Custom Search

Iraq has awarded three of its established gas fields to foreign consortia in the third stage of an energy sell-off, as the country races to supply gas to local power plants and to export markets.

The three fields, in the south, centre and far west of Iraq were sold at or slightly below the price the oil ministry had wanted. They were taken by three groups that now have rights to develop about 10% of Iraq's proven gas reserves – around 300bn cubic metres.

The Iraqi government maintains overall control of the fields (As was the case with the two rounds of oil auctions conducted last year), and will pay each consortium a fee per barrel of oil equivalent.

The winners of the three fields have been announced as follows:

As Iraq reports the results of its recent gas auctions, the western province of Anbar is demanding more control over its potentially huge energy reserves, including the vast desert province’s Akkas reservoir.

According to Reuters, Anbar’s government last week rejected Baghdad’s plan for the auction due to the possibility that surplus gas will be exported.

Anbar’s opposition reflects deep discontent in Iraq’s Sunni heartland about the Shiite-led central government.

“We are against the approach of the central government and we will be against any contract between the central government and any company in the world,” Anbar Governor Qasim Abid said.

“We have our own vision of how to develop this [field].”

Mainly Sunni Anbar Province, controlled by Al-Qaeda in the years following the US-led ouster of Saddam Hussein, has been relatively quiet since tribal sheikhs joined forces with US troops to drive out Sunni Islamist militants in 2006 and 2007.

“We demand the Oil Ministry start exploration in Anbar because it’s unfair to develop and start production from oilfields in some provinces and ignore the billions of barrels of crude we have,” Anbar provincial council leader Jassim Mohammad said.

Anbar authorities warned they would refuse to provide security to foreign firms working in Akkas and would use all means, including “civil revolt,” if Baghdad ignores their demands.

Two weeks ago Iraq revised its estimates of oil reserves upwards, and this was immediately followed by Iran doing the same.

Now Reuters reports that a former oil minister has cast doubt on the numbers and on the motivation of the governments in issuing the figures, saying that the estimates are politically motivated and not justified by the evidence.

Mr Issam Al Chalabi, who served as Iraqi oil minister in the government of Mr Saddam Hussein, said Iraq's announcement last week that its proven oil reserves were 25% higher was 'unreliable'. Unfortunately the announcement that was made last week has not been substantiated by proper evidence; he said that it is not a reliable figure. This is not the way to handle the reserves. I think it was made for political reasons.

According to BP data, Iraq raised its total estimate of proven oil reserves to 143 billion barrels making it the holder of the world's third largest reserves after Saudi Arabia and Venezuela.

Iraqi officials said that the figures had been inflated by new estimates for the West Qurna and Zubair oilfields. But Mr Chalabi, who was Iraqi oil minister from 1987 to 1990, questioned the motivation for the new estimate.

Iraq's Ministry of Oil will auction off more gas fields on the 20th October 2010.

Xinhua was told by an official: "The bidding for the gas fields of Akkas in Iraq's western province of Anbar, Mansuriyah in eastern Diyala province and Siba in the southern province of Basra, will be held on October 20th." Ministry of Oil figures put the gas reserves of these fields at 11.23tn cubic feet. Currently, the country is producing just 1.5bn to 1.65bn cubic feet per day from proven reserves of 112tn.

This auction has been delayed from May, as firms needed time to look into the contracts, which could last 20 years, according to Nina News. There was a symposium last month so that firms could review the petroleum reserves of the fields.

Countries with interested companies include: France, India, Japan, Kuwait, Norway, Turkey, Russia, South Korea and the UK.

In the first two rounds of licensing, the Ministry of Oil signed 12 contracts, with the aim of increasing oil production to 12m barrels per day by 2017. Currently it produces about 2.5m barrels and exports about 2m.

Read more on oil and gas.

(Sources: Nina News, Xinhua)

Gas companies bidding to develop three Iraqi gas fields (Mansouriya, Akkas, and Siba) have had the terms of the deal clarified.

Reuters reports that the companies will not have to develop export facilities or pipelines, and that the Oil Ministry will pay the companies anyway so long as they have done the required work (even if Iraq fails to establish the national gas pipeline network in time to receive gas from the fields).

Abdul-Mahdy al-Ameedi, director general of the Iraqi Oil Ministry's Petroleum Contracts and Licensing Directorate, said: "There is no article in the contract that states that companies should build export infrastructure. The contractor digs wells then produces gas and builds infrastructure to process and manufacture the natural gas."

He also clarified that the companies will not be responsible for finding customers for the gas.

Click here for more details of the gas fields being auctioned.

(Source: Reuters)

Iraq, site of the world’s third-largest oil reserves, will hold a third bidding round for gas fields which will take place on October 1, an Oil Ministry official has confirmed, according to a report from Bloomberg.

