Thursday, 25 July 2013

Iraq-India strengthen energy ties

Iraq has moved to strengthen its relations with India by offering the country three contracts to develop blocks in the Middle Furat oilfields. The three blocks are Kifil, West Kifl and Merjan.
The offers were made during the recent visit by Indian oil minister Veerappa Moily to Baghdad. Moily came as head of a 28-member delegation that was in Iraq to participate in the 17th India- Iraq joint commission on economic and technical co-operation, held on 7 July. This commission is aimed at broadening bilateral co-operation across a number of sectors including energy, agriculture, affordable housing, higher education and tourism.
What was unusual about the offers was that they were awarded without any bidding process. This is a rare occurrence in Iraq, outside of the KRG, suggesting that Baghdad is particularly keen to develop its relations with Delhi.
It was reported, too, that Iraq has also agreed to renegotiate the contract that was awarded to Indian company ONGC Videsh (OVL) in 2000 for block 8. The Saddam Hussain regime initially offered OVL a production-sharing contract for the block, but later changed its mind and sought a contract renegotiation. The post-Saddam Hussain government initially agreed to honour the PSC with OVL, but reportedly then had second thoughts, preferring the service contract model instead. Negotiations over the contract have been at a standstill. However, following Moily's visit, Iraq is now willing to start renegotiations with the firm for the block.
In addition, according to a statement issued by the Indian Oil Ministry, Iraq has agreed to consider investing in Indian Oil Corporation's Paradip refinery. According to the refinery project executive director, M Vijaywargiya, the refinery, at Jagatsinghpur in Odisha, is set to be commissioned in September–October this year. The Oil Ministry also stated that Baghdad is open to considering extending 60 days credit for crude sales to India.
For more news and expert analysis about Iraq, please see Iraq Focus.
© 2013 Menas Associates

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