casper
12-12-2009, 01:03 PM
Iraq offers choice oilfields, Lukoil wins one
BAGHDAD (Reuters) - A group led by Russian energy giant Lukoil won a deal to develop one of Iraq's most attractive oilfields on Saturday, in the country's second auction of contracts that promise to thrust it into the ranks of the world's top producers.
The West Qurna Phase Two oilfield, with a massive 12.9 billion barrels of reserves, produced fierce competition among the 30-odd international oil companies that braved the threat of violence and attacks to come to Baghdad.
The Russian company's win of West Qurna is made sweeter by the fact it had lobbied unsuccessfully since the 2003 U.S. invasion to revive a Saddam Hussein-era contract for the field.
Lukoil is partnered by Norway's Statoil in the deal. Competition was also strong on Saturday for the smaller Gharaf oilfield, also in southern Iraq.
Two big oilfields, including the 12.6 billion barrel "supergiant" Majnoon, were awarded on Friday, as oil majors from Asia and the West put aside concerns over security just days after car bombs killed 112 people in the Iraqi capital.
Supergiants are fields with more than 5 billion barrels in reserves. Iraq has some of the largest untapped supergiants left on earth.
"The terrorists tried to send a message to the companies through the bombings ... that Iraq is unstable and investment will be overshadowed by risks," Oil Minister Hussain al-Shahristani told state television on Friday night.
"But this message was not delivered and never deceived them. They came and submitted competitive offers that surprised the global oil industry."
The 10 oilfields on offer in Iraq's second contract auction since the invasion, plus deals emerging from a first auction in June, have the potential to quadruple Iraqi crude output to 10 million barrels per day in six or seven years.
That capacity would match Russia's, and bring Iraq close to No. 1 producer Saudi Arabia's 12.5 million bpd capacity.
Only two of the five fields on offer on Friday were successfully bid for as oil firms steered clear of more dangerous or troublesome areas, including the supergiant East Baghdad oilfield that lies in part under Baghdad's Sadr City slum and fields in the north where violence is still rife.
One field in the north near the violent city of Mosul, which was not awarded on Friday, was won by Angolan state-oil firm Sonangol on Saturday after the company changed its mind about accepting the government's proposed $5 per barrel fee. Sonangol had wanted more than twice that.
DOOR OPEN ONLY FOR A WHILE
But for other fields, the companies actually asked for less than the government was willing to pay.
"They were astonishingly low figures. But 2009 will be remembered as the year that Iraq opened its door to the international oil companies and then shut it. It's 10 fields and that's it," said a senior oil executive.
"So it's strategic for the oil firms, either you are here or you aren't and this is the chance. You have to think about it like that."
Royal Dutch Shell and Malaysia's Petronas won the deal for Majnoon, proposing a fee of $1.39 per barrel and pledging to increase output to 1.8 million bpd, more than double what Iraq had expected.
They outbid Total, a favorite to take the field that it had sought to develop under Saddam.
Halfaya, with 4.1 billion barrels of reserves, was some consolation. CNPC, Total and Petronas won it with a fee of $1.40 per barrel and a plateau production target of 535,000 bpd.
The Lukoil and Statoil partnership for West Qurna Phase Two proposed a fee per barrel of $1.15 and a plateau production level of 1.8 million bpd.
The smaller Gharaf field was won by Malaysia's Petronas and Japanese oil company Japex, with a fee of $1.49 per barrel and plateau output target of 230,000 bpd.
EMERGING FROM WAR
The country is beginning to emerge from the sectarian bloodshed unleashed after the U.S. invasion, but violence has continued to keep investors at bay.
The series of car bombs in the capital on Tuesday was the third major assault on government buildings in Baghdad in four months and a bloody reminder of the fragile security as Iraq heads into a general election in March.
The two-day oil auction in an auditorium of the Oil Ministry called the "Nationalisation Room" took place under intense security, with thousands of Iraqi police and troops deployed on the streets of Baghdad and army helicopters buzzing overhead.
