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Iraq has reportedly made "favourable" changes to some of the terms of the 20-year technical service contracts offered under the 4th energy licensing round.

International companies have been invited to compete for the rights to explore for oil and gas in 12 blocks to be auctioned in May.

According to Dow Jones, the most important change to the original model contract is that international firms would have 100% stake in the projects, up from the 75% stake initially proposed, with state-owned Iraqi companies holding none.

This would allow faster cost recovery as the companies will have bigger shares of the discovered and produced oil and gas output.

Oil and gas companies such as France's Total had expressed concern that the potential rewards of the contracts were not enough to compensate for the risks.

The Iraqi oil ministry is expected to meet its advisors, the U.K.-based Gaffney, Cline & Associates, in Istanbul in March to finalize the draft model contract before handing it to companies in April.

An unidentified source said the ministry has changed a provision that allowed the Iraq ministry to postpone development of fields, to a period of up to seven years from the date of the announcement of commercial discovery, which was mentioned in the previous model contract and was one the terms disliked by potential bidders.

"In case of oil discovery and the Iraqi government decides to put on hold development of the field, contractors are liable to reimburse costs of appraisal and exploration plus interest at Libor +3% during the years that the development is on hold," the source said.

In the previous draft contract, contractors were not liable for such interests.

"For special costs which include de-mining, building roads, etc, contractors are liable to receive interest at Libor +5% during the years that development of fields is on hold," he added.

Nine companies are believed to have dropped out of the fourth bidding round but Iraq expected a good number of bids from the 37 firms still in the race, oil ministry officials had previously said.

(Source: Dow Jones)

ExxonMobil is to be excluded from Iraq's fourth licensing auction because of its deals in Iraqi Kurdistan.

"The Iraqi government has decided that Exxon won't be allowed to participate in the next oil and gas bidding round," Faisal Abdullah, a spokesman for Iraq's Deputy Prime Minster for Energy, Hussein al-Shahristani, said on Monday.

"We are still waiting for Exxon to answer our letters in which we warned that it has to choose between contracts in Kurdistan and those in southern Iraq," Mr. Abdullah said, adding that in light of Exxon's reply the Iraqi government would make a decision regarding its contract in the south.

"Exxon was informed about the Iraqi government position clearly and openly. They asked for some time, and we are waiting for their final answer to inform them of our final decision," Shahristani said.

Meanwhile, French oil giant Total has said that it will focus on opportunities in iraqi Kurdistan, as it does not regard the terms in the fourth round to be attractive.

(Source: Wall Street Journal, Bloomberg, Reuters)

Reuters reports that Iraq has allowed the privately-owned Korean firm SK Innovation to bid in its fourth energy auction, after the company sold its stake in the Bazian block in Kurdistan.

The stake was sold to the state-owned Korea National Oil Corporation (KNOC), which was already barred from participating due to its stakes in both Bazian and Sangaw North.

American oil firm Hess Corp was also excluded from bidding for the similar reasons.

The next licensing round has been repeatedly delayed and is currently expected to take place May 30-31.

(Source: Reuters)

Iraq has postponed its next energy licensing round by more than a month to May 30, a senior government official has said.

Speaking to Reuters on January 31, Abdul Mahdy al-Ameedi, the Oil Ministry’s Director-General, said the decision to move the date back had been made to allow potential bidders more time to study the contracts following a number of alterations by the department.

“We have made major changes and amendments on the initial contract that concern the economic and contractual terms, and the result was a new model contract,” he said.

“The changes and amendments on the exploration contract were mainly touching the pricing formula and profits of the companies, and how to determine their shares in the contract.”

The two-day round had been scheduled for April 11.

This was the second postponement, with the original auction date delayed last month after a number of requests from international oil companies (IOCs).

“The [existing] technical service contracts are very tight, [as] the Iraqis managed to squeeze companies quite heavily on the terms,” Sam Ciszuk, an analyst with KBC Energy Economics, told The National.

“IOCs were still moving forward with this because of potential future opportunities. Now it seems like those opportunities look fairly unattractive and the Iraqis have seen that they need to do something about that.”

More than 40 operators have qualified to take part in the round, which is expected to add 29 trillion cubic feet (812 bcm) of gas and 10 billion barrels of oil to Iraq’s reserves once exploration work begins.

