Global Processing

Iraq eyes top spot after oil auction

December 14, 2009
Iraq awarded oil contracts to foreign giants at an auction reports the Associated Foreign Press. Iraq hopes the contracts will hike output to 12 million barrels a day and put it on a par with the world''s top producer Saudi Arabia. Baghdad sold Russian firm Lukoil rights to one of the world''s biggest untapped oil fields on the auction''s second day, after striking deals with Anglo-Dutch company Shell, China''s CNPC and Malaysia''s Petronas. Deals reached at the two-day auction would boost Iraq''s oil production by more than 4.7 million barrels per day (bpd) over the next several years, from the current 2.5 million bpd. The biggest agreement struck during the auction was for the West Qurna-2 oil field, awarded to Lukoil, which will work with junior partner StatoilHydro of Norway. West Qurna-2, with known reserves of 12.9 billion barrels, lies in southern Iraq to the west of the equally enormous Majnoon field, was auctioned to Shell and Petronas. CNPC led a group comprising Petronas and France''s Total to secure Halfaya, a southern field with reserves of 4.1 billion barrels. They will receive 1.40 dollars per barrel with estimated output of 535,000 bpd. Deals were also reached over the Garraf, Najmah, Qaiyarah and Badra fields. Angolan firm Sonangol won contracts to develop both Qaiyarah and Najmah, which lie close to each other in the northern province of Nineveh. Sonangol will produce a combined 230,000 bpd from the two fields. A joint bid from Petronas and Japan''s Japex scooped the Garraf field in southern Iraq, and will lead to additional output of 230,000 bpd. And a consortium led by Russia''s Gazprom was awarded a contract to work Badra, near the Iranian border, and produce 170,000 bpd. The group also includes Petronas, South Korea''s KoGas and Turkey''s TPAO. Companies shied away from the East Baghdad field, and two clusters known as Eastern Fields and Middle Furat. Analysts said this was because of continuing violence in East Baghdad and Eastern Fields, while Middle Furat was expensive as it lacked infrastructure. At 115 billion barrels, Iraq has the world''s third-largest proven oil reserves, behind only Saudi Arabia and Iran. Oil sales provide 85 percent of government revenues.