IDC’s Success Story

Iraq Drilling Co (IDC) is back in force and seems on the way to turn itself into a success story by teaming up with the big ones. After the short setback following the failed joint venture with Mesopotamia Petroleum, it has finally found the magic formula to play the leading role in the gigantic drilling effort that will take place across the Iraqi oil fields over the next few years.

In the first drilling tender launched earlier this year for drilling in Rumaila oil field, IDC bid jointly with Schlumberger, the world’s largest oilfield services provider and together they won a contract to drill 21 new wells and carry out workover jobs on 23 wells. IDC will supply three of its…

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Watering the Oil Fields

Iraq is set to witness a few firsts when it comes to how oil fields have been and are being developed around the world. After all, at no time in the history of the industry has so many oil fields of this size been developed all at once in such a short time span. One of the major firsts will no doubt be the Common Seawater Supply Facility (CSSF) which will aim to process up to 15 million barrels per day of raw seawater from the Mideast Gulf in order to provide some 12 million b/d of treated water to be injected in fields in southern Iraq as they are developed. That makes it the biggest such project in the…

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The State Partners

Iraq’s oil ministry did well in choosing different companies to represent the state stake in the consortia awarded contracts to develop oil fields. Unlike the old days when the state oil marketing organization (Somo) was considered the de-facto state partner, including in five oil deals signed before the 2003 toppling of the previous regime (two production sharing contracts with CNPC and Lukoil and three exploration contracts with PetroVietnam, ONGC and Pertamina), different representatives now sit on the management committees of each field as holders of the 25% government share in each consortium.

Somo was the state partner on the BP-led consortia that signed the Rumaila deal. Missan Oil Co (MOC) represents the state on the consortia developing the Majnoon and Zubair…

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1st bid round . 2nd bid round . Badra . consortium . contracts . garraf . Gharraf . Halfaya . IDC . IOEC . JMC . Majnoon . MOC . Najmah . NOC . oil ministry . Qayarah . Rumaila . SOC . Somo . state partner . West Qurna . Zubair The View from Baghdad

The Real Winners

In retrospect, and despite what was considered at the time a ridiculously low fee, producing oil fields awarded to international oil companies in the first bid round turned out to be the most lucrative in terms of the service fee they will be paid. That’s excluding the three fields that will be producing less than 200,000 b/d (see table below). Even with the protracted negotiations over amendments to the final producing field technical service contract (PFTSC) with both Eni and Exxon Mobil, the final contractual terms are admittedly balanced and fair to both sides.

There were 18 amendments that were proposed by the cabinet’s legal advisor Fadhel Mohammed Jawad, to both Zubair and West Qurna – phase 1 contracts. The fact that…

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1st bid round . 2nd bid round . amendments . Badra . BP . CNPC . costs . DPSC . ENI . Exxon Mobil . Fadhel Mohammed Jawad . fees . Gazprom . Gharraf . Halfaya . legal advisor . Lukoil . Majnoon . Najmah . oil ministry . pcld . Petronas . PFTSC . Qayarah . results . Rumaila . service contracts . Shahristani . Shell . SOC . Sonangol . supplementary costs . West Qurna . Zubair The View from Baghdad