Iraq has allowed only five oil field services companies to participate in increasing production on the work on the country’s existing hydrocarbon fields.
A source familiar with the Iraq market tells MEED that the ‘big four’ US-based oilfield services companies of the Weatherford, Baker Hughes, Halliburton and US-based Schlumberger, as well as Iraq’s Oil Serv are being allowed to bid for at present.
“At the moment it’s only the big four and Oil Serv,” the source says. “Oil Serv is not capable of providing all of the services that the others can, but is still being allowed to bid for work because it is a local company.
“This is a problem for other companies because if you are not aligned to one of the big four or Oil Serv then you simply have not got access to market at the moment. And Iraq is a big market,” he adds.
At present, the international oil companies (IOCs) are under pressure to increase production at Iraq’s producing oil fields. To fast-track the process the IOCs are subcontracting large tranches of work to the five oil field services companies working in the country.
“The IOCs are just managing the risk at the moment and seem happy to push large chunks of work towards the [oil field] services companies,” the source says. “This means the services companies are taking on an awful lot of risk in Iraq, but this is the chance they are taking to get fully established in the market.”
The increase in activity in Iraq is a significant step in persuading outside interests that the Iraq government is serious about increasing its hydrocarbon production. Many detractors have said that Iraq could turn out to be like other countries whose predicted boom never materialised, like Libya.
“What is definite is that the Iraq market is real,” the source says. “In Iraq the contracts are real and the scope of work is real. There is a lot of effort going in and there is a lot money being spent on infrastructure by the oi lfield services industry as it gears up for a long-term deployment.”
Another source from one of the big four oil field services companies confirms that only five companies are bidding for work in Iraq at present, but states that this will change.
“The IOCs will revert back to their normal practices very soon, maybe 12 months” he says. “After this first phase of work has been allocated then the market will open up and everyone else will be able to bid if they are technically able to do so.”