IOCs and the Future of Basrah

I believe the governor’s views are quite right, very positive and give assurances to the IOCs who signed contracts to develop oil fields in the Basrah governorate. The message is clear to the IOCs to engage with the local community and make an effort to reach out. It’s true that, and in spite of the monopolistic and concessionary nature of the old contracts IOCs had with Iraq, Basrah people did benefit from work opportunities, housing and other initiatives such as social and sports clubs …etc. One has to admit here that the priority is employment with Basrah population exceeding two million and high unemployment rate. The city has been deprived of work opportunities for decades though there are skilled and…

1st bid round . 2nd bid round . Basrah . BP . Exxon Mobil . governor . Khor al-Zubair . Lukoil . Majnoon . oil fields . oil ministry . Rumaila . Shell . Sheltag Abboud . West Qurna . Zubair The Forum

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

2nd Bid Round: The Results – 11 December 2009

- MAJNOON OIL FIELD:

THE BIDDERS:

1. Royal Dutch Shell (60%) – Petronas (40%)

FEE BID: $1.39    PLATEAU: 1,800,000 b/d     SCORE:100

2. Total (57%) – CNPC (43%)

FEE BID $1.75    PLATEAU: 1,405,000 b/d       SCORE: 79

Ministry Max Remuneration Fee: not revealed

Majnoon contract awarded to SHELL

- HALFAYA OIL FIELD:

THE BIDDERS:

1. ONGC (50%) – TPAO (30%) Oil India (20%)

FEE BID: $1.76      PLATEAU: 550,000     SCORE: 82

2. ENI (30%) Sonangol (15%) CNOOC (15%) Kogas (20%) Oxy (20%)

FEE BID $12.90     PLATEAU: 400,000     SCORE 22

3. STATOIL (50%) Lukoil (50%)

FEE BID $1.53       PLATEAU 600,000       SCORE 93

4. CNPC (50%) Petronas (25%) Total (25%)

FEE BID 1.40          PLATEAU 535,000       SCORE…

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2nd bid round . Bid fee . CNOOC . CNPC . East Baghdad . eastern fields . ENI . Halfaya . Kogas . Lukoil . Majnoon . Oil India . ONGC . Oxy . Petronas . plateau production . Qaiyarah . score . Shell . Sonangol . Statoil . Total . TPAO The Forum

First Bid Round Revisited

Lukoil’s Vagit Alekperov said his company has now changed its mind on West Qurna -1 oil field following a detailed analysis and is now ready to follow in the footsteps of BP/CNPC and sign up to develop the field for a $1.9/bbl remuneration fee, the maximum fee the Iraqi oil ministry was willing to offer oil companies when the first licensing round bids were opened on June 30.

Lukoil is not the only company redoing the sums and concluding that if $2/bbl remuneration fee for Rumaila field development works for the BP/ CNPC consortium, then why not for West Qurna. Other international oil companies are also reassessing the opportunities and balancing risk against return concerning the $2/bbl offered by Iraq for…

1st bid round . 2nd bid round . Alekperov . BP . CNPC . depletion rate . istanbul . Kirkuk . licensing round . Lukoil . Majnoon . maximum remuneration fee . production plateau . production to reserve ratio . Rumaila . Shahristani . west qurna-1 . West Qurna-2 . Zubair The View from Baghdad