Iraq is moving ahead slowly with its fourth oil and gas bid round in two years. International oil companies have been invited to pre-qualify in May to bid for 12 exploration blocks across the country, although the auction has now been pushed back to January next year. The companies will be looking for gas primarily, but also for oil.
The country hardly needs to develop any more oil fields. Oil Minister, Abdulkarim al-Luaibi is already overseeing more than a dozen oil and gas fields under the development contracts awarded in the first three bid rounds. Through these contracts, he hopes to see production capacity lifted to more than 10 million barrels a day (b/d) from the current 2.7 million b/d.
But oil production is not the point. Iraq must replace its reserves as production is rapidly ramped up. In October, the Oil Ministry announced an increase in its estimate of its crude oil reserves to 143 billion barrels, up from 115 billion barrels. As more exploratory wells are drilled and data gathered, this figure is likely to increase again.
There is also the issue of gas. Iraq has so far been unable to monetise this key resource and continues its wasteful practise of flaring associated-gas. Although some way down the road any natural gas discoveries are likely to be fast-tracked and brought on-stream as quickly as possible to respond to Iraq’s increasing frustration over a lack of power.
While Basra has held the limelight in previous bid rounds, the exploration round will focus on remote and often restive regions, such as the Western Desert. Any finds will be an opportunity to attract investment and a larger share of Iraq’s hydrocarbon wealth.