These include major names such as BP, Shell, ExxonMobil, Lukoil, Total, China National Petroleum Corp (CNPC), Eni, Occidental Petroleum and Chevron.

In total, 12 exploration blocks are being made available, ranging in size from 5,500 to 9,000 square kilometres.

According to the ministry, seven of these are believed to contain natural gas, and five are thought to contain crude oil.

The blocks are located in the provinces of Basra, Najaf, Babil, Muthanna, Diwaniyah and Dhi Qar, south of Baghdad, Nineveh and Diyala to the north and Anbar to the west.

(Source: NewsBase)

NewsBase was founded in Edinburgh, Scotland, in 1995. Its weekly publications cover oil and gas, unconventional resources, LNG, power, petrochemicals, renewable energy and the carbon market. They provide high-level commentary and analysis on developments in Africa, Asia, Europe, the Middle East, Latin America, North America, Russia and the rest of the CIS.

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• Iraqiya ends parliamentary boycott, discusses ending cabinet boycott: Iraqiya fading as Iraq moves towards semi-stable majority government.
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• Iraq again delays 4th bid round auction: Bigger news is Exxon's re-entry onto list of bidders.

Headlines:

• Maliki advisor: oil law pushed to late 2012: Not necessarily surprising, but underlines that Kurds are building facts on ground, rather than relying on promises in Baghdad.
• Turkish official cancels Baghdad anti-terror trip: Minor indicator of larger trend - Erbil-Ankara entente at expense of Baghdad.

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• This month - Iraqiya ends cabinet boycott
• Next month - National Reconciliation Conference?

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There has been a welcome outbreak of pragmatism in Iraq in recent days.

While the fact that ExxonMobil will apparently be allowed to take part in the auction for the fourth round oil licences was not entirely unexpected, some will see it as a climb down on the part of Baghdad.

Others, such as Hess Corp, which was barred in September as a result of its contracts in Iraqi Kurdistan, will be left in little doubt that some oil companies are more equal than others.

On the party-political front, the return of Iraqiyya deputies to the parliament after several weeks of boycott has generally been seen as a positive, especially with budgets to be finalised.

But this should not lead to any complacency, as tensions between the factions still remain high.

What this all means for the long-awaited hydrocarbon law remains to be seen.

Iraq’s legislation doesn’t prevent oil companies from signing deals with the central government in Baghdad and with the KRG, as ExxonMobil has done, said Adnan al-Janabi, chairman of Iraq’s Oil and Energy Committee.

Speaking on the sidelines of an oil conference in London, he added, "there are no blacklists in parliament".

“With or without the [new hydrocarbon] law, I don’t think there is anything to constrain any company from operating anywhere in Iraq ... I don’t see any legality in announcing anyone as being blacklisted.”

He said he expected a first reading of the law in Iraq’s parliament next month.

As recently as September Baghdad reportedly excluded Hess Corp from participation in the fourth energy licensing round because of its contracts with the KRG.

(Sources: Bloomberg, Reuters)

Reuters reports that Iraq has delayed its 4th energy auction until the end of May.

"The oil ministry has decided to delay the 4th bidding round until May 30-31 to give more time for the interested companies to study the new amended contract," said Abdul-Mahdy al-Ameedi, director of the oil ministry's petroleum contracts and licensing directorate (PCLD).

The auction for the 12 new gas and oil exploration blocks has been delayed several times and had most recently been scheduled for 11-12th April.

(Source: Reuters)

Saudi Telecom (STC), the kingdom’s largest telephone company, has reportedly abandoned plans to bid for Iraq’s fourth mobile-phone licence after delays in awarding the contract.

Ghassan Hasbani, the company’s chief executive officer for international operations, told MEED that they will only be interested in the licence if they receive “concrete” information from the government.

(Sources: MEED, Bloomberg)

Central Bank of Iraq announced that it revaluated the Iraqi Dinar by 3.4% relative to the US Dollar, according to a report from Al Sumaria.

“During the daily auction of foreign currencies’ exchange, the Central Bank raised the value of Iraqi dinar against the dollar by 3.4%, or four Dinars,” the deputy governor of the bank told the news agency.

“The nominal rate of the Dinar doesn’t coincide with its purchasing power or with its real exchange rate against the Dollar,” he reportedly added. “The current account of Iraq payments has a surplus of 5 to 8% of GDP.”

(Source: Al Sumaria)