Baghdad to award short-term deals to boost oil production

16 October 2009

The Iraqi government plans to award a series of short-term contracts to increase production at five of its oil fields

According to an official at the Oil Ministry, it is seeking to award engineering, procurement and construction (EPC) service deals of no more than three years’ duration for the fields, rather than auction off 20-year concessions to develop the sites as it has for two recent deals.

The fields are Nasiriyah, Nahr bin Umar, East Baghdad, Tuba and Rafidain. Baghdad has held talks with contractors over the terms and conditions of the deals since the first quarter of this year.

Japanese firms Nippon Oil Corporation, Inpex and JGC Corporation expect their consortium will win the first EPC deal to develop Nasiriyah by the end of this year.

The Oil Ministry plans to award all four remaining EPC deals in 2010, starting with the giant Nahr bin Umar oil field. The ministry has received preliminary technical offers from Norway’s Statoil-Hydro and a consortium of France’s Total and the US’ Chevron Corporation to develop the field.

It then hopes to award an EPC deal to develop the East Baghdad field, for which Japan’s Japex Corporation is the front runner. Finally, the government will enter talks over the Tuba and Rafidain fields in the south of the country.

Baghdad’s change of focus comes despite its recent success in awarding one 20-year development deal and lining up a consortium for a second long-term deal.

On 13 October, Iraq awarded a 20-year deal to develop the Zubair field to a consortium of Italy’s Eni, South Korea’s Kogas and US oil major Occidental Petroleum. The source says the ministry expects to award the second deal – to develop the West Qurna oil field – to Russia’s Lukoil and the US’ Conoco-Phillips by the end of this year.

Zubair and West Qurna are both super-giant oil fields.

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