Iraq’s Oil Ministry has invited prequalified international oil companies to bid for licensing contracts for three gas fields in the country. Of the 44 international companies prequalified for the first and second bid rounds, only 15 have been invited to participate in the third round.
Oil Minister Hussein al-Shahristani officially launched Iraq’s third licensing round on 6 May confirming the list of gas fields and setting a 1 September date for the auction.
On offer are the 2.1 trillion cubic feet (cf) Akkas field, the 3.3 trillion cf Mansouriya field and the 0.1 trillion cf Siba gas field.
Two of the three fields on offer, Akkas and Mansuriyah, were included in the first bid round in June 2009. The Mansuriyah field in the western desert received no bids, while the Akkas field close to the border with Syria received only one, from a consortium led by Italy’s Edison, which was rejected by the oil ministry. Following the auction, the oil ministry later announced it would develop the fields on its own (MEED 6:8:09).
Iraq needs to increase its gas supplies for electricity generation, according to the government. While the oil ministry prepares for the gas field auction, the government has finalised talks with UK-Dutch Shell Group over the stalled South Gas Project. The deal has now been placed before Iraq’s cabinet for ratification. A quick solution to the stalled scheme is not expected as the country’s political leaders are still engaged in the formation of a new government following the 7 March parliamentary elections.
Shell signed a heads-of-agreement deal with the oil ministry in September 2008, and was expected to form a joint venture with state-run South Gas Company (MEED 22:9:08).
Shell holds a 44 per cent stake in the South Gas Project and Japan’s Mitsubishi Corporation holds 5 per cent. South Oil Company holds the remaining 51 per cent.
The project, which aims to gather associated-gas in the Basra region that would typically be flared, has come under intense criticism over the breadth of coverage – almost 70 per cent of all Iraqi gas according to a expert – and accusations of a lack of transparency behind the award process.
Conflicting messages on the deal have come from the government with various ministers and spokesmen announcing the end or continuation of negotiations.