Iraq awarded two gas fields at a major international auction yesterday in a move that the oil minister said was key to boosting the economy.
The largest of the three fields up for sale went to a Kazakh and Korean consortium while the smallest went to a Turkish and Kuwaiti joint venture.
The Korean Gas Corporation of South Korea and Kazakhstan’s KazMunaiGaz won the 50-50 joint venture to develop the Akkaz field, in Anbar province west of Baghdad, which has reserves of about 158 billion cubic metres.
The winning bid offered $5.50 per oil-barrel-equivalent and a plateau production of 400 million cubic feet per day over 13 years.
The only other bidders for Akkaz were France’s Total and Turkey’s TPAO, which placed a 50-50 joint-venture bid, offering a price of $19 of oil-barrel-equivalent.
Siba, the smallest field up for auction according to Oil Minister Hussein al-Shahristani, went to a joint venture between Kuwait Energy and Turkey’s TPAO.
The two firms, which have a 60-40 split in the joint venture, offered a nine-year contract at $7.5 per oil-barrel-equivalent and a per-day production plateau of 100 million cubic feet.
The oil minister opened the auction saying the energy sector could jumpstart the economy by creating jobs and providing much-needed electricity.
Oil and gas contracts are “very important and we hope they will help in creating jobs and providing electricity,” Shahristani said.
Iraq needs the energy revenues to cut down on unemployment, running at 28 per cent, according to the United Nations, and provide much-need electricity to end routine power rationing. French oil giant Total, Japan’s Mitsubishi and competitors from Russia, South Korea, Turkey and India were among 13 companies eligible to bid in the auction which has twice been postponed and which analysts had warned could prove a hard sell for Iraq.
The lukewarm interest was visible in the small number of bidders yesterday.
Iraq, which this month upped its figure for proven oil reserves by nearly a quarter to 143.1 billion barrels – one of the world’s largest – is hoping the auction will do for its gas fields what similar auctions last year did for its oil industry.
In two bid rounds, foreign firms snapped up contracts to develop 10 oilfields, which Baghdad is tapping in an ambitious bid to eventually raise crude output from the current 2.4 million barrels per day to between 10 and 12 million barrels per day, more than oil heavyweight Saudi Arabia.
The eligible bidders yesterday were Italy’s Eni and Edison, France’s Total, Japan’s Jogmec, Mitsubishi and Itochu, Korean Gas Corporation of South Korea, Turkey’s TPAO, Kazakhstan’s KazMunaiGaz, Russia’s TNK-BP, India’s Oil & Natural Gas Corporation, Kuwait Energy, and Norwegian giant Statoil.