Nearly a week has passed since the finalisation of Iraq’s fourth round of oil licences, this time relating to oil and gas exploration blocks.
In the meantime, the debate has rumbled on regarding the results of the auction, with some regarding it as a success and others as a failure.
Among the professionals, the consensus is very much that the process was a disappointment as it failed to secure exploration agreements for nine of the twelve blocks on offer:
“The Iraqis are working with a service contract model that is not conducive with exploration … It works with a discovered resource basis, it works with proven reserves.”
— Alex Munton, analyst at Wood Mackenzie.
“The drawbacks were the conditions, as they were only pure service contracts, so they did not have upside potential if they found a big field.”
— Manouchehr Takin, analyst at the Centre for Global Energy Studies.
“It was not a success because the main aim of Bid Round Four was to find gas and develop it … Until you drill, and make a discovery and you appraise that discovery, and until it is declared commercial, you cannot tell how much you want to be paid for that, to make the project feasible … you cannot monetise the discovery because you will only start receiving remuneration once you start producing, and you cannot produce if this infrastructure is not ready.”
— Ruba Husari, of Iraq Oil Forum.
Against this we have the comments of Abdul Mahdi Al Ameedi, director of the oil ministry’s Petroleum Contracts and Licensing Directorate (PCLD), which ran the auction:
“We believe the contracts serve the interests of the companies and Iraq. But they have a different view … With the three contracts today, there are 18 contracts ongoing across the country — this is a huge task for the country.”
So which is it?