“Definitive model contracts and final tender protocols will be ready on September 10, and the bidding process will be on October 1,” Abdul Mahdy al-Ameedi, deputy director general at Iraq’s Petroleum Contracts and Licensing Directorate, said in a telephone interview.

“We expect the round to be a success, it is now all going fine and everything will be on time,” al-Ameedi said.

It held two licensing rounds last year for oil and gas investments, and the third is specifically for the gas fields Akkas, Mansouriya and Siba, which Iraq is eager to develop for domestic power generation as well as export revenue.

You can find more details of the gas fields here.

(Source: Bloomberg)

Iraq will produce natural gas in two years, and will become one of the most important gas exporters to Europe, according to a report from Aswat al-Iraq.

As we recently reported, the fate of the three gas fields of Akkas, Mansouriya and Siba will be decided in October.

A source from the Iraqi Oil Ministry told Aswat al-Iraq news agency on Monday that factors such as production levels and costs will be considered in evaluating the bids.

“Iraq will use only about 50% of the produced gas to generate electricity, while the rest will be exported,” the source added.

(Source: Aswat al-Iraq)

Related articles:

• Gas Auction Postponed, but Terms Sweetened
• Iraq to Import Gas from Iran
• Iraq Confirms Transit Of Iranian Gas To Europe

Iraq is about to sweeten the contract terms for its third bidding round for its three prized natural gas fields, in an attempt to entice international companies to enter the auction, according to a report in the Wall Street Journal.

Unlike oil deals for the first and second bidding rounds for oil fields last year, winning companies won't need to pay 'signature bonuses' to the Iraqi government for the three natural gas fields on offer, a company executive said on the sidelines of two-day roadshow held by the Iraqi oil ministry in Istanbul.

International oil companies have had to pay bonuses of between $100 million and $500 million for deals they won in the first and second licensing auctions.

Iraq has also delayed the bidding by a month, with it now scheduled to be held Oct. 1, according to a reporf from Reuters.

Iraq's oil minister, Hussein al-Shahristani, said that one of the incentives for interested companies would be to allow them to export 50% of the natural gas produced from these fields. The Iraqi government will commit to purchasing half of the gas produced.

However, for some companies the export clause is a "negative condition," said another company official. Iraq hasn't the infrastructure to export gas from these fields, he said. So if half of the produced natural gas would be for exports, pipelines, reservoirs and gathering stations for exports would need to be built. Companies also need to look for customers for the Iraqi gas, he added.

Bloomberg reports that developers will be paid on the basis of barrels of oil equivalent, and will not be involved in setting the prices of gas exports.

The three natural gas fields to be bid for are:

• the Akkas field in Anbar province, near the Syrian border, which the oil ministry puts at 5.6 trillion-cubic feet of gas reserves.  Discovered in 1998, Akkas already has six wells, and Iraq is interested mainly in exporting associated gas produced there along with oil. There was a single bid for this field last year, from a consortium of five companies led by Italy’s Edison, but it was rejected;
• the Mansouriya field in Diyala, with 4.5 trillion-cubic feet of reserves. There were no bids for this last year. Discovered in 1979, this would be used first for domestic consumption, then later for exports, possibly supplying the proposed Nabucco pipeline; and,
• the Siba field, located in Basra province, with 1.13 trillion-cubic-feet of reserves and three existing wells. Discovered in 1968, Siba was withdrawn from a previous auction last year.

Fifteen international companies have so far shown interest in taking part in the third bidding round, reports the Wall Street Journal. Sabah Abdulkadhem al-Saaidi, head of the legal and commercial section at the oil ministry's petroleum contracts, also said that Aug. 20 would be the last date for companies to register for the natural gas bidding round.

The roadshow in Istanbul was reportedly attended by companies including Total of France, Italy's Edison, South Korea's KOGAS, India's Oil & Natural Gas Corp Japan Oil, Gas and Metals National Corp (JOGMEC), Itochu Corp, Russia's TNK-BP (half-owned by BP), Kuwait Energy, Turkey's state-run TPAO, and Kazakh KazMunaiGaz

It is believed that companies like Total, Royal Dutch Shell, and KOGAS are favoured because of their experience; the state energy companies may also take stakes of up to 25% in the projects, similar to the earlier oil contracts.

Despite huge gas reserves estimated at 112 trillion cubic feet—the fifth highest in the region, according to U.S. Energy Information Agency data—Iraq is producing 1.65 billion cubic feet a day of gas, some 700 million cubic feet a day of which is flared due to lack of infrastructure.