(Additional reporting by Mohammed Abbas, Ayla Jean Yackley, Aseel Kami, Khalid al-Ansary and Missy Ryan; Writing by Michael Christie; Editing by Bill Tarrant)
BAGHDAD (Reuters) - A group led by Russian energy giant Lukoil won a deal to develop one of Iraq's most attractive oilfields on Saturday, in the country's second auction of contracts that promise to thrust it into the ranks of the world's top producers.
The West Qurna Phase Two oilfield, with a massive 12.9 billion barrels of reserves, produced fierce competition among the 30-odd international oil companies that braved the threat of violence and attacks to come to Baghdad.
The Russian company's win of West Qurna is made sweeter by the fact it had lobbied unsuccessfully since the 2003 U.S. invasion to revive a Saddam Hussein-era contract for the field.
Lukoil is partnered by Norway's Statoil in the deal. Competition was also strong on Saturday for the smaller Gharaf oilfield, also in southern Iraq.
Two big oilfields, including the 12.6 billion barrel "supergiant" Majnoon, were awarded on Friday, as oil majors from Asia and the West put aside concerns over security just days after car bombs killed 112 people in the Iraqi capital.
Supergiants are fields with more than 5 billion barrels in reserves. Iraq has some of the largest untapped supergiants left on earth.
"The terrorists tried to send a message to the companies through the bombings ... that Iraq is unstable and investment will be overshadowed by risks," Oil Minister Hussain al-Shahristani told state television on Friday night.
"But this message was not delivered and never deceived them. They came and submitted competitive offers that surprised the global oil industry."
The 10 oilfields on offer in Iraq's second contract auction since the invasion, plus deals emerging from a first auction in June, have the potential to quadruple Iraqi crude output to 10 million barrels per day in six or seven years.
That capacity would match Russia's, and bring Iraq close to No. 1 producer Saudi Arabia's 12.5 million bpd capacity.
Only two of the five fields on offer on Friday were successfully bid for as oil firms steered clear of more dangerous or troublesome areas, including the supergiant East Baghdad oilfield that lies in part under Baghdad's Sadr City slum and fields in the north where violence is still rife.
One field in the north near the violent city of Mosul, which was not awarded on Friday, was won by Angolan state-oil firm Sonangol on Saturday after the company changed its mind about accepting the government's proposed $5 per barrel fee. Sonangol had wanted more than twice that.
DOOR OPEN ONLY FOR A WHILE
But for other fields, the companies actually asked for less than the government was willing to pay.
"They were astonishingly low figures. But 2009 will be remembered as the year that Iraq opened its door to the international oil companies and then shut it. It's 10 fields and that's it," said a senior oil executive.
"So it's strategic for the oil firms, either you are here or you aren't and this is the chance. You have to think about it like that."
Royal Dutch Shell and Malaysia's Petronas won the deal for Majnoon, proposing a fee of $1.39 per barrel and pledging to increase output to 1.8 million bpd, more than double what Iraq had expected.
They outbid Total, a favorite to take the field that it had sought to develop under Saddam.
Halfaya, with 4.1 billion barrels of reserves, was some consolation. CNPC, Total and Petronas won it with a fee of $1.40 per barrel and a plateau production target of 535,000 bpd.
The Lukoil and Statoil partnership for West Qurna Phase Two proposed a fee per barrel of $1.15 and a plateau production level of 1.8 million bpd.
The smaller Gharaf field was won by Malaysia's Petronas and Japanese oil company Japex, with a fee of $1.49 per barrel and plateau output target of 230,000 bpd.
EMERGING FROM WAR
The country is beginning to emerge from the sectarian bloodshed unleashed after the U.S. invasion, but violence has continued to keep investors at bay.
The series of car bombs in the capital on Tuesday was the third major assault on government buildings in Baghdad in four months and a bloody reminder of the fragile security as Iraq heads into a general election in March.
The two-day oil auction in an auditorium of the Oil Ministry called the "Nationalisation Room" took place under intense security, with thousands of Iraqi police and troops deployed on the streets of Baghdad and army helicopters buzzing overhead.
(Additional reporting by Mohammed Abbas, Ayla Jean Yackley, Aseel Kami, Khalid al-Ansary and Missy Ryan; Writing by Michael Christie; Editing by Bill Tarrant)