Iraq’s Oil Ministry has revised its service agreements ahead of its planned oil and gas exploration licensing round, which will be held for January 2012.
The main change in the new contract has been to the remuneration fee formula, which has been altered to encourage developers to minimise costs. Twelve oil and gas exploration blocks are up for auction, with 46 international oil companies prequalified to bid.
The details of the initial draft contract were revealed to prequalified firms at the Oil Ministry’s roadshow in Amman, according to Abdul-Mahdy al-Ameedi, head of the ministry’s petroleum contracts and licensing directorate.
Remuneration fees are expected to be higher than those previously offered, but will only be paid after deducting the cost of subcontracts from total production. The move is aimed at reducing the cost of subcontracts, which the Oil Ministry says has been inflated by oil companies that signed licences in 2009-10.
Contract lengths have also been extended to a maximum of 30 years, including four years of exploration and 20 years of development.
The model contract and final tender protocol will be released on 15 December, after the Oil Ministry holds technical and contractual workshops with bidders in November. The auction will take place on 25-26 January 2012 (MEED 29:4:11).