Wednesday was Day 1 of Iraq’s two-day auction for the rights to 12 new exploration fields, but the long-awaited and often-delayed event was widely considered a disappointment, with only two bids received and only one deal agreed.
The reason, say critics, is that Iraq is playing hardball on the terms offered to the 47 international exploration firms.
This can be a difficult judgement call for governments, with many regimes around the world accused of selling off their national resources too cheaply, sometimes in return for kickbacks.
Taking a very long-term view, Iraq has many large existing fields to develop, and could easily afford to leave any as-yet-undiscovered oil and gas in the ground until conditions improve and prices are more favourable.
But that’s not the plan, with the Oil Ministry reportedly intending to grant the fields to Iraqi companies if they are not allocated on Thursday.
If that is the case, we will be very interested to see what terms and business models are agreed with these locally-based companies.