Iraq reviews oil tenders after foreign snub

Iraq’s Cabinet was reviewing on Wednesday new bids from foreign energy firms to develop the country’s oil and gas reserves, a day after being widely snubbed by companies unhappy over the terms on offer.

“Ministers are meeting and discussing the issue,” an official in Prime Minister Nuri al-Maliki’s office said after a deal was struck on Tuesday to develop only one of six oil fields up for tender.

In the five other cases, and with two gas fields, companies balked at the deals because Iraq was offering far less per barrel of oil produced than they considered acceptable.

But Oil Ministry spokesperson Assem Jihad said: “the top two consortiums for each field have made new proposals, and the Cabinet will study them and decide what to do.”

The service contracts offered by Baghdad are based on companies accepting a fixed fee per barrel of oil extracted from the six fields, rather than an equity stake.

Foreign companies raised doubts in the run-up to the bidding about having to partner with state-owned firms and the requirement to share management of the fields, despite fully financing their development.

In the end, British energy giant BP and China’s CNPC International were the only bid winners, accepting a deal for two dollars per barrel to work in the giant Rumaila oil field in southern Iraq, which has known reserves of 17,7-billion barrels.—Sapa-AFP