Iraq delayed an international auction of rights to 11 of its oil and natural gas deposits, pushing back the bidding date after introducing changes to the contract, according to people familiar with the matter. The oil ministry re-scheduled the auction for April 25, said one of the people, who asked not to be identified because the information isn’t public. International energy companies will still participate in the bidding because the prospect of prodigious crude reservoirs outweighs the new contract’s lack of clarity, analysts at Wood Mackenzie Ltd. and the Iraq Energy Institute said.
Foreign investment and expertise are crucial for Iraq to meet its goal of pumping 6 million barrels a day of oil by 2020 as it overcomes decades of conflict and sanctions. Crude output has gained sharply in recent years, turning Iraq into the second-biggest producer in the Organization of Petroleum Exporting Countries. Iraq pumped 4.43 million barrels of crude a day in March, data compiled by Bloomberg show.
Iraq plans to develop three blocks near the Kuwaiti border and seven close to Iran, as well as one offshore area in the Persian Gulf. The best fields, according to Thom, are those that are close to existing oil reservoirs and export facilities. Companies already producing in the country are likely to seek rights in adjacent fields, he said. “The basin in Iraq is world-class and is the most prospective across the Middle East,” Thom said. “For companies that are thinking about building a business that’s resilient, having low-cost resources is a good place to start.”
China’s Cnooc Ltd. said it hasn’t received information about the bidding but would evaluate new opportunities in Iraq closely. None of the other prospective bidders commented.
Sources and photo-credits: Bloomberg with assistance by Chiara Albanese, Aibing Guo, Debjit Chakraborty, Elffie Chew, Elena Mazneva, Kevin Crowley, and Francois De Beaupuy