The goal is to fuel turbines ordered for new power stations with gas instead of crude, and the fields on offer could start commercial production in one to two years.

(Sources: Wall Street Journal, Reuters, Bloomberg)

Related articles:

• Baghdad Puts Gas Trio on Table
• Multi-billion Gas Deal with Shell and Mitsubishi
• Iraq Plans Power Boost After Gas Fields Auction

08 June 2010  - Upreamonline.com

Iraq plans to offer three gas fields with combined in-place resources of 25 trillion cubic feet of gas to international bidders “in the coming months”, according to Iraqi Oil Minister Hussain Shahristani.

The Akkas, Mansuriyah and Siba fields are expected to whet the appetite of major players including Shell, Total and Kogas – 15 companies have been shortlisted.

Iraq takes 99.3% of the revenues from its oil and gas field operations, Shahristani said in his keynote address to the Petronas-managed Asia Oil & Gas Conference.

The gas fields will be offered on 20-year technical service contracts, similar to those in the first two bidding rounds when oil acreages were tendered. Gas from the fields will be used for power generation and petrochemicals, Shahristani said.

Akkas and Mansuriyah had earlier been offered, the former attracting a sole bid from Edison while Mansuriyah failed to elicit any proposals. Siba had originally been included in Iraq’s second round last December but was later withdrawn.

Shahristani added that “no large-scale bid rounds were planned in the future, at least not in the near future”.

Doha, 10 May 2010 - Reuters

Iraq plans to boost power capacity to 27,000 megawatts in four years after opening its gas sector to foreign investment and sealing a gas capture deal with Royal Dutch Shell, a minister said on Sunday.

The OPEC member would need to invest at least $3 billion to $4 billion per year to reach that target, Iraq’s Electricity Minister Karim Waheed told Reuters on Sunday.

He did not say how Iraq plans to raise such funds. It has struggled to finance its previous power generation plans.

Reaching the ambitious power capacity target would depend mainly on finalising a venture with Shell to capture and use gas now being burned in the southern oilfields around Basra, and on output from three gas fields, which Iraq is auctioning off in September, Waheed said.

‘This depends on both the gas fields — the announcement for the third round — and on capturing the burned gas deal with Shell,’ he said in an interview on the sidelines of an energy conference in Qatar.

Waheed said if Iraq does not come to an agreement with Shell, the ministry will have to rethink its power plans.

Iraq is close to signing a final deal between its South Gas Company, Shell and Japan’s Mitsubishi, after it sent the final draft of the agreement to the cabinet for approval, Iraqi Oil Minister Hussain Al Shahristani said on Thursday.

Shahristani also said that Iraq will invite 45 international companies, which were prequalified for two oil auctions last year, to bid to develop Akkas gas field in Iraq’s western desert, Mansuriyah gas field in eastern Iraq and Siba in the southern oil hub of Basra.

Waheed said he expects the gas fields now being tendered to start producing in two to three years.

TENDERS

Iraq plans to issue new tenders next week for installing turbines as part of the ministry’s plans to boost electricity capacity, Waheed said.

In 2008, it said it had agreed a 1.5 billion euro ($2.03 billion) deal with Siemens for 16 gas turbines and a deal with General Electric worth $3 billion for 56 turbines. The turbines are expected to add nearly 9,000 megawatts of capacity over the next few years.

Iraq scrambled for ways to finance the purchase after a plunge in oil prices in 2008 deprived it of revenues and forced it to slash its 2009 budget three times. It had offered investors stakes in the electricity turbines it has ordered, and said it would repay investors from future electricity sales.

In March, the finance minister said Iraq raised $2.1 billion from local banks via a one-year treasury bond issue to fund electricity projects.

‘Next week, we will tender for bids for installing turbines at two more sites, at Baiji for six turbines of 160 MW and Kirkuk for one turbine of 260 MW,’ Waheed said.

‘Some 38 companies will participate and compete for the deals. Just to install the turbines, we’ve already bought the turbines.’

Waheed put Iraq’s available power capacity at 9,000 MW, and installed capacity at 11,000 to 12,000 MW. Demand is estimated to be at least 12,000 MW.

Frequent fuel shortages and constant maintenance are a main reason behind the shortfall in available power capacity in Iraq, where dilapidated infrastructure has been hit hard by years of war, insurgency attacks and underinvestment.

Seven years after the U.S.-led invasion, Iraq’s national grid still only supplies a few hours of power each day. Intermittent electricity is one of the public’s top complaints.

Baghdad, the capital, is expected to enjoy about eight hours of electricity a day when temperatures hit 50 degrees Celsius in the summer, Waheed said.

With the new power plans, Baghdad, with current 3,000 MW of power available, could finally have 24 hours a day of electricity in two years.