The 2nd Round Fields

APS Diplomat Operations in Oil Diplomacy, Feb 9, 2009

Oil Ministry spokesman 'Asem Jihad on Feb. 2 said a Jan. 31 deadline for IOCs to send in documentation to qualify for a second round of bidding for TSAs had been extended to Feb. 15. This was because of all the holidays declared in January, including the Jan. 31 provincial elections.

The Oil Ministry has named 11 oil and gas fields open for TSAs: Majnoon, West Qurna Phase II, Halfaya, East Baghdad, Gharraf, Kifil, Kifil West, Merjan, Najmah, Qayara, and the Siba gas field in Basra province.

In April 2008 the Oil Ministry published a list of 35 IOCs which qualified to compete in its first bidding round, after around 120 firms applied. Jihad said 30 of the IOCs bought data packages on the fields. The fields announced in the second round could increase crude oil production to 6-6.5m b/d by 2015, up from 2.5m b/d now. The Oil Ministry said TSAs for the second round would be finalised by end-2009.

By October 2008 Baghdad had rejected a bid by LUKoil of Russia to revive a deal struck in the mid-1990s for the exploration and development of West Qurna oilfield which holds some 6 bn barrels. The Oil Ministry decided to include West Qurna-1 in the first round and West Qurna-2 in the second round.

A PSA for West Qurna between a LUKoil-led Russian consortium Saddam's regime collapsed in late 2002 when the Oil Ministry cancelled the deal after LUKoil refused to breach UN trade sanctions by beginning field exploration and development work.

When LUKoil CEO Wagit Alekperov and Russian Deputy Foreign Minister Alexander Sultanov met Iraqi political leaders in Baghdad in April 2008, there appeared to be a chance that the deal would be revived. But MEED on Oct. 3 quoted an adviser to Iraq's Oil Ministry as saying the second phase of West Qurna was no longer up for negotiation, adding: "We expect to include it in the second licencing round, along with a number of other promising fields [in the country]". He said it had been made clear to LUKoil that its PSA was "no longer valid".

LUKoil in early 2009 indicated it may still bid for West Qurna-2 as part of a consortium with ConocoPhillips. MEED quoted a London-based energy analyst as saying: "It is difficult to know what the reaction from Baghdad would be to LUKoil putting in a fresh bid. Teaming up with a US major such as Conoco would not harm its chances".

The prized Nahr 'Umr oilfield, another giant in Basra province, is likely to be offered separately along with acreage in Missan and Diyala provinces. Baghdad is pressing ahead with both rounds and planned separate offerings.