Baghdad is on the verge of awarding a major contract to help it plan the overhaul of the country’s energy industry, with US consultant Booz & Company the frontrunner to win the deal.
The project, known as the Integrated National Energy Strategy Technical Assistance (Inesta) scheme, will be a major step towards creating long-term plans for the development of the country’s oil and gas, power, and general energy sectors, sources with knowledge of the project tell MEED.
The estimated $5m study is being paid for by the Washington-headquartered World Bank, which also helped Baghdad tender the consultancy deal.
“This is a hugely important contract,” says a senior executive at one international oil company who has held talks with Baghdad over the deal. “It really is a major project.”
A number of international consultants including the US’ McKinsey & Company and PFC Energy bid for the deal in January, but Booz emerged as the frontrunner to win the contract during the week ending 18 February.
A senior source in Baghdad confirms that the company is favourite to win the contract, adding that a final decision was due to be made on 25 February.
The winning bidder will work with the government of Iraq on the creation of a detailed strategy for the entire energy sector, from oil and gas production to power generation and distribution. It will also help develop a structure for policy implementation, including the creation of new government institutions and the planning of major investments.
Key objectives of the contract include a review of the current makeup of the energy sector; an analysis of strategies used in other countries in a similar situation to Iraq; and an overview of the options for new regulations and the establishment of new government bodies.
The consultant will also conduct a discussion of the social issues associated with the development of the sector; review Baghdad’s current equipment and service industry capabilities; and draw up a list of priorities for capacity building.
It will also help with the creation and publication of an implementation plan, including an assessment of associated social and environmental issues.
In a December report, the World Bank said the consultant would primarily focus on the oil and gas sector, which would make up around 60 per cent of the project workload.
An assessment of the country’s power industry would make up 30 per cent of the job with general energy sector strategy accounting for the remaining 10 per cent.
Iraq holds some of the biggest oil and gas reserves in the world, but its energy industry was crippled from 1991 onwards by two wars which saw US-led troops targeting refineries and power stations, and UN sanctions which made development of the sector extremely difficult.
International and national oil companies have now pledged to boost the country’s oil production by 4.7 million barrels a day (b/d) by 2015 from current levels of around 2.3 million b/d and Baghdad wants to produce 12 million b/d by 2020.