Iraq has awarded two of the largest fields in its second licensing round to international oil companies which have pledged to increase oil production by 2.3 million barrels a day (b/d) by 2016.
The UK/Dutch Shell Group and Malaysia’s Petronas have secured a contract to develop the Majnoon field, 60 kilometres northwest of Basra.
The consortium pledged to boost output to 1.8 million b/d from current production of 45,000 b/d in return for a fee of $1.39, for every additional barrel they produce. Shell will operate the field with a 60 per cent stake. Petronas will hold 40 per cent and will help Shell to develop the field.
France’s Total and China National Petroleum Corporation (CNPC) also bid for Majnoon, promising to increase production to 1.4 million b/d, for a fee of $1.75 for each additional barrel produced.
Total and CNPC were successful in winning the rights to develop the Halfaya field in a separate consortium, with Petronas as a minority shareholder.
The consortium aims to increase production at the field, in the Missan governorate north of Basra, from 3,000 b/d currently to 535,000 b/d for a fee of $1.40 for every additional barrel produced. CNPC will operate the field with a 50 per cent stake. Total and Petronas will split the remaining equity equally.
Three other groups also bid for the Halfaya field.
However, the Iraqis received no bids for either the East Baghdad or Eastern Fields contracts.
Angola’s Sonangol submitted a fee of $12.50 for each additional barrel for the Qaiyarah field near Kirkuk, which was well above the maximum fee of $5 a barrel that the oil ministry said it would pay.
Iraq will hold a second day of bidding on 12 December when it auctions a further five fields, including the giant West Qurna-2 field, to international oil companies.
Baghdad only awarded a single oil field in its first licensing round in June, although it has since negotiated contracts for several other fields.
Iraq currently produces 2.5 million b/d of oil. It hopes to increase production to 6 million b/d by 2017.