Iraq Parliament Panel Wants to Halt 4th Bidding Round

Source: Reuters 5/16/2011, Location: Middle East

Iraq's gas field auction set for January must be delayed until a new energy law is passed and companies signing new contracts with Iraq do so "at their peril," parliament's energy committee chief said. The 4th bidding round for 12 new exploration blocs, scheduled for January 25-26, is expected to add 29 trillion cubic feet of gas and 10 billion barrels of oil to Iraqi reserves.

Oil and gas committee chief Adnan al-Janabi, in an interview with Reuters, said he had asked the Oil Ministry to postpone the auction but it had refused, and any contracts that resulted would be illegal. He said his committee would ask parliament to forbid "the carrying out of new bid rounds or the signing of any new contracts until the necessary petroleum legislation is passed."

"If the Oil Ministry proceeds with its plans, it will not be acting legally, and any signing parties will do so at their peril," he said. In a brief response, the oil ministry's media office said the ministry was holding the auction in compliance with "valid Iraqi laws."

OPEC member Iraq has signed a series of contracts with foreign oil firms in a bid to ramp up crude production capacity to 12 million barrels per day by 2017, which could catapult it into the top rank of world producers, rivalling Saudi Arabia.

Iraq is depending on oil and gas revenue to help it rebuild after years of war, economic sanctions and under investment. Eight years after the U.S.-led invasion that toppled Saddam Hussein, oil production is about 2.7 million bpd now.

A new hydrocarbons law has been in the making for years but has not been passed by parliament. Iraq's new government was formed in late December following more than nine months of wrangling after an inconclusive national election in March 2010. "The three bid rounds already conducted by the ministry in a legal vacuum have set lofty claims for production targets, with still little progress on the ground, and serious investments required in supporting infrastructure," Janabi said.

Parliament's energy committee met with Oil Minister Abdul-Kareem Luaibi last Thursday, asking him to delay the 4th bid round and not to sign any more contracts pending approval of a new hydrocarbons law, Janabi said. Luaibi told the committee "we have launched the fourth bidding round and there is no way to step back," Janabi said.

He said his committee would ask parliament to pass a law preventing the ministry from signing any new contracts. "Companies should know that any future deals will be considered illegal," he said.


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