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Iraq to 'fast track' oil bids to boost production, sets June TSA deadline


Published: April 29, 2008 at 5:15 PM
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ROME, April 29 (UPI) -- Iraq will "fast track" the first oil and gas field bidding round this year and wants rounds two and three next year, the oil minister told reporters in Rome.

Argus Media's World Petroleum Argus reported the wide-ranging interview given on the sidelines of the International Energy Forum in which Hussain al-Shahristani said the window for Big Oil firms to sign two-year production enhancement deals would end in June.

Without a new oil law to guide developments, Shahristani has decided on a multi-pronged approach to further increase Iraq's oil production beyond the post-war record level it is hovering at or near today.

The ministry is negotiating with Shell, BP, Total, Chevron and ExxonMobil to supply technology, equipment and training to five key producing oil fields, with the goal of boosting production by 100,000 barrels per day on each within two years.

Meanwhile, the ministry is readying a first selection of oil and gas fields to be put to tender, where pre-qualified oil companies from around the world will bid on producing fields. They will be "long-term development contracts," Shahristani said, "but they will be based on service contracts," where a company is paid for the job.

"We are going to fast-track the field developments as soon as we finish the first bidding round, hopefully by the end of this year," he said. "Next year we will definitely go through the second and perhaps third round."

While the ministry remains mum on the fields that will be offered for bidding, he said "some of the giant fields that have been producing for decades will definitely be included," and "very likely" the Akkas gas field near the Syrian border as well.

Iraq is producing about 2.37 million bpd, according to the global energy information firm Platts. Its short-term goal is 6 million bpd, which Iraq is trending to rely on both the state-owned and international oil firms to meet.

"We are pleased with the progress we have made on our own," Shahristani said. "We have managed to increase production by almost 500,000 bpd over the last six months, and we are planning to increase it by another 500,000 by early next year."

The contracts negotiated with the five oil firms, referred to as technical support agreements, are designed to "fill the gap" until the longer-term contracts are implemented. But negotiations have been prolonged, largely over the specific terms of payment, sources tell United Press International. If Iraq is going to pay with crude in lieu of cash, it will need to make sure it jives with the U.N. mandate ensuring transparency over its oil revenues.

Regardless, Iraq is obviously getting impatient and Shahristani said "if there are going to be delays -- and these are not caused by the Iraqi side -- the relevance of these TSAs will be in question. We have told the companies that they are losing time, and June is a bit late."

Iraq has put out a tender for seismic testing on the Kirkuk and Rumaila fields, which could be an indication of the ministry's moves toward keeping development in house.

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