Iraq extends bid submission deadline for exploration blocks

16 April 2018
Baghdad defers deadline to submit bids for 11 blocks by 10 days in response to request for more time from bidders

Iraq has extended the deadline for foreign exploration and production (E&P) companies to submit bids for its latest oil blocks licensing round to 25 April.

Iraq’s Oil Ministry had initially set 15 April as the bid submission deadline for exploration in 11 blocks – 10 onshore, on the country’s border with Iran and Kuwait, and one offshore in Gulf waters.

According to a statement from the ministry, ‘the postponement was made according to the request of the companies [bidders] to have more time to study the offers of the licensing round before the presentation at the determined date’.

MEED had reported that there was concern among E&P firms about the tight timeframe in which they were required to study the blocks on offer and prepare bids.

The ministry has revealed that 14 companies have purchased the data for the blocks on offer.

Exploration contracts for the blocks are expected to be awarded in June.

A ministry spokesperson said the terms of the service contracts have been revised after discussions with the bidders ‘in order to achieve the mutual benefits for the concerned parties’.

An Iraqi official has been previously quoted as saying that oil by-products from the companies’ revenues will be excluded from the new contracts. A linkage will be established between prevailing oil prices and payment, introducing a royalty element.

Foreign oil companies currently operating in Iraq receive remuneration from the government linked to production increases. It includes crude oil and oil by-products such as liquefied petroleum gas and dry gas.

Iraq decided to change the contract frameworks with foreign oil companies after a global supply glut caused oil prices to crash in 2014, affecting the ability of the Iraqi government to afford such payments.

Over the past decade, foreign oil companies such as US-based Exxon Mobil, the UK's BP, France's Total, Italy's Eni, Russia's Lukoil, and the UK/Netherlands' Royal Dutch Shell, assisted Iraq in boosting its output by 2.5 million barrels a day (b/d) to almost 4.7 million b/d.

Unlike the federal government of Iraq, the Kurdistan Regional Government (KRG) produces oil and gas from the fields under its control in a production-shared model, which tends to be more profitable to oil companies.

Baghdad, in its new contracts, will also push companies to put an end to gas flaring from oilfields in the coming years. The Iraqi government aims to stop gas flaring by the end of 2021, which amounts to almost $2.5bn in lost revenue for Baghdad, a sum that could fulfill most of the needs for the gas-based power generation, according to the World Bank.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.