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Iraq's three mobile operators are unlikely to conduct initial public offerings until the middle of next year and will not be penalised for missing an August 2011 deadline, the country's regulator said on Thursday, according to a report from Reuters.

Under the terms of the 15-year, $1.25-billion, operating licences they secured in 2007, Korek, Zain and Asiacell were supposed to sell 25 percent of their shares via an IPO by the end of August, but all three had missed the deadline saying the fledgling Iraqi bourse was ill prepared for these listings.

"To put these shares in the market, it takes time," Ahmed Alomary, Commissioner of Iraq's Communications and Media Commission, told reporters on the sidelines of a conference in Dubai.

Iraq's bourse has a market capitalisation of around $4 billion, and average daily trading in May was less than $2 million, prompting analysts to question whether the market is ready for the telecoms IPOs.

The three operators must first change from private companies to shareholding companies, a process that takes at least a month.

"One of the operators has provided a timeframe for the whole transition - it will be 260 (working) days," said Alomary, without naming the firm.

According to its chief executive, Korek Telecom is unlikely to launch an initial public offering this year.

Iraq is sticking with plans to auction a fourth mobile licence by the end of 2011, Communications Minister Mohammed Allawi told Reuters on Thursday.

(Source: Reuters)

Who controls the Iraqi oil fields that could make the nation one of the richest in the region? As political rivals squabble, that question could be one that topples the precariously balanced Iraqi government, according to this report from Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraq is officially the owner of the third largest oil reserves in the world and in August, it produced almost 2.2 million barrels a day, according to data provided by the Iraqi oil ministry. Those numbers are expected to continue to rise and Iraq could become one of the biggest investment areas for energy companies from all around the world.

But there is one big obstacle: the federal oil and gas law. Efforts to come up with legislation that is acceptable to all parties to a hydrocarbons deal inside Iraq have so far failed. And with developments this month, the issue looks like it could cause further trouble inside the fledgling democracy, with its precariously balanced ruling coalition.

The first draft of a federal oil and gas law was formulated by the Iraqi cabinet in 2007. Although it was the subject of much debate and was never passed by the Iraqi parliament, that version did give regional powers, such as those in the semi-autonomous state of Iraqi Kurdistan, at least partial authority over the oil reserves in their own area.

However in early September, Iraqi Prime Minister Nouri al-Maliki approved a new formulation of the same law and again, has sent it to parliament for approval.

Several important, and potentially even more controversial, things changed in this version.

By Ahmed Mousa Jiyad. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The international Journal of Contemporary Iraqi Studies-IJCIS has just released it is special issue on “Oil in Iraq”.

Many prominent Iraqi and non-Iraqi scholars have contributed articles to this timely and important volume, which makes it an invaluable scholarly work to understanding the complexities of oil in Iraq.

The following is my introduction, as the guest editor of this special issue of IJCIS.

Three unprecedented and interrelated developments have taken place in the Iraqi petroleum sector since the 2003 invasion. Wide openness of all petroleum sub-sectors (upstream, midstream and downstream) for foreign investment; offering, through three bid rounds, the most prized oil and gas fields for an international auction resulting in contracting almost 60 per cent of the country’s proven petroleum reserves for at least 20–25 years; and finally, these contracts would expand oil production and export capacities by fivefold in less than seven years.

Such an opening could lend support to the notion that, ‘the invasion was all about oil’ and provoke legitimate questions on why a country, with incomplete sovereignty due to the presence of occupying forces and still under Chapter Seven of the UN Charter takes such unwarranted drastic actions; how it is going to manage such a massive undertaking; and what is it going to do with the influx of huge revenues, and mitigate the consequences.

Though many, and for variety of convincing reasons and powerful arguments, doubt very much the feasibility of attaining such production targets at such a fast pace under structural weaknesses and prevailing conditions in the country. However, even with half-success, this would, by all standards, be very significant indeed, and with far-reaching implications domestically, regionally and internationally.

Expanding production (and by logic, intentions and necessity) and export capacities would lead to a tremendous augmentation of the economic rent (or windfall) for the state due to expected higher oil prices, with or without the Peak Oil argument, in relation to the comparatively low production (or extraction) cost.

Domestically, such a huge influx of foreign exchange is bound to face three interrelated and theoretically enforcing hurdles: absorptive capacity limitations, Dutch disease and resource curse attacks. Each has its own dynamics and requires policy options to mitigate consequences. Thus, Iraq needs to devise sound development policy and modalities to mange effectively the plenty generated from its depleting natural resources.

