Bids in for new acreage on fresh contract terms

03 September 2004
Firms submitted bids for the exploration and development of 16 new oil blocks by the 1 September deadline. The blocks are the first to give automatic development rights to companies discovering oil. However, fresh doubts have been raised about the formula after the Majlis (parliament) rejected key parts of the proposed five-year development plan (FYDP) involving the oil sector (MEED 16:5:04).

Details about the bidders were unavailable as MEED went to press. In the run-up to bid submission, interest was said to be high, with more than 30 companies purchasing the field data. However, appetite was expected to be concentrated on fewer than five blocks, mainly those falling in the Zagros region, where prospectivity is understood to be significantly higher than elsewhere. National Iranian Oil Company (NIOC)has only asked for a minimum commitment in 11 of the blocks, whereas proposals for the remaining five can be made as study contracts only.

The minimum work contracts will include a commitment to shoot several hundred kilometres of seismic surveys and drill at least one exploration well. The companies must also submit a financial proposal including a rate of return.

The new FYDP had proposed changes to the constitutional regulations separating different upstream activities. This part of the plan was in August rejected by the Majlis and the Expediency Council. However, the status of the 16 new blocks remains unclear. Some oil sources say they are ringfenced from the constitutional discussions, but others suggest the acreage may have to be retendered under less attractive terms.

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