BAGHDAD, Dec. 3 (UPI) -- France's Total and Japan's Nippon Oil are seen as front-runners to secure development rights to some of the 10 Iraqi oil fields up for auction in Baghdad next week that the government hopes will triple oil production and restore the crisis-torn country's fortunes.
Underlining Baghdad's expectations that allowing foreign oil giants to return to Iraq will revive the country's rundown oil industry, its economic mainstay, the government has unveiled plans for four new offshore terminals in the northern Gulf and three new undersea pipelines to boost export capacity.
Total, which has yet to win Iraqi contracts, is eyeing at least three oil fields as it strives to resume operations in a country where it first helped explore for oil in 1927.
The French producer, Europe's third-largest oil company, made a bid for the giant West Qurna field in the first auction in June. But like many other foreign oil companies it refused to accept the Oil Ministry's offer of $2 for every barrel of crude it produced.
It is expected to bid for West Qurna (Phase 2) again, along with the rich Majnoun field in southeastern Iraq near the border with Iran and Nahr bin Umr near the southern capital of Basra, in the new auction scheduled for Dec. 11-12.
West Qurna, arguably the most sought-after location, holds the equivalent of at least 8.6 billion barrels of oil. Majnoun's reserves are estimated at 12 billion, plus 9.5 trillion cubic feet of natural gas, while Nahr bin Umr holds 6.6 billion barrels and 12 billion cubic feet of gas.
Since the June auction, most of the oil companies have lowered their sights in line with the Oil Ministry's terms, to which it has doggedly stuck.
BP and China National Petroleum Co. was the only consortium to win a contract in June for the megafield at Rumaila, which contains an estimated 17.8 billion barrels of crude.
Following secret post-auction negotiations, a consortium of Italy's Eni, Occidental of the United States and Korea Gas signed a preliminary deal to develop Zubair, with 4.1 billion barrels.
Soon after, Exxon Mobil and Royal Dutch Shell clinched a deal for West Qurna.
Total and the other oil giants bidding next week are expected to secure similar contracts.
Total's hopes were buoyed last week when Iraqi President Jalal Talabani gave strong hints that the French would get development deals for Majnoun and West Qurna (Phase 2).
"We might favor a French bid whatever the figures," he told a meeting with France's influential MEDEF employers' association. "Don't fear this auction. … The figures aren't everything. We want to see Total work in our fields."
As for the Japanese, Deputy Oil Minister Ahmed al-Shamma said Wednesday that a proposal from a consortium led by Nippon Oil Corp. to develop the large Nasiriyah field was awaiting the approval of the Finance Ministry.
For some weeks the consortium has been edging closer to wrapping up the $8 billion engineering, procurement and construction deal for the southern oil field, which holds an estimated 4 billion barrels of crude.
Nippon, with partners oil explorer Inpex Corp. and engineering firm JGC Group, would build an oil refinery as part of the project.
That would be in addition to the new floating terminals and pipelines planned by Iraq's South Oil Co., which runs oil exports from the southern fields that contain two-thirds of the country's estimated 115 billion barrels of reserves.
Dhiya Jaafar, South's chief, said the facilities should be completed in the second half of 2011.
They are being built to handle the expected increase in production that is anticipated from the contracts being awarded to the foreign firms to upgrade and expand the long-neglected oil fields.
Iraqi oil exports, including the northern fields at Kirkuk, reached 1.86 million barrels per day in October, out of an overall production total of around 2.5 million barrels daily.
Oil Minister Hussain al-Shahristani wants to ramp up production to between 10 million and 12 million barrels a day within six years.
Iraqi officials say the expected production increases from West Qurna, Rumaila and Zubair alone should push national output to 7 million barrels a day within Shahristani's timeframe.
