Tamsin Carlisle
Last Updated: December 21. 2009 7:20PM UAE / December 21. 2009 3:20PM GMT
This month’s successful bidders for deals to develop seven Iraqi oilfields have started signing contracts with Baghdad, despite heightened geopolitical and security concerns.
On Sunday, a consortium of Royal Dutch Shell and the Malaysian state-owned Petronas signed an agreement to develop the Majnoon field in southern Iraq, a “supergiant” with 13 billion barrels of proved reserves, among the world’s biggest oil deposits.
Yesterday, Petronas and Japan Petroleum Exploration signed an initial deal to develop the smaller Gharaf field, which has about 900,000 barrels of reserves, after submitting the winning bid for the work during Iraq’s second postwar auction of oil licences, held this month.
Both contracts were signed as an international spat over oil in a disputed border area played out between Iran and Iraq. It was the first serious incident between the two OPEC oil producers since the US-led invasion of Iraq in 2003, and it helped crude prices climb above US$75 per barrel yesterday from about $70 a week ago.
Meanwhile, a bomb attack outside Mosul halted exports through Iraq’s biggest cross-border oil pipeline for the fourth time since late October. The line, which can carry more than 400,000 barrels of oil per day, has been repeatedly attacked by insurgents.
Analysts said security concerns dissuaded foreign firms from bidding on some of the 10 oil licences offered in the auction on December 11 and 12. Nevertheless, Iraqi officials were confident yesterday that Baghdad would sign preliminary agreements by the end of this year for the projects that did attract bids.
The Iraqi oil ministry expects to pen further deals this month with a group consisting of China National Petroleum Corporation, Petronas and Total of France, a team led by Russia’s Gazprom, and a partnership between another Russian oil producer, Lukoil, and Norway’s StatoilHydro. The agreements require cabinet approval to become final.
Abdul-Karim Elaibi, the Iraqi senior deputy oil minister, said yesterday’s contract signing showed security concerns were not chasing investors away. “Their presence here today is a great evidence that there is no relation with what happened in the borders with our neighbour, Iran,” he said.
Baghdad said Iranian troops crossed the border last week to seize an oil well located about 100 metres inside Iraqi territory. Government officials said yesterday the troops had withdrawn from the facility but remained on Iraqi soil.
Tehran said the oil well was in Iranian territory. Ali Larijani, the speaker of the Iranian parliament, said the incident had been “blown out of proportion” and had been “contained”.
Since June, Iraq has awarded contracts that could put the country on course to surpass Iran and rival Saudi Arabia as an oil exporter. Iraq has the world’s third-biggest proved oil reserves and significant potential for further large discoveries. Even the most optimistic observers, however, see little prospect of a big jump in its oil output in the immediate future.
Ahead of an OPEC meeting today in Angola, Dr Hussain al Shahristani, the Iraqi oil minister, told reporters he did not expect Iraq to achieve a “significant” increase in crude production before 2012. As a result, he did not expect to deal with the question of re-establishing an OPEC production quota for the country for another two to three years.
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091221/BUSINESS/712219938/1050
Last Updated: December 21. 2009 7:20PM UAE / December 21. 2009 3:20PM GMT
This month’s successful bidders for deals to develop seven Iraqi oilfields have started signing contracts with Baghdad, despite heightened geopolitical and security concerns.
On Sunday, a consortium of Royal Dutch Shell and the Malaysian state-owned Petronas signed an agreement to develop the Majnoon field in southern Iraq, a “supergiant” with 13 billion barrels of proved reserves, among the world’s biggest oil deposits.
Yesterday, Petronas and Japan Petroleum Exploration signed an initial deal to develop the smaller Gharaf field, which has about 900,000 barrels of reserves, after submitting the winning bid for the work during Iraq’s second postwar auction of oil licences, held this month.
Both contracts were signed as an international spat over oil in a disputed border area played out between Iran and Iraq. It was the first serious incident between the two OPEC oil producers since the US-led invasion of Iraq in 2003, and it helped crude prices climb above US$75 per barrel yesterday from about $70 a week ago.
Meanwhile, a bomb attack outside Mosul halted exports through Iraq’s biggest cross-border oil pipeline for the fourth time since late October. The line, which can carry more than 400,000 barrels of oil per day, has been repeatedly attacked by insurgents.
Analysts said security concerns dissuaded foreign firms from bidding on some of the 10 oil licences offered in the auction on December 11 and 12. Nevertheless, Iraqi officials were confident yesterday that Baghdad would sign preliminary agreements by the end of this year for the projects that did attract bids.
The Iraqi oil ministry expects to pen further deals this month with a group consisting of China National Petroleum Corporation, Petronas and Total of France, a team led by Russia’s Gazprom, and a partnership between another Russian oil producer, Lukoil, and Norway’s StatoilHydro. The agreements require cabinet approval to become final.
Abdul-Karim Elaibi, the Iraqi senior deputy oil minister, said yesterday’s contract signing showed security concerns were not chasing investors away. “Their presence here today is a great evidence that there is no relation with what happened in the borders with our neighbour, Iran,” he said.
Baghdad said Iranian troops crossed the border last week to seize an oil well located about 100 metres inside Iraqi territory. Government officials said yesterday the troops had withdrawn from the facility but remained on Iraqi soil.
Tehran said the oil well was in Iranian territory. Ali Larijani, the speaker of the Iranian parliament, said the incident had been “blown out of proportion” and had been “contained”.
Since June, Iraq has awarded contracts that could put the country on course to surpass Iran and rival Saudi Arabia as an oil exporter. Iraq has the world’s third-biggest proved oil reserves and significant potential for further large discoveries. Even the most optimistic observers, however, see little prospect of a big jump in its oil output in the immediate future.
Ahead of an OPEC meeting today in Angola, Dr Hussain al Shahristani, the Iraqi oil minister, told reporters he did not expect Iraq to achieve a “significant” increase in crude production before 2012. As a result, he did not expect to deal with the question of re-establishing an OPEC production quota for the country for another two to three years.
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091221/BUSINESS/712219938/1050