By Sammy Ketz
BAGHDAD, Jul 01, 2009 (AFP) - Iraq on Wednesday said it has rejected further offers from foreign companies to work in the country's oil and gas sector and pledged that some sites will instead be solely exploited by state-owned firms.
The cabinet made its decision after reviewing new offers from international bidders, government spokesman Ali al-Dabbagh told AFP, a day after being widely snubbed by energy companies unhappy about the terms on offer.
"The offers from the foreign companies were rejected by the government," Dabbagh said.
"If they want to have the oil fields they have to match the prices offered by the ministry of oil."
Doubts had been raised by international companies in the run-up to Tuesday's bidding about having to partner with state-owned firms and the requirement to share management of the fields, despite fully financing their development.
Only one deal, involving British energy giant BPBP and China's CNPC International Ltd, was made during the high-profile event in Baghdad, where five other oil fields and two gas sites were also offered for development.
Dabbagh said the BPBP-CNPC consortium's contract was rubber-stamped by the cabinet during Wednesday's meeting.
But two gas fields, and possibly one of the oil fields that was not taken up by foreign bidders, would instead be solely managed by state-owned companies, the spokesman said.
"The two gas fields of Mansuriya and Akkas, and maybe the oil field of Kirkuk, will be exploited by national Iraqi companies," Dabbagh added.
BPBP and CNPC accepted two dollars per barrel to work in the giant Rumaila oil field in southern Iraq, which has known reserves of 17.7 billion barrels, making it much the biggest field on offer.
In contrast, China's CNOOC and Sinopec had wanted 25.40 dollars per barrel extracted from the Maysan field but the government offered them only 2.30 dollars.
US energy giant ConocoPhillips asked for 26.70 dollars per barrel to work in the Bai Hassan oil field but the government offered four dollars.
A consortium featuring Sinopec, Italy's Eni Medio Orient SpA, America's Occidental Petroleum and South Korea's Korea Gas Corp (Kogas) withdrew from bidding for the Zubair oil field. It asked for 4.80 dollars per barrel but the oil ministry offered only two dollars.
The tender process attracted offers from 31 firms including US and European giants ExxonMobil and Shell and a swathe of companies from China, India, South Korea and Indonesia.
Commenting on the impasse, Ruba Husari, editor of the Iraq Oil Forum, told AFP a compromise needs to be found.
The stand-off is between Iraq, "which wants to offer a poor return and is demanding increased output and... the needs of the oil companies, which must invest billions of dollars to hike production and also make a profit," she said.
In the case of two dollars a barrel offered by Iraq, companies would only receive 95 cents after paying 35 percent in taxes and 25 percent of after-tax income to their associated Iraqi company, Husari said.
Oil ministry spokesman Assem Jihad denied that Tuesday's bidding had been a flop.
Indeed, he said it was a "success because the large foreign oil companies showed up, which shows their desire to invest in Iraq, and the procedure was transparent, which is unique in this region."
Oil Minister Hussein al-Shahristani had said on Tuesday that the Rumaila deal would take total production from 2.4 million barrels a day to more than four million in five years.
ak/adm/anw
Copyright AFP 2009.
http://www.zawya.com/Story.cfm/sidANA20090701T132215ZMLS70/Iraq%20stands%20firm%2C%20rejects%20foreign%20oil%20deals
BAGHDAD, Jul 01, 2009 (AFP) - Iraq on Wednesday said it has rejected further offers from foreign companies to work in the country's oil and gas sector and pledged that some sites will instead be solely exploited by state-owned firms.
The cabinet made its decision after reviewing new offers from international bidders, government spokesman Ali al-Dabbagh told AFP, a day after being widely snubbed by energy companies unhappy about the terms on offer.
"The offers from the foreign companies were rejected by the government," Dabbagh said.
"If they want to have the oil fields they have to match the prices offered by the ministry of oil."
Doubts had been raised by international companies in the run-up to Tuesday's bidding about having to partner with state-owned firms and the requirement to share management of the fields, despite fully financing their development.
Only one deal, involving British energy giant BPBP and China's CNPC International Ltd, was made during the high-profile event in Baghdad, where five other oil fields and two gas sites were also offered for development.
Dabbagh said the BPBP-CNPC consortium's contract was rubber-stamped by the cabinet during Wednesday's meeting.
But two gas fields, and possibly one of the oil fields that was not taken up by foreign bidders, would instead be solely managed by state-owned companies, the spokesman said.
"The two gas fields of Mansuriya and Akkas, and maybe the oil field of Kirkuk, will be exploited by national Iraqi companies," Dabbagh added.
BPBP and CNPC accepted two dollars per barrel to work in the giant Rumaila oil field in southern Iraq, which has known reserves of 17.7 billion barrels, making it much the biggest field on offer.
In contrast, China's CNOOC and Sinopec had wanted 25.40 dollars per barrel extracted from the Maysan field but the government offered them only 2.30 dollars.
US energy giant ConocoPhillips asked for 26.70 dollars per barrel to work in the Bai Hassan oil field but the government offered four dollars.
A consortium featuring Sinopec, Italy's Eni Medio Orient SpA, America's Occidental Petroleum and South Korea's Korea Gas Corp (Kogas) withdrew from bidding for the Zubair oil field. It asked for 4.80 dollars per barrel but the oil ministry offered only two dollars.
The tender process attracted offers from 31 firms including US and European giants ExxonMobil and Shell and a swathe of companies from China, India, South Korea and Indonesia.
Commenting on the impasse, Ruba Husari, editor of the Iraq Oil Forum, told AFP a compromise needs to be found.
The stand-off is between Iraq, "which wants to offer a poor return and is demanding increased output and... the needs of the oil companies, which must invest billions of dollars to hike production and also make a profit," she said.
In the case of two dollars a barrel offered by Iraq, companies would only receive 95 cents after paying 35 percent in taxes and 25 percent of after-tax income to their associated Iraqi company, Husari said.
Oil ministry spokesman Assem Jihad denied that Tuesday's bidding had been a flop.
Indeed, he said it was a "success because the large foreign oil companies showed up, which shows their desire to invest in Iraq, and the procedure was transparent, which is unique in this region."
Oil Minister Hussein al-Shahristani had said on Tuesday that the Rumaila deal would take total production from 2.4 million barrels a day to more than four million in five years.
ak/adm/anw
Copyright AFP 2009.http://www.zawya.com/Story.cfm/sidANA20090701T132215ZMLS70/Iraq%20stands%20firm%2C%20rejects%20foreign%20oil%20deals