Iraq signs first exploration deal

18 July 2012

Pakistan Petroleum to explore Iraq’s Block 8 for oil and gas

Iraq’s Oil Ministry has signed its first oil and gas exploration deal following its fourth licensing round held at the end of May.

The agreement was signed on 16 July with Pakistan Petroleum Limited for the 6,000-square-kilometre Block 8 in the eastern Diyala and Wasit provinces, according to an Oil Ministry statement. 

The government also plans to sign an agreement with a group led by Kuwait Energy for Block 9. Kuwait Energy will be the operator of the project with a 40 per cent stake, along with Turkiye Petrolleri and UK-listed Dragon Oil with 30 per cent each.

Another deal, with Russia’s Lukoil and Japan’s Inpex Corporation, will also be signed for Block 10 in the south of Iraq. Lukoil will be the operator with a 60 per cent stake. The company is already developing the West Qurna Phase-2 oil field in the Basra province.

A fourth deal was agreed with Russia’s Bashneft and the UK’s Premier Oil covering Block 12 in the Muthana and Najaf provinces in southern Iraq. The block was awarded in late June, almost a month after the auction was held.

Previous licensing rounds were for producing or undeveloped fields, the latest contracts are intended to discover new hydrocarbons reserves.

Bashneft and Vietnam’s PetroVietnam had been part of a consortium led by Premier Oil in the May auction. The group rejected the government’s proposed fee of $5 for each barrel of oil equivalent, bidding as much as $9.85 a barrel. A separate agreement was reached with Bashneft at the end of June after it accepted the $5 fee.

Iraq offered 12 oil and gas exploration blocks for auction, but eight received no bids at all, a reflection of the perceived risks and tough terms demanded by the government.

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