Iraq will hold a second auction of contracts to develop some its prized oilfields on Dec. 11-12, and plans to meet oil majors in coming weeks to seal deals rapidly renegotiated after a lacklustre first bidding round.
If finalised, the three revised deals would catapult Iraq to number three among world oil producers from its current 11th spot. The second bid round in December would offer more deals on untapped oilfields, with potential to produce millions of barrels more that could take Iraqi production higher still.
"The second bid round will take place in Baghdad on Dec. 11-12," Abdul-Mahdy al-Ameedi, deputy director of Iraq's Petroleum and Licensing Directorate, told reporters on the sidelines of a meeting with the world's largest energy firms to discuss contracts for the second round.
Competition for the contracts is likely to be fierce, executives from the 44 oil firms attending the meeting said.
Risks that dogged the first bidding round were now seen as less of a problem, they added.
"After the deals from the first round, the uncertainty is less," said one oil executive. "Now everybody needs to get involved. This is historic, there is going to be oil industry development like you've never seen anywhere else on earth, even before any awards in the second bid round."
Foreign capital and expertise is viewed as essential if Iraq's dilapidated oil infrastructure is to recover from decades of war, sanctions and under investment, allowing it to raise the billions of dollars it needs to rebuild.
Ameedi said contract terms for the second round would be similar to those in the first. Iraq lowered taxes on fields offered in the first round to get oil firms back to the table to renegotiate. The lower taxes would stand in the second round.
Another change to the contracts in the second round was to include clauses on developing oil reservoirs that oil firms may discover as they work on existing oilfields, he said. Fees for newly discovered reservoirs would be agreed on a case-by-case basis, he said.
Iraq has yet to fix the maximum fee per barrel it would pay for the 10 oilfields on offer in the second round, Ameedi said.
Iraq is close to sealing deals on two oilfields it failed to award in the first round, including the Zubair field, which has reserves of about 4 billion barrels.
Iraqi officials plan to meet Eni representatives in the next two days to discuss its bid for the $10 billion Zubair project. Iraq hopes to initial a contract next week.
"We will not change anything on that contract," Ameedi said. "We will initial it and then send it on to the cabinet for approval, and then we'll sign it."
Consortiums headed by Exxon Mobil and Russia's LUKOIL are competing for the 8.7 billion barrel West Qurna field. Lukoil submitted a revised bid for that on Saturday, an industry source said earlier.
Yet another deal may be resurrected from the first round. Iraqi officials might meet Royal Dutch Shell executives before the end of the month to discuss its possible involvement in operating Iraq's Kirkuk oilfield, Ameedi said.
China's Sinopec would be banned from partnering Shell in Kirkuk due to its involvement with Iraq's Kurdish region, he added. Baghdad deems oil deals signed by the Kurdistan Regional Government to be illegal.
Separate to the tenders, Iraq is pursuing a development deal for the Nassiriya oilfield, and Iraqi officials are expected to meet Nippon Oil Corp in late October or early November, Ameedi said. Iraq officials had no plans to meet Eni on that field, he said. Eni had competed for the contract before it got close to sealing the deal for Zubair.
Some 45 firms are qualified to bid for the second round fields, which hold reserves estimated at 41.3 billion barrels. Sinopec was excluded from the Istanbul meeting for its Kurdish involvement.