MIDDLE EAST: Iraq. The International Oil Companies qualify for bid round

Iraq's oil ministry has qualified thirty five international oil companies (IOCs) to bid for its first post-war licensing round, which it hopes to launch in May 2008.

The list of IOCs, compiled by the oil ministry's Petroleum Contracts and Licensing Directorate and obtained by Platts, includes US and European oil and gas majors as well as Russian, Chinese, Korean and Japanese companies. More than 120 international companies submitted expressions of interest and the ministry document says some would be considered for future licensing awards.

"The Petroleum Contracts and Licensing Directorate will continue updating the process of qualifying companies, especially those that did not pass, by updating their information with the view to allowing as many as possible of the IOCs to participate in the next Licensing Rounds (following the First Round)," the document states.

The list excludes companies such as Austrian OMV and Norway's DNO, which angered Baghdad by concluding production-sharing agreements with the Kurdistan Regional Government on the basis of a hydrocarbon law approved by the Kurdish parliament without central government approval.

The Iraqi oil ministry in Baghdad decided to forge ahead with the further development of Iraq's oil fields without waiting for a federal hydrocarbon law, which has failed to win the approval of all three main sectarian groups in Iraq, the Shiites, Sunnis and Kurds.

Iraq's oil reserves, estimated at 115 billion barrels, are second only to Saudi Arabia's. But much of the country remains unexplored and its producing fields are suffering from a lack of investment as a result of decades of war and UN sanctions.

Iraq's oil production averaged 2.181 million b/d in 2007, oil ministry figures obtained by Platts showed. This is below the average 2.8 million b/d achieved in the final three months before the US-led war of 2003 and far below the country's potential.

The Iraqi oil ministry is negotiating separately with foreign oil companies on short-term technical service agreements as a stop-gap measure to boost production capacity from major producing fields.

It had hoped to sign agreements with multinationals in April but the talks appear to have stalled as the oil majors sought to link the Technical Support Contracts (TSCs) to longer-term contracts.

Source: Platts|