In addition to the above macroeconomics structural difficulties, weak institutional capacities, ambiguous legal and constitutional frameworks, lack of suitable infrastructural facilities and fragmented political climate, all represent formidable domestic determinants.

The Iraqi Oil Ministry has announced amendments to the contracts for the fourth oil licensing round after complaints from participating companies, reports AKnews.

The Ministry's Director of Contracts and Licenses, Abdulmahdi al-Amidi [Abdul-Mahdy al-Ameedi], said that a final formula will be issued before the beginning of the negotiations in November.

"These contracts purchased by the companies are not final," Amadi said.

The Ministry has already revised the fee structure for these contracts.

The Iraqi Oil Ministry had presented initial contracts for 12 oil and gas sites in Iraq to 46 foreign companies intending to participate in the bidding.

(Source: AKnews)

According to a document obtained by Reuters from Iraq's oil ministry, Iraq's Zubair oilfield will reach its peak output target of 1.2 million barrels per day (bpd) by the start of 2017.

The Zubair consortium plans to invest around $18 billion to upgrade the southern Iraqi field, spending $2.8 billion in 2011, $4.9 billion in 2012, $3.9 billion in 2013 and nearly the same in 2014, and $3.1 billion in 2015

Italian oil company Eni is the lead partner with 32.81 percent, and Iraq's Missan Oil Company holding 25 percent, Occidental Petroleum Corp 23.44 percent, and South Korea's KOGAS 18.75 percent.

The document also showed output projections for Zubair were 300,000 bpd at end-2011, 400,000 bpd at the start of 2013, 600,000 bpd at the start of 2014, 800,000 bpd in 2015 and 1 million bpd by the start of 2016.

The group won the right to develop Zubair in 2009 following the country's first auction of oil contracts since the 2003 U.S.-led invasion. The field was not initially awarded in the auction, but a deal was reached in subsequent negotiations under which the group will be paid a remuneration fee of $2 a barrel.

(Source: Reuters)

Reuters reports that four international oil companies(IOCs)  have shown an interest in developing the Nassiriyah oilfield in Iraq.

A senior oil official said on Sunday that Iraq may hold a mini-auction for the largely undeveloped field, following a number of unsucessful attempts to reach agreement with foreign firms.

Talks with a Japanese group led by Nippon Oil, a unit of JX Holdings, reached a dead end over financing issues last year and Iraq said it would develop the field itself.

Then, earlier this year, a government official said Iraq planned to invite oil companies to bid on the field, listed as having reserves under 5 billion barrels.

Abdul-Mahdy al-Ameedi, head of the oil ministry's contracts and licensing directorate, said Nippon, ENI , Chevron and Repsol had submitted proposals, but added that Repsol was not qualified and only the other three would be invited to bid.

"If we would like to do so, we will hold a mini bidding round and we will ask companies to participate," Ameedi said at a meeting with oil companies in Amman, Jordan. "They would have to develop the field and a refinery with a capacity of 300,000 bpd (barrels per day)."

(Source: Reuters)

Iraq's fourth auction for exploration rights will offer international energy companies a revised remuneration fee formula designed to benefit bidders while encouraging them to minimise costs, according to Reuters.

Abdul-Mahdy al-Ameedi, head of the oil ministry's contracts and licensing directorate, told the oil ministry's roadshow in Amman, Jordan, that the ministry has made some alterations in the new service agreement from contracts signed with oil companies after the three previous bidding rounds in 2009 and 2010.

"There are not many differences from the previous contracts. But we recognised that there are some minor mistakes in the previous contracts, not substantial," he told Reuters. "So we were able to overcome this in our current contract."

One of the main changes was the way the remuneration fee is calculated in the new contract, Ameedi said.

"If the total production is 1 million barrels per day and the cost recovery is (the value of) 300,000 bpd, then we will deduct the 300,000 from the net production and the remainder is 700,000 bpd, so we will pay remuneration for the 700,000 only, not for the 1 million," Ameedi said.

"The remuneration will be higher so it is in our interest and I think it is in the interest of the contractor."

The calculation change is aimed at cutting the cost of subcontracts, which was inflated by some oil companies under the current deals signed with Iraq, Ameedi said.

"We will deduct the cost of subcontracts from the total production and the remaining production will pay remuneration for it," he told reporters on the sidelines of the roadshow.

"If that share of production is less, remuneration of the contract will be affected negatively, and if it is high, they will get more remuneration," he said.

"It coincides with the idea of production sharing in this sense only: That there would be 'cost oil' but there would not be 'profit oil'."

The contract length will be a maximum of 30 years including four years for exploration and 20 for development, Ameedi said.

The model contract was not final and could be changed.

