Oil firms to scramble for Iraq deals on live TV

The secretive world of Middle East oil deals will be thrown open in Baghdad next week when a contract auction is broadcast live, shining a spotlight on big oil dealmakers that prefer to stay behind the scenes.

“This is shaping up to be unlike anything I have ever been involved in,” said one senior executive for a major western oil company. “It is quite unique and will be some theatre. I don’t think any of us really know how this is going to work out.”

Bids for contracts for six of Iraq’s largest oilfields and two untapped gas fields will be opened in front of the cameras and the world’s media on June 29 and 30 in Baghdad.
The bids will be compared and contracts awarded there and then.

After the first contract is awarded, competing firms would have a chance to go back and revise the terms of their next bid.

That is where the process could come to resemble a live TV game show.

“Firms are going to have to break alliances and broker new ones there and then, bid by bid, depending on what they win or lose,” said another oil executive working on the bidding process.

“They will also have to change bids under time pressure. That could become a bit unseemly if it happens in front of the cameras.”

The terms of the tender limit the 32 competing firms to just one contract as lead partner or field operator. They can participate in three contracts as members of consortia.

Some of the biggest firms would be planning bids as operators for several fields, in case they fail to win the field of their choice, executives said.

If they win early on, they would have to pull out of any other alliances they were heading as lead partners.

Those that fail to win the first fields auctioned would likely submit increasingly competitive terms as the two-day process continues.

The auction represents the first chance for decades for international energy companies to bid for contracts in Iraq.

Returning empty handed from what analysts say is the largest ever single auction in terms of oil reserves on offer would be difficult to stomach for the likes of Exxon Mobil, Royal Dutch Shell, BP, Chevron, Total and ConocoPhillips.

“It looks like it will be a very transparent bidding process,” said one executive. “It is going to be fascinating.”—Reuters

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