 2.45 million barrels a day of crude, a level that’s “higher than planned,” Luaibi, the oil minister, said today.
Production has rebounded since Hussein’s defeat and removal in 2003 ended decades of stagnation from wars and sanctions. The Persian Gulf state is now pumping crude at more than 3 million barrels a day, according to OPEC data, and is on track to surpass Iran as the group’s No. 2 producer within months.
Iraq’s output will rise further in July, partly because of a planned increase at the Halfaya oil field in southeastern al- Amara province, Luaibi said