Iraq is planning to announce in December a second round of bidding for long-term contracts to develop oil fields. It also extended the deadline for bids under its first round to next March. "If all goes well, contracts from both rounds could be awarded" as early as next summer, said Samuel Ciszuk, the business intelligence firm Global Insight's Middle East energy analyst. The close timing of the competitions suggests Baghdad is trying to attract as wide a range of foreign participants to its oil sector as possible, offsetting the deterrent effect of its oil ministry's apparent decision to favour fee-for-service contracts over production-sharing agreements. That runs against international oil companies' strong preference for the latter due to the potential for long-term profits from production-sharing deals, while appeasing increasingly vociferous political calls within Iraq for oil industry nationalisation.
Last month, in his strongest statement on the issue to date, Hussein al Shahristani, the Iraqi oil minister, told al Jazeerah television that his ministry would never sign production sharing contracts with international companies. In total, the oil fields under consideration under the second bidding round contain more than 40 billion barrels of reserves with production potential of three million barrels per day (bd), industry sources said.
tcarlisle@thenational.ae