Iraq’s first petroleum licensing round is an offering of service contracts for eight contract areas. (Image courtesy of Petroleum Contracts and Licensing Directorate or the Ministry of Oil, Republic of Iraq)

Iraq’s First Petroleum Licensing Round is offering service contracts for eight areas. The objective of the round is to substantially increase production of each of the offered oil fields and to commence production on two gas fields.

The six oil fields contribute approximately 2 MMb/d of Iraq’s current total production of 2.5 MMb/d. The other two areas are undeveloped gas fields. Each is operated by one of the Regional Oil Companies (North Oil Company, South Oil Company, and Missan Oil Company).

The producing field technical service contracts will be divided into two phases with a rehabilitation phase of approximately 30 to 36 months and an enhanced redevelopment and production phase covering the remainder of the 20-year contract.

Companies will be expected to undertake short-term improvements to the existing production systems and gather new data for older fields to increase production above a pre-set baseline, which will be established by the Petroleum Contracts and Licensing Directorate of the Ministry of Oil, Republic of Iraq (PCLD). A rehabilitation plan will be submitted by each company within the first six months of the contract.

The Enhanced Redevelopment Plan will be submitted as soon as possible, but no later than 36 months from the effective date of the service contract. According to the PCLD, a company’s proposed level of increase for each field will provide a competitive component for the round.

Field operations will be carried out through joint ventures between Iraq’s Regional Oil Co. (51% interest as operator) and the contractor (49% interest).
Iraq’s PCLD began the licensing round process by prequalifying companies as early as Feb. 2008. The formal announcement of the round was made by the Minister of Oil in June 2008.

Iraq’s Oil Minister Hussain Shahristani met with operators bidding for long-term oil and gas service contracts in London in October to discuss details of the fields on offer as well as planned contract terms. The long-term development contracts are intended to raise oil output by a combined 1.5 MMb/d from six fields. Iraq hopes to raise total oil output to 4.5 MMb/d by 2013.

The licensing process will grade each company or consortium on competitiveness in three distinct parameters. Included in criteria are the per-barrel fee for baseline oil production; per-barrel (per-thousand cubic foot) fee for incremental production; and the overall enhanced production target. Each contract area will have a pre-specified signature bonus that is not biddable. For the six oil areas, the bonus is set at US $10 million plus $50/bbl by which the baseline production exceeds 100,000 b/d of oil.

Oil fields listed for the first bidding round included Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and Maysan, which comprises the Bazargan, Abu Gharab and Fakka fields. Two gas fields, Akkas and Mansuriyah, are also on offer. The Iraqi government hopes to sign deals by the middle of 2009.

In all, the list of 35 companies prequalified for the round includes many national oil companies and major independent oil companies from 19 countries located throughout Europe, Asia, North America, and Australia. For more information on the bid round and the available service contracts visit www.pcld-iraq.com.

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