By Charles Kennedy for the OilPrice.com. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.
Iraq Moves to Profit-Sharing Terms in New Oil and Gas Contracts
Iraq seeks to attract more investment in its oil and gas industry by moving to profit-sharing contracts for new bid rounds from the technical service contracts it has awarded so far.
Unfortunately, this is totally inaccurate; the reporter seems unfamiliar with the contractual provisions governing these new deals and with the proceedings and outcomes of the related bidding round.
Very briefly,
First: what an IOC gets is only the “profitability share/percentage” it has submitted and accepted during the bidding event. The accepted “profitability shar/percentage” ranges between 6.2% and 29.16% for the discovered fields, and between 9.1% and 32% for the exploration blocks.
Second: the “profitability shar/percentage” applies to the net revenues after deducting the following: CAPEX, OPEX, Royalty (25%), Corporate Income Tax (35%), State-Partner Participating Interest (when applicable), R-F (when applicable) and other contractually nonrefundable obligations.
Moreover, there are provisions concerning cost recovery when oil price is below a specified level for a specified duration.
Ahmed Mousa Jiyad,
Development Consultancy & Research,
Norway.
22 August 2024