Any new oil reserves discovered will be used to maintain and boost reserves, while companies who make gas discoveries will be allowed to produce it.

"We may or may not develop and produce (from) the oilfields, if any," Ameedi said.

The holding period will be up to seven years for oil discoveries.

46 pre-qualified oil and gas explorers showed for the 4th oil licensing roadshow in Amman.

More than 100 executives from oil majors such as ExxonMobil , Chevron, Total , BP and Lukoil attended the show, where Iraqi officials presented the service contract and licensing process for the auction, scheduled for Jan. 25-26.

"The remuneration fee is going to be much bigger, there is no question about that. But that does not necessarily automatically make it more economically interesting because the risks are high," an oil executive attending the workshop said.

"Access to the crude is far more important than the economics for some, which could make this fourth bidding round, most probably, a success."

(Source: Reuters)

Reuters reports that Iraq has approved six more energy companies to participate in its 4th energy auction, raising the number of pre-qualified bidders to 46.

"We have six companies that were not qualified first, but after reviewing their information, we asked them to submit further documents to support their position. We have decided to qualify them after they offered the required documents," Abdul-Mahdy al-Ameedi, director of the oil ministry's contracts and licensing directorate, told the agency.

Ameedi said the six new companies were: Dubai-based oil explorer Dragon Oil Plc , Glencore International Plc , Gulfsands Petroleum Plc , China's Zhenhua Oil, Vitol Holding BV and Romania's Romgaz.

The other 40 companies are listed here.

The Oil Ministry has excluded U.S oil company Hess Corp because the company signed deals with Iraq's northern Kurdish region.

The auction for 12 new exploration blocs, scheduled for late January, is expected to add 29 trillion cubic feet of gas and 10 billion barrels of oil to Iraqi reserves. Iraq will meet with executives from the energy companies at a roadshow on 11th September in Amman, Jordan and present a data package with initial tender protocols to the companies on 12th Sept.

(Source: Reuters)

Reuters reports that Iraq's Oil Ministry has excluded American oil firm Hess Corp from competing in its 4th energy auction because the company signed deals with Iraq's northern Kurdish region.

As we reported last week, Hess was one of the 41 companies pre-qualified for the auctions, but it was not included on a new list of 40 qualified firms issued on Monday.

"We decided to remove Hess from the pre-qualified companies after it signed two deals in the Kurdish region," Abdul-Mahdy al-Ameedi, director of the oil ministry's contracts and licensing directorate, told Reuters.

"The Oil Ministry is committed to not dealing with any oil company that signs oil contracts with the Kurdish regional government without the approval of the central government and the Iraqi Oil Ministry," he said.

In late July Hess signed production sharing contracts with the KRG, in partnership with Petroceltic International Plc, for the Dinarta and Shakrok exploration blocks.

Iraq's 4th bidding round for 12 new exploration blocs, scheduled for late January, is expected to add 29 trillion cubic feet of gas and 10 billion barrels of oil to Iraqi reserves. The auction will focus mainly on gas exploration.

Iraq will meet with executives from 40 oil and gas companies at a roadshow on Sept. 11 in Amman, Jordan and present a data package with initial tender protocols to the companies on Sept. 12.

(Source: Reuters)

Iraq's oil ministry said on Tuesday that it would unveil model contracts for oil and gas exploration blocks to pre-qualified international companies on 11th September, kicking off a process that will culminate with the award of contracts in January, according to a report from Platts.

Iraq launched its first post-war exploration round in April, offering 12 blocks in various parts of the country as part of a bid to raise oil reserves by an estimated 10 billion barrels and gas by 29 trillion cubic feet. But the oil ministry has not given details about the type of contracts it plans to offer.

The oil ministry statement quoted Abdul Mahdi al-Ameedi, director general of the ministry's Petroleum Contracts and Licensing Directorate (PCLD), as saying that it would present the draft contract at the meeting in Amman, Jordan, on September 11. Data packages and technical information on the blocks along with tender protocols will be available a day later.

Interested companies will have six weeks to submit recommendations and requests for clarification on the documents before a November roadshow to discuss the technical and contractual details, after which a final contract would be drafted, he said.

The fourth bidding round will be held in January 2012, when the contracts will be awarded.

The oil ministry has qualified 41 companies for the exploration round, including several of the multinational companies that have already been awarded long-term service contracts for development of oil and gas fields in three previous auctions held in 2009 and 2010. Out of the 41 companies, 30 qualified as operators and 11 as non-operators.

Ameedi said that only companies qualified as operators would be allowed to submit bids while non-operators would have to form a partnership with or join a consortium headed by a company qualified for operatorship.

(Source: Platts)