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13 April 2024

Iraq to finalise oil deals later this month

The jump in Iraq's oil output is set to bring a flood of cash that is desperately needed to build public works damaged after the US invasion. (AFP)

By Reuters

Iraq's Oil Ministry will finalise deals later this month with foreign energy firms for its Majnoon, Gharaf, Qayara and Najmah fields, a ministry official said yesterday.

Sabah Abdul Kadhim, the Head of the Legal Section of Iraq's Petroleum Contracts and Licensing Directorate, said the ministry would sign a final service contract for super giant Majnoon, which was awarded to Royal Dutch Shell and Malaysia's Petronas in a December energy auction, on January 17.

Majnoon's reserves are a whopping 12.6 billion barrels, making it one of the world's largest untapped fields. On January 18, it will sign a deal for smaller field Gharaf, with reserves of 900 million barrels, with Petronas and the Japan Petroleum Exploration Company (Japex).

On January 26, the ministry will sign with Angola's Sonangol for northern Qayara and Najmah fields, he said. The deals for the four fields, awarded at an auction held on December 11-12, were ratified by Iraq's Cabinet early this month, and now require the final signature of oil officials and foreign consortia before work can begin.

The deals could go a long way in transforming Iraq's underperforming oil sector and bringing output capacity to an eventual 12 million barrels per day (bpd).

That jump would bring Iraq a flood of oil cash that is desperately needed to rebuild public works damaged after the US invasion, create jobs, and lay the groundwork for economic stability.

Kadhim said three other deals from Iraq's second bidding round, for Halfaya, Badrah and West Qurna Phase Two fields, would not need to be ratified by parliament but would be given the Oil Ministry's final signature as soon as participating firms accept a host of proposed amendments. The Cabinet proposed a number of legal and technical amendments, which officials have described as minor.

West Qurna Phase Two, a super giant with reserves of 12.9 billion barrels, went to Russia's Lukoil and Norway's Statoil. Halfaya, with reserves of 4.1 billion barrels, was won by China National Petroleum Company, Total and Petronas. Russia's Gazprom, Turkey's TPAO, Kogas and Petronas won the deal for Badrah field. Kadhim also said that a delegation from Nippon Oil Corporation would meet with Iraqi officials on January 24 in a bid to complete talks over the Nassiriya oilfield.

Negotiations for a deal to develop the four-billion-barrel field have dragged on for months, even as Iraq has moved ahead with other major oilfield contracts.

Kadhim said last month that the financing details of the engineering, procurement and construction contract put forward by Nippon and its partners were complicated and unclear.

Last month, Iraq temporarily froze the talks with Nippon so it could focus on the second oilfield auction.

Now, Nippon, which has partnered with oil explorer Inpex and plant engineering firm JGC, is set to resume talks in Baghdad.

Kadhim said the hope was that a final agreement might be reached – maybe.

"We gave them our draft contract," he said. "Now they will come back with their draft. The talks will not be